Colorado Technical University Collective Bargaining at Magic Carpet Airlines Discussion Individual project #3 – Read the Collective Bargaining at Magic Car

Colorado Technical University Collective Bargaining at Magic Carpet Airlines Discussion Individual project #3 – Read the Collective Bargaining at Magic Carpet Airlines: A Union Perspective case in the learning materials section of the class portal and answer and give examples of negotiation strategies to the following questions. What did the union do to prepare for negotiations? What additional sources of information might it have used? What were the union’s primary objectives? What were the union’s strategies? Were they reasonable? What were the company’s goals? What were the company’s strategies? How did the deregulation of the airline industry in the late 1970s influence labor relations at Magic Carpet? Collective Bargaining at Magic Carpet Airlines: A Union Perspective (A)
History of Magic Carpet Air
Magic Carpet Air (MCA) began operations in 1961, serving 2 cities, and grew to serve 18 cities by 1987.
River City Airlines (RCA) began in 1969 with service to 4 cities and grew to serve 12 cities by 1987. In
January 1987, Magic Carpet Air purchased River City Airlines and merged the two operations. The joining
of these two regional airlines created a small “national “airline (defined as a carrier with sales between
$100 million and $ I billion) with sales of $140,265,000 in 1987. Even so, the firm competed primarily in
only one region of the country, and managers constantly compared it to other large regional airlines.
ln May 1988, Magic Carpet Air entered into a marketing agreement with a major national carrier and
became a “feeder” airline for that carrier (e.g., American Eagle is a feeder airline for American Airlines,
United Express is a feeder for United Airlines). That is, MCA delivered passengers from small airports to
larger ones, where passengers could make connections using that airline. Subsequently, no more
reservations were given to the public as Magic Carpet Air; passengers believed that they bought tickets
for the major carrier. The company also repainted all aircraft to make the public believe Magic Carpet
Air was part of the major carrier.
Prior to 1989, the flight attendants at neither company were unionized. However, both MCA and RCA
flight attendants worried about what they perceived as the arbitrary way that MCA management
resolved personnel issues such as merging seniority lists. Such fears led several workers to contact the
League of Flight Attendants (LFA), a union whose membership consisted solely of flight attendants.
Despite opposition to unionization from MCA, the LFA won a union certification election with 82 percent
of the vote.
Previous Contract Negotiations
Negotiations for the first MCA -LFA contract began in November 1989, and negotiators from both sides
cooperated effectively. The committee borrowed language from other airline contracts (e.g., Piedmont
Airlines). The committee also incorporated the past practices and working conditions that were used at
River City Airlines. These rules had not been written down but had been mutually acceptable past
practices. Negotiators signed the final contract in August 1990. The contract was effective until August
1994. Negotiations for the second contract also went smoothly. In terms of contract provisions, the
second contract was basically an extension of the first, with a modest pay increase and one additional
paid holiday. The agreement was effective until August 31, 1997.
What follows is a synopsis of the 1997 contract negotiations from a union negotiator’s perspective.
League of Flight Attendants (LFA) Negotiating Team
Whenever an LFA carrier began negotiations, the National Office of LFA sent a national bargaining
representative (NBR) to the scene. Dixie Lee, the NBR assigned to the MCA negotiations, met with the
flight attendants’ Master Executive Council (MEC) to select a negotiating team. The negotiating team
prepared for negotiations and conducted the actual bargaining sessions. Once at the table, Dixie spoke
for the committee. Using an NBR as the spokesperson lessened the likelihood that a flight attendant
who was emotionally involved with an issue might say something inappropriate while trying to
1
negotiate. Dixie had 14 years’ experience and had also assisted with the 1994 MCA contract
negotiations. Although Dixie was the spokesperson, the negotiating team was formally chaired by Ruth
Boaz, LFA MEC president at Magic Carpet Air. Other members of the team included local LFA union
presidents Peggy Hardy, Marie Phillips, and Jody Rogers.
Determining the Union’s Bargaining Objectives
The LFA negotiating committee members first identified their bargaining objectives. For the 1997
contract, the LFA negotiating committee devised an opening offer based on the average working
conditions and wage rates for flight attendants offered by other, similarly sized carriers. They looked at
wage, unemployment, and cost-of-living data from government sources such as the Monthly Labor
Review. The committee members knew the financial history of MCA and kept their proposals within
financial reach of the company. They also used other employee groups (e.g., pilots, mechanics) within
MCA as a guide-many of the LFA proposals were items that these other unions already had in their
contracts. The LFA negotiating committee hoped to bring wages and work rules in line with the
company’s financial performance and industry standard s (see Table 1). Finally, they looked at past
grievances and arbitration cases to determine if contract wording needed changes.
After tallying the responses, negotiating team members discovered that the flight attendants’ major
concern was wage determination
TABLE 1
1996-97 Regional Airline Industry Comparisons
Airline Starting Wage/Hour
Days off per Month
Duty Rig* as Airline (percentage of time)
A
$17.00
11
60%
B
$15.00
12
62%
c
$15 .00
12
none
D
$14.00
13
none
E
$14.00
10
none
F
$13.50
10
33%
10
none
Magic Carpet
$13.00
*Duty rig is a pay calculation that is a certain percentage of the period of time which a flight attendant is
on duty with the company. Duty time normally begins 45 minutes prior to first scheduled trip departure
time and ends 15 minutes after final arrival time at the end of the day.
Committee members also considered the wishes of the rank-and-file members. To do this, the
committee mailed a survey to the 115 LFA members asking question regarding wages, working
conditions, and issues of concern to flight attendants. They received a 75 percent response rate; results
are shown in Table 2.
2
TABLE 2
Results of the Flight Attendant Survey
Questionnaires mailed: 115
Questionnaires returned: 86
Question: What was the flight attendant’s top priority for the new contract?
Direct wages
40%
Job security
31%
Working conditions
26%
Other
3%
Question: How did the flight attendant want to receive her/his direct wages?
Duty rigs
Hourly rate
Holiday pay
Other
47%
34%
15%
4%
Question: How did the flight attendant want her/his job security?
Seniority protection
Protection from layoffs
Protection of contract
60%
28%
12%
MCA currently paid flight attendants for the time they were in the aircraft with it moving under its own
power – they were not paid for the time spent sitting in airports waiting for flights. Union members
wanted MCA to implement duty rigs. A duty rig paid the attendant a fixed percentage of the period of
time he or she was on duty with the company.
For example, suppose an attendant worked a 15-hour day, but worked in moving aircraft for only six
hours. Under the current system, MCA paid wages for six hours, plus one hour for preparation time
(duty time) at the beginning of the day. However, if the duty rig pay rate was 67 percent, MCA would
pay the attendant for 10 hours of work, plus 1 hour for duty time. Thus duty rigs would require the
airline to pay a percentage of the wage for all time at work, whether flying or sitting.
Flight attendants also voiced concern over job security and working conditions. When they analyzed the
job security issue, team members found that in the event of any merger or buyout of MCA, the flight
attendants wanted their seniority with the carrier to be continued by any new company. Second, flight
attendants sought protection from layoffs in the event of a merger or acquisition.
The survey also had a section for employee comments. The area that members most frequently relayed
as a concern was their current sick leave program. Many flight attendants complained that they were
not allowed to use their accrued sick time when they were sick. Others complained that they had to give
management a five-day notice whenever they wanted to swap routes with other MCA attendants.
From this information, union negotiating committee members identified two broad objectives:
increased wages via a duty rig provision, and increased job security. They also decided that their initial
package would be very close to their final objectives. The committee members proposed a duty rig
3
clause with the same standards as the pilots, although the dollar amount was less important than just
obtaining the provision itself. They also devised a “successorship clause” allowing attendants to arbitrate
their seniority rights in the event someone bought MCA. In order to obtain these clauses, the union also
proposed two throwaway clauses: an expensive health care package and double- time wages for
working holidays.
Strategies of the Union
During planning sessions, the negotiating committee identified four strategies for achieving its
objectives through bargaining:
1.
Keeping union members informed of negotiation progress.
2.
Getting union members involved.
3.
Convincing the company that the union’s demands were serious.
4.
Settling an issue only with the unanimous consent of the negotiating committee.
Informing Union Members
The first strategy attempted to keep the union members informed. The negotiating committee mailed a
short letter after each bargaining session, explaining the issues discussed and the general content of any
agreed-upon sections. Members were also sent Negotiation Update newsletters every two weeks,
telling flight attendants of their progress. These newsletters did not reveal any initial proposals because
committee members knew that union members would be disappointed if the union did not receive what
was initially requested.
Involving Union Members
The second strategy sought to get the union members involved. The negotiating committee printed the
slogan, “We make the difference and they make the money” on pens, buttons, and T-shirts. These were
distributed to all members and to all passengers on selected flights. This program was loosely modeled
after the United Airlines’ 1996-97.
Create Havoc Around Our System (CHAOS) program, where the union sought to enlist the aid of the
public and employed creative tactics (e.g., intermittent strikes, informational picketing) to pressure
management to resolve their contract dispute. The union also invited any member in good standing to
attend any negotiation session.
Convincing the Company
The third strategy attempted to convince the company to take the LFA seriously. In a widely publicized
move, negotiation team members did extensive research on both economic picketing and informational
picketing, inquiring at all of their domicile cities as to what permits would be needed to picket. The
union mailed their Negotiation Update newsletters to each manager’s home address, informing
managers of the LFA’s preparations in the event of a future strike. Committee members hoped these
actions would convince management that the LFA made serious proposals-and would strike if those
proposals were not met.
4
Settling Issues
The fourth strategy was that the team would not proceed with an item without the entire team being in
total agreement. All planning meetings and caucuses (meetings without the company team member
present) during negotiations would involve every committee member.
Company Negotiating Team
The company negotiating team consisted of the following people:
•
Bill Orleans, director of labor relations.
•
Ross Irving, director of human resources. Kristine Lamb, director of in-flight services. Christian
Andrew, executive vice president.
Willie Sanders, senior vice president of operations.
Tom Windham, chief executive officer (CEO) and president.
The company team was in a state of transition, and consequently seemed to suffer from much
confusion. Bill Orleans had recently been demoted from director of human resources to director of labor
relations-a move he resented. Ross Irving, the new director of human resources, hired from another
firm, avoided the sessions; he seemed uncomfortable sitting next to his predecessor, particularly since
Orleans had negotiated most of the un on contracts at MCA. Finally, Lamb, who was used to giving
orders to flight attendants, acted as if the negotiations reflected a lack of loyalty on the part of the
workers and interference with her job on the part of management. Tom Windham was grooming Willie
Sanders to take over upon Windham’s retirement.
The Negotiating Process: Initial Positions
Airlines are governed under the Railway Labor Act of 1926, as amended. This act states that labor
contracts never expire, but may be amended on their amendable dates. When the amendable date
comes near, a letter is mailed by the party requesting changes in the contract to the counterparty in the
contract. This letter allows contract talks to begin. Dixie mailed MCA such a letter on March 31, giving a
full 60 days’ notice of the flight attendants’ intent to open talks for amending their current contract
before September 1.
Inasmuch as the company would not meet in a neutral city, LFA negotiators agreed to an MCA proposal
to meet at a hotel located near corporate headquarters. MCA paid for the meeting room. The first
negotiation session was scheduled for May 29, 1997.
Everyone on the LFA committee had the jitters. It was the first time in negotiations for Marie, Jody, and
Peggy. Dixie gave them some last-minute instructions:
I don’t want y’all to speak or use any facial expressions at the table. Instead, I want all of y’all to
silently take notes. Draw a vertical line down the middle of each note page. Write whatever the
managers say on the left side of the page and write whatever I say on the right-hand side of the
page. ls it OK with y’all if I do the negotiating? I’ve found things go best if only one person talks
at the bargaining table.
5
As the LFA negotiators filed into the conference room, they saw it was empty. Each of the managers
arrived late. Twenty minutes later, Orleans still had not come. As everyone waited, CEO Tom Windham
arrived. Small talk began as Windham glanced over his notes and spoke:
You know that as a feeder airline we do not have full control over our own destiny; the
marketing agreement with the major carrier restricts our flexibility. Even so, I am willing to give
your flight attendant group a modest increase. I am not looking for any concessions. Also, my
philosophy is that all the groups (pilots, agents, office personnel) should be treated equally.
However, your union does have a good agreement right now-say, why don’t we just agree to
continue the present contract for another six years? It could save a Iot of time!
As everyone chuckled at Windham’s joke, Orleans arrived. The union negotiators could tell by the
expression on his face that he was surprised and embarrassed to see Tom Windham there. Windham
stood up, wished everyone good luck, and left.
The Union’s Initial Position
Dixie spent the first day describing problems with the current contract. At 4: 15p.m., the union
presented the company with its neatly typed contract proposal. Dixie had written; “change, “new,”
“clarification,” and so on in the margin next to each paragraph that has been changed in any way from
the 1994 contract.
ORLEANS: This is a “wish book”! Do I look like Santa Claus?
LEE: Stop fidgeting, Mr. Orleans. Let me explain why we are insisting on these changes.
Dixie read only about one-third of the provisions in the union ‘s contract proposal. Two additional
sessions were necessary to read through the entire proposal. The major changes are summarized in
Table 3.
TABLE 3
Changes in the Magic Carpet Air-League of Flight Attendants Contract
Contract Provision
Compensation
Base wage
Wage after five years
Duty rig pay
Daily guarantee
Holiday pay
Job security
Successorship
Protection of seniority rights
in the event of a merger
Working conditions
Trip trading lead time
Shoe allowance
1994-97
Contract Union Proposal
$13
$20.20
NONE
3.25 hours
NONE
$15.45
$25.55
1 hour pay per 2-hour duty (50%)
4.5 hours
8 holidays at double-time rate
NONE
NONE
Contract will be still be binding
Arbitrator
5 days
NONE
24 hours
$100/year
6
Winter coat
Uniform maintenance
NONE
$16/month
Total cost
$20/month
Management’s Initial Position
On the fourth day, company representatives presented their initial offer to the union. Orleans handed
each of the LFA committee members a book in a binder. As they leafed through the book, members
were puzzled. They did not see any notations indicating changes from the current contract. Orleans
talked quickly, summarizing the provisions in the contract; most of the proposed provisions included
some type of union concessions, but he did not highlight these.
LEE: Is this a serious proposal? The union presented a realistic proposal using industry standards,
and your opener (opening offer) is totally unreasonable.
ORLEANS: Don’t get your panties in a wad. The party has just begun and there is lots of time to
dance. Why, we didn’t even list any wages in our proposal-we were hoping you would work for
free, ha ha.
Orleans then gave a long, patronizing sermon regarding MCA’s poor financial health and how the
company could be bankrupt at any time. However, in the history of Magic Carpet Air, the company had
never shown a loss on its financial statement. A recess was called for lunch. As the union members
caucused, Peggy looked depressed. Marie sat with fists clenched.
MARIE: I can’t eat anything! I am furious at Mr. Orleans-he has some nerve!
JODY: The others were not much better. Did you hear their snide remarks about us when they
went to lunch?
PEGGY: What are we going to do? They have asked for concessions on everything! And Mr.
Windham promised us just the opposite.
DIXIE: Now girls, just relax. It is still the first week of negotiations. I suggest that we just work
from our initial contract proposal and ignore theirs. It can’t be taken seriously anyway, in my
opinion.
MARIE: Well, you’ ll have to carry on without me tomorrow; I have to work. Management won’t
let me rearrange my schedule to negotiate. At least I won’t have to watch Mr. Orleans chain
smoke!
Talks resumed after lunch break. Dixie summarized each section of the LFA proposal. Orleans fidgeted
and kept saying “No.” Nothing was settled that day.
By noon the next day, it became obvious that not much was getting accomplished. Finally, the union
moved to sections where it did not propose any changes and the managers tentatively agreed to keep
those intact. It seemed like a mountain had been climbed just to get the company to agree to those “no
changes.” Negotiations were adjourned for the day.
LEE: When can we meet? Monday, at 8:30?
SANDERS: No good for me. I have important meetings that day.
LEE: How about Tuesday?
7
ANDREW: I can’t make it. Every day next week is bad.
ORLEANS: The following week I will be out of town. Sorry!
LEE: OK, y’all tell us when y’all ‘s schedules are free.
ORLEANS: We’ll have to caucus. We’ll get back to you.
Instead of caucusing and deciding when they could next meet, the managers simply went home, leaving
the union negotiating team to wonder when-or if-bargaining would continue.
Round 2
On Wednesday, July 16, Ruth Boaz got a letter from management asking for a meeting two days later.
Ruth quickly scheduled a planning session for Thursday night, where the LFA team members reviewed
their objectives and the progress to date. Negotiations with MCA resumed Friday.
July 18: Grievances and Uniforms
Irving proposed using the same language for a revised grievance procedure as that printed in the pilot’s
contract. The union caucused. Ruth telephoned the pilot’s union and, once she was satisfied that the
pilots were happy with their grievance procedure, convinced the union negotiating team to agree.
The discussion moved to the section on uniforms. After some countering back and forth on various
issues, a winter coat was added as an optional item; however, who would pay the cost was still an issue.
T…
Purchase answer to see full
attachment