Having been plagued by uncontrolled fuel prices, several bankruptcies, and consumer displeasure, the US aviation industry in 2005 faced probably the worst labor unrest in the history of the airline industry. The 2005 airline industry strikes brought to mind the disruptions experienced in the 80s and 90s when carriers such as the Eastern Airways, Continental Airlines, World Airways, and Pan-American were ruined by the anger of their workforce who saw their jobs vanish in the wake of benefits and pay cuts. This unrest resulted in the grounding of Pan Am and Eastern Airways. These forces came again to bear in 2005. All seven principal airways in the United States of America reduced their benefits, spending, wages, and jobs. In the end, they managed to cut billions in expenses and thousands of jobs (Davies, 2007).
The US Airlines and the United Airlines did so undergrounds of bankruptcy, which protected them from going under. Upon asking and fielding their case for bankruptcy, they asked Judges to allow them to terminate their contractual agreements with their employees and replace them with affordable agreements. They also requested to be allowed to terminate conventional pension agreements for their employees’ moves that in the end helped them to save billions. This brought strike threats that were led by the association of flight attendants: a labor union organization that began carrying out a strike authorization vote amongst its members employed by the US Airways (Fisher, 2009).
However, according to federal law, flight attendants are not permitted to engage in industrial action unless they terminate their contracts. On the other hand, if the contracts are set aside by bankruptcy courts, the unions would be free to continue with their industrial action albeit under obligatory rules. Following this ruling by the courts, the labor unions breathed a sigh of relief and backed the court’s judgment that their case was different from a negotiated contract. On the other hand, the airlines maintained that this ruling was illegal. The airline companies, still shocked by this ruling, kept their eyes on the rising price of jet fuel that had risen by 74% in 2003. According to analysts, local airlines that in a period spanning five years had already lost $30 billion had been projected to lose a further $5.6 billion in 2004. In addition, indications were high that they could lose even more in 2005 in case the rise in fuel prices was not contained (Maynard, 2004).
Despite these concerns, the South West Airlines Chairman, Herbert D. Kelleher, was upbeat about the US Airline industry and cited different issues in this regard. According to him, in spite of whether fuel prices were low, high or medium, the airline industry as a whole had experienced profound and deep changes. He was even optimistic that by the mid of 2005, the US Airline industry would have had experienced lower process and substantial competition. Herbart believed that the US aviation industry was already doing good and that the crisis was just but part of what needed to make it do better. Though planes in the US Airline industry were busy in most of 2004, the industry started noise driving in August of the same year. This provoked the Airline industry led by companies renowned for their low fares like Jet Blue and South West to provide winter and fall sales earlier than the norm and they even offered extensions (Morris, 2012).
Economic analysts projected South West Airlines, which was the largest amongst the low fair companies, to be the only major profitable airline in 2004. This stemmed from the reports that in 2003, it had achieved two different high points. Firstly, it started offering its services from Philadelphia, which was a big challenge to US Airways that had boasted of having monopolized the route for many years. Secondly, it overtook the Delta Airlines and at this point in history, became the largest mover of airborne passengers within the USA (Davies, 2007).
However, before the end of 2004, it was faced with a daunting task. For instance, it had to decide the cities it needed to add to its flight schedules in a bid to contain its many new aircrafts. Jet Blue also faced similar dilemmas. Long perceived by analysts to be the best company on Wall Street for its non-union operations and low costs, it shocked many observers when it posted ridiculous financial results in two separate quarters (Fisher, 2009).
In 2005, Jet blue was busy in the process of delivering its new regional jets. Its esteemed customers were eagerly waiting to know if they would be invited to fly in its 30 new cities that it had added to its flight schedule given the industry’s problems. David L. Gregory, a law professor, argued that the US Airline industry will several years down the line look back at 2005 with awe for the intensity of these upheavals would be more manifest after about eight years (Maynard, 2004).
My Reflections about the Article
I agree with the fact that the 2005 US airline crisis was probably the worst at that point in time in the history of the US aviation industry. However, the experiences of the 80s and 90s do not even come close to the experiences following the September 11 2001 attacks where everyone in the US aviation industry, including passengers had to think twice on whether to continue working in the industry or not. This was practical because it was a matter of choosing between life and death and not putting food on the table (Maynard, 2004).
As much as I agree with the fact that by the US airlines cutting on their employees’ benefits, spending, wages and jobs they managed to save billions, I do not agree with their action for it was not legal. The only companies that did this legally were the US Airlines and the United Airlines who quoted grounds of bankruptcy that allowed them to take such action under the US industrial law.
I do not agree with the ruling of the court that allowed the Flight attendants to continue with their strike, citing that their contract was not a negotiated agreement. This is because a contract, whether negotiated or not should be respected. The rise in fuel prices has been there for centuries. Since 2005, jet fuel prices have soared sometime with very big margins but this has not caused problems in the US airline sector (Morris, 2012).
My opinion is that other underlying factors in the US aviation industry that were behind this problem. In this regard, I totally agree with the South West Airlines Chairman, Herbert D. Kelleher who cited different issues. According to him, in spite of whether fuel prices were low, high or medium, the airline industry as a whole had experienced profound and deep changes. He was even optimistic that by the mid of 2005, the US Airline industry would have had experienced lower process and substantial competition (Fisher, 2009).
As much as most of the US Airlines made losses in 2004, I do not agree with the fact that South West Airlines that was the largest amongst the low fair companies was projected to be the only major airline to be profitable in 2004. This is because the US airline industry as a whole made a net profit of $17 billion in the year 2004, in spite of the challenges of labor unrest and rising fuel costs (Maynard, 2004).
David L. Gregory, a law professor, was very right in his remarks that the US Airline industry will several years down the line look back at 2005 with awe for the intensity of these upheavals would be more manifest after about eight years. One of the monumental outcomes that are already affecting other industrial disputes today is the ruling made by the court upon hearing the RLA status quo provisions and the Airline disputes. In a case that pitied the North American Airlines against the international brotherhood of Teamsters, the jury in their opinion cited the Railway labor act of 1926. In addition, following their interpretation, they ruled that the independent adjustment of working conditions are not prevented in circumstances where there is no preceding joint bargaining accord, in spite of any imminent negotiations. This case has continued to be debated by analysts and critics alike on whether the RLA status quo as duly interpreted by the Supreme Court and sufficiently served the initial objective intended by the RLA in ensuring that labor disputes were peaceably resolved (Davies, 2007).
Davies, R.E.G.(2007) Airlines of the United States since 1914. Washington DC: Smithsonian Institution Press.
Fisher D, (2009) The Age of flight: a history of America’s pioneering Airline. Geenceboro,NC: Pace Communications.
Maynard, M. (2004, December). On The Rise: Labor Unrest and Jet Fuel. The New York Times, 287 (2), 12
Morris E. (June, 18, 2012). United shows off new operations center. Chicago: Sun Times. 123 (8), 43.
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