Essay on Magic Carpet Airlines Case Study

Case 5-3, "Did the Company Violate....?", p. 232; and Case 5-5, "Bulletin Board Use", p. 236. Answer the questions at the end of each case in typewritten format, 3 - 5 pages.

The flight attendants explicitly requested their seniority carry over to any new company in the event of another merger or buyout of MCA, and protection from any layoffs that may result. The flight attendants also expressed concerns with regarding wages via duty rig, and requested the same provision as those provided to the pilot. As of current, MCA only paid flight attendants for the time they were in the aircraft with it moving, they were not compensated for time spent sitting in airports or waiting for flights. The flight attendants want to implement duty rigs, where they are compensated a fixed percentage for time spent on duty with the company.

Its importance role of providing a platform for unions to negotiate and bargain with their respective airlines has minimized or prevented the extent of the damages strikes have on the airline industry. Strikes, such as the one by ALPA, have been proven to be disastrous with regard to public interest. RLA’s role cannot be taken lightly as an absence of such an act would be extremely detrimental to the airline industry and ultimately, United States’ commerce.

Starting in week 5, both teams formed their initial demands. From week 6 to week 10, we took part in discussing our demands, finalizing them and posting them in the Negotiation Room. Each union member participated as a Chief negotiator and performed negotiations with the Chief negotiator from the management team. I have come to realize through the weeks that negotiations are tough, no matter if they are through online or in person, for a mock negotiation project or for a real labor negotiation. There is a lot that goes into the bargaining process and many things that need planning even before the negotiations begin.

“Impasses involving a first contract dislike between key negotiators, conflict within management or union teams, union strength, pattern bargaining, and an inability to pay is more often resolved by intensive mediation.” (Fossum, 2009) I believe that a mediator would help the company bridge the gap between what the union believes that we can provide as far as compensation and also better express the impact of medical costs on the health of the company. With the involvement of a mediator we may be more successful in a counter offer of a lower increase in pay of 5 cents.

Your team represents HCC management in bargaining sessions with the UCPW Local 14. The team is expected to negotiate an agreement that will allow the company to achieve its strategic goals over the next three years. Your team will use the following items to formulate its initial demands and for negotiating a new collective bargaining agreement:

The issues between the union and the Magic Carpet Airlines are that the airlines do not pay their flight attendants duty rig pay, there is no job security, and they weren’t able to use their sick leave when they were sick. They did not agree with the way they had to give a five day notice to swap routes with other Magic Carpet Airlines flight attendants. Their major concerns were their direct wages, they wanted to be paid more and have duty rig, and have job security. These concerns were all determined by surveys that were mailed out to each of the union members, and flight attendants voicing their concerns.

The airline industry is one of the largest and most innovative industries within the United States. Aside from the innovations for which it is reputable and which changed the world the US airline industry is also notable in terms of the developments registered at the level of collective bargaining. The lines below reveal a brief time line of the events after 1978:

In 2003, Don Carty, a chairman and the chief operating officer of American Airlines resigned to avoid the company from entering bankruptcy (Wong, 2003). Prior to his resignation, Carty spent 12 hours with three of the union’s representatives to discuss new contracts. These new contracts included five instead of six year contracts and a new cash incentive plan (Wong, 2003). The unions he negotiated with were the Allied Pilots Association, transport Workers Union, and the Association of Professional Flight Attendants (Wong, 2003). In the provided video, Don Carty addresses two challenges he believes is driving the airline industry. The first challenge of being able to find an accepted price that both the consumers and the suppliers can agree on as fair or at a level that brings in profitable traffic to the business. The second challenge, relating to the air traffic industry, in finding a better way to conduct labor relations in the airline industry without the help of American government agencies.

Northrup’s 1984 article “The Rise and Demise of PATCO” argues that both PATCO and the Reagan administration were justified in their actions, but both took unnecessary measures in the wake of new president Reagan’s policies. Northrup, an economist, compiled his essay from sources such as interviews with FAA employees, government reports, court cases documents, secondary economics sources. This highly objective essay highlights both the US government’s earlier concessions to PATCO, PATCO’s greediness, PATCO’s failures, and the Reagan administrations harsh reactions. Northrup concludes that PATCO had received generous offers from the Reagan administration but continued to strike out of greed and that if they and congress would have accepted previous agreements it would have changed the face of labor relations in the United States. This article matter because it gives us a glimpse into the reasons behind PATCO’s failure from the labor union’s point of view as opposed to the Reagan centric examination of the 1980s most often

I would characterize the U.S. airline industry in the early 1990’s as a steak being trimmed of all its fat, the economic climate created a financial calamity of bankruptcies and collapse by major airlines, which in turn created opportunity for smaller more efficient carriers with cost advantages to enter a near oligopoly industry. The economic distress the airlines industry encountered was spawned from recession and a doubling of fuel prices during the Gulf War in 1991. Fuel, the second largest cost to the industry, an uncontrollable cost that raised havoc on this industry,

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being

At the onset of the airline industry in the United States, major network airlines were the sole providers of air travel. This multifaceted industry was a difficult industry to break into as a consequence of “sophisticated customer segmentation, hub-and spoke models and costly information systems for reservations, fare wars and intense competition” (Thompson 2008). Shrinkage in airline ticket prices augmented the demand for airline travel. Many markets were simply deserted or over-looked by major network airlines; this is a region a fresh “second tier of service providers” could enter into. This endeavor proved to provide a consumer savings of billions per year. Thus in June of 1971, after a tumultuous battle with other Texas-based

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

5. How does the merger between Delta and Virgin Airlines impact the company as a whole? (Outside research required).