What are Scope Clauses and Why Are People Fighting Over Them?

In January 2010, nearly every single one of United Airlines' (UAUA) labor contracts officially becomes amendable. The rhetoric from both sides is bound to ramp up as we get closer, and you're going to hear a lot about scope clauses, particularly during the pilot negotiations. Why? And what is a scope clause anyway?

First, for you non-airline folks, I should explain the "amendable" piece. Normal labor law doesn't apply to the airline industry. Instead, airlines are governed by the Railway Labor Act. Under this act, contracts don't expire but rather become amendable. This is to help prevent work stoppages in an industry that is considered vital to the nation. But once it becomes amendable, the negotiations really heat up on a new contract, and it can take ages to resolve.

Usually, you hear about pay as being the hot button issue, but this time around at United and elsewhere in the industry, the pilots are really focusing on scope. So what is scope?

A scope clause is what defines what type of flying can be done by pilots that aren't employed by the airline. Historically, this has been primarily used to limit the scope of flying that the regional carriers can do under the mainline's brand name.

Ever wonder why American Eagle (AMR) has so few 70 seaters buzzing around? And why Continental Express has no jets larger than 50 seats? It's all because of the scope clause. The scope clause can not only limit the number of seats but it can also limit the total number of airframes flown by others. In some cases, there is a ratio set up so that the number of express airplanes can grow as long as the number of mainline planes grow as well.

At United, the situation is particularly acute since the airline has been rapidly expanding regional flying. For example, in October, mainline flying was down 6.8 percent while regional flying was up 14.7 percent. United recently finished retiring 100 mainline planes without a replacement planned. And just to put a cherry on top of this thing, they announced earlier this year a new partnership with Aer Lingus.

So why is that a big deal? Well, the plan is for United to market the flights as its own but Aer Lingus will do the flying. Sounds like a codeshare, right? Wrong. These will be airplanes that Aer Lingus pulls out of their own system to fly from a United hub (Washington/Dulles) to a third city (Madrid). They will staff the airline with US-based, non-union workers in order to keep costs low. This is effectively United bringing the regional model to long haul, widebody flying. So United pilots are being squeezed from both ends.

Naturally, United's employees are scared about this. They can fight for all the pay raises they want, but it doesn't help if all the flying is done by someone else. So you will see scope clauses coming front and center in the near future as these and other negotiations begin to really heat up.