How to Fix the Pilot Seniority Mess at US Airways

CHARLOTTE ( TheStreet) -- Five years after the controversial Nicolau seniority ruling was issued, it still separates the two pilot groups at US Airways ( LCC) and continues to generate litigation.

The list resulted from binding arbitration following the 2005 merger of US Airways and America West. Pilots from the two airlines have been filing cases ever since the 2007 ruling. Last week, the US Airlines Pilots Association, dominated by pilots from old US Airways, filed a complaint in the bankruptcy court that is hearing the American ( LCC) bankruptcy case. USAPA asked the court to be sure that the former America West pilots do not block the planned merger with US Airways.

In a subsequent letter to its members, Leonidas, which represents west pilots, wrote, "Truth be told, nobody on the west is trying to stop the merger." For its part, Leonidas filed a case in U.S. District Court in Phoenix, asking for an injunction to prevent US Airways and USAPA from bypassing the Nicolau list.

As with many long-lasting legal battles, this one continues because both sides are right. West pilots say binding arbitration is binding arbitration. Few of us would want to live in a world where that is not true. East pilots argue that binding arbitration occurred under the jurisdiction of the Air Line Pilots Association, which is basically a private club, and US Airways pilots voted to leave the club.

The underlying issue is that the Nicolau ruling is unfair to nearly 1,000 east pilots. To quote USAPA: "The Nicolau award would place an America West first officer born in 1971 with 1.5 years of seniority ahead of a US Airways first officer born in 1955 with 17.8 years of seniority." Or, as an east pilot hired in 1987 told me, "Except for about 50 guys, every west pilot, even guys who were there three months at the time of the merger, would be senior to me."

Fortunately, the solution to this mess is relatively simply and could be reached if the McCaskill-Bond legislation, mandating negotiations followed by binding arbitration if negotiations fail, is followed. Those negotiations could provide fences, which could eventually expire, to assure that every pilot maintains a right to current flying. Negotiations could also take into account the reality that by 2022, about 2,200 east pilots and more than 3,000 American pilots will retire. So the problem is one that could be solved by the passage of time.

As for the Nicolau ruling itself, a few alterations ought to be made. At the top, Nicolau mandates that nothing changes for the top 512 east pilots, who were flying widebody jets. But why assume that senior west pilots shouldn't fly widebodies? They deserve the right if they want to leave a nice life in Phoenix.

Regarding active pilots, Nicolau slotted pilots from the two airlines according to relative seniority. This is the only section of the ruling that is dramatically unfair and should change.

As for the 1,700 east pilots who were laid off at the time of the merger, Nicolau put them at the bottom of the list. That conforms to precedent. But perhaps their active duty time, rather than their date of hire, could be considered in compiling a new list.

How did the Nicolau award come to be? First, arbitrator George Nicolau viewed US Airways as a failing airline because, at the time of the merger, it was in bankruptcy court. But he did not consider that America West was also on shaky financial ground. Also, several non-pilot sources involved in labor relations have said that Nicolau threw up his hands because east pilot leaders refused his invitation to negotiate their unyielding commitment to "date of hire" seniority. In a sense, they abdicated their responsibility to represent all of their members.

Various courts have issued rulings in the cases that have followed the ruling. The most important one, from the highest court involved so far, was issued in 2010 by the Ninth Circuit Court of Appeals in San Francisco. About 99% of the 31-page page ruling makes the point that the seniority issue was not "ripe" because no one had yet been damaged by it.

But in two places, the two-judge majority of the court's three-judge panel considers the possibility that the Nicolau award may not apply. In one section, the majority writes: "USAPA's final proposal may yet be one that does not work the disadvantages plaintiffs fear, even if that proposal is not the Nicolau Award." Also, in a footnote disputing the single judge's dissent, the majority writes: "We do not address the thorny question of the extent to which the Nicolau Award is binding on USAPA. We note, as the district court recognized, that USAPA is at least as free to abandon the Nicolau Award as was its predecessor, ALPA. The dissent appears implicitly to assume that the Nicolau Award, the product of the internal rules and processes of ALPA, is binding on USAPA."

Again, the central point of the ruling is that USAPA can do what it wants, as long as it seeks to represent west pilots as well as east, until it can legitimately be sued, so it is not possible to ascertain what the full court's final decision might be.

In talking and emailing with hundreds of east and west pilots, I have never communicated with a single person who does not expect his or her view to prevail in court. But someone has to lose in court. In a negotiated settlement, fences and retirements and basic fairness could protect everyone.

-- Written by Ted Reed in Charlotte, N.C.

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