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271169 �,�`�' '-? �,�a G ITY OF SAINT PAITL � �� "�.eoa a■.■aba■. OFFIGE OF THE MAYOg ���ep�r 34Z GITY HALL SAINT PALTL, MINIVESOTA 55102 (612) 298^4�323 GEOAGE LATIME2? MAYOA May 11, 1978 T0: COUNCIL PRESIDENT ROBERT SYLVESTER� MEMBERS OF CITY COUNCIL FR: MAYOR GEORGE LATIME RE: NORTHWEST AIRLINES S IKE I have been contacted by W. Patrick Reaves and requested to join with him in signing a petition to halt the flow of Mutual Aid Pact funds to Northwest Airlines. I believe that the receipt of these funds by Northwest does not provide the necessary incentive for meaningful labor negotiations since it allows Northwest to sustain the strike by main- taining a profit. At the same time, the strike is having a detrimental affect on the region' s economy. It is my understanding that the legality of the Mutual Aid Pact is currently in question and the subject of hearings before the Civil Aeronautics Board in Washington, D.C. Therefore, until the legality is determined, I support Mr. Reaves ' position that Mutual Aid Pact funds be suspended in order to promote legitimate labor negotiations . Due to the urgency involved, I have agreed to sign the attached petition. However, I don' t wish to act alone on this matter and ask you to consider adopting a Council Resolution to further support this position. CC: W. Patrick Reaves City Clerk � City Attorney ��f� 1�ttachment ��`� 1� S,�EN�� G`� p�v�S�ER � � GL:e j t C'��ER� �� - O . �'�� � �� UNITED STATES OF AriERICA CIVIL AERONAUTICS BOARD WASHINGTON, D.C. - - - - - - - - - - - - - -x . IN THE MATTER OF � Agreements CAB � z�l.�.5, et al. MUTUAL AID PACT : INVESTIGATION DOCKET N0. 9977 . . . - - - - - - - - - - - - - - -x (Renewal) REQIIEST FOR SUSPENSION OF ALL PAYMENTS AND TRANSFERENCE OF REVENUE BETWEEN CARRIER MEMBERS OF THE AMENDED MUTUAL AID PACT PENDING BOARD DECISIONS ON RENEWAL APPLICATIO1d AND EVIDENTIARY HEARINGS MAYOR GEORGE LATIMER � Wjj,MER PATRICK REAVES - CITY OF SAINT PAUL Route 2, Box j26 347 City Hall Rockford, Minnesota 55373 Saint Paul, Minnesota 55102 (692) If.7?-5555 (612) 298-4323 May 11 , 1978 � . � . , ;. . _ • TABLE OF CONTENTS Pa�e , i . Preliminary Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. � I. Since approving the �Amended Pact for five years, Labor disputes and Air service disruptions have increased substantially, requiring a respite pending final Board actian. . . . . . . . . . . . . . . . . . . . . . . . 4• II. Pact Carrier Members do not suffer " full economic consequences of a strike, burden non-striking Carriers, and negotiate un£airly as a result of the unbalance of power. . . . . . . . . . . . . . . . . . . . . . . . . 5. III. An Administr&tive restraining order is needed to prevent economic damage to other than struck Carrier Pact Members. . . . . . . . . 6. The impact of Mutual Aid Pact Payments that were a percentage of losses of Pact Members in 1975• • • • • • • • • • ?• IV. An Administrative Order is needed to prevent economic damage to the Public. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '10. Appendix A Appendix B Appendix C - Affidavit of Notification . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 11 . Statement of participation . . . . . . . . . . . . . . . . . . . . . .: . . . . . .. - 11 . . . , . . . . UNITED STATES OF AT��RICA CIVIL AERONAUTICS BOARD - WASHINGTON, D. C. ----------------------------X � IN THE MATTER OF , Agreements CAB I�IUTIIAL AID PACT ' 21l�1+5, et al INVESTIGATION . DOCKET N0. 9977 . ----------------------------X _ (renewal) r REQIIEST FOR SIISPENSION OF ALL PAYMENTS AND TRANSFERENCTy�OF REVENUE BETWEEN CARRIER MEMBERS OF THE AMENDED. MUTUAL AID PACT PENDING BOARD DECISIONS ON RENEWAL APPLICATION AND EVIDENTIARY HEARINGS PRELIMINARY STATEMENT • The rule forbidding judicial restrair�tts of pending admini- • � strative proceedings is especially in force where a full and adequate judicial review of the decision of the agency ia pro- vided for by statute.Also, to obtain judicial relief before the prescribed .administrative remedy has been exhausted, have • been held to be contrary to the long settled rule of Judicial administration. A litigant is required to exhaust the adminis- �rative remedy and must depend on that agency to exercise the utmost caution concerning the interest of all parties involved and effected by a pending decision. Where a statue is not so obviously violated, or that no sacrifice or total obliteration of a right which a legislature has created to protect the inte�- est of indivivals or the public is involved, then it must fall upon the � administrative agency itself to effect its own relief _ in questionable cases before it until final litigation is re- solved. 1. � , ' _ . . Irreparable injury is usually considered to be a ground for injunctive relief, and continuance of the Carriers operating ,i� under the amended Mutual Aid Pact to cause irreparable injury to their employees and effected labor groups is not an impossi- bility. Therefore it would not seem unusual for an administrative a�ency to parallel�` a judicial form of injunctive relief with the mandating of the status Quo. This should be especially true where a preponderance of evidence has recently emerged . that shoizld be evaluated to determine the Mutual Aid Pacts � effect and injury to thousands of commercial aviation employees,the Public, labor groups, and the Airlines themselves. The Carriers have requested that the Board approve renewal of the Amended Mutual Aid Pact, and insomuch as the expiration date of February 27th, 1978 has passed without approval while . request for full evidentiary hearings are pending, damage from prolonged strikes may be avoided if s suspension of Mu�ual Aid Pact benefits is granted. This suspension is asked to . alleviate �damage_�to the public and the Airline employees, and to encourage the Pact Members to negoiate in a neutral atmos- phere existing before the 1958 Mut..ual Aid Pact approval. Suspension of Pact benefits and the transfer of Revenue by Pact Members are necessary for the following reasons ; 1 . In the past, all applications for renewa� of the pact have been approved, or the payment , under �he provisions of the Pact increased. With evidence and arguments to be introduced, and the large volume of evidence forthcoming in requested hearings in oppasition to renewal � of the Pact,, it would be in the Public in- terest to exercise caution and grant relief in the form of an administrative injunction to pr�hibit ftzrther'-�se 'af� the �act until the - � . � �.Board has rende'red a final .decision on renewal. 2. To prevent damage to the Airlines, employees, and the public convenience, immediate relief from the Pacts effects are required because five of the member carriers of the Pact are presently involved in application for mediation, mediation under way, or a recession of inediation in their labor contract negotiations. Member 2. . � � r . . . . . , _ . . . . . , . . , . . Carriers currently in direct negotiations involve six carriers negotiating seven contracts. These two facts indicate that four of major trunk carriers could be in- . involved in revenue exchange under the Pact this year, and five feeder carrier me.mbers in direct negotiations could gravitate to the posture of utilizing the Pact �payments • WITHIN ONE YEAR. The threatened use of the pact on negotiations is de�rimental to fair and meaningful negotiations and is clearly an upset of the �bQlance of power between . labor and management in light of curr•ent Federal laws governing negotiations. 3.- Section 705 of the Administrative Proeedure Act (amended by act of June 5th,1967, Public Law 90-23, 81 St�t. 5!�) , entitled Relief pending review, states that when justice so requires, it ma.y "pospone the effective date of action taken by it, pending judicial re- _ _ , view". The postpanement of the operation of Pact obligations by member carriers is in the publics best interest, especially in light of a past renewal date by the Board pending review. An order restrainin.g Pact � members from exchanging revenue under the pact would be, at a minimum, fair, in the face of evidence that the Pact can and did place upon the public much harm and inconvenience with an undue and excessive interuption of Air Service. .3• . � . � . � � . � . . . . � '. . . ' - . ' . .- . ^ . _ ' . . I. � SINCE APPROVING THE AMENDED PACT ' � FOR FIVE YEARS, LABOR DISPUTES AND AIR SERVICE DISRUPTIQN HAVE �� INCREASED SUBSTANTIALLY, REQUIRING A RESPITE PENDING FINAL BOARD ACTION Since. order no. 73-Z-110 (February 27,1973) aPProving tYie amended pact for five years, eight carriers as meml�rs of the Pact have been involved in 52l� days of strikes, with a total exchange (estimated) of approximately $ 261 ,692,000. in pact revenue. (see appendix A) Over a five year period � this amounts to one ar.. more of the pact carriers under a strike posture 29� of the time. Since 1969, the year Pact paymenta were approved to 50� initial].y, an additional �b35 days of strikes can .bg_added to the above total, with an additional $ � 34,185s000 0� revenues exchanged. Since the Mutual Aid Pact, the traveling public has suffered 6L.+. major shutdowns over labor disputes lastin� an average of 37 dags. Prior to the pact, strikes averaged about 15 days, and were generally of the type that were of �'long duration" to gain basic rights and benefits in a developing air industry. The bureau of labor statistics showed that the average length of airline strikes was 19.7 days during 1958-1968, but more than doubled to an average of 51 .8 days during the 1969- 1974 Period when Mutual Aid Pact benefits were escalated to their present high levels. (see appendix B) It is apparent that the carrier members of the pact were willing to sustain a strike posture, with full lrnowledge of its inherent harm and inconvenience to the public, with such reserves of revenue still payable to them via pact payments. Two of the Carriers in the pact , Northwest and National airlines, have accounted for a large share of the strike days within the industry. Northwest, with a poor mediation record 4- . . � � r . . . � . � . -, . . _ . � � : , - � of seven strikes resulting from eight mediation attempts : (this includes the present 30 day cooling off period follow- a release from mediation March 29,1978 by the Natianal Mediation Board with a strike dead7.ine set for April 29) , has had the longest s�rike in 19?0 of 163 days, with a total of 261 days of strikes since 19?0. National holds the record number of days on strike with a total of 3!}1 days since 1970. With Northwest within a cooling off period under the � provisions of the Railway Labor Act of 1926, and a strike imminent, an order restraining the Pact carriers from transferring revenue under the provisions of the pact is of utmost importance and timeliness to protect the travel- public from economic harm and extreme i:nconvenience. II. PACT CARRIER MEMBERS DO NOT SUFFER FULL ECONOMIC CONSEQUENCES OF A STRIKE, BURDEN �NON-STRIKING CARRIERS, AND NEGOTIATE IINFAIRLY AS THE RESULT OF THE UNBALANCE OF POWER. In 1965-1975, the corporate rate of return for all major II. S. carriers showed substantial profits in spite of long shutdowna far struck carrzers. Northwest Airlines, in 19?0, with a six month strike showed a 9.6� rate of return. In 1972, after drawing almost fifty milliora. dollars in MAP aid, Northwest still returned 1.�..6� even after a three month strike. ATa-�ional, with its six month strike in 197l�., returned 10.0�, and in 1975, returned 7.3� . See Appendix C. TWA suffered a strike in 1973 of !�l�. days duration and returned 2.8�. American Airlines had a strike lasting three weeks in �9?!.� and- ret�rned l�..b�. These are examples of almost normal profits even in years after the fuel embargo when expenses were higher than ever before. Corporate returns and profits remained normal even though work stoppages of up to six months occured. , Utilizing the Railway Labor Act to delay the completion of signing of a contract, with a profitable situation still 5. , . - : . possible af�er a fa�lure to negotiate meaningfully results in a strike, gives the pact members little incentive to expeditiously and fairly conclude a contract. A carrier, drawing up to 50� of its operating expenses based on last years revenues, plus windfall profits, could definitely see an advantage in sustaining a strike for a certain duration in a year of declining revenues to show a profit. Traditionally, a strike is harmful to all parties con- cerned, especially the employees and the communities involved. This is also especially true in remote areas often served in large part by one airline. In the past, before the pact, labor and management exerted every effort to avoid a strike. But is seems difficult to ignore the heavy increase in strike events and duration since the founding of the pact. It is evident that struck carriers sit back and delete service to the public to draw often profitable pact payments. The real power lies in an ability to take a strike without either immediate or long range `economic harm to the capital structure of the carrier. With tlli.s ability intact through the pact, a clear unbalance of power has emerged , and can only be relieved through an adrainistrative restraining order iriatructing the pact to cease payments until a final board deci�ion on renewal can be effected. � III. An Administrative Restraining order is needed to prevent economic damage to other than struck carrier � pact members. Of the total of 28l.�, million dollars transferred through MA,p payments up until 1975, two airlines have received 57� of the total amounts. Northwest and National received 162 Million dollars and of course, they were also the carriers that have suffered the longest strikes, were the most financially able, and in the case of Northwest, had a maderately non-competitive route system. The Carriers who dealt with their labor problems successfully however, were the losers, for they had to pay the substantial Pact payments often to their own detriment. 6• - • . . .. _ � . , � In 1975, 115 million dollars chan�ed hands in I�LAP payments alone amoung its 15 members. This was nearly 30� of all MAP payments ' � paid since the Pacts creation. National Airlines received $54 Million during its 139 day stewradess strike , which increased its MAP receipts to a total of $121 ,161 ,000. This put National $425 Million ahead of Northwest Airlines in total MAP payments. Therefore, National, which had paid in the lowest amount into � �P payments, is the leader in net gains from receipts from MAP. Its total gains are $121 Million. � The losers bore the hardship of the payments at the same time,however. IInited Airlines paid the largest share of all MAP payments primarily because its route structure encompasses almost the entite IInited States, thus making it liable to � "windfall" profits to almost any carrier Pact member struck. IInited paid out over $91� million total in MAP payments, but in 1975 found itself in the unique position of both paying and receiving MAP payments because of a 16 day International mach�- nist Association strike. It paid $1 ,538,000 out and received $1�8,OOO,Q00 that �ear. In tlze post 1969 period, when the Pact payments were raised to t�neir present high levels, National and Northwest had received $221 .l� million , or 55� of the $400 million paid since the amendments took force. This does not include the present payments . being forwarded to Northwest airlines during its pilots strike of 1978. P� �, in a financially weakened position9 . had no strikes and drew no payments. But as a percent of 1975 losses, Pan Am loss $1.�6 million and paid out $11 million in MAP payments, or 25.2/ of its losses were MAP payments. � The impact of losses and the percentage of those losses that were MAP payments were �as follo�rs : year, 1975 100% 98.7� 85•5� 80% 60I 40% 48.8� �5.� 2� .7� 20�b � t i 0� Eas ern Pan Am TWA American Continental 7• ' : r . � � � . � - In 1975, of the years top contributing carriers, three have been in financial trouble; Eastern, Pan Am, TWA. Those carriers lost $182.1 million, and included in that loss was $5�.6 million paid to other MAP carriers. In Januray, 1977, Pan Am withdrew from the Pact. The Air Transport Association (ATA) testified at the October, 1975 hearin�s that the Pact is a tool that protects � them from permanent damage financially, but had little response when testimony was brought forward on how the employees of Pan Am, TWA, and Eastern, took wage reductions to help their Airlines out of financially bad times, much as a result of payments to the Mutual Aid Pact by their carriers. With deregulation legi�'lation pending and most major airlines _ attempting to reduce their fares as much as 50� in a new Adminis- tration attempt to encourage competition, it is important that all Mutual Aid Payments be suspended to prevent damage to Pact members until all hearings are complete and a final decision is rendered on the Pacts continuation by the Civil Aeronautics Board. IV An Administrative Order is needed to prevent economic damage to the Publico The public suffers a loss in both services and revenue from taxes and salaries when a Pact memb�r engages in a strike of long duration while drawing large MAP payments. This is especially true over relatively non-competitive routes. An example of this effect is the financial chaos levied upon States served by Northwest-Orient Airlines through the midwest comprising Montana, North Dakota, South Dakota, Wisconsin, Oregon, Washington, and PZinnesota. All these States suffered substantially through strikes by Northwest Airlines since 1966, with Northwest being one of the highest MAP payment receivers. In 19?8, the Civil Aeronautics Board had to give emergency relief to those states to a certain extent by certifying North Central Airlines to operate along those routes during the 1978 Pilots strike. 8. . � . � . ' . . .� _ : : . � � , Little relief can be given to an entire area however, for a replacement Airline cannot be diverted or created overnight to the ; stricken area. Airlines operate on optimum costs curves with little or no excess equipment to spare due to high costs. There-b the fore if service to an area is stopped due to a strike prolonged y Mutual Aid Pact payment�, the public sector simply suffers until the strike ends. North Dakota estimated it lost over $3 million daily during the 1975 Northwest strike lasting three months. Car$o space for large equipment is presently not available to Minneapolis during the 1978 Pilots strike, and cargo in general is backlogg�d two to t�.ree days on other available carriers and charters for normal shipment sizes. This economic loss is augmented by a total revenue loss to Minnesota through salaries, Taxes, and as�saciated industry income by approximately $75 million a month. This sort of eeonomio damage can be reduced or prevented if an administra�ive restraining o�der is issued to halt all Mutual Aid Pact payments until final hearings are complete by the Civil Aeronautics Board on sustaining the Pact. This suspension of Pact payments will also encourage the Airlines involved in MAP payment collections to bar�ain meaningfully to end a st�ike by restoring the management-Labor balance of power. 9. . . - . � • .. . Conclusion For the foregoing reasons, the Board ahould order suspension of all payments. and transference of revenue between Carrier Pact members of the Amended rlutual Aid Pact pendin� Board decision on renewal applications and Evidentiary Hearings. - Respectfully submitted Wilmer Patrick Reaves Rt. 2, sox 326 Rockford, Minnesota 55373 ; (6� 2) 477-5555 ' � Mayor eorge Latimer City f Saint Paul 347 City Hall Saint Paul, Minnesota 551Q2 (612) 298-4323 I�ia� 11,1978 10. " , r . __ y STR�S ON MUriTUAL AID PACT ' � CARR.IE�tS AND EST��I�,TID , PAYMENTS (000) s�tcE 1.g69 �NDMF.NTS ►W�a7 QY.1:l.i1 3V 1JA-LS . . . - Airline and � . Estima.ted ye� � Receipts Union Duration ___.__ 1970 Ra�o9 6 A� 107 . �� � ) , 197� Northwest HRAC . 163 ($�+7,268) . . 197a-'T�- Mohaw:� ALPA ' 15�* � (�6�582) � 1971 � Sta�h es Airwest AMFA 116 . ($$,�'23) 1972 Northwest ALPA � . 95 � - �$�+3�926) 1973 oza�rk82 AMFA 7� - (� �5 ) 1y73 - �wA � Az.sS�,i � ; �$?���3� . � � Io8 - ; lgj1� ` National � � � ($�+3,027) � l�j,l�._75 Texas Int t l. . ATFA 12� . � (�u�5��� . 19'T5-?6 i�tationzl ALPAJAFA - • 126 ($5�,200) . ; . , ; i OTHER STRIKES � I 197p - Tt�TA Al.ss�i ' 2 . � �$2���� • . . � 1 � � l�PPEPIDI� A . . ., ' _ ' . r , - . -- . �'����� �.irline and Estimated Union Duration Year Receipts ____�— ALPA 1 i 197�+ ��b�� : 3 � 1975 Northwest �A ' , ��2,800) �: . I� ° 16 � 1975 IInited � (�1-�$,000) t � i'2 (�. 1976 �A� ; �$1,900) : ALPA 2� ► 1976 Continental . . ! ($16,000) , , � Mohaw� became eligible �or Psct membership a..fter the stri�e _ began. _ - Sources: 1�TYMB Re�orts, CAB reports and other available sources. Di��erent agencies de�ine strike duration dif�erent].,y, but variables are not si�3-fican� �°T P�Poses of this submissi�. p ents for strikes since the 1971 haarings are est3,ma�ed. � ' . . . , APPENDIX A � _2_ - . , . .. _ -. - • l , AVERAGE DURATION OF AIRLINE STRIKES (Days) , 1958-1968 MAP Phases 1, 2 1969-1974 MAP Phase 3 source : Civil Aeronautics Board Eligible non-MAP all MAP all non carriers carriers carriers MAP Carriers � 1958-1968 28 27 29 '17 1969-1974� 70 83 L�. 12 The Mutual Aid Pact causes longer strikes in the Airline Induatry. The Air Transport Aasociation, which represents most 'U.S. Air- lines, voices its popular argument that since 19l�b, the average length of strikes against non-Pact ��arrs.e�s`"has been 1.�.3.6 days compared to 38.5 days for Pact members. ATA fails to point out that the Pact was not established until 1958; therefore, inclusion of pre-1958 strikes is as misleading as it is erroneous. The average strike length was 28 days during the 1958-� 968 period, and then jumped to 70 days for the 1969-1971{• Period, or an increase of 1.�2 days with the amended Pact rules and increased payments through the Pact. In looking at the non-Map carriers which were eligible to join but chose not to, the average strike len�th was shortened (rather than lengthened) after 1969 to an average of 12 da9s from the pre-1969 average of 17 days. � Not all carriers are eligible to join �.�. 1964, the year Pact benefita were raised to 50J initial operating expense levels at the offset of a strike APPENDIX S � _ � • . . — - . .r� r - ^--�--�---"--- ..c.....e... .. - _� . . ....-. .-- - � - ... .. . �`l' � � � .. . .. . . . � � . . . :t ��` ry ��. l J ' I •• � ` • . �. . r �• u f..'rs , .� � l .i '� _ .� �v� V O C'7 r' '� IC? ��C'� � � �O �� . . ... • � , ',,��= ' ;� � — s � c 2°� ( c�i cv o r �i tv si �ci ui ,o c�i . F .. , . . �* ' •!1 � ^ 7 ti � !�' . . .. . - � . .R� ^.w� 4 y•�y � . 4 *}„`- � �`./ � � l. � �� . t.� - . . . :,�r f 1 ..�• " .. - Q ... - CJ v ���"' '�` _ ,r .�4�+ . -�_ _ . , � ' � L.. 1�... . a V '7 � w '.G 1� ' :. .: .. 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O ..: - "' p � �e- r- �- r- � r- s- r a- � � � � �'.i > : .� + � ro � O � � ~ �• � • Q ' - c� }�--}~ �� k � - ` � Z . 5�.: � _ w C CL co � ' : • � � `° _° ,�e r -- :� ; � . �.. � $� , i �� , APPENDIX C ;� `� � � ; y �.� ' --- ---- -��_�- -- _.. _..... _..�_ —___-- _ � �'j '.y��l�p ,,•_ � ; i%�^-! � 1 __ �f' S�`'i;+�. �<'1ry.?t � -a. . �� i - _—. _ —- - '----' — _.. -"--= �_ ':�:s�}a- ?!�,�'°;y�x,,'. ��_ � - _. . -�-- � - �_��_ . . . . ... � . . . . r..�.. �kk• . '__._'._. - . _ ' _'" . . __.. _.. - . . - . . . � 5i" .. . . . ` . , � � �' . . . . . . . • - . ' . . . . � . . . � . . . . . . . . ♦ . _. �. • . .. . . . " '-�, . , AFFIDAVIT OF NOTIFICATION ' I certify that I have forwarded notice and copies of this document to the following parties : Charles H. Miller, Councel for the Applicants Covington and Burling , 888 16th street N.W. Washington, D.C. 20006 Wm. G. Mahoney HighsaW, Mahoney & Friedman Suite 210 1050 17th street N.W. Washington, D.C. 20036 � Martin C. Sehan, Counsel for IAM and Allied Pilots Assoc. Surrey, Karasik, Morse end 3ehan 500 f if th avenue � . New York, N.Y. 10036 Robert S. Sa;elson Cohen, Weiss, & Simon 605 3rd, avenue . � New York, N.Y. 10016 Gary A Green Daniel Katz legal Department Airline Pilots Association, International 1625 Massachusetts avenue, N.W. � Washington, D.C. 20036 STATEMENT IF NECESSARY, WE ARE PREPARED TO PARTICIPATE IN A HEARING TO FIIRTHER SIIBSTANTIATE AND EXPLICATE THESE VIEWS. .�- . 11 . � • , .: . . . .