EoW July 2009

Labour issues complicate US-European e orts to cooperate on transatlantic air travel The Delta-Air France-KLM joint venture mentioned above is not the only example of US and European air carriers making common cause in the hope of and cost- and revenue-sharing advantages for all concerned. But joining forces on transatlantic business has a chequered history. A pending bid by American Airlines and British Airways, now under study by antitrust examiners, demonstrates that such ventures are not launched quickly or easily. American and its partners argue for antitrust immunity for their alliance (oneworld) on grounds that two competing alliances already have it: Star (composed of Lufthansa, United, and, beginning later this year, Continental) and SkyTeam (Delta, Air France-KLM). American also cites the ‘Open Skies’ treaty, signed since a previous, failed, attempt at a BA-American alliance. The 2008 trade agreement that allows European and US carriers to o er international ights between their regions has lifted many restrictions and meant more vigorous competition at BA’s busy Heathrow hub. But Open Skies, created to foster US-European harmony, has brought its own complications to the transatlantic air lanes. The projected pairing-up of a US and an Irish carrier to outsource pilots on overseas ights – written up in the Chicago Tribune this spring – provides a case in point. ‘Incendiary’ labour issues Tribune reporter Julie Johnsson observed that other US carriers and their unions were closely watching a venture conceived by Chicago-based United Airlines and Dublin-based Aer Lingus that would use non-union crews on new international ights. The move to outsource some ying between Washington-Dulles International Airport and Madrid was, she predicted, “likely to spark an uproar” when United next entered contract talks with its pilots. (“Clipping Union’s Wings,” 16 th March). As outlined by Ms Johnsson, the Europe-based partnership sees United as contributing marketing muscle and passengers from Dulles, its second-largest hub. Aer Lingus would contribute three new Airbus A330 jets and recruit pilots who are employees of neither airline. Service on the Chicago-Madrid route would commence in March of next year, with two other cities to be added in 2011. Analysts consulted by the Tribune noted that the venture, if successful, could encourage United to seek partnerships with larger European players, including Germany’s Lufthansa. With its implicit promise of lower labour costs, it would also serve as a model for other airlines. Most notably, the outsourcing of transatlantic ying threatens to diminish the powerful in uence of unionised pilots in airline operations. This last aspect caused one aviation observer to describe the labour issues raised by the plan as “incendiary” to American airline workers. Nor would US limitations on foreign ownership apply, since the partnership is to be based overseas. Ms Johnsson also posed the question whether such “potentially contentious and structurally awkward arrangements” are nancially feasible. Aviation consultant Robert Mann commented, “It’s hard to imagine how this makes money.”

Dorothy Fabian USA Editor

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EuroWire – July 2009