Airline Industry

In the wake of a sizable slump in demand driven by the confluence of economic downturn, terrorism, war, and disease, as well as increased competition from low-cost carriers, many incumbent U.S. airlines have been attempting a fundamental restructuring of their operations. Arguably, a central element in this restructuring involves labor contract negotiations. Yet, even before the events of September 11, 2001, observers perceived strains in the industry’s labor relations system, claiming that contracts were taking longer to negotiate, rank-and-file rejections of tentative agreements were more frequent, and job actions were on the rise. Not surprisingly, then, calls for reform of the Railway Labor Act—the law that has governed airline collective bargaining since 1933 have gained momentum. Recent work has demonstrated that carrier-level differences in the duration of contract negotiations are associated with the quality of the labor management relationship and, consequently, with airline productivity, customer service, and profitability. Although the mechanisms of cause and