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

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Frequency of occurrence of resolution processes. Table 3 presents the frequency of occurrence of the various resolution procedures administered by the National Mediation Board. The first point to note is that the system does seem to produce negotiated settlements: strikes (3 percent of cases) and even Presidential Emergency Boards (1.5 percent of cases) are rare occurrences.

However, it is not at all uncommon for these settlements to require an extended process and government intervention: half of the contracts went into mediation, and one-third of the mediated contracts (16 percent overall) were declared to be at an impasse and released into the cooling-off period. In addition, 19 percent of the contracts were initially rejected at least once by the rank and file.

These events have clear implications as regards the duration of negotiations. Table 3 indicates that mediated contracts take more than twice as long to reach agreement as those which settle without mediation (19.2 months, compared with 9.0 months), and a rejected tentative agreement adds about 6 months to negotiations (18.5 months, as opposed to 13.0 months, a 45-percent increase). (Of course, the negotiations that went into mediation could have taken even longer--or had a much higher probability of ending in a strike--without the availability of mediation.) Interestingly, voluntary arbitration is a rare event (3.5 percent of contracts). Clearly, the parties prefer to seek negotiated settlements.

Trends. Table 4 shows the average duration of all negotiations that began in a given year. (That is, the amendable date was in that year.) Chart 2 displays these annual averages graphically. The chart seems to indicate an increase in the duration of negotiations over time, but certainly not at a steady rate. To test whether there has been a statistically significant trend in the duration of negotiations over time, the method of ordinary least squares was used to regress duration2 on a time trend variable (equal to unity in 1981 and proceeding by increments to 20 in 2000). The resulting coefficient of 0.574 on the time trend variable was significant at the 99-percent confidence level. This suggests that, on average, negotiations took about 19 days longer each successive year. Of course, as chart 2 indicates, the trend was by no means a smooth increase. When the sample is restricted to major carriers only, the trend loses its statistical significance altogether (and decreases in magnitude). Apparently, then, the temporally increasing trend is actually the result of the changing composition of carriers in the industry (or at least in the sample). Smaller carriers that also had shorter negotiation times were more prevalent in the early years of the sample and dropped out in the later years.

Table 5 displays the frequencies of resolution procedures in different periods. The sample time frame is broken into five periods: 1982-85, 1986-89, 1990-93, 1994-97, and 1998-2000. The table shows a much higher reliance on National Mediation Board processes after 1997: in 1998-2000, the percentage of contracts that went into mediation jumped to 73 percent after averaging close to 50 percent for the previous four periods. Arbitration, always rare, did not occur at all in the latest period. No Presidential Emergency Boards were invoked until after 1993, and there have been three since. Curiously, the percentage of released contracts is much lower in the most recent period, after having jumped up slightly in period 4. To some degree, this diminution may result from the fact that not all contracts that became amendable in 2000 had been renegotiated by the end of the study; hence, those contracts were not included in the sample and were certainly likely to be in mediation and perhaps more likely to be released. Overall, table 5 lends more support to the belief that the labor relations system is taking longer and relying more heavily on government intervention in the most recent period, relative to previous periods.