Collective Bargaining at Magic Carpet Airlines: A Union Perspective (A) (A case prepared by Briggs & Ross 1997 published by Midwest Society for Case Research)

Airline business expands more these days not only to the elite star alliance flights but also to the low cost airlines and small airline companies accommodating the middle income customers which has more volume of passengers during travel pick seasons.  Though the positive result of easy air travel is in our society now, several negative business problems arises in the midst of the airline business “boom”.  

As to the case of “Magic Carpet Airlines” the company operates 12 cities in US by 1987.  The company further purchased River City Airlines which resulted to a national airline operation of Magic Carpet Air.  The company enjoyed the merging of the two companies were by some renovations like painting jobs for the airplane boost the company’s business confidence nationally.  As the business merging operation prosper, labor management on the other hand confuses the labor union as to who will be in-charge in some merged work positions.  The League of Flight Attendants (LFA) has the big participation in the negotiation towards the company knowing that the LFA is the recognized body of the workers towards the company.  Several revisions are to be met by the company for the job satisfaction grievances of the union.  The company believes that the success of the new merged airline company is relying from the positive business unity between the two airline personnel.

PROBLEM:

As the two companies RCA and MCA are in their merging status, management dilemma between the two companies creates a havoc initiated by the labor union.  The company has to revise the contracts of the workers as to the new policy of the merged companies.  The late and recent contracts varies from favorable to unfavorable and vice versa creates confusion between the RCA & MCA personnel. The new management must adhere to the clamor of the union granting the bargaining agreement being executed are all new since the two companies are merging.  

Furthermore, objectives must not be bias towards the company only or towards one group of personnel union.  The objective of the negotiation is to have at least a lasting negotiation contract between parties.  Specific problem being mentioned in the survey is raised by the union regarding the “Duty rigs”.  The union is asking to permit the flight attendants to have pay during duty rigs.  Duty rigs “is by paying the attendant a fixed percentage of the period of time he or she was on duty with the company” (Lewicki et al. 2010 p.631).  Even if the flight attendant is off the tarmac but the attendant is on duty then he or she is paid for his/ her duty time.  From the result of the flight attendant survey 47% are having concerns in terms of their duty rigs next to seniority protection issue.

Collective Bargaining Explained

Theory:

Based from the reading of the class, (Reading 3.13) p. 229 believes to be a useful negotiation strategy knowing that the negotiation issue rely from the union or a team.  The company is not dealing with one personnel but a body of personnel represented by the union.  In this case, teams are represented by the company top management and the union.  Both teams, the company and the union can utilize the three main techniques in thriving a conflict.  One, is seek familiarity, not friendship, discuss differences in advance, and assign roles and responsibilities. (Program on Negotiation newsletter at the Harvard Law School www.pon.harvard.edu 2009 pp. 5-7)

As to the recent reading of the class, Decision making biases can also be applied to the case problem (Reading 2.2) p. 125.  Amos Tversky Prospect theory covers the framing and loss aversion, Risk Seeking, Source dependence, escalation of commitment, and overconfidence. (Trevis, Connelly, and Laszlo 2008 pp.113-119 Kelley School of Business.)

On the contrary, under the International law covering the International employment law, collective bargaining and union activity must apply the National Labor Relations Act of 1935 NLRA or the Wagner Act (Reference case Becknell v. Board of Education 2008 US Dist. LEXIS 35075 (U.S. Dist. Ct. E.D. Ky. 2008, Keeton v. Flying J, Inc. 429 F.3d 259 6^thCir. 2005)

CONCLUSION:

As the case reveals the endless argument between the two parties. The objective of the union and the company must be realistic as to the long range revision of the collective bargaining agreement.  In such manner, collective bargaining needs to be revised from time to time but avoiding frequent revisions will avoid unstable management of personnel.  A good agreement between parties must last at least longer than the recent dilemma of the case.

Case Reference:

By Peggy Briggs and William Ross, University of Wisconsin-Lacrosse Annual Advances in Case Research Copyright 1991

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