Posts Tagged ‘labor’

Is "Straight Talk Express" now the regional affiliate of Straight Talk Air?

Is "Straight Talk Express" now the regional affiliate of Air McCain?

I haven’t had any luck getting the McCain campaign to fill me in on the details of his aviation plan (if he has one). His website has one mention of aviation, and it’s a throwaway press release on the air traffic control communications outage in August with a boilerplate call for reform in Washington. However, his twenty-six years in Washington and his chairmanship of the Senate committee that oversees aviation mean he has a pretty wide paper trail. Two of the most important issues on which he’s weighed in are air traffic control modernization (and how to fund it) and international aviation agreements.

John McCain has a track record of supporting market-based air traffic control reforms. In a 2001 interview with General Aviation News, which is full of revealing nuggets, he discussed a Reason Foundation report proposing a commercialized, nonprofit government corporation to provide air traffic control services (much like NAV CANADA). The interviewer was especially concerned about McCain’s support for user fees, the bete noire of the general-aviation community, and asked: “You have advocated ATC user fees in the past. Do you continue to support that approach?” McCain replied:

While there are a number of ideas about how to fund the aviation system, I have not yet come to a final conclusion about the best solution. The Commerce Committee will continue to examine different proposals and ideas, including a user-fee system. As I have often stated publicly, I am always open to new and fresh ideas on how to provide the proper funding to ensure a safe and efficient air-transportation system. The issue of user fees is closely linked to funding for the FAA, which is absolutely critical to the future of aviation in our country. The national air transportation system needs a predictable and reliable funding stream that is not subject to unnecessary budget pressures and gimmicks. A positive step in the right direction was the funding provided through the most recent FAA reauthorization bill, commonly known as AIR-21. But AIR-21 is not a permanent solution, and ensuring adequate funding for the long-term future of aviation remains a challenge.

While avoiding an endorsement of the Reason proposal, McCain did promise to include commercialization in the Commerce Committee deliberations on ATC: “However, the issue of ATC modernization is certainly an issue that the Commerce Committee will be looking into this year, and I expect ATC privatization will be included in the overall scope of the debate.”

User fees seem to appeal to McCain’s populist political persona and rhetoric. While acknowledging that user fees should not be structured to harm recreational users, he assails business jets’ use of the system: (more…)

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I previously wrote about Barack Obama’s aviation plan; today’s post is about the one aviation-related bill he’s introduced in Congress, the FAA Fair Labor Management Dispute Resolution Act of 2006 (S 2201). The bill, which never made it out of committee, would have amended the FAA’s personnel management procedures so that the FAA administrator would be unable to impose work rules in stalled labor negotiations without congressional assent. If Congress were not to act on the FAA administrator’s proposed work rules within sixty days, any contract-negotiation impasse would instead have to be submitted to binding arbitration.

Air traffic controllers have been working under these imposed work rules for two years this month. According to the Wall Street Journal, “[T]he FAA imposed contract terms on the union after negotiators failed to reach a deal on pay and working conditions. The FAA ended up imposing significant pay cuts for new controllers and froze salaries of others, along with setting new work rules.” (For more on this, see the controllers’ union and ATC blogs like Get the Flick and The FAA Follies.) Obama’s legislation would have required the FAA to give in and submit to neutral, binding arbitration in its negotiations with the controllers, as the work rules would never have made it past a Democratic Congress (or even perhaps a Republican one — remember, aviation issues don’t break down evenly along party lines).

Labor organizations, including NATCA and AFSCME, supported S 2201. NATCA endorsed Obama for president largely on the strength of this legislation: (more…)

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Welcome, new readers! For more blogging on aviation politics, click here.

First of all, big props to Obama and his campaign team for actually having a transportation agenda [PDF]. The McCain campaign devotes a whole section to manned space exploration but can’t spare a word for aviation. So, to Obama, an A for effort.

Now let’s dig into the plan:

As our society becomes more mobile and interconnected, the need for 21st-century transportation networks has never been greater. However, too many of our nation’s railways, highways, bridges, airports, and neighborhood streets are slowly decaying due to lack of investment and strategic long-term planning. Barack Obama believes that America’s long-term competitiveness depends on the stability of our critical infrastructure. As president, Obama will make strengthening our transportation systems, including our roads and bridges, a top priority.

Barack Obama believes that it is critically important for the United States to rebuild its national transportation infrastructure — its highways, bridges, roads, ports, air, and train systems — to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow. Investing in national infrastructure is especially important in our efforts to bolster our homeland security to meet international terrorism and natural disaster threats. . . .  Barack Obama will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation’s most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation.

Worthy goals. One of the core functions of government is to provide for infrastructure development and maintenance. How will this money be allocated? By DOT, or by Congress? Political realities mandate, for example, that Airport Improvement Fund monies go disproportionately to airports that do not need them as much as the highly trafficked and congested commercial hubs. How it gets allocated is key. (more…)

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In the first mention of aviation I’ve heard during either convention’s primetime speeches, former Arkansas governor Mike Huckabee gave a brief shoutout to airline workers: “If you’re a flight attendant or baggage handler and you’re asked to take a pay cut to keep your job, you want something to change.” Amen!

It was a one of the best speeches of the GOP convention thus far. Unlike so much stilted and predictable convention oratory, Huckabee can spin a great yarn, and he infuses his speeches with the melodic cadences of the best Baptist preachers.

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As I was preparing this post, I noticed that Sean O’Neill at This Just In has written something similar. So, go read his work, then come back here for further reflections.

Commercial airline pilots: blue-collar or white-collar? Working class or middle class? (Never mind the fact that “working class” and “middle class” are swiftly becoming relics of a past era of social stratification.)

In the white-collar column: pilots are professionals who require a government license to practice. They are required to have bachelor degrees. Although less so today, in the past, they often came from the military officers corps, whose members tend to exit into middle-class lives. And commercial airline pilots enjoy an average annual wage of $148,810.

In the blue-collar column: pilots are operators of machinery. They have strict uniforms and ranks. They are organized into highly regimented seniority structures. They are unionized. They are paid by the hour. They are highly vulnerable to layoffs and furloughs. And they start their careers making less than $20,000 per year in many cases.

Indeed, the airline pilot is a strange blend of blue and white collars, as if he washed his colors with his whites. As one of Patrick Smith’s correspondents writes, “Pilots are a weird blend of white- and blue-collar, neither tradesmen nor professionals, and the usual definitions don’t apply. What do you call someone who spends tens of thousands of dollars on his own training, then endures years in an ill-paid apprenticeship, in a notoriously unstable industry, cemented into a seniority system, unable to freelance or change companies? I don’t know, but it’s not a professional. Of course, neither are we true blue-collar workers, who at least have transferable skills. And I suspect the ubiquitous seniority system, originally set up to protect pilots from capricious promotions and demotions, may be our greatest hindrance.” The seniority system is a holy grail of the unions.


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Sorry for the light posting around here. I’ve been working on some major writing projects that will appear over the next few months. In the course of one of them, I had occasion to chat with Alfred Kahn, the chairman of the Civil Aeronautics Board in the late ’70s and the “father of airline deregulation” (although when deregulation’s record was questioned he would later joke that he wanted a paternity test). Here are a few highlights from our conversation.

Looking back, was airline deregulation a good idea? “It clearly, definitely was,” Kahn said, “even though circumstances have now changed abruptly and the response of the market to changed circumstances . . . are in a sense wiping out henceforward many of the benefits that flowed during the past 30 years.”

Why was it so successful? The answer, he said, is that it “sparked an enormous increase in competition and air travel affordable to people from a much wider spectrum of income than before . . . made possible by filling seats in the previous decade that had gone empty.” Furthermore, he added, airlines are providing the service demanded: “I don’t see any evidence even now that the industry is failing to provide service that is economically viable.”

Notwithstanding the high fuel costs that many analysts say will drive most airlines into bankruptcy and force an industry transformation, Kahn insists that introducing competition into the industry was a good thing to do. “That’s no reason for denying the benefits from competition.” There is nothing inconsistent to say that there was a $5-10 billion per year benefit to consumers and that today’s energy situation may be reversing those benefits. Furthermore, changes the airlines made in the past thirty years due to competitive pressures may help them in today’s climate: “The increase in competition clearly forced them to improve their productivity; I don’t see that those [gains] are being wiped out.” All industries are to some extent exposed to losses due to high energy prices, Kahn said, so “nor would it be desirable for [airlines] to be sheltered from the change in our energy situation.” (more…)

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Yesterday, several outlets reported on former American Airlines CEO Robert Crandall’s speech at the Wings Club (full text here). Crandall, who ran AA during the process of deregulation and made it an industry leader in the post-deregulation era, opposed deregulation in the late 1970s, and his opinions haven’t changed: “We have failed to confront the reality that unfettered competition just doesn’t work very well in certain industries, as aptly demonstrated by our airline experience and by the adverse outcomes associated with various state efforts to deregulate electricity rates. It’s time to acknowledge that airlines look and are more like utilities than ordinary businesses.”

Because Crandall is such a legend in the airline world, I’d like to go through his remarks seriously and respectfully. The key question: should airlines be operated like public utilities? Public utilities arise from natural monopolies, in which it is most efficient for a single firm than multiple, competitive firms to provide a service. Natural monopolies usually result in infrastructure- and capital-intensive industries. Classic examples include electricity transmission or public transportation: it’s too costly for competing firms to maintain multiple networks of power lines or subway tunnels. A utility is often created because it is the only way to ensure crucial infrastructure investments are made; if multiple firms are competing, they may not be able to afford to upgrade their systems over time. Economists have been doing important work exploring whether such utilities are really natural monopolies. Back in the 1970s, a consensus was reached that airlines did not constitute such a monopoly.

Indeed, certain elements of the infrastructure of the airline industry may be natural monopolies. Would it be more efficient to have multiple air traffic control firms competing? Not likely. And communities in which there is one major airport may find that a natural monopoly. (But regions with multiple, competitive airports, like London or New York, have great potential for airline competition. BAA, the owner/operator of London’s three largest airports, was set up as a sort of private utility with so much market power because only such a structure was thought to allow sufficient investment in infrastructure. As it turns out, BAA’s common ownership in a competitive environment has retarded investment.)

But airlines themselves are no longer thought of as a utility. Why were they ever? (more…)

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