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Will labor strife led by pilots become the airline industry’s next big obstacle?

Date: January 4, 2023

By Kyle Arnold, Dallas Morning News

The big challenges of 2022 — COVID and inflation — posed no obstacle to travelers, but finding enough pilots slowed down the travel recovery.

Now, with all four big airlines negotiating pilot contracts and several in talks with flight attendants and other groups, labor could again be a pain point for travelers and carriers alike.

Union pilots at Southwest Airlines, American Airlines, United and Delta have increased pressure on management with staged demonstrations throughout the fall. Three of those four airlines have accepted some form of tentative deals, but American and United pilots rejected pay raises of 20% or more before the contracts could even go to members. Delta’s deal is still pending.

More than half of Southwest’s employees are in negotiations, including pilots, flight attendants, dispatchers and ramp agents.

While pilots are prohibited from striking without approval from federal labor officials, a strike threat has already been uttered by Delta’s pilots, who voted to authorize a strike. Leaders from the Southwest Airlines Pilot Association brought up the possibility of striking earlier this month when the board of directors authorized union president Casey Murray to call for a strike vote, although that’s a long way from an actual walkout.

There have been signs of progress. The deal with Delta pilots with 34% pay raises over four years sets a bar that airline executives said could push negotiations forward.

A union representing 8,300 Southwest Airlines customer service workers approved a new contract with 25% raises over four years. Employees in that workgroup rejected two contract offers in the last year.

“Labor thinks this is the best time for them after several years of stagnating wages,” said Bijan Vasigh, a finance professor at Embry-Riddle Aeronautical University in Daytona, Fla. “A decade ago, consolidation was very good for the airlines because they got some kind of power on the employees. But that is changing now.”

Pilots and flight attendants at Southwest and American have been in negotiations for more than three years, and all are losing patience that a deal isn’t done yet.

That’s because after losing billions of dollars during 2020 and 2021, Fort Worth-based American made a $976 million profit in the second and third quarters and Dallas-based Southwest made $1.04 billion during the same period.

“Labor is not stupid,” Vasigh said. “They have economists, they have consultants and they know that we have passed the back part of the COVID and we are expecting that in 2023 we will have some growth in the airline industry.”

Commercial flying is down still 5% to 10% from pre-pandemic levels due to a shortage of pilots. Airlines are expected to surpass 2019 levels in 2023.

“Coming out of the pandemic, you can see the consumer’s desire to travel,” said Jeff Windau, an Edward Jones analyst who follows Southwest. “It’s already back from the leisure standpoint; business travel has started to come back.”

With pilots being the chokepoint in the travel recovery, any uncertainty with labor negotiations could be problematic, especially if pilots are not motivated to pick up extra flying during critical travel peaks.

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