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How Not to Negotiate: Continental and United Pilots Boldly Ask for the Moon

By Brett Snyder

Updated on: August 31, 2010 / 4:36 PM EDT / MoneyWatch

It wasn't long ago that I wrote about how important so-called "scope clauses" would become in the pilot integration at the combined United and Continental. A scope clause determines how much flying can be done by pilots outside the organization, and there was no doubt there would be a battle here. The pilots have now decided to stake out an extreme position by proposing to end outsourcing completely.

They know this isn't going to happen, but now it's time to negotiate. Trouble is, it's a terrible tactic that's likely to backfire on the pilots.

The pilots have laid it on the table by saying that they want all outsourcing to end so that everything can be flown by United (UAUA) and Continental (CAL) pilots. This would be no small feat. Combined, United and Continental operate about 700 airplanes, but they have roughly 550 more airplanes that are operated by nearly a dozen different regional providers. This just isn't going to happen.

And the pilots know it. Jay Pierce, head of Continental's pilots union, said "It's a proposition we believe will not be readily acceptable [to management]." So why bother?

Well, the pilots have apparently taken a page out of my playbook when I was a three year old. I used to ask my mom for 100 cookies. The expectation was that I'd probably only get one if I asked for a cookie, but by anchoring her at 100, I figured I could squeeze two or three out of the deal. That's exactly what the pilots are doing here.

The problem is that I just can't see it working. When you're talking about cookies, it's not a big deal. In fact, I'd recommend this strategy to kids everywhere. But in this complicated negotiation, I don't see how it helps the situation.

The pilots know this isn't going to happen, but by trying to anchor with an extreme proposal instead of coming to the table with at least some sort of effort at compromise, it instantly sets negotiations off on the wrong foot. Even worse, it may very well unrealistically set expectations for the rank and file that this might be possible. (I like to think that pilots are a lot smarter than that, but you never know how this will be received.)

I have no doubt that the pilots have come down with competitive wage rates, but as in any negotiation it's never just about wages. Benefits are an issue as well, but the biggest issue of all is what I call the marriage problem.

Think of outsourcing in terms of relationships. United/Continental and its pilots are effectively in a marriage. Meanwhile, United/Continental and its regional providers are shacking up. (It's a little different since Continental owns its main regional provider's planes, but let's go with this.)

In the marriage, United and Continental are bound to their pilots tightly. They can't just go and replace their partner here without some serious pain. (And as in all good marriages, they shouldn't be looking to replace each other either.) Meanwhile, with regional providers, they can walk away and find someone else to shack up with. All they have to do is give back her DVDs and toothbrush. It's an easier split.

Regional providers give United/Continental flexibility in many ways. If wages start to creep up to an unsustainable level, United/Continental can walk away and find another partner that will do it for less when the agreement comes up for renewal. If it has too many airplanes, it can just walk away from that partner when the term is up. It's not a lifelong commitment here.

There are, of course, a lot of good things that come from deeper commitment. You arguably get a better product from people who work for the company and care about it deeply. It's easier to meet standards and deliver consistent service. That's why I actually prefer the in-sourcing model myself in a customer service business.

But airline management teams haven't shown that same level of interest. For them, money rules the day and it's just cheaper to work with a regional provider. Regionals can put out a product for a lower amount and have tremendous pressure to keep those levels low or risk losing the contract.

So, right or wrong, this proposal is unquestionably not going to happen. I'm afraid it will simply end up poisoning the atmosphere at the bargaining table. That's not a good way to renew your vows.

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Photo via Flickr user GenBug, CC 2.0