Labor contract negotiations in the airline industry: airline labor negotiations take 1.3 years, on average, to conclude, and about half go into Federal mediation; much of the variance in the duration of negotiations can be attributed to which particular airlines and unions are bargaining, not to economic conditions

Monthly Labor Review, July, 2003 by Andrew von Nordenflycht, Thomas A. Kochan

A few of the contracts in the sample have negative values (for example, -1.5 months) for the amendable-date measure. Negative values result when a new contract is ratified before the existing contract becomes amendable. This occurs primarily with midterm negotiations; hence, many of these negative values are excluded from the analysis. However, a few remain, so the reader is asked to keep in mind that such results do not represent problems or errors in the analysis.

For some analyses, we restrict the sample to "major" carriers only. Carriers identified as major in the sample are Alaska, American, America West, Continental, Delta, Eastern, Northwest, Pan American (PanAm), Southwest, Trans World (TWA), United, and US Airways.

Descriptive results

Durations of negotiation. Table 1 summarizes the average duration of contract negotiations for various types of contracts across all carriers and all years from 1982 to 2002. For "standard" contracts--all those except first contracts and those sealed through midterm negotiations--the industry average over those years was 14.1 months between the amendable date of the previous contract and the ratification date of the negotiated contract. The duration varied from as low as -11.5 months (agreements reached almost 1 year before the previous contract became amendable) to as high as 72 months (6 years). Contracts with the major carriers took 20 percent longer, with a 16.5-month average. For about half of the sample (121 standard contracts), an actual negotiation starting date, typically 1 or 2 months before the amendable date, was available. Measured from that date, contracts took an average of 16.0 months (1.3 years) to negotiate. (4)

Table 2 shows the distribution of durations of negotiation relative to the amendable date. For example, 7 percent of the contracts were ratified before the amendable date of the previous contract, about half of the contracts were ratified by 1 year after the amendable date, and 81 percent of the contracts were ratified by 2 years after the amendable date, leaving 19 percent still in negotiations after 2 years. The major carriers' distribution is shifted further out, with a smaller percentage of completed negotiations at every period. The two distributions provide a way to compare the airline industry against industries with contracts covered under the National Labor Relations Act.

Comparison with other industries. Although no data are available that allow a direct comparison of the time required to reach agreements in airline negotiations with the time required to reach agreements in industries with contracts covered under the National Labor Relations Act, a partial comparison can be made from a survey of a nationally representative sample of negotiations conducted under the Act between 1994-96 and 1997-99. (5) Chart 1 compares the percentage of negotiations completed within 1 month of the amendable date at all airlines and at major carriers against the percentage of negotiations completed within 1 month of the expiration date in the National Labor Relations Act sample. While differences in periods covered by these data, as well as differences between the legal and institutional settings in which the negotiations occur, caution against making too much of the comparisons, the differences are too large to dismiss. Under the National Labor Relations Act, 74 percent of contracts were settled before or within 1 month of their expiration date, compared with 11 percent of the airline contracts. The perception that negotiations in the airline industry take a long time is thus borne out by the data.