PILOT POWER : ‘Elitist’ Union Gets Pugnacious as It Pushes for Blue Collar Goals

Not long ago, there were said to be only two unions whose members read the Wall Street Journal every day: a radical left-wing group that sought to keep track of the capitalist conspiracy against it and the Air Line Pilots Assn., whose members wanted to keep an eye on their investments.

The pilots, even though their highly paid heyday might be on the wane, have not laid the stock tables aside. After all, members of ALPA, despite wage cuts, work-rule concessions and low entry-level pay, remain among the nation’s best-compensated unionized workers, averaging $80,000 a year. Some veterans earn more than $150,000 while working only eight to 10 days a month and also hold lucrative second jobs.

But the 57-year-old union has changed, becoming increasingly concerned with the goals of traditional blue collar unionism and, in the process, gaining stature and power both in the labor movement and in the airline industry.

A few years ago, the pilots union was considered by other trade unionists to be “elitist,” with members who were “white collar prima donnas.”

The pilots were criticized for considering it beneath their dignity to help other airline unions in their labor disputes, for not standing shoulder-to-shoulder with their brethren in the Teamsters, machinists or flight attendants unions, for seldom honoring their picket lines. So the pilots were resented and distrusted.

Some of that feeling persists. “ALPA thinks it is more like the American Medical Assn. than like a labor union,” Charles Craypo, chairman of the economics department at the University of Notre Dame, said in a telephone interview. “Like doctors in a hospital, the pilots feel they have a kind of a status over the other professionals. They give the orders. They want complete control over the process.”

But in recent years ALPA, which represents pilots at 44 airlines, has become more of a traditional-style trade union--more pugnacious and demanding about such things as wages, benefits, work rules, seniority and strikes. In a few instances, in fact, its locals have become dissatisfied with the managements of their airlines and have tried to become entrepreneurs, attempting to buy out the carriers.

“Without question we are more a labor union today. That’s out of necessity,” said Henry A. Duffy, ALPA’s 53-year-old president, in an interview. “We had to, in order to deal with the increasingly hostile tactics that we were exposed to from the carriers.”

Much of this stemmed from Congress’ deregulation of U.S. airlines in 1978, increasing the competitive pressures on the industry. “Maybe there was a justification for what (the airlines) had to do,” Duffy said, “because they were under economic pressures they never had before.

“But when they transferred it to us and to collective bargaining, things got pretty brutal in this industry, and we had to toughen up. And part of this toughening up was to be more like a union.”

Duffy also said that his union now supports other airline labor groups. “We are out on other people’s picket lines,” he said. “I think we have broken down a lot of the old feelings.”

Track Record

And there is no question that, in its reincarnation, the 40,000-member union has acquired a considerable amount of clout. Its renewed influence is being felt throughout the airline industry.

A few recent examples:

- It prevented airline mogul Frank Lorenzo, an archenemy, from acquiring Trans World Airlines a few years ago and sent it into the arms of what it considered a lesser evil, financier Carl C. Icahn.

- It prevented United Airlines from acquiring and rescuing Frontier Airlines even though, as a result, Denver-based Frontier went to its grave.

- The New York local (they are known as master executive councils) was instrumental in the ouster at Pan American World Airways of Chairman C. Edward Acker and Vice Chairman Martin Shugrue earlier this year, reportedly insisting that the two leave as a quid pro quo for agreeing to grant the airline $180 million in labor and work-rules concessions. The concessions have not yet been forthcoming, according to a Pan Am spokesman.

- The Chicago local was the prime mover in the breakup of Allegis Corp., parent of United Airlines.

The episode began in April, 1987, when the union, saying it opposed the company’s program of diversification, offered to buy the airline from the parent firm for $4 billion. Allegis refused, but the offer put the corporation “into play,” as Wall Streeters say, making it fair game for takeover sharks.

Credit, Blame

Largely because of the pilots’ pressure, Allegis was restructured. Its vision of becoming a total travel conglomerate was dashed and its chairman, Richard Ferris, whose dream it all was, was sent out to pasture. And Allegis sold off all of its subsidiaries (the Hertz rental car business and the Westin and Hilton International hotel chains) except the airline--and the pilots are still trying to wrest control of that.

- The pilots get much of the credit--or blame--for triggering the current federal investigations into the safety of operations by Eastern and Continental airlines and of a separate government probe into the financial stability of Texas Air, the holding company that owns both carriers.

That situation appears to be a byproduct of the longstanding acrimonious management-labor relations at Texas Air, which is headed by the pilots’ old nemesis Lorenzo. Along with the International Assn. of Machinists, the pilots complained about so many alleged violations of safety regulations that the Federal Aviation Administration was obliged to investigate.

The union’s leaders say the organization’s most important function is promoting air safety, that one of the pilots’ primary responsibilities is to discover and report safety problems--regulatory, mechanical or human.

“Safety in the workplace goes way back in labor struggles,” Duffy said. “With us, it’s life or death.”

Airline executives, most of whom agreed to be interviewed only if they were not quoted by name, give the union high grades for efficiency in representing its members and for reasonableness.

Opinions Vary

“It’s a much more effective union than it was in the ‘70s,” said the labor negotiator for one major carrier. “It is much more aggressive on issues that affect pilots, but it is a constructive union. It will not take an adversarial role until all other resources have been exhausted. Collective bargaining is the rule. I have never seen a wildcat strike (by) ALPA.”

Pilots themselves, however, have a variety of opinions as to how they have been served by their union.

“I don’t think that ALPA is representing the pilot group fairly,” said Mark Sork, a former Western Airlines pilot who has flown for Delta Airlines since the two carriers merged a year ago.

Mainly, Sork is angry about the way Western’s pilots were meshed with Delta’s. In fact, the 750 former Western pilots are suing both Delta and ALPA, their own union, in an effort to throw out the seniority list that was developed, charging that Delta pilots received unfairly favorable treatment.

Some of the former Western pilots charge that behind it all is the fact that Duffy, the union president, is a pilot for Atlanta-based Delta. But a spokesman for the union, John Mazor, said such charges are baseless.

He said headquarters does not get involved in pilot integration negotiations. There have been such integration problems in every one of the recent airline mergers, he added.

Other pilots praise the union.

“I think ALPA has represented me fairly and has not made outrageous demands on the company,” said Kenneth W. Watts, a pilot for Northwest Airlines. “ALPA . . . has continued to push for what we feel is right in matters of safety and pay raises.”

The union’s new militancy was born of necessity about a decade ago, when deregulation transformed the airline industry.

Before 1978, pilots and the other airline labor groups enjoyed considerable leverage in bargaining for higher wages and improved benefits because airline fares were regulated by the now-defunct Civil Aeronautics Board. With government approval, pay raises at all airlines were automatically passed on to passengers, so added labor costs did not put the carriers at a competitive disadvantage the way they do today.

Warm Relations

Thus, the airlines had little reason to resist the salary demands, so wages were higher and working conditions better in the airline industry than in similar jobs in manufacturing.

Employers felt that the cost of contract improvements were “worth granting to avoid strikes,” said Peter Cappelli, a professor in the Department of Management at the Wharton School of the University of Pennsylvania. Relations were so warm between labor and management in those pre-deregulation days that it was often said that airline managements were “in bed” with the unions.

Indeed. In the early years of Ferris’ reign at United, relations between him and the union were so good that the executive, an amateur pilot, was made an honorary member of ALPA.

“Ferris and the head of the United pilots local union were best of friends,” said one industry observer who insisted on anonymity. “Labor agreements would be basically negotiated between the chairman of the corporation and the chairman of the ALPA United Master Executive Council, the airline’s local.”

But then things changed.

“The industry has been a pressure cooker since deregulation,” said Harley S. Shaiken, an associate professor in the communications department at the University of California, San Diego, who formerly taught labor relations management at Massachusetts Institute of Technology. “The skies are very much uncharted for everybody concerned. Clearly, what worked for ALPA in the 1970s has not worked in the 1980s.”

Immediately after deregulation, the unions were aided by the fact that the airlines could no longer rely on the Mutual Assistance Plan, an industry strike fund that was legislated out of existence.

And, not long after 1978, the pilots came out swinging. They did not always win, but they were beginning to fight against industry’s new drive to cut expenses, principally the cost of labor.

The blow that jolted the pilots’ union out of its remaining complacency was the Continental Airlines affair.

In 1982, Lorenzo bought Continental, quickly filed for bankruptcy and shut down the carrier. Then, after a few days, he reopened Continental as a non-union airline paying lower wages.

ALPA called a strike, but many of Continental’s pilots, including some newly hired ones, crossed the picket lines. There were ugly incidents, such as the burning of a barn owned by a non-striking pilot, and union President Duffy labeled Continental “corporate enemy No. 1.”

Two-Tier Scale Okd

The airline continued to fly, and the strike, though largely ineffective, continued for more than two years until the union authorized pilots who were still striking to apply to get their old jobs back at the greatly reduced pay scale. The walkout cost the union $70 million, according to Duffy.

In 1985, ALPA struck United for 29 days, almost totally grounding the big carrier. Pilots who had been hired by the airline to train in case there was a walkout refused to cross the picket lines. But United stuck to its chief demand and obtained agreement on a two-tier wage scale--in which starting pilots begin at much lower pay--though in a somewhat watered-down version.

A precedent for such agreements had been set two years earlier when one was signed by American Airlines and its pilots, who had left ALPA in 1963 and now have their own, separate union.

Also in 1985, Lorenzo tried to take over TWA, but ALPA was able to thwart him. It pledged to Icahn that it would agree to a 26% cut in total compensation, and that potential saving allowed Icahn to top Lorenzo’s offer.

The pilots have put on the gloves for defensive reasons: They saw themselves as vulnerable to the assaults of deregulation. With their high pay, they have much to lose from the airline bankruptcies and mergers that have been common occurences since the industry was deregulated.

Wharton’s Cappelli said the pilots since deregulation have given up more than any other labor group in the airline industry--42% of all the concessions made in the industry through 1985, the last figures available, and more than all other airline work groups combined.

But some say that still has not been enough.

“They are going to have to bargain realistically,” said Shugrue, who now heads Continental. “They have made concessions, but they have not made them fast enough. The traveling public is no longer going to subsidize $150,000-a-year captains’ salaries or jobs where they work eight to 10 days a month and enjoy 20 to 22 days off a month.”

Shugrue charged that the union is waging a “holy war” against Lorenzo. “This is absolutely ridiculous.” he said. “Eastern cannot sit there without moving its costs down to marketplace levels. Every airline in America has done it, and Eastern is no exception. ALPA has to come to grips with economic realities.”

Seniority Lost

Still, the pilots, in effort to avoid layoffs, have usually been first make wage and work-rule concessions and have given up the lion’s share. They say that members of other unions--machinists, flight attendants, clerks and others--can find jobs in other industries, often at comparable salaries. But for pilots there are almost no employment prospects outside the airline industry.

Furthermore, they point out, moving from one carrier to another results in sharp pay cuts. Pilots who switch carriers lose their seniority and move to the bottom of the pay scale.

A United Boeing 747 captain, for example, is paid $162,000 a year plus benefits for working 78 hours a month. On average, it has taken him at least 20 years to get to that position. Despite the concessions to which they have agreed, United’s 6,000 pilots still earn an average of between $90,000 and $100,000.

If such a pilot had to leave United for another carrier, starting all over at the bottom of the ladder at an airline with an entry-level “B pay scale,” he would start at about $25,000 a year.

“After deregulation, with all of the new (low-cost) carriers coming into the industry and with many other carriers going bankrupt,” said Frank A. Spencer, professor of transportation and industrial relations at the J. L. Kellogg Graduate School of Management at Northwestern University, “it became a survivorship deal. They gave up a lot of money to preserve their jobs--money and work rules both.”

Spencer, an American Airlines pilot for 30 years and a former international secretary of ALPA, added, “Suddenly, jobs became more important than pay raises. Pay raises were, in fact, traded for jobs.”

The pilots, of course, in addition to having work schedules that, understandably, keep them in the cockpit much less time than office workers spend at their desks, also receive insurance, pension and medical benefits that cost major airlines $20,000 to $30,000 a year each.

On the other hand, ALPA says, some small regional carriers provide hardly any benefits to their employees.

Critics charge that ALPA is not a national union at all, at least not where collective bargaining is concerned, because each local cuts its own deals with its airline, regardless of what the national union’s centralized bargaining committee has recommended. Thus, ALPA cannot bring down an entire industry the way some unions can. It can handle just one airline at a time.

But “there is more concerted action than meets the eye,” said Eugene J. Keilin, general partner of Lazard Freres, the investment banker for the pilots’ union. “The union is the recipient of very substantial resources. It uses these resources to promote safety issues and to lobby for benefits, pensions and health-related issues.”

An airline executive added, “ALPA is a very efficient lobbying tool. It has expertise in dealing with Federal Aviation Administration actions against pilots and in safety. But safety is like apple pie. Everybody is for safety. If it did not have these issues, it would find itself out of existence.”

ALPA President Duffy, whose own $200,307 annual salary is calculated by averaging the pay of the highest-paid pilots at each of the nation’s five largest airlines, said one reason for the union’s added strength is its improved financial condition. In 1985, the union increased national membership dues from 1.35% of gross pay to 2.35%. The resulting “war chest” now contains $35 million.

Duffy conceded that there has been some decentralization and that “we have allowed variances in how the local unions negotiate.” He added, “We have national standards, but they have considerable latitude if they stay within those standards.”

However, he noted, “We (at union headquarters in Washington) have all of the purse strings. All of the money comes here, and we give it back. That, in itself, gives us a tremendous amount of centralized power.”

And how the pilots use that power in the next few years will to a great degree determine the future of the airline industry.