Profile of the American Pilots' Sickout Airlines’ Pilot Sickout Last February, pilots at American Airlines conducted a 10-day sickout that centered on when American Airlines would integrate the operations of Reno Air, a regional low-fare carrier it purchased in December 1998 to shore up its West Coast presence. After 8 months of negotia- tions the carrier officially integrated Reno Air operations. ast February, American Air- Background MICHAEL H. CIMINI lines and the Allied Pilots As- At the time of the dispute over the in- Lsociation (APA) were involved tegration of Reno Air, there was al- in a labor dispute that spawned a 10- ready discord between American Air- day sickout and led to the cancellation lines and the Allied Pilots because of of some 6,600 flights that cost the car- problems that had been brewing for rier an estimated $200 million.1 The several years. In the mid-1980s, dispute revolved around when Ameri- American Airlines unilaterally im- can would integrate 300 Reno Air pi- posed a two-tiered wage system on pi- lots into its pay and seniority ranks, lots. In addition, following the inte- following the merger of the two carri- gration of AirCal in 1987, some ers. Worried that American Airlines AirCal pilots stayed for several years would transfer its routes to Reno’s at lower wage rates than their coun- lower-paid pilots, the Allied Pilots terparts at American Airlines.2 In the proposed that the integration be ret- early 1990s, the carrier closed hubs in roactive to December 23, 1998, when San Jose and Raleigh-Durham, and American took control of Reno Air. pulled out of West Coast service. As a American Airlines told the union that result, American Airlines made joint it intended to operate Reno Air sepa- marketing agreements with low-cost rately for a transition period—12 to carriers, such as Reno Air, that gave 18 months—to give it time to retrain them access to American’s gates. Reno Air’s pilots, refurbish its air- American pilots saw this as an attempt craft, and consolidate airport facilities. to subcontract their jobs. During this After 9 months of fruitless negotia- time, American furloughed 610 pilots, tions, American Airlines officially in- some for as long as 3 years.3 Michael H. Cimini is an economist in the tegrated Reno Air’s operation on Au- At the same time, Reno Air enjoyed Division of Compensation Data Analysis gust 31, 1999, effectively ending a close business relationship with and Planning, Bureau of Labor Statistics. Telephone: (202) 691-6275 another chapter in the parties’ bar- American Airlines, which even al- E-mail: [email protected] gaining history. lowed Reno Air’s passengers to earn Compensation and Working Conditions Winter 1999 21 American frequent-flier miles. As the Issues in dispute different wage scales for the same work. furlough list grew, so did the Allied The 1999 dispute revolved around the The merger would bring sizable Pilots’ resentment over the close rela- Allied Pilots’ contention that Ameri- wage increases for the Reno pilots and tionship between the two carriers, es- can Airlines was violating their 1997- new advancement opportunities for pecially since Reno Air had taken over 2001 collective bargaining agree- American Airlines’ first officers. The former American Airlines’ routes.4 ment’s scope clause by continuing to APA proposed that American Airlines Coupled with years of mistrust, this operate Reno Air as a separate air car- pay all pilots as if their promotions resentment surfaced in 1997, when the rier, even though it had purchased a were retroactive to December 23, pilots struck America Airlines briefly majority of Reno Air’s stock and had 1998. However, the company was only before being sent back to work under placed four of its senior-level officers willing to phase in the wage boost over an executive order. The subsequent on Reno Air’s board of directors. The a 12- to 18-month integration period. 1997-2001 contract agreement further APA feared that American Airlines The union also requested that the car- angered many pilots, who were already would operate Reno Air as a separate rier compensate the pilots furloughed frustrated by the president’s decision carrier. This would allow American in the early 1990s, whom the union to end the 1997 strike.5 to expand its Reno Air operations; alleged were laid off because of thus, work would be lost to the Reno American’s decision to pull out of vari- Parties to the dispute Air pilots who would not be covered ous West Coast markets and to subsi- American Airlines. American Air- under the terms of the American-APA dize Reno Air through market ar- lines, a unit of ARM Corp., is the collective bargaining agreement. rangements and other support. Nation’s second largest airline, with The union cited its scope clause as Throughout this dispute, APA insisted scheduled service to 161 cities, mostly governing the dispute: “All flying per- that these pilots’ interests be addressed throughout North America, the Car- formed by or on behalf of the company in the negotiations. ibbean, Latin America, Europe, and or an Affiliate shall be performed by American rejected these two pro- the Pacific. Coupled with its regional pilots on the American Airlines Pilots posals, saying that it would cost an affiliate, American Eagle, the carrier Seniority List in accordance with the additional $40-$50 million and wipe serves 233 cities, with a workforce of terms and conditions of the Agree- out significant benefits brought about 8 109,000 and a fleet of 892 aircraft. ment.” According to the union, the by the merger. The carrier claimed American Airlines carries some scope clause meant that the flying per- that its integration proposal was more 225,000 passengers each day, and has formed by the Reno Air pilots for generous than those in past airline 2,200 daily departures. Its major hubs American Airlines since December 23, mergers. It noted that it had made it are located at Dallas-Fort Worth, Chi- 1998, should have been assigned to clear to the union that it would not cago, Miami, New York, and San American Airline pilots, and that all operate Reno Air as a separate carrier, Juan.6 pilots’ work was to be performed ac- and that it would pay Reno Air pilots cording to the American Airline–APA American Airline pilots’ wages as contract. The union said that it noti- soon as the integration was complete. Allied Pilots Association. The APA fied the carrier in October of 1998 that In addition, American Airlines said it is an independent union representing it needed to obtain an exemption (a offered to significantly boost Reno Air American Airlines’ 9,500 pilots, who “bridge agreement”) to temporarily pilots’ wages during the integration fly as captains and first and second operate Reno Air.7 period. officers. The union was founded in The APA wanted to protect its Also at issue was the integration of 1963, and was recognized for collec- members’ job security and pay. Reno the seniority list, which directly or in- tive bargaining purposes by American Air pilots were paid half of the directly affects many aspects of the Airlines in July of that year. The APA $140,000 average salary earned by pilots’ pay and working conditions. is headquartered in Fort Worth, Texas. their American Airlines counterparts. The APA wanted the Reno pilots to be The union feared that American would placed at the bottom of the seniority Reno Air. Reno Air, a scheduled, low- use these lower paid pilots in place of list, instead of placing them accord- fare airline, began operations in July their higher-paid members. The APA ing to their years of service. This 1992. The carrier employed 2,100 insisted that all American pilots, in- would protect the American pilots, but people and had a fleet of 25 aircraft. cluding the former Reno Air pilots, put the Reno pilots, who were not cov- It operated 182 daily flights to 13 cit- should receive the pay rates set under ered under the APA collective bargain- ies from three major hubs—Reno-Lake the Allied Pilots’ contract. The union ing agreement, at a considerable dis- Tahoe, San Jose, and Las Vegas. The had vigorously opposed two-tiered advantage. carrier, which had little overlap in wage systems in the past, and cited its routes flown by American Airlines, current agreement—negotiated after Negotiations and court maintained a marketing agreement the 1997 strike—that had contract lan- proceedings with American from 1993 until 1998. guage calling for the elimination of American Airlines’ and the APA ne- 22 Compensation and Working Conditions Winter 1999 gotiators opened contract talks in mental concerns, there was no reason low the union to use self-help, up to Pilots' Sickout January 1999. After negotiators for the job action to continue. With and including a strike. The union cited reached an impasse in early February that, the union canceled the negotia- a 1969 U.S. Supreme Court ruling that 1999, the APA urged its members to tion sessions that were to be held that it claimed applied to the Reno Air dis- consider whether the emotional or day. pute: physical stress from the dispute would On February 10, U.S. District Judge …it could hardly be expected affect their ability to fly safely. The Joseph Kendall found that the under- that a union would sit idly by as union’s president, Richard LaVoy, told lying labor dispute was a so-called the…(carrier) rushed to accomplish his members shortly after the sickout “minor dispute” and, thus, the job ac- the very result the union was seek- began, “We simply cannot allow any- tion was “inappropriate and has to ing to prohibit by agreement.