Negotiations Proceed Quietly... For Now

It's a refreshing change of pace, though it doesn't garner many headlines. Negotiations are well underway between management at Dallas-based Southwest Airlines and its pilots union on a new contract, though you'd be hard-pressed to hear anything about them.

But despite a lack of bluster -- at least compared to similar negotiations occurring just down Highway 183, at American Airlines -- talks on a new contract for Southwest Airlines pilots are equally challenging, reports the Fort Worth Star-Telegram.

Southwest's pilots are the highest-paid in the industry, with an average annual salary of $166,000... and they're asking for more money, right at a time Southwest is struggling to adapt its low-cost business model in a more competitive environment, minus many of the fuel "hedges" the airline has enjoyed against high energy prices in the past.

It's a daunting task... and no one feels the pressure more than lead negotiator Joe Harris, hired last year to act as intermediary between management and pilots, for the first contract talks between the two sides since 1994.

Not long after he was hired, Harris recounts, Southwest co-founder and Chairman Herb Kelleher pulled him aside and gave him blunt instructions: "'Don't screw this up, Harris," he says. Not long after, he heard a similar message from a pilot in passing. "[The pilot came up to me and said, 'Don't let them screw this up,'" Harris adds.

"Both sides want to come out of this with something they'll be happy with," Harris says. "That's never easy, but that's what we're working toward."

Wages for Southwest pilots have increased sharply in just the past few years -- by almost 50 percent since 2000. Compare that to those flying for crosstown rival American Airlines... who netted a four percent pay increase in that time, after enduring drastic pay cuts in 2003 to help keep the carrier out of bankruptcy.

That discrepancy is not lost on pilots at American... as their union lobs accusations of executives collecting "blood money" on the backs of American's labor force, while management at the Fort Worth-based airline collect lucrative bonuses.

While talks at Southwest have been far more cordial thus far, they're by no means less important.

"Southwest is in a tough position right now, tougher in some ways than what's going on at American," said MIT airline economist William Swelbar. "This is a very important contract for the entire industry."

Swelbar -- a former flight attendant, who now sits on the board at Hawaiian Airlines -- says Southwest's negotiations have proceeded without the apparent drama at American "because both sides are very disciplined about not negotiating in public. They keep their issues at the bargaining table."

That doesn't mean there hasn't been some discord, though.As ANN reported, talks got underway in August 2006, after pilots voted down a one-year extension offered by the airline. The initial negotiations -- during which issues were discussed separately, in a style known as "interest-based bargaining" -- failed after a few months.

"As soon as we would look at economic issues, it kind of fell apart," said Carl Kuwitzky, president of the Southwest Airlines Pilots Association. A more traditional system has been in place since, though both sides didn't exchange contract proposals until April.

"It's been very slow going," Kuwitzky said, adding issues such as potential mergers or partnerships -- and the effects such happenings would have on pilot duties and job security -- weigh heavily on the current talks.

"Our pilots are the best-compensated group in the industry, and we don't want to take anything away from them," Harris asserts. "But unfortunately we don't have a blank check we can just fill out."

Talks between Southwest and its pilots also serve as the proverbial canary in the mineshaft... as contracts with flight attendants, customer service agents and other workers become amenable in 2008. Those groups are paying attention to pilot negotiations, to gauge how willing Southwest executives will be to bend to their wishes.

"This isn't as exciting as what's going on at American, but it's a big deal," Swelbar said. "Everyone's watching."

FMI: www.southwest.com, www.swapa.org