American’s Mechanics Dispute is Really About the Future Role of Union Airline Mechanics

American’s mechanics have played a role in the airline’s subpar operational performance this summer but it’s only one small piece of the puzzle.

The lack of a contract between the airline and its legacy US Airways and legacy Aemrican mechanics and fleet service workers groups means the merger still isn’t completed, and they’re not fully able to capture merger efficiencies even nearly six years in.

Management seems to have messed up some in the negotiations, fronting some of the raises mechanics will get without the need for a new contract. They may not be offering enough to get workers to agree to ‘scope’ provisions the airline wants (more outsourcing). And the workers themselves haven’t come together in a truly unified front, still represented by their own unions as part of an ‘alliance’ and each set of workers has different priorities (US Airways mechanics don’t want to be migrated over to a less generous health plan).

Ultimately though the union wants to preserve its size and strength, which has more to do with future negotiations and future members than with current ones. At legacy American, represented by the TWU, the average age of a mechanic is mid-50s. The airline has insisted they’re offering “job and base protection” so that everyone keeps a job in their current location.

In some sense the fight over whether or not American can do things like more maintenance on the ground by its own (non-union) employees in Brazil, while aircraft sit there all day, is about the future of the union mechanic at U.S. airlines.

U.S. Airline Maintenance is Safe, Period

The American Airlines mechanics unions make the case that outsourcing is dangerous. They focus on foreigners but of course much outsourcing goes on in the U.S. There’s simply no data to suggest that outsourced work is less safe, there are simply anecdotes on both sides. Does anyone think Qantas is an unsafe airline because work is done in Australia (and elsewhere) and not the United States?

Maintenance work needs to be overseen properly, work needs to be checked, that’s true whether the work is performed in the U.S. or abroad, by union members or non-union workers. The safety record of U.S. airlines suggests this is exactly what’s happening.

One worry over requiring maintenance work to be done by union workers domestically is that high cost maintenance is what airlines might try to avoid. For safety’s sake maintenance needs to be affordable. Lower cost quality maintenance allows an airline to consume more maintenance.

American Does Most of Its Work In-House, What’s All This Talk of Outsourcing?

American Airlines outsources far less than United and Delta do, and that should remain true even if the company gets its way in a final contract. So American is hardly the ‘labor bad boy’ here.

Ted Reed writes about maintenance outsourcing levels at different US airlines:

  • Hawaiian 75%
  • JetBlue 74%
  • Southwest 52%
  • Alaska 49%
  • Delta 43%
  • American 33%

This data is from last year and pre-dates the most recent Southwest mechanics agreement.

Over Time There’s Less and Less Work for Legacy Airline Mechanics to Do

Engine maintenance, which is materials-heavy, is driven at many airlines by the manufacturer (‘power by the hour’ agreements). Many carriers only do line maintenance at their hubs. On the whole smaller airlines outsource maintenance, and many that lease all their planes lack significant maintenance capabilities entirely.

European carriers outsource maintenance too for instance Lufthansa does work in Eastern Europe and the Philippines.

Newer aircraft have longer heavy check intervals, meaning less maintenance work. Composite materials in the latest generation of planes mean less work too (no metal airframe corrosion). The same is true resulting from more electronic components replacing mechanical parts. That’s materials replacing labor.

Inspections can be increasingly done by computers, replacing error-prone people. People have to supervise machines, but the number of people and type of work changes.

The legacy U.S. airline mechanic, doing soup-to-nuts work in house, is becoming increasingly a rarity.

Delta is Chasing High Value Work: Their Outsourcing Benefits Employees

When American management points out that Delta does more outsourcing misses the point, Delta is providing good jobs for its mechanics over the long term because they’re doing high value maintenance in house, and growing that portion of the business turning maintenance into a profit center by doing work for other airlines. Meanwhile they outsource lower value work.

Delta expects to grow its maintenance business by $1 billion a year over the next 5 years.

No doubt unions would prefer all work done in house, meaning more people on their rolls, but for existing employees taking low value work of their plate and giving them more high value work to do is what allows them to earn more. Ultimately fighting to do low value stuff in house is going to be a losing battle, you can’t have 55 year old union workers doing all your de-icing.

The World is Changing and That’s Where Friction Comes From

The TWU and IAM at American are fighting a rearguard action to (1) protect existing jobs, and (2) preserve union strength and numbers for leverage in the next contract. But without a vision for higher value work to be insourced from other airlines, there’s just not going to be as much high value work to do and they’re too expensive for the lower value work. That’s management’s fault, but with the current business plan it’s probably inevitable. So the best mechanics can do is base and job protection for the current group.

There may not be enough money on the table to get a contract done. The airline suing its mechanics, if they obtain damages, could be leverage to push through a deal. In the meantime we see friction, but it’s the friction that is a microcosm of a transforming economy. Airlines are one of the last few private sector union strongholds, but likely aren’t immune from changes in the world.

The trend is for high value work to be done in house, and lower value work to be outsourced. That’s a trend that union mechanics aren’t going to be able to escape. Legacy American Airlines mechanics are in their mid-50s on average and are being promised job and base protection, so the fight is really about future workers.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The only reason “the fight is about future workers” is because new hires are what adds seniority value to those with longevity.
    Clearly these union folks are not vested in the success of the company.

  2. “The TWU and IAM at American are fighting a rearguard action to (1) protect existing jobs, and (2) preserve union strength and numbers for leverage in the next contract.”
    You’re forgetting #3 which is most important: money. Unions exist on dues and like every organization, they need money (in union’s case this is to fund Democrat politicians who will work to force people into joining unions and/or feed lucrative government contracts to union shops). Its all about the money.

  3. True enough, but there’s nothing new in this story. The INTERESTING thing going on here is how the Judge’s ruling basically ended all the maintenance related cancellations and delays at the airline. This isn’t widely known, largely because AA isn’t saying anything about it — presumably so they don’t jinx the multi-million dollar damage claim again the unions that they’re now seeking from the Court. AA is now running a decent airline, at least when the weather is reasonable.

  4. Sorry but I’m not a fan of the games companies pay. Hotels that outsource cleaning and then when people complain the employees are getting paid so poorly and don’t have benefits the hotel goes “well it isn’t our problem”. Sorry that doesn’t fly for me.

    Jobs need to have a decent pay and benefits for all employees and whether those people are direct or sub-contractors, that should apply.

    And no, I’ve never been part of any union. Just because something won’t benefit me (and may cost me money) doesn’t mean I’m against it. This stuff of treating people like disposable items is disgusting.

    And I do think the AA unions need to get their act together. First of all they need to set aside their differences and merge into a single union. Then they need to be reasonable in their demands. Their actions so far are embarrassing.

  5. @Gary

    You talk about high value and low value maintenance work, but don’t specify what it is. You use the word “de-icing” once, and that was it. De-icing isn’t even maintenance work, at least in the sense that you need an A&P (licensed aircraft mechanic) to do it. At some airports/airlines, line mechanics do aircraft pushbacks, which again doesn’t require a licensed mechanic. Both components are that isn’t unreasonable to have unionized airline labor perform — albeit as ramp employees on a presumably lower paid contract.

    This piece would be a bit more informative if you spent some time elaborating on the difference between high value and low value work, and what types of work Delta is doing that is considered “high value.”

  6. I’ve worked for this airline for 35 years and it ALL COMES DOWN TO CORPORATE GREED
    ITS PERFECTLY OK TO PAY THE TOP 3 executives in the company
    Literally 50-60million in one year
    But they can’t give their hard working employees decent affordable health care
    Sickening is what this country
    Has become

  7. Unions are useless anchors to effective business. In 2019 outsourcing, part time work, contracting for specialized services, etc is the most effective way to cost effectively get the job done. I hope AA breaks the damn union as it would be in the best interest of passengers, through most cost effective and timely maintenance, to do things outside of the tired, old union way.

    BTW, there are sufficient oversights that safety won’t be compromised. I negotiated and managed IT outsourcing contracts for over 25 years and you can put contractual assurances in service agreements that you just can’t match with in-house staff. I mean so what if a mechanic screws up, all you can do is fire them! If you have a services contract there are outside audits, insurance protection, financial remedies and obligated service reviews to ensure everything is done appropriately. Not only is outsourcing more flexible and cheaper, it is often safer due to the added contractual assurances in place.

  8. There’s 7 mins of my life I won’t get back. Several facts are wrong mainly the deicing it is done by ramp workers at AA. Maintenance hasn’t done it in 35 plus years.

  9. FWIW. AA just announced today 400 new jobs at its Tulsa base, which is the “world’s largest commercial aviation base maintenance facility”. So, it does not look like they are planning to outsource significantly.

  10. Interesting that American just announced hiring 400 new “team members” at Tech Ops – Tulsa, the largest commercial aviation base in the world, because it is expanding the amount of work there. They are starting maintenance on 787s and will do more work on 777s and landing gear repair.

    Regarding @AC, comment, Often management underestimates the fact that a contract guarantees nothing. It is only a promise or series of promises by the parties. When one party thinks the other didn’t perform, the only remedies are legal (slow, costly, and uncertain). I don’t know why managers think outsourcing is such a great idea since they give up control but not responsibility.

  11. The only slowdown is manufactured by American Airlines, 2003 AA got concessions from Ground Workgroups to prevent bankruptcy filing only to pass the 2008 Amendable date with NO new contract. Concession Contract talks stalled until November 2011 AA Bankruptcy Filing with Billions on hand and largest aircraft order in history.
    AA used Bankruptcy law as a business plan to destroy aviation careers with the loss of benefits, jobs , and outsourcing. Now with the Bankruptcy Contract past it’s Amendable date of September 2018, Here the Ground Workgroups of AA sit with broken promises, uncertainty and more disappointments. AA Executives have enriched themselves, AA has bought Billions in stock buybacks, building a hotel in the amount of 250 million or more, building of maintenance hangars in Chile and Brazil, and the tight lip budget of the New Headquarters building in Dallas.
    But the AA Executives have a difficult time getting a Contract for the Complex Ground Workgroups. It is hard to get a Contract for Ground Workgroups if AA Executive Leadership doesn’t schedule talks. No urgency by AA to show fairness to Ground Workgroups speaks volumes. Ground Workgroups deserves better, ALL Workgroups deserves better!!
    The slowdown or work action is coming from American Airlines Executives Leadership-Unacceptable by any measure of fairness….
    American Airlines “Good Faith Negotiations” 3 Years , 8 Months and counting. I hope the APA is paying attention… also, AA Outsourcing is above 41 percent over the 35 percent agreed on.
    Good News AA Executives are receiving millions in Bonuses and Stock — good job
    ✈️✈️

  12. AC your probaly Parkers chauffer and your comment has no merit . Before you comment know what your talking about go back to chauffeuring

  13. AC. Does that stand for ass clown! Obviously you don’t know the first thing about aircraft maintenance. “So what if a mechanic screws up, just fire him.” What if he miscalculated a fuel to known quantity. Or didn’t torque an igniter, wheel axel nut right improper crimp canon plug pins. All this comes with experience from working large transport aircraft. Your dumb ass doesn’t sound like you could handle the work. That is why large carriers rarely out source line mx. Your an Idiot.

  14. @dmz

    And Gary hates it when I tell him to stick with what he knows: frequent flyer miles and loyalty programs. He gets off that script and the haterz come out of the woodwork.

    I repeat: deicing aircraft is not a maintenance activity. If he’s going to capture that in his “low skill maintenance” talk, then he needs to be clear about that.

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