Akkam’s Razor

The central argument that the Supermarket industry used in contract negotiations last year in California is that their insurance costs were too high for them to compete with Walmart. Mind you, unionized supermarket employees have pretty good benefits. So, industry wants to push their expense on to workers. That has a chilling effect on the rest of the supermarket industry, which will eventually make the jump to other industries.

You are going to see the same thing happen with the airline unions. They (United and USAir) are crying poor and using bankruptcy as leverage against unions and their contracts. Basically, if you don’t agree to concesions, a BK judge could nullify the contract.

The problem with all of this is that the problem is managements, not the unions. For some reason, some airlines are doing OK, particularly Southwest. They had the foresight to buy fuel futures at a low price, rather than getting it at market prices. Although healthcare and pensions are a concern (wonder why no one is worried about THAT unfunded liability?), the leading pressure on airlines financial statements is fuel costs. What happens once things return to normal after the workers have made their concesions? Anything?

At this point, as a taxpayer, I am unwilling to consider subsidizing the airlines. Although USAir is a major employer in my region, and it will cause hardship on my neighbors, we are only delaying the inevitable.

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