There is a rising demand among airline employees in the United States – ranging from pilots to catering workers, for higher wages and better benefits, as the entire industry in the country is set to record the tenth consecutive year of profitability.
However, the profitability of the airlines is sweet to take a hit next year as all of the major airlines of the country are due to hold negotiations with workers over labor agreements and will include 120,000 unionized employees. That could result in an increase of costs for the airlines.
For example, American, the largest US airline will be holding negotiations with almost all of its unionized workforce which will include pilots, flight attendants and maintenance workers.
The larger portion of the overall costs to US airlines is costs of labor. The share of labor costs of the total revenue of $187 billion for US based airlines last year was 28% compared to a share of 21% in 2008. According to data from trade group Airlines for America, the reason for this increase is an increase in hiring and increase in costs of compensation.
“There are simply more funds to get and workers are cognizant they’re turning out more value,” said Sara Nelson, international president of the Association of Flight Attendants. This union has a total of about 50,000 cabin crew members in 20 airlines including United. An attempt to bring the flight attendants at Delta under its union was made by the AFA recently. The cabin crews of this airline do not belong to a union and is the only one of the big four U.S. carriers without a union for cabin crews.
A slew wave of bankruptcies and consequent megamergers had rocked the US airline industry about a decade ago. The reorganization of the industry had left it with just four major players with a market share about 75 per cent of the total airline market. Profits of the companies reached a peak during the middle of the decade. Analysts however expect the growth rate of net income of the four largest players in the US airline industry to be around less than 1% starting this year at about $12.44 billion.
“When the airlines are making money, it’s hard to deny the increase” in compensation, said Kit Darby, a consultant who tracks pilot pay. “Everybody tries to get a good contract when times are good. If it’s a short downturn, they hold on to what they got.”
Demands for pay increases, more predictable schedules and better working conditions have been made by airline workers in recent months with multiple protests at airports and elsewhere.
Similar demands have also been made by employees in some other businesses sin the US including hospitality, auto manufacturing and grocery stores as they claim a greater share of the increasing profits of the companies in the sectors over the last decade.
“The rubber band has been stretched so far,” said Nelson.
“There’s a potential for more labor discord here in the U.S.,” said Savi Syth, an airline analyst at Raymond James, adding that the industry is more stable now than a decade or more ago. “Labor has to buy in that this is a different industry.”
(Adapted from CNBC.com)