Heathrow Labor Spat Puts Airline Strike Threat In Focus
Source: CBS Marketwatch
Author: August Cole
SAN FRANCISCO (MarketWatch) - The wildcat strike that paralyzed British Airways at Heathrow Airport in the past two days serves as a reminder to travelers how much is at stake for the airline industry during this busy and financially tenuous summer.
With crude oil at a new high and jet fuel costs up sharply over last year, pressure is increasing to get as much revenue as possible from the throngs of fliers taking to the skies.
Throughout the industry downturn that followed the Sept. 11 attacks, airlines have been looking to cut costs of all kinds, with a particular focus on labor because it's typically the largest cost category for most airlines. Concessions have been made throughout the industry but it's been a contentious process.
That's why Northwest Airlines has gone to great lengths over the past 18 months to prepare for a possible strike by members of the Aircraft Mechanics Fraternal Association should they walk off the job later this month.
"We have no choice but to restructure and to restructure now," said Northwest Airlines Chief Executive Douglas Steenland during a briefing Thursday on the plans.
If it comes to a strike, the airline said it's ready with replacement workers and a host of other measures so it can continue to offer service without any hiccups.
AMFA has called Northwest's offers unreasonable and said that the airline is forcing it to consider strike.
"Whatever happens between (the union) and Northwest, this is really a watershed event," said Terry Trippler, airline expert at CheapSeats.com. That will set the tone for labor-management relations for years to come, he said.
The union contends its concessions are enough to help the airline get to its goal of saving more than $1.1 billion a year in labor costs. The airline says its cost-cutting targets have to be met to keep the carrier competitive in an era where rivals can make money even with record fuel prices and a flood of cheap tickets.
"As determined as AMFA leadership is to not allow these cuts to happen to their members, Northwest leadership is equally, if not more, determined to keep their airline flying," said Trippler.
Element of surprise
In the case of British Airways, the finally tally of travelers touched by the Heathrow halt has yet to be finalized. But at least 70,000 have been affected so far by the walkout of ground workers who joined an unauthorized strike by fellow union members at the airline's catering company in a gesture of solidarity. The action was as unexpected as it was brief. By Friday evening, British Airways flights were back in the air.
According to Merrill Lynch, if British Airways' network were to have closed down it would have cost them 23 million pounds ($41.6 million) a day in revenue. The wildcat strike at Heathrow would've had a smaller effect but labor troubles during summer are worse than slowdowns or strikes at other times of the year.
"The problem is that coming in August, there's probably no worse time for an airline to go on strike, other than the Wednesday before Thanksgiving," said Henry Harteveldt, vice president and travel industry expert at Forrester Research.
Record load factors this summer are proof that planes are flying full. That makes rebooking passengers on another carrier much tougher if there's a problem like a strike. Empty seats are scarce these days, Harteveldt said, giving fewer options for an affected airline.
Plus, prices are usually highest during the summer because of strong demand for leisure travel.
At bankrupt United Airlines, its fight attendants represented by the Association of Flight Attendants have threatened work stoppages or slowdowns over terminating their pension plan. But the company has not had any disruptions, said United Airlines spokeswoman Jean Medina, and has consensual agreements with all of its labor groups.
Yet the risk remains, even if it's at the back of a customer's mind.
"While we haven't called for a strike action yet, that doesn't mean we won't do it tomorrow or the next day," said Sara Nelson Dela Cruz, spokeswoman for United's workers represented by the Association of Flight Attendants. The union is also looking for legislative and legal ways to protect its pension alongside the threat of its CHAOS action, which stands for create havoc around our system.
Being prepared
For travelers who think they might face a strike when they get to the airport, Harteveldt said that technology needs to be on their side. "This is the time to make sure you got to the airport with your cell phone charged and a WiFi card in your computer," he said. Signing up for automatic text-message alerts also gives travelers an advantage.
And so does patience.
"In an airline strike, the first couple of days are usually the most chaotic. Usually every day after the first day, things get a little bit better," he said.
But if an airline's operations were to grind to a halt and business stalls major damage financial damage could be done. "There really isn't an airline now that could handle it. And labor knows it," said Trippler.
