Like other industries, the airlines have been hit by the world depression. In addition they have had to face the enormous increase of petrol prices, the undercutting of fares by the Laker Company and, in America, the Air Traffic Controllers’ strike. Also, as in other industries, while some companies are on the verge of bankruptcy, others are still making profits. The nationalised British Airways lost £141 million in 1980 and Pan-Am is expected to lose £50 million this year, but British Caledonian and Laker Airways, and several American companies, are holding their own.
Inevitably the workers have suffered. Pan Am staff in America have accepted a ten per cent wage cut and a freeze on wage increases in 1982 and their staff all over the world, including Britain, are facing a similar demand. British Airways have announced a 9,000 cut in staff and the number is likely to be increased. All the American companies are standing workers off.
Financially hard-hit companies, under pressure from the banks anxious about safeguarding their loans, are being forced to sell assets to raise cash. British Airways is to sell its Victoria Air Terminal site, and has sold, for £80m, two Boeing 747 planes before accepting delivery: Pan Am sold its New York Head Office building for £22m; and its chain of profitable hotels for £265m to the British Grand Metropolitan Company.
Laker Airways also has its problems. It owes £130m to banks and the interest charge (payable in dollars) has risen sharply owing to the fall of the pound against the dollar. The Laker invasion of the market of the established airlines was based on the principle of offering “economy-class” travel, pruned of expensive “luxuries”, at an estimated 25 per cent below existing lowest fares, but with each plane carrying a full load, as against the often part empty planes of his rivals. But now Laker is to introduce a new transatlantic “luxury business class” with higher fares — claimed, however, to be comparable to the economy fares of other companies.
Of course the other companies had to cut their fares in competition with Laker or to offer new attractions like Pan Am’s “two seats for the price of one” to anyone who buys a first class return ticket to Miami before 30 September. Now, in face of increased petrol prices and other costs, all air fares are expected to rise. All the companies are waiting hopefully for the passing of the depression to get then out of trouble.
In the meantime the very great number of American internal services and the relatively few flights to and from America were disrupted by the American Air Traffic Controllers’ strike and the Government’s fierce reaction to it.
When a politically stable government, in full control of its armed forces and police, resolutely decides that a vital issue is at stake on which its policy and its own survival depends, it can and will take decisive action without regard to cost. (In 1921 when a combined strike of miners, railwaymen and transport workers was threatened, the Prime Minister, Lloyd George, called the leaders to a meeting and is reputed to have told them that, as the army was disaffected, if the strike took place the Government would resign. Had they considered their next move after that? Their reply is not known, but the miners fought a lockout on their own and were defeated).
In such a situation Trade Unions which contemplate “taking on the Government” can, perhaps, test the matter to find out if the Government really does regard the issue as vital to itself. If not it will quickly make concessions. But the Unions, before they act, have the elementary duty to weigh up very carefully whether the government’s position is such that it is bound to use all its powers to fight the strike. This the American Air Traffic Controllers’ organisation (like the British Civil Service Unions in their recent unsuccessful strike) signally failed to do. They may have been misled by the fact that, in different circumstances, the American post office workers in 1970 did strike with some success against the government, and equally illegally.
The Air 'Traffic Controllers “seriously underestimated the Reagan Administration’s determination to resist its demands”. The Union President, Mr Robert Poli, said in a television interview that his Union “could be accused of miscalculation. I was surprised. I didn’t really believe that they would have taken such harsh action” (The Times, 18 August 1981).
As government employees their strike was illegal and the controllers individually had signed the standard declaration that they would not strike. The government did indeed take harsh action. It gave them a short time to return to work or be sacked and cease to be eligible for re-employment in the government service. It got Court injunctions declaring the strike illegal, freezing Union funds, imposing fines of £55.000 an hour (later reduced on appeal) and putting several officials in jail for contempt of Court.
The government set about keeping the planes flying with Army air traffic controllers and the minority of strikers who returned to work, and started immediately recruiting and training new permanent replacements. The strikers received only expressions of sympathy from other American unions, though some Unions in other countries did, for a time, give help by blacking flights to and from America. Other air line staffs in America, including the pilots, continued at work.
There was chaos and hardship for air passengers for a time, mainly outside America, but by the end of August the Government reckoned that it could hope to maintain some two thirds of its flights until new staffs were trained. There was an obvious danger of air disasters, though the American pilots denied that the risk had been increased.
The American Air Traffic Controllers’ Organisation had last year supported Reagan in the Presidential election, but Presidents (like British Prime Ministers) are not in office to help trade unions but to keep wages down to a level which enables profits to be made. The Traffic Controllers came out on strike to get their average pay increased from the £22,000 a year which was on offer, to £27,000, but also to get their hours reduced from 40 to 32. This latter was probably their main concern because they complain that the excessive strain of work, and the conditions under which it is performed, undermine their health, causing heart disease and premature retirement.
One result of the strike and of the government’s action in planning a cutback of flights to 80 per cent of pre-strike capacity is that the profitability of the airlines inside America will be improved. “At a stroke it will remove the excess capacity which is bedevilling the business”.
This would boost profits because it would mean the airlines would scale back their costs to a level justified by the lower number of flights while the number of passengers and the revenue from ticket sales will stay the same.(Sunday Times 16/8/81)
This idiot’s progress of the airlines industry is how capitalism actually operates, as distinct from the smooth efficiency represented in the economic textbooks. For the workers the lesson is that there are no trade union solutions to their problems: at best they deal with effects and place limits on exploitation. Yet the unions everywhere continue their blind support for capitalism in the hopeless belief that they, or their Labour Party allies, can make it operate in the interests of workers.
Edgar Hardcastle
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