Sunday, January 15, 2006

SkyWest Airlines.

SkyWest Airlines: Non-Union Success Story
Growth has accelerated rapidly over the past five years, at Non-Union SkyWest Airlines.

"In 2000, SkyWest operated just 16 CRJs, according to Raymond James & Assoc. At the end of 2004, it was up to 137 CRJs (125 CRJ200s and 12 CRJ700s), including 28 added last year of which 24 were new and four were purchased from Independence Air. It will take a further 20 CRJ700s this year, a move that will require hiring 200 more pilots. Sixty-nine Brasilia turboprops round out the fleet."

"The carrier also enjoys 'the strongest balance sheet in the Regional airline industry,' according to RJ&A. Its long-term debt to capitalization ratio was 61% at Sept. 30, 2004, compared to an industry average of 92% among its peers. Long-term debt totaled $463.2 million at year end and it was sitting on a cash hoard of $550 million."

What follows, is the official statement from SkyWest Airlines, about why they have remained union-free for 30 years, and how that fact gives them a distinct advantage over much of their competition:


Our Union Free Statement

SkyWest Airlines has been union-free for over 30 years. It is our desire to remain so. Today, SkyWest is standing amidst the ruins of a once proud industry. Our success is our people. We have accepted the responsibility of open and honest communication. We have maintained an open-door policy that enables any employee access to anyone in management, from your supervisor to our CEO. We want you to be informed. And as SkyWest continues to grow, the continued empowerment of employees through education is what will not only preserve, but improve Our Culture.

We feel strongly that the long-term interests of all SkyWest employees can be best served by maintaining our current environment of open and honest communication without adding an unnecessary layer of outside third party bureaucracy. We should not compromise the environment we have worked so hard to create. The existence of a third party will undoubtedly change the relationship that we currently have of dealing directly with one another.

And while union organizers may want you to believe they have your best interest at heart, the truth is that unions are businesses that generate money by signing up new members and collecting dues. They do not provide wages, benefits, buildings and equipment, or any other asset necessary to keep our company in business. A union can only provide its members with what a company is willing to give. The truth is that a union only has two things it can guarantee its members: its right to strike and make its members pay dues and assessments.

History has taught us that powerful unions, particularly in our industry, do not hesitate to place their companies in financial peril -- ultimately costing thousands of hardworking men and women their jobs. Understand, this is not "just a pilot" issue. Union activity affects every single employee.

Our dedication to fairness in all that we do, coupled with an uncompromising commitment to quality, truly sets SkyWest apart as an airline and an employer. We believe in treating each employee with respect. We have continued to update our policies and procedures to ensure that you will be treated fairly and consistently. By working together, we have created an environment of competitive wages, good working conditions, and opportunity for both personal and professional growth. Together we have built SkyWest; and together we can continue to build a better SkyWest for our fellow employees and ourselves.


The Legacy Airlines are at a tremendous disadvantage in comparison to non-union airlines like JetBlue and SkyWest. The managements of those non-union carriers have a much greater range of options available to them, enabling them to keep their companies on a more efficient path and to ensure they are able to continue expanding, in a consistently profitable way.

Legacy Airlines, in contrast, have so many union work-rule millstones hanging about their necks, that their managements are not only saddled with much higher labor costs, but they are also very limited in their options. Being so constrained, often induces those managements to grasp for straws, as they try to find ways to make money for their airline.

In my view, that was a significant underlying factor in United's decision to attempt to acquire US Airways, in the year 2000. It proved to be a very costly mistake; one which probably never would have been made, had United not been saddled with a pilots' union like ALPA, led by the likes of Frederick Dubinsky.

Legacy Airlines have been unable to expand into smaller markets with smaller jets, like the CRJs, because of the highly restrictive "Scope" clauses in the union contracts of those millstone-laden carriers. Following that Dubinsky model, the ALPA pilots thought they were protecting their jobs, but in fact they were only making it harder for their own airlines to operate profitably, while at the same time, handing their competition the keys to the treasury.

As long as anyone is willing to accept the idea that wealth and abundance can be produced, just by union "solidarity" forcing the employer to capitulate to every irrational demand of the union bosses----without any regard to the realities in the Free-Market Place----then union jobs will continue to go the way of the Dodo Bird. Loyalty to one's peer group is a poor substitute for understanding the basic laws and fundamental facts of economics.

Any way you look at it, the economic model of ALPA and Frederick Dubinsky and Roger Hall has been an unmitigated disaster for United Airlines, and for all the other Legacy Airlines who have tried to follow that suicidal model, which has been leading them all down the bone-yard path to the tar pits, where the dinosaurs are laid to rest forever.

US Airways is in bankruptcy court for the second time. United has been there too, for over two years. Delta and Northwest are now filing too, for the same bankruptcy protection. One cannot help but wonder if American and Continental won't eventually be drug down that same path to oblivion.

Meanwhile JetBlue and SkyWest are continually expanding, hiring and making money. Southwest is too, because so far its management has been able to persuade its unions to behave in a responsible way, which recognizes the realities of the highly competitive Free-Market. Translated-----Southwest does not have the usual kinds of featherbedding millstones in its union contracts, which so hamstring the Legacy Airlines. And fortunately, SWAPA apparently hasn't yet been cursed with union "leaders" of the ilk of Frederick Dubinsky or Roger Hall. If that ever happens, and a majority of the SWAPA pilots buy into the siren song of such economic charlatans, then the heyday of Southwest Airlines will have passed, and they too will begin the trek down that bone yard road to the dinosaur tar pits.


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