Trans World Airlines Flight Attendance - Case Study Example

 Trans World Airlines Flight Attendance The case study explains the events that took place during a 1986 strike by the Independent Federation of Flight Attendants (IFFA), a federation that worked for Trans World Airlines (TWA) (Wallace, n.d.). The strike started on 6 March 1986 and it turned out to be the most relevant labor disputes in explaining the continuity of relations that subsist under the Railway Labor Act. A one-sided action by an employer does not deny a labor union the right to represent its members. TWA’s majority shareholder at the time was Carl Icahn who became the chairperson of the airlines board in January 1986. The strike happened at a time when the airline business was highly competitive (Wallace, n.d.). All airlines were aiming at making huge profit margins. The industry had become deregulated. This case study is a summary of the issues that characterized the strike. It also gives an opinion on the subject supporting it with similar occurrences and common practice. It also makes recommendations on the best way to solve predicaments similar to the one faced by the IFFA and TWA. The recommendations analyze the most favorable solutions to parties embroiled in similar trade disputes. Icahn was faced with the need to cut on costs to bolster TWA’s profits. One way of doing this was by reducing labor costs. It was the easiest way out owing to the fact that other management teams apply it when faced with situations that demand lowering of operational costs. Icahn required wage concessions and benefit costs amounting to about 300 million U.S. dollars. This would reduce labor costs and expenses before tax by 20% and 8% respectively. The Air Line Pilots Association (ALPA) and the International Association of Machinists and Aerospace Workers (IAM) were agreeable. The two groups granted Icahn concessions worth $100 million and $50 million respectively, the consideration being profit sharing and worker stock-ownership plans. Icahn was expected to get the remainder from IFFA (Wallace). ALPA and IAM expected the same. If not, he would have to sell the airline because there were some interested parties. IFFA’s leader, Victoria Frankovich, had her reservations about the wage concessions. This was coupled with Icahn’s demands that the flight attendants would be required to put more hours to increase the airline’s productivity and competitiveness. It was intimated that the airline paid a lot more in wages as compared to other airlines with whom it competed; thus justifying these demands. The IFFA took a rigid stance on these issues, especially the demand for more work hours from the flight attendants. There were claims that TWA’s management was a chauvinist due to insinuations that the flight attendants were not breadwinners. These circumstances prompted a strike, a sympathy action in which the IAM also participated. The attendants complained that more work hours would be highly demanding even for the healthiest attendants. It would also keep them away from their families for longer periods. The strike that ensued led to significant interruption of TWA’s operations. The management forecasted losses ranging from $45 million to $50 million. Even without the strike, a $125 million loss was anticipated. The IAM were later ordered to work by a Kansas federal court (Wallace). This left IFFA alone. To avert the effects of the strike and maintain operations, TWA had been training some flight attendants, in anticipation of the strike. With 1200 substitutes ready and 400 attendants not participating in the strike, TWA needed 2300 more attendants. They would be enough if they worked under the suggested conditions of more work hours. However, negotiations resumed only for the stalemate to subsist. The IFFA refused to accept TWA’s offer. TWA was then at an advanced stage of replacing the striking attendants. IFFA asked its members to return to work on 17 May 1986. It is at this stage that the vulnerability of workers’ unions is most visible. The pay cut and the increased working hours proposed by TWA were affected. This case study is in agreement with the article that the power of trade unions is diminishing. The public’s attitude towards labor strikes is not supportive any more. The report in the St. Louis Post Dispatch on 13 April 1986 is a testimony of this fact. It is corroborated by the observation made on 12 January 1986, in the Minneapolis Star Tribune, stating that strikes have become ineffective in asserting workers’ rights. Unions have experienced hostile reception by both the public and employers. Attempts by union leaders to secure workers’ interests have failed on numerous occasions (Freedom House, 2010). One effect of deregulation of the airline industry is the need for competitiveness (Wallace, n.d.). The various airlines need to make as much profit as they can. This demands that they put in place initiatives to ensure that their financial reports indicate profitability of the company (Williams, 1994). This is in a bid to safeguard investor confidence. Past practice by TWA was under different circumstance. In 1973, the industry was not deregulated. Interruption of operations was not so worrisome. Mutual Aid Pacts between airlines were there to enhance survival any airline that suffered such disruption. The disbanding of the mutual aid arrangements opened new vistas whereby stiff competition between airlines emanated. The overall effect is that the airlines find it imperative to cut on costs and maximize on the available resources (Wallace, n.d.). This may justify TWA’s initiatives aimed at enhancing productivity. Many airlines suffered bankruptcy after the deregulation (Christopher, 2008). This may have led to public sympathy of sorts towards the airlines. The effect is that efforts by workers’ unions in the industry may have been dwarfed by the legal changes brought about by the Airline Deregulation Act of 1978 (Christopher, 2008). The nation may have started finding it irrelevant for unions, such as the IFFA, to keep fighting for the workers’ rights yet the airlines were handling difficult productivity issues. Recommendation One viable recommendation that this case study finds is that airlines should search for other means of keeping costs at a bare minimum. Tactics such as pay cuts may lead to undesirable labor turnover (Sugars, 2007). The fact that TWA was competing with airlines that offered less salaries may have been a deterrent of labor turnover in the airline. All the same, the airline should have embarked on other means of lowering costs such as more stringent budgets. This would have averted the industrial actions while availing more sustainable management tactics. Instead of using pay cuts to reduce operational costs, the airline should have applied aggressive marketing strategies. This would have been a sustainable way of ensuring that the airline remained afloat. It would also have enhanced its productivity. It would only require effective marketing strategies for the airline to achieve this. Increased number of passengers would have ensured that the airline’s experienced human resource would be put to greater use. In the circumstances, the new attendants hired would be employed to cater for the increasing number of passengers. Thus, enhanced marketing would be a viable option in facing stiffer competition. References Christopher, T. (2008). Thirty Years of Airline Deregulation: An Analysis of Changes in the Industry. Retrieved November 1, 2013 from: http://voices.yahoo.com/thirty-years-airline-deregulation-analysis-of-1506393.html Freedom House. (2010). The Global State of Workers’ Rights: Free Labor in a Hostile World . Country Reports, 1-50. Sugars, B. (2007). Keeping Your Costs Down. Retrieved November 1, 2013 from: http://www.entrepreneur.com/article/177116 Wallace, W. C. (n.d.). Strike by Trans World Airlines Flight Attendance; Contract Continuity Under the Railway Labor Act. Elections, Certifications and Procedures, 31-37. Williams, G. (1994). The Airline Industry and the Impact of Deregulation, 2 ed. Burlington: Ashgate Publishing. Read More