The Game Theory Of American Airlines Pilots Voting On A Strike

American Airlines CEO went around their pilot union, telling cockpit crew that they’re ready to pay them up to $590,000 per year, essentially matching Delta’s new pay rates and improving on scheduling and other quality of life issues.

Immediately following this message, the board of the Allied Pilots Association agreed to seek authorization from pilots for a strike.

There are two views, generally, about this strike authorization vote. One is that it’s business as usual. They’re in negotiations and want to ‘keep the pressure on’ so the logical step is a strike threat. The other view is that there’s anger at the company for making an end run around the union. However these aren’t as mutually exclusive as they first appear.

  • Unions want a strike authorization vote to make threats of a strike credible. Meanwhile they tell members that the strike authorization vote gets them the contract they want meaning it makes a strike unnecessary. Many members will vote to authorize a strike without wanting to strike, and they’re told voting to strike doesn’t mean striking – it’s a way to get what they want without doing so.

  • At the same time a strike vote makes an actual strike more likely. It’s one step towards a strike, and it hands power to union leadership and gives them the choice (once the National Mediation Board releases them to do so).

  • A strike isn’t the only way a pilot union threatens the company. Pilots can work to rule. They take longer, double and triple checking everything ‘for safety’ and out of ‘an abundance of caution’ to slow down the operation. They find issues that aren’t safety problems, that they’d normally fly with, and reject an aircraft. They get paid to foil the airline operationally.

So what is the union doing here, seeking a strike authorization right as the airline is offering to give them the pay they want and expect, and improved work rules as well?

Negotiations aren’t done. Many of their members will be happy with the message. The union doesn’t want to close up shop on negotiations, they still need to get work rule details ironed out. To union negotiators it’s too early to celebrate, and their members have expectations of a Delta contract not just in pay rates but in all respects and they aren’t actually there yet.

If pilots celebrate prematurely that’s going to help the company and prevent the union from getting all the details it wants. So a strike vote signals to the company that this isn’t done. And a successful strike authorization vote means there’s still pressure to negotiate since there’s still a threat to the airline.

There’s some risk in running the strike authorization vote. The union could lose it! But:

  1. They won’t lose the authorization vote, because the union will explain that’s caving at the finish line
  2. The strike authorization vote will go on for two months, so that gives the union two months of negotiating – when the company says they want to wrap a deal quickly – while the pressure is on.

The company won a PR coup by telling pilots they can have a 21% pay increase in the first year and 40% by the fourth year of the deal. It’s right there in front of them. The union needs to push back so that they can improve not just wages but get closer to Delta on work rules as well. They need to change the narrative.

Publicly, though, they won’t get much sympathy. The headline top pay of $590,000 underscores that pilots aren’t oppressed workers, exploited by management. In fact the huge raises being offered are in stark contrast to modest changes offered to most of management. The C-Suite has done well on compensation, but middle managers are seeing, in many cases, low single digit changes.

Nonetheless, the goal of American pilots is to be like Delta pilots in all respects. Work rules are costly, too, and American can’t afford the pay increases they’re offering to pilots as it is.

The company reports a $7 billion cost increase over four years for the contract they are offering. That is more than the airline earns now. With $2.1 billion in interest payments and an average cost increase for pilots of $1.7 billion. The company’s net income was $328 million in 2022, though conditions improved through the year with American earning $827 million in the fourth quarter (having lost money early in the year).

United CEO Scott Kirby has observed that higher pilot pay helps high cost major airlines at the expense of lower cost carriers, whose pilot pay increases represent a higher percentage of total costs. Similarly, though, pilot pay increases at financially stronger Delta disproportionately harm airlines with weaker financials like American.

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, 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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  1. I don’t know, it seems to me this is going to be short lived. AA seems to be running and wanting to jump off a cliff, declaring In chapter 11 protection again. That’s the only way they could really scrub this contract off and let the real negotiations begin. Risky, very risky, but at this point, IMO, not even the pilots are trusting upper management that much, proof of that is their vote to strike advocacy.

  2. Until the ink is dry on a finalized agreement, signatures included, and the terms of the agreement no longer easily rescindable after execution, the pressure can’t be dropped by one side without risk of the other side trying to come back with a reduction in the concessions agreed upon or playing run-around games in other ways.

  3. This running up of pilot pay at the legacy majors will be followed by increased fares being paid for by US consumers. Not just because of the airlines’ increased labor costs but because it leads to the oligopolistic industry cartel kingpins to enforce discipline on the supply side and act effectively as a restraint on capacity growth on the supply side.

    It’s really too bad that the USG gave the US legacy majors so many waivers and favors that the state of the airline marketplace is such that the airline industry kingpins run the show across the entirety of the market.

  4. Strike authorization votes are common esp. among pilots which are harder to replace than other airline works. SAVs are a tool which labor can use in a process that decidedly tips the balance of power away from labor and to management but it is far from certain that SAVs really move the ball forward.
    DL and its pilots supposedly really closed the big remaining gaps in the last two weeks before an AIP was reached. When AA is ready to come up w/ a deal, they will. When AA pilots realize that they have gotten as much as they think they can get, they will accept. Until then, there is all kinds of chest beating on both sides.

  5. Delta pilots ratified a mediated outcome. American pilots want and expect a negotiated outcome. That must be above and beyond what Delta received. It must address and correct the horrendous work rules established after AMR bankruptcy, and return to industry standard or American will no longer be able to attract top tier pilot talent, and current pilots will not give any product out beyond contractual minimums.

  6. Airline labor relations are always toxic due to the stupid application of the Railway Labor Act. It would be a great day in America if this application were repealed for all super highly paid airline employees. I can’t see this ever happening though, unless a pilot’s union did something incredibly stupid that greatly inconvenienced millions of Americans, and even then you’d probably need a smart, action-oriented President and a Republican Congress. Just thank god America doesn’t have other highly pai, elite professionals who are allowed to unionize.

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