What CO and SWA Can Learn from Two Recent and Very Different Airline Mergers

The tale of two mergers.  One that took place in 2005 and remains a bloody mess (editor’s note: the linked article could be written today as nothing has changed to dilute the poison in the waters at Airways)  and one that took place in 2008 and is the industry standard for labor peace, unlocked efficiencies, and economies of scale.   The difference?  It’s the pilots – stupid.  Like the recognized leaders of virtually any social organization, be it human or animal, pilots have the ability to influence fellow employees to either poison or purify the labor waters unlike any other group.  They interact with all major operational groups.  They are highly trained and hiring criteria are stricter than for any other group.  They have the ability through their skillset and licensing to cause absolutely catastrophic financial losses with a job action thus giving them greater negotiating power than other workgroups.  And even to this day, the word Captain carries with it an embedded respect based on the frontline, highly visible role they play in getting the wheels off the ground and back on safely.  In other words, pilots can convey a message of fairness resulting from labor negotiations or they can douse other labor groups with arsenic-infused dirty bombs with resulting reverberations felt throughout all labor groups.

For US Airways and America West, their pilot groups have been at war and have fueled legal action that five years later leaves Airways a dismembered mess looking for someone, anyone, to put the pieces of their miserably failed merger together.  This utter failure of corporate leadership should serve as a harbinger to CO and SWA leaders to get involved in pilot negotiations early and often.  Not coincidentally, Airways has found forging labor peace among other groups near impossible with no resolution in sight.  For Delta and Northwest, pilot peace was a first and foremost priority with the result of labor peace and unlocked synergies exceeding even the optimistic projections of leaders when the merger was announced.  And as my last post suggests, the cascading results among other labor groups at Delta have been nothing short of awesome.  Now, take those same two pilot groups from Delta and Northwest and throw in the US Airways and America West acrimony and this writer bets his weight in Boston Baked Beans that the labor landscape at Delta might be tilted very differently.  Why?  I’m so glad that you always ask.

Take all that you know about labor issues of this versus that and pay and benefits and, and, and…and suspend it briefly, please.  For in the airline industry, one thing matters:  seniority.  It determines vacation allotments, route bids, unpredictable reserve schedules vs. being able to hold a line, preferred weekday versus weekend shifts, day versus graveyard shift schedules, salaries, and the holy grail for airline employees, non-revenue access to open seats on an airplane.  In short, seniority at an airline conveys countless goodies unknown in other industries.  And in the terminally incestuous business of airlines, it means credibility.  For once the clock starts at day one of seniority, airline employees are on an inexorable walk toward an ultra-magnetic tractor beam that virtually crushes the desire to move to another company either inside or outside the industry.  The resulting social strata based on longevity leads to the “street cred” that creates a virtual pecking order based on years of service.  Proof?  Walk onto any operation at any airline and you’ll notice one thing.  The first place an employee’s eyes go to is the mandated, above-the-waist, visible employee ID.  Why?  One, to make sure you’re where you’re supposed to be according to company and government security policies, and two, it shows when you were hired.  (A quick anecdote, I’ve also witnessed employees wives subconsciously segregate themselves at social events based on their husbands’ seniority with the lowly, young narrow-body domestic wives staring enviously at the spouses of the higher compensated wide-body international pilots.)

So what’s the answer we learn from Delta to get pilots on board whereas prior attempts  have flown woefully off course?  Address seniority in a way acceptable to the majority of pilots first and foremost.  If this includes priority weighting for certain groups get the proposals on the table immediately and sort them so both sides can position themselves as winners within their own constituencies.  More than anything, show how by compromising on the most volatile issues, by employing an equal pain for equal gain approach, each side wins.  And use Airways as the penultimate example of how dug-in, no movement strategies benefit no one and in fact can imperil a company’s ability as a going concern.  While this sounds simple in principle, it can become impossible without senior corporate involvement.  Simply said, in contrast to Airways’ assertion, seniority is not a “pilot issue.”  Seniority is a leadership issue.  And make no mistake, Airways is an American Airlines merger with jetBlue or another carrier away from finding itself at the extremely lonely end of a very slippery competitive ladder.  If this were to happen, union members can dust off their funeral pyre dances and chants of “full pay to the last day” as their intransigence cripples Airways’ ability to compete.

So Continental and Southwest senior leaders, get your United and AirTran drivers to the table.  Lay out a growth plan that hits the equal pain and equal gain equation straight on while fully acknowledging the paramount importance of seniority.  Get a deal with your pilots that neuters any potential claims of undo preference or unfairness by the other labor groups.  Accomplish this and you’re off to the races of crafting a successful integration.  Once an early history of fairness is created in labor relations, the rest is much easier.  Short of that, you can take all of the projected synergies, savings, and revenue projections and park them on a  tarmac in Phoenix and await your tarmac delay fine.  Chances are it’ll be far more expensive than you ever bargained.

Chris

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