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Tilting at Windmills

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April 14, 2007
By: Kevin Drum

BEND OVER....From the annals of American labor relations, circa 2007:

When the airline industry went into a deep slump after the 2001 terrorist attacks, American Airlines' pilots, flight attendants and mechanics agreed to billions of dollars in cuts in wages and benefits to keep the carrier afloat.

Now AMR Corp., American's parent, is back in the black, so much so that 874 top executives will receive more than $150 million in stock bonuses next week.

As for the 57,000 rank-and-file employees, they're seeing red. "We made huge sacrifices," said Dana Davis, an 18-year American employee and spokeswoman for the Assn. of Professional Flight Attendants. The airline's 18,000 attendants took an across-the-board 16% pay cut and gave up vacation days. "We're not getting anything back for it," Davis said.

Of course, if American's workers dare to go on strike later this year, we'll be besieged by comments from tough-minded free-market conservatives about how unions are ruining the competitiveness of a once-great American industry by making plainly irresponsible wage demands. Don't these people understand creative destruction?

And for those who like to pretend that this is all just posturing because executive compensation isn't big enough to make a serious difference when it's spread among all a company's workers, I'll do the arithmetic right here. $150 million split among 57,000 workers is....

$2,600 each. Chump change for the rock jawed captains of industry running American Airlines, I'm sure, but probably not to the flight attendants.

Kevin Drum 12:31 PM Permalink | Trackbacks | Comments (78)

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but they work soooo hard!

Posted by: dontcallmefrancis on April 14, 2007 at 12:48 PM | PERMALINK

Yeah, this is one where labor actually has an issue that just might resonate with the general public. Overpaid CEOs and corporate insiders are bad enough, but it's even worse when their fat paydays came from the pockets of the rank and file.

Posted by: Auto on April 14, 2007 at 12:49 PM | PERMALINK

"Overpaid CEOs and corporate insiders are bad enough, but it's even worse when their fat paydays came from the pockets of the rank and file."

Not to mention taxpayer $ -- or am I hallucinating that there were big giveaways to the airlines right after 9/11?

Posted by: smartalek on April 14, 2007 at 12:51 PM | PERMALINK

Now AMR Corp., American's parent, is back in the black, so much so that 874 top executives will receive more than $150 million in stock bonuses next week.
"We're not getting anything back for it," Davis said.

Nonsense. The union is getting a lot back because they have a pension plan. Since top executives were the ones who brought American Airlines from the brink, they deserve the raise. If the top executives get a paycut, they will leave in droves causing American to go back in the red again.

Link

"For its part, American says the executive bonuses, part of a stock-based performance share plan, are necessary to retain managers. And, the airline says, it's a logical way to reward managers for turning American around. The carrier was one of the few to avoid bankruptcy.
American says it is one of the few large carriers that maintains a pension plan for employees.
"Our employees have among the best compensation packages in the airline industry," company spokesman Andy Backover said."

Posted by: Al on April 14, 2007 at 12:53 PM | PERMALINK

kevin- i think you're presenting a distorted view- i just read the whole article- what about this?

He added that American in 2003 gave employees $38 million in stock options that are now valued at about $1 billion. About half of the options have been exercised.

that's no chump change

Posted by: j.s. on April 14, 2007 at 12:59 PM | PERMALINK

Hey, that's nothing. GM's trying to dump $54B in legacy (retiree) health benefits...

Posted by: MsNThrope on April 14, 2007 at 12:59 PM | PERMALINK

Of course Al would never think that improved customer service and improved performance by the airline would have helped the stock improve.

What MsNThrope said, also.

Posted by: Randy Paul on April 14, 2007 at 1:05 PM | PERMALINK

Sure Al your neverending bull shit makes me want to throw up. I'm betting none of those wanker executives took a pay cut to save the company. And since all the employees bit the bullit to save the company how about rewarding them for the loyalty and sacrifice they showed. Are there so few qualified execs in this country that only the few that exists should be elevated to the status of Roman emperors? If those guys were so brilliant why did they have to get all the employees to take pay cuts?

Posted by: Gandalf on April 14, 2007 at 1:05 PM | PERMALINK

Also, as usual, Al fails to give the complete picture as to why the employees are pissed at the execs.

Nothing occurs in a vacuum, Al.

Posted by: Randy Paul on April 14, 2007 at 1:07 PM | PERMALINK

And mind you, this is just the bonuses we're talking about. But the problem is not just with executive pay, it's also the ferocious lopsided triumph of the Wall Street investor class and the financial industry over workers generally. Whenever you see that productivity boom vs. stagnant wages chart over the last 30 years, it helps to bear in mind that Wall Street firms distributed $25 billion in cash bonuses to themselves just last year (and $25 billion the year before). Compare that to the $16 billion that the entire U.S. auto industry lost in 2006 (not to mention the elimination of 150,000 jobs—although the CEO of Ford did manage to eke out a $28 million paycheck for 4 months "work").

You know, that $150 million in bonuse to AMR execs works out to $8,333 per flight attendant. Wanna bet that would make up for their 16% pay cut?

Shhhhh. Class warfare.

Posted by: R. Porrofatto on April 14, 2007 at 1:10 PM | PERMALINK

That should read $23 billion in bonuses the year before last for Wall Streeters. Hey, what's a couple of billion here or there?

Posted by: R. Porrofatto on April 14, 2007 at 1:13 PM | PERMALINK

When I argue for providing compensation to the descendants of ex-slaves, one of my points is that slaves added so much value to early America that it enriched the country enough to finance the war for independence. A counterpoint to my assertion is that the slave owners added so much value through their management skills and insight into tobacco and cotton planting, that they deserved all of the surplus value added by the slaves. I am sorry to see this theme still in use.

Posted by: Brojo on April 14, 2007 at 1:15 PM | PERMALINK

But if you split it among the 874 top executives that's $171,624.72 apiece. That could represent a substantial investment in a new boat, or a set of solid gold cookie forks.

Posted by: cld on April 14, 2007 at 1:16 PM | PERMALINK

Yeah, kind of priceless that this bonus amount works out to something very close to the 16% pay cut of the 18,000 FA's.

Posted by: shameless on April 14, 2007 at 1:18 PM | PERMALINK

First of all, as far as I know, stock bonuses don't cost a company a nickel in actual cash. It's paper moving around. $150 million paid out in money would be a different story.

That being said, I don't think there's anything wrong with spreading more stock options to the employees.

The rest of the article indicates that this isn't as bad as Kevin makes it sound, including comments by the AFL-CIO representative.

Posted by: harry on April 14, 2007 at 1:19 PM | PERMALINK

It really does seem that only effective unions might fight the absurd over-compensation of the executive class. In that little mutual admiration society, how could it possibly be the case that anyone other than another executive could be credited with positive results (even though they are never punished when things go wrong)?

Why economists, who have for decades acted as if somehow economic growth always pulls up the entire workforce, couldn't have seen this situation coming is simply beyond me. They are, as my grandmother used to say, useless as tits on a boar hog.

Posted by: frankly0 on April 14, 2007 at 1:26 PM | PERMALINK

Brojo: You are such a complete tool. I truly pity the people around you.

Posted by: Pat on April 14, 2007 at 1:28 PM | PERMALINK

"Bend over" is a homophobic, heterosexist joke that alludes to violent rape using a phallocentric weapon, and it ain't funny. Expect the femosphere to place you on the list with Sadly, No! and TBogg.

Posted by: Feminist Thought Police on April 14, 2007 at 1:29 PM | PERMALINK

Here's my periodic reminder that exec salaries aren't free-market anyway: they are agreed on by Boards of people who aren't spending their own money. Something's not "worth x to Mr. _____" if Mr. _____ can use someone else's money to pay for it. Only if the the cost of the CEO salaries was deducted from board member salaries, would it be really their choice as to how much loss a given gain is worth trading for.

And again, my periodic reminder that "Al" has just too much time handy and presence here to be anyone expressing his own personal interest.

Posted by: Neil B. on April 14, 2007 at 1:38 PM | PERMALINK

Kevin:
Great comments section. This morning, via harry, I learned that money grows on trees.

Posted by: milo on April 14, 2007 at 1:43 PM | PERMALINK

Kevin,

Nice strawman, Kevin. Most free-markets supporters have no problem with workers forming unions, what we have a problem with is using the law to force companies to deal with the unions exclusively. The principle involved is not what is economically efficient, but rather, what provides the most liberty. Where we differ is that you have no problem abrogating the fundamental rights of employers to enhance the benefits to employees, whereas I treat the rights of free association and property equally for both groups.

Now, as far as the story at hand, I find it somewhat dishonest of you to ignore the part of the story about the stock options that were distributed in 2003 to the employees, the options that are now worth $1 billion, and half of which have already been exercised.

If the bonuses are unjustified (and I don't know, maybe they are), then it is the shareholders getting hosed, not the rest of the employees.

Posted by: Yancey Ward on April 14, 2007 at 2:00 PM | PERMALINK

For fucks sakes Yancey, I find it totally dishonest of you to put the beatdown on Kevin to ignore the "1 billion dollars worth of stock options" that the employees received. You dishonest asshole those options were originally a paltry 38 million and in all fairness that hardly offsets the 6 billion in lost wages suffered by the employees during the same trime period.

Posted by: Gandalf on April 14, 2007 at 2:16 PM | PERMALINK

The principle involved is not what is economically efficient, but rather, what provides the most liberty.

Finally a libertarian who admits that his philosophy has nothing to do with economic efficiency. Time to celebrate.

Posted by: Disputo on April 14, 2007 at 2:22 PM | PERMALINK

Al is, once again, a moron.

My brother-in-law flies for American. He figures he lost a great part of his pension, his paid medical is now paid by him and the 30% paycut hurts also. The stock option should have been in addition to instead of lieu of retirement, due to high strike price he received approximately 9 cents on the lost retirement dollar.

Meanwhile the AA managers retained and enhanced their DB retirement plan. The entire airline debacle was a triple play on 9-11, crappy economy (two months prior to 9-11) and executive enhancing administration.

If only, a nation-wide shutdown, for a day or so. A little 2x4 up the head of the American consumer (as well as the moron in the White House) wouldn't hurt at all.

Posted by: Sky-Ho on April 14, 2007 at 2:25 PM | PERMALINK

"Most free-market supporters have no problem with workers forming unions."

There are times when no snide comment is adequate--Dogbert

Posted by: ThresherK on April 14, 2007 at 2:25 PM | PERMALINK

If the employee count is right, the "top" executives manage an average of less than 70 people. That seems to include inthe "top", people who'd barely rate the title of middle managemant. Why don't they just say they gave a huge bonus to everyone but their actual workers?

Posted by: feetfail on April 14, 2007 at 2:29 PM | PERMALINK

Where we differ is that you have no problem abrogating the fundamental rights of employers to enhance the benefits to employees, whereas I treat the rights of free association and property equally for both groups.

If we're talking about employers who are actual people, okay, but corporations as artificial persons don't really have fundamental rights, do they?

Posted by: RSA on April 14, 2007 at 2:32 PM | PERMALINK

This reminds me of something I just read in May's Harper's. Northwest Airlines sent a list of 'helpful hints' to the 30,000 employees it had recently fired. After employee complaints the airline apologized and stopped distribution. The list included:

*Use the phone book instead of directory assistance

*Do you own nails

*Buy spare parts for your car at the junkyard

*Write letters instead of calling

*Make your own baby food

*Hang clothes out to dry

*Use old newspapers for cat litter

*Grow your own vegetables and herbs

*Borrow a dress for a big night out

*Don't be shy about pulling something you like out of your neighbor's trash

etc., etc.

Posted by: nepeta on April 14, 2007 at 2:36 PM | PERMALINK

"$2,600 each. Chump change for the rock jawed captains of industry running American Airlines, I'm sure, but probably not to the flight attendants."

Kevin, you obviously don't care very much about the yacht building industry...

Posted by: Petey on April 14, 2007 at 2:42 PM | PERMALINK

Actually, one of the real problems in the airline industry has been insufficient creative destruction; that is, airlines nearly always reorganize in chapter 11, as opposed to liquidate in chapter 7. The result is that airlines not in bankruptcy, thus paying their creditors, are forced to compete against airlines who stiff their creditors, all the while an oversupply of capacity continues, year after year. This goes along way to explaining why the industry as a whole, over it's entire life, has been unprofitable.

Now, this isn't wholly negative, since consumers have benefitted, while creditors and shareholders have been left holding the bag on numerous occasions. It probably has, however, impeded greater productivity, since the ability to avoid liquidation allows inefficiencies to linger, despite the fact some airlines, Southwest in particular, are consistently profitable, demonstrating that smart union leadership combined with smart management can function well is this most dysfunctional of industries.

There is no doubt, however, that many airlines have suffered from the same principal/agent problem that plagues many large corporations, in which top mangement serves itself at the expense of shareholders. It is a devilishly difficult problem, just as it is devilishly difficult to have most unions operate with an eye on the long term interest employees have on maximizing productivity, like Southwest's employees' unions do. Top managers seeking to cash out in the short term, combined with a union membership which does not see the critical nature of maximizing productivity, in an environment in which liquidation is very infrequent, and, well, it becomes a wonder that many of these companies can sell stock at all, except to cyclical speculators.

In the long term, it is likely that within 20 years, the military will develop pilotless fighters, in particular the Navy. Once it has been demonstrated that high performance aircraft can make carrier landings at night, without a human pilot aboard, and have a greater success rate than the fighters with homo sapiens under a canopy, the airline industry will undergo a profound change.

Posted by: Will Alen on April 14, 2007 at 2:47 PM | PERMALINK

Not to mention taxpayer $ -- or am I hallucinating that there were big giveaways to the airlines right after 9/11?
smartalek, you are hallucinating a bit -- after 9/11, the government made loans to a few carriers that were on the brink of insolvency. All that money was repaid, and the government turned a nifty little profit on it as well.

Posted by: Carl on April 14, 2007 at 3:39 PM | PERMALINK

Yeah, Carl, I was amazed at how willing the loan board was to turn away airlines with their hands out. Obviously the White House and Congress screwed up and didn't figure out a way to buy a few lousy votes with that subsidy.

Posted by: Will Allen on April 14, 2007 at 3:50 PM | PERMALINK

If you're pro-labor, you're pro-business; if you're pro-management, you're anti-business.

Posted by: Mike on April 14, 2007 at 3:50 PM | PERMALINK

Mike, a bad union can wreck a company nearly as surely, albeit not as quickly, as bad management, and my impression (which could be inaccurate) is that there are fewer great union leadership groups, on a percentage basis, than there are great management groups. Now, given how high a percentage of union membership is comprised of government workers, this may be unsurprising, since it as impossible for a government employee union to avoid rent seeking as it is for a company whose primary customer is the government.

Posted by: Will Allen on April 14, 2007 at 4:02 PM | PERMALINK

I should have figured this thread would bring out the loony libertarians.

Yancey Ward, ladies and gentlemen.

And oh, goody, we're in for Will, I'm disappointed -- you didn't repeat your assertion about how easy planes are to fly (settling instead for a pipe dream about pilotless aircraft -- like the airline market would embrace that), setting yourself up for more embarrassment like last time. I guess you can be taught.

Did you ever admit you have no actual flying experience? Your avoiding that question -- and therefore admitting you don't know what you're talking about as usual -- was truly amusing. Great times.

Posted by: Gregory on April 14, 2007 at 4:05 PM | PERMALINK

Gregory, go ahead and link to that thread, so anybody can see how dishonest you are. It is easier to fly a large multi engine aircraft than it ever has been, and it is getting easier with each successive generation. Furthermore, it doesn't take the full elimination of on board pilots to revolutionize the industry, although that day will come. When pilotless military craft make carrier landings at night with a higher success rate than human piloted craft, it will become obvious that having multiple pilots on board is more redundant than is needed; the extra pilot simply won't add enough safety, statistically, to make it worthwhile to build the extra cost into the price of an airline ticket, and thus keep the consumer trade off between flying an hour and a half, and, far more dangerously, driving a eight hours, as high as it would be with two pilots.

Bless your Luddite soul, Gregory, the world simply won't remain static for you.

Posted by: Will Allen on April 14, 2007 at 4:28 PM | PERMALINK

Ah, Will, dishonest as ever.

Let's not forget you claimed multi-engine planes were harder to fly than single-engine planes.

Which is why, of course, everyone has to train on 747s before graduating to Cessnas.

Your idiocy, too, was that you were just relating some other pilot's boastings -- you could have easily stood corrected with no harm to your fragile little ego, but noooooo, not you, Will.

Now, how many hours flyingtime do you have, that makes you such an authority?

That's what I thought.

Moron.

Posted by: Gregory on April 14, 2007 at 4:31 PM | PERMALINK

And Will? I know you desperately want to portray commercial pilots as unskilled labor, but your implication that the commercial airline market would embrace pilotless aircraft ought to be downright embarrassing to you as a loony libertarian -- after all, you people worship the free market; one would think you'd know something about it.

Posted by: Gregory on April 14, 2007 at 4:33 PM | PERMALINK

Pilotless Aircraft!

Sounds a lot like a TANG F-102 somewhere in Texas, circa 71 and 72.

Posted by: thethirdPaul on April 14, 2007 at 4:34 PM | PERMALINK

By the way, here's the link.

When dealing with Will, I cheer the fact that our words remain for posterity to judge.

Posted by: Gregory on April 14, 2007 at 4:37 PM | PERMALINK

The only reason airplane drivers make 10x the salary of bus drivers, who have many, many times the responsibility for split second decision making, is because the industry developed in a cocoon of regulation in the first place. Will Allen is right, if the govt auctioned off terminal rights instead of giving the best slots to the biggest PAC contributors, if Tom Daschle's wife didn't make $3 million plus a year as an airline lobbyist, the industry might be a lot more rational.

On the more universal question of exec compensation, I generally agree with you. If the Dems were smart [if a frog had wings] they would focus on revising the recent bankruptcy law travesty by allowing a clawback of any bonuses and/or executive compansation or perks in the 10 years prior to the filing, as well as forbid them for the 10 years after discharge.

Posted by: minion on April 14, 2007 at 4:57 PM | PERMALINK

Don't think the link is working, gregory, but if I remember right, there was an observer in that thread who remarked upon your dishonesty. Of course, your dishonesty has been proven such a constant by now that it barely worth mentioning.

Posted by: Will Allen on April 14, 2007 at 4:57 PM | PERMALINK

link fixed (I hope)

Irony alert: Will Allen citing a remark about someone else's dishonesty!

Will, ol' buddy, as I've said before, I'm perfectly happy to let my comments and yours speak for themselves and let the reader judge who is dishonest and whose opinion of who is dishonest isn't worth a bucket of piss. Are you?

Posted by: Gregory on April 14, 2007 at 5:03 PM | PERMALINK

Yeah, minion, corporate bankruptcy law was always much more due for reform than individual bankruptcy law, but it provides a perfect example of how regulatory or judicial power nearly always gets captured by the most motivated or concentrated entities, to the general detriment of economic rationality, and thus to the general detriment of the public at large. It'd be nice if more strong statists could acknowledge the reality of regulatory capture.

Posted by: Will Allen on April 14, 2007 at 5:04 PM | PERMALINK

Additional math:

If they made on average 30 grand a year before the pay cut, that'd replace about half of what they'd given up.

Posted by: JoeF on April 14, 2007 at 5:06 PM | PERMALINK

Ah yes, pilotless fighters. I think I remember those in my old Twilight:2000 books alongside the Sgt York and the crewless tank turrets.

Posted by: Doug H. on April 14, 2007 at 5:35 PM | PERMALINK

Ah yes, Doug H., things will always be the way the way they are now because....well...just because.

Posted by: Will Allen on April 14, 2007 at 6:37 PM | PERMALINK

Further proof if proof was necesary that bringing back the 1950s version of the progressive income tax, with a 95% bite for all income from any source over $1 million/year would be the best thing that could happen to American capitalism.

That and the closing of all B-schools and the abolition of the M.B.A. as a recognized degree.

AMR would likely have gotten "in the black" sooner, had they fired the 874 pinstriped pimps from the executive suite.

Posted by: TCinLA on April 14, 2007 at 6:45 PM | PERMALINK

"$2600? 2600?! That's how much I paid my accountant to figure out how much I should pay myself this year! We don't want to confuse our workers...so, let's just give ourselves fat bonuses instead! I mean...$2600 isn't that much anyways, right?"

Posted by: parrot on April 14, 2007 at 6:55 PM | PERMALINK
When pilotless military craft make carrier landings at night with a higher success rate than human piloted craft, it will become obvious that having multiple pilots on board is more redundant than is needed; the extra pilot simply won't add enough safety, statistically, to make it worthwhile to build the extra cost into the price of an airline ticket, and thus keep the consumer trade off between flying an hour and a half, and, far more dangerously, driving a eight hours, as high as it would be with two pilots.

This is all interesting speculation, but how much, exactly, difference do you think the difference between 1 and 2 pilots makes in the cost of a flight? Given that the technology is going to have a price, too, I don't think it makes for the kind of phenomenal transformation in favor of the commercial airline industry you seem to imagine here.

I also think you are overlooking transformative effects that would harm the industry from safe, reliable automated piloting being a widely available technology.

Posted by: cmdicely on April 14, 2007 at 7:57 PM | PERMALINK

I fly to Brazil pretty regularly from New York. For a trip of that duration(overnight for about ten hours) FAA regulations require three pilots (one of whom is always catching some shut-eye in a designated seat in first class except at take-off and landing) working in shifts throughout the flight.

On my first trip to Brazil on a 767 out of Miami we had an engine flameout (according to another pilot on the flight), had to detour to Caracas and landed hard there. I will always be grateful for the pilot's skill in landing the plane safely. It was an American Airlines flight, btw.

Posted by: Randy Paul on April 14, 2007 at 10:37 PM | PERMALINK

If the Union don't like it, they should have asked for a cap on exec compensation when they took their cuts. If they don't know to ask - its their problem.
Its not like unions can't hire good lawyers.

Fact is. It was that or lose all their pensions and hope the execs turn things round.

Posted by: McA on April 14, 2007 at 11:54 PM | PERMALINK

"Bend over" is a homophobic, heterosexist joke

I most certainly am not.

Posted by: Ben Dover on April 15, 2007 at 12:46 AM | PERMALINK

Same thing is going to happen at NorthWest Airlines right now, whose cabin staff union the court has instructed CANNOT strike in protest and recover lost pay and priviliges although they gave up pay, etc. to return the company to profitability.

I don't get it.

You strip people of their negotiated and fair reward -- you, the management gave it to them, no gun or court involved. You return to profitablity and the first thing you do is pat youself on the back and distribute an average of $170,000 to 1000 of the elite. You have to be Republiscum. "Oh, Yeah. Did it all ourselves! We are so good!"

And all the time they preach "team spirit", "we're all in it together", "we all pull together and we can get out of this", etc., etc. Oh, yeah, Seen it up close.

This greed is most attractive.

You have to wonder why there is only the euphemism "gone postal" and not also ... hmmm. Any ideas?

Posted by: notthere on April 15, 2007 at 12:55 AM | PERMALINK

...and hope the execs turn things round.

Posted by: McA on April 14, 2007 at 11:54 PM | PERMALINK

You mean the same execs who got them in the mess.

Responsibility cuts both ways; up and down.

Seems like "execs" only want to take credit for the upside these days. Every day.

Golden parachutes pre-negotiated when you have done a shitty job. It's not like the board can't hire lawyers.

But they don't, obviously. And they're way smarter, it seems by your judgement. Right?

Posted by: notthere on April 15, 2007 at 1:01 AM | PERMALINK

I keep half expecting to pick up a newspaper some morning and read about employees of some corporation lynching their senior management team.

Posted by: CalD on April 15, 2007 at 1:07 AM | PERMALINK

CalD -- that might give a new meaning to "Hang 'em High"!

Posted by: notthere on April 15, 2007 at 1:50 AM | PERMALINK

Perhaps an Executive Black List with pressure applied to Calpers and such?

Posted by: snicker-snack on April 15, 2007 at 2:56 AM | PERMALINK

I assure you I'm as liberal as anyone on this board, but this is one area where I simply don't agree with most of you. Only one person has even hinted at the point I'm about to make. I urge you all to look deeper into the economics of the airline industry before making a judgment.

In someways, airline execs did what Bush did after 9/11 - they took advantage of the situation to do something they never would have been able to do otherwise. Except in this case, I happen to think what airline execs did was the right thing.

Pilots have been remarkably well-shielded from reality over the last 50 years in terms of $$, earning a ridiculously high wage relative to their skill level, and relative to what the market would bare thanks to unions.

Labor is a huge cost in the airline industry, and what happens is, pilot unions operate by using the pilots lower on the seniority totem to be the removable appendage that keeps the high wages secure for the more seasoned guys. Rather than voting equitable salaries that are set at a reasonable levels, the more experienced guys make a ton of money with the expectation that in an economic downturn, the bottom 20% on the seniority list will get laid off and furloughed for a few years. All an airline pilot has to do is survive 6-7 yrs, and they join the gravy train too.

Great 'union' huh?

The reason Southwest Airlines had far less trouble after 9/11 is because they pay their pilots 1/2 to 2/3rds as much. And that's why they were profitable in the quarters following 9/11 while Delta, UAL, and AA were all thiking bankruptcy. This was business darwinism the way it's supposed to work - Southwest has simply found a better business model for operating an airline; they're far more efficient, and have a more sensible wage scale for pilots, something that eats up enormous resources for other airlines. Slashing pilot salaries at AA was long overdue, and that's what's allowed the airline to rebound and compete.

Oh and guess what, Southwest pilots aren't going hungry, and they aren't crashing planes into mountains several times a year. And fighter pilots are still leaving the Navy and lining up to go work at SWA. We're talking about a senior airline captain, instead of making $350,000 a year (at AA or Delta) makes $250,000 a year at Southwest. Instead of paying First Officers $160k/yr in their 3rd or 4th year on the job, at SWA theyre still in the upper 90's.

I'm not saying airline execs aren't slimeballs, they certainly are, and especially so at American. But keep your eyes open on this issue, and don't believe everything you read coming from either side of the story.

Posted by: sda on April 15, 2007 at 8:09 AM | PERMALINK

Once it has been demonstrated that high performance aircraft can make carrier landings at night, without a human pilot aboard, and have a greater success rate than the fighters with homo sapiens under a canopy, the airline industry will undergo a profound change.
Posted by: Will Alen on April 14, 2007 at 2:47 PM

Um, Will? The carrier deck I worked on 10 years ago had that. It's called the ACLS- Automatic Carrier Landing System. (The first such system was developed in the 60s.) And, so we were told, it was more efficient and safer than human pilot landings. Aircraft are still, and will continue to be, landed by hand so as to maintain pilot proficiency. It's a backup system so that the plane can recover even if the pilot is unconscious.

Fighters and attack planes with 2 crew (f-14 being replaced by the fa-18d) don't have 2 pilots. They have a pilot and a RIO (Radar Intercept Officer) who operates the sensor and weapons systems. The purpose is to reduce the workload; they work as a team. As difficult as landing on the deck is, the real stress for the crew is, duh, combat. Then there's a little matter of judgement- correctly identifying a target and making the decision, in a split second, whether to destroy it or not.

They could let the machine fly itself onto the deck all the time, but they'll still need 2 crew to fight with it. And how much money do you think the Navy would "save" by replacing its entire fleet of practically new Super Hornets with... the old Hornets? And when was the last time they replaced a new design with an old one?

If, for some fool reason, the Navy decided it had to fly single-seat fighters again, what makes you think they'd downgrade? Ain't gonna happen: they'd blow a decade and several billion to develop a new jet, of course.

As for commercial application, my understanding is that the system is already being put into place. Like the military system, it's intended as a backup for safety, NOT as a replacement for human pilots. And how about the public perception? How many airline passengers are going to WANT to fly on a pilotless aircraft? Not me. Even if they had the entire flight profile completely and reliably automated, there will still be human pilots, if only as a backup for the automated system instead of the other way around. Even if the pilots do nothing but twiddle their thumbs for the entire ride, passengers are still going to want a human in charge.

Overpaid CEOs and corporate insiders are bad enough, but it's even worse when their fat paydays came from the pockets of the rank and file.
Posted by: Auto on April 14, 2007 at 12:49 PM

When don't they?

Posted by: RobW on April 15, 2007 at 9:10 AM | PERMALINK

You guys need to read:

http://www.thenation.com/doc/20070430/greider
The Establishment Rethinks Globalization

by WILLIAM GREIDER

The church of global free trade, which rules American politics with infallible pretensions, may have finally met its Martin Luther. An unlikely dissenter has come forward with a revised understanding of globalization that argues for thorough reformation. This man knows the global trading system from the inside because he is a respected veteran of multinational business. His ideas contain an explosive message: that what established authorities teach Americans about global trade is simply wrong--disastrously wrong for the United States.

[snip]

Essentially, the terms of trade have changed as more and more value-added production has shifted from the United States to its poorer trading partners. America, he explains, becomes increasingly dependent, buying from abroad more and more of what its citizens consume and producing relatively less at home. US incomes stagnate as the high-wage jobs disappear and US exports become a smaller share of the world total.

[snip]

'Gomory's vision of reformation actually goes beyond the trading system and America's economic deterioration. He wants to re-create an understanding of the corporation's obligations to society, the social perspective that flourished for a time in the last century but is now nearly extinct. The old idea was that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product. "That attitude was the attitude I grew up on in IBM," Gomory explains. "That's the way we thought--good for the country, good for the people, good for the shareholders--and I hope we will get back to it.... We should measure corporations by their impact on all their constituencies."

[snip]

Posted by: MsNThrope on April 15, 2007 at 1:03 PM | PERMALINK

Uh, Rob W., are you aware that nearly all analysts agree that the F-22 and F-35 will be the last manned fighters developed for the U.S. military? Having a human onboard actually is a limiting factor, performance-wise. No, aircraft with human pilots will likely never disappear completely, but the next generation air superiority mission fighters will not have humans on them; the pilots will be elsewhere. Once it becomes routine for fighters without human beings on board to have better performance than ones with a cockpit for a human being, it will inevitably have an effect on commercial aviation as well.

Posted by: Will Alen on April 15, 2007 at 3:07 PM | PERMALINK

Will Allen

And how about the public perception? How many airline passengers are going to WANT to fly on a pilotless aircraft? Not me.

Me neither.

Moreover, please read what I wrote earlier:

I fly to Brazil pretty regularly from New York. For a trip of that duration(overnight for about ten hours) FAA regulations require three pilots (one of whom is always catching some shut-eye in a designated seat in first class except at take-off and landing) working in shifts throughout the flight.

The public through the marketplace and FAA regulations will determine primarily if and sometimes how commercial aircraft are staffed, not technology. Moreover, who will air traffic contro;;ers advise of changes? What if the flight is instructed to land on one runway, but the automated flight attempts to land on another? Who will be there in the plane to override this?

Posted by: Randy Paul on April 15, 2007 at 3:38 PM | PERMALINK

I can assure you that the $150 million bonus is not distributed by simply dividing it evenly among all those eligible.

American's bonuses, like most in corporate America, are given out as if the coxswain did all the work and the rowers were around for the ride. Fair enough, the coxswain kept the boat straight, but he or she didn't do much to propel the boat to victory.

Posted by: OutSourced on April 15, 2007 at 4:32 PM | PERMALINK

Excuse me if I cough at the notion that labor is adequately compensated by having a job in the first place. Surely, even someone with a Chicago MBA might consider that observation no more explanatory than observing that top managers retain theirs.

What's odder is that in workouts and bankruptcies, the very managers whose decisions often led to such bottom-ranked performance are the very ones the company goes so out of its way to keep and over-compensate. Perhaps the oracle at Delphi could tell us why.

Posted by: OutSourced on April 15, 2007 at 4:37 PM | PERMALINK

AMR, the parent of American Airlines, posted a profit of $231 million in 2006. It looks like part of that was because of cheaper fuel.


"
American Airlines parent AMR had a $17 million fourth- quarter profit compared with a year-earlier loss as its jet-fuel bill slid 8.5 percent. Southwest's profit dropped 19 percent on a 41 percent jump in fuel spending.

...
AMR posted a full-year profit of $231 million after losing $8.12 billion from 2001 through 2005 as it skirted bankruptcy and won concessions from employees.

Fourth-quarter revenue rose to $5.4 billion, a gain of 4.4 percent. American's load factor, a measure of how full its planes were with paying passengers, was a record 78.8 percent, up from 77.9 percent a year earlier. Higher travel demand helped American join in 10 industrywide fare increases last year.

Falling fuel prices provided a bigger boost to American than its own hedging strategy.

American paid $1.88 a gallon for jet fuel last quarter, compared with $2.02 a year earlier. It trimmed fuel consumption by 1.3 percent as it pared capacity, excluding its American Eagle regional unit, by 1.1 percent.
"
http://www.bloomberg.com/apps/news?pid=20601087&sid=amYRq2c2TOLA&refer=home

Posted by: joel on April 16, 2007 at 12:03 AM | PERMALINK

'Can We Get a Bib for Highly Educated Workers Who Can't Compete in a Global Economy?'
http://www.prospect.org/deanbaker/

The NYT has a column today laboring over the meaning of the H1-B visa program. It asks whether employers are treating U.S. workers fairly or whether the visa program is simply a way to get cheaper labor.

Okay, this is really dumb. Of course the visa program is a way to get cheaper labor. Suppose the jobs that are filled by foreigners on the H1-B visa program offered $200k or $300k instead of the $50k-$80k that H1-B recipients get. Would there be more citizens willing to take these jobs? Of coure there would be. This is about wages, everyone who took any economic should be answer this question in about two seconds.

Now, there is the second question, are we treating our tech workers fairly? Well, both Democratic and Republican administrations have worked hard to put manufacturing workers into direct competition with low-paid workers in the developing world. They have also thought it important to put many people in low-paying service sector jobs into direct competition with workers from the developing world through immigration policy (e.g. custodians, dishwashers, nannies).

Are we treating our high tech workers unfairly if they face the same competition as textile workers and custodians? Only if we think that people with more education need more protection than people with less education.

--Dean Baker

Of course Dean fails to mention that there are lots of American workers who would gladly take these jobs at the wages offered to HB-1 visa recipients, but the program makes no demand that these companies offer these jobs to US workers.

The point, in any case, is to export these jobs anyway which does have the entirely predictable result that fewer students wish to spend 4-6 years of their lives training for jobs which are vanishing right before their eyes as soon as they gain any experience or seniority. There's illegal age discrimination rampant through all of this, too.

It's all imported out-sourcing and it's all deeply and profoundly detrimental to the interests of the vast majority of people of this country. A transfer of wealth from workers to the owners (or since it's all based on a global debt bubble - rentiers) of capital.

Posted by: MsNThrope on April 16, 2007 at 8:28 AM | PERMALINK

Randy, public perceptions are no more static than technology. Everything changes, given time. No, the changes don't occur in one fell swoop, but they do occur. The first step will be having only one pilot for shorter trips, and it will progress from there.

Posted by: Will Allen on April 16, 2007 at 11:01 AM | PERMALINK

Don't count on it, not from the public, nor the FAA.

Posted by: Randy Paul on April 16, 2007 at 12:28 PM | PERMALINK

Randy, people who predict that things will remain the same are always wrong. 100% of the time. A prediction of stasis is what should not be counted on.

Posted by: Will Allen on April 16, 2007 at 12:44 PM | PERMALINK

A prediction of stasis is what should not be counted on.
Posted by: Will Allen

My money's on the Second Law of Thermodynamics.

Posted by: MsNThrope on April 16, 2007 at 1:25 PM | PERMALINK

It's probably been said above, but I imagine those execs are getting the $150 million bonuses in repayment for the fact that they were able to convince American's pilots, flight attendants, etc. to bend over and take it without complaining...

Posted by: Everett Volk on April 16, 2007 at 2:00 PM | PERMALINK

Randy, people who predict that things will remain the same are always wrong.

There are very few absolutes in the world. MsNThrope points out one.

Just for the record, people who make fanciful claims about the future are often yoked back into reality. Remember how nuclear power would be so cheap it wouldn't have to be metered?

Posted by: Randy Paul on April 16, 2007 at 2:14 PM | PERMALINK

Of course, the 2nd law of thermodynamics has zero applicability to human economic or political behavior. One of the sillier things to do is to use theorems or laws employed in physics or other physical sciences to predict human behavior.

Randy, please point out one aspect of economic or political behavior, or market preference, which has ever remained static.

Posted by: Will Allen on April 16, 2007 at 2:27 PM | PERMALINK

The majority of people in this country commuting to work by car for the past forty years.

Posted by: Randy Paul on April 16, 2007 at 2:44 PM | PERMALINK

(Hit post too soon)

Coal power plants. The internal combustion engine.

Posted by: Randy Paul on April 16, 2007 at 2:46 PM | PERMALINK

Yes, Randy, and the day will come when coal power plants and the internal combustion engine no longer are dominant means of energy production or transportation. The only thing worth debating is when it will happen. If the technology is proven in military applications, I doubt most people, even today, would really notice that the commercial airliner they fly from Chicago to New York had only one pilot, instead of two. Heck, lot of wealthy people today take small charters with one pilot, even though the safety record of such craft is noticeably worse. Safety isn't the only thing people care about.

Posted by: Will Allen on April 16, 2007 at 5:28 PM | PERMALINK

You still haven't convinced me that pilotless aircraft will ever be used for commercial aviation.

Posted by: Randy Paul on April 16, 2007 at 7:53 PM | PERMALINK




 

 

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