While the start of ‘open-skies’ flights between Europe and the US – the result of four years of arduous negotiations between the two parties – began end-March, two consolidation dramas were playing out on either side of the Atlantic. While both the Northwest/Delta and Air France-KLM/Alitalia merger talks would clearly have benefited the hugely fragmented air industry, both have exemplified the stunted mentality that continues to be a ball and chain around the ankles of the air industry.
There can be no disputing the absolute need – dire need in the case of the US carriers – for a hefty dose of rationalisation. The industry, as painful as it might be for some carriers, needs to embrace the free market environment like a pair of love-sick teenagers. And as much as at least some of the industry may share that desire, misguided and protectionist politicians, self-serving unions and a dusty international convention stuck in perpetual time-warp all conspire to play Victorian chaperone in frustrating that ultimate embrace. In the case of the US carriers, the process was derailed by the inability of the pilots’ unions to reach an agreement on the seemingly simple issue of combining their seniority lists.
While it’s tempting to think of it as a loathsome aspect of unionised labour relations, the concept does have serious ramifications for the pilots in terms of what routes they fly, how much they’re paid, etc. But it does, never-the-less seem a shame that the pilots’ unions could not exhibit some degree of flexibility to help ensure the health of not only their companies but the industry as a whole, which by the way, ensures the viability of their very employment.
But, even if the pilots had agreed, there was no guarantee that the evolving political scene in the US would be amenable to such a move. It’s not clear how such consolidation would be viewed by either a Democratic or Republican president, but if history is any clue, inevitably politically-induced myopia would likely obscure the far more important issue of improving the health of the US airline industry, which ultimately benefits consumers.
Meanwhile, on the other side of the Atlantic, negotiations for a take-over of Italian carrier Alitalia by the Air France/KLM group – itself a prime example of a successful consolidation in Europe – has not faired much better in terms of the union and political environment. Plans to cut up to 2,100 jobs at the Italian carrier – which is losing about one million euros a day – were greeted with a predictable opposition, forcing Air France/KLM to waffle on just how many jobs would be cut.
Similarly the suggestion that Alitalia’s cargo division would be dissolved went over like a lead-balloon forcing another bout of backtracking in which the “definite choice” to close it down, quickly became only an “option”. Negotiations with the unions are still ongoing and the Franco-Dutch airline has stated clearly it will not take control of Alitalia, in which the Italian government holds a 49.9 per cent stake, without union agreement and the blessing of the new government to be elected April 13-14. This may mean a quick scuttling of the entire process should opposition leader Silvio Berlusconi win the premiership for a third time. Berlusconi has repeatedly said he will kill the deal if he comes to power.
And so, all we can do is sit back and watch the drama unfold like some second-rate, day-time soap opera, thanks to the self-serving unions and politicians. In the final analysis, the airlines, their employees, the industry in general and consumers would be far better off if less time was spent protecting vested interests and more on finding constructive long-term solutions to make the carriers and industry healthyand sustainable. But, some things never change. – Donald Urquhart