Proposed contract stirs hornets’ nest at NetJets

Aviation International News » November 2004
December 14, 2007, 7:37 AM

Mount Saint Helens wasn’t the only imminent eruption last month. With liquid magma figuratively coursing through their veins, many NetJets pilots–estimated by some in the flying ranks to be an “overwhelming majority”–were expressing anger over the tentative agreement (TA) their master executive council (MEC) struck with the company for a new three-year labor contract.

NetJets has the only unionized pilot group working at any of the fractional aircraft providers. The International Brotherhood of Teamsters Local 284 represents the pilots, and the Teamsters’ airline division assisted during the negotiations for the new TA. The current five-member NetJets pilot MEC consists of chairman Dave Vermeulen, vice chairman Peter Britt, Paul Heimann, Roger Battistoni and Mitch Michel.

The 157-page TA, completed in late August, comes nearly three years after the current pilot contract became “amendable” in October 2001. Under the Railway Labor Act of 1926, under which airlines and fractional providers fall, labor contracts do not have fixed expiration dates; rather, they have “amendable” dates. After the amendable date, the existing contract remains in effect until the parties–in this case NetJets and the pilots’ union–reach a new agreement. New contract terms cannot be imposed unilaterally and strikes or lockouts can’t be initiated until the parties have gone through several steps that are regulated by the National Mediation Board (NMB).

Active contract negotiations have been ongoing–albeit slowly at times– for about the past year-and-a-half between the fractional firm and the union representatives. NetJets Aviation president Bill Boisture joined the company last October and immediately became involved in the talks. After the two sides reached an impasse late last year, the NMB stepped in to help reach an agreement, culminating in the completion of the TA on August 27. At press time, pilots were mailing in votes for or against the TA, with ballot counting slated for October 29.

Numerous Shortcomings?
Not surprisingly, the largest complaint from NetJets pilots is about the proposed pay scales under the TA. When the current MEC was elected two years ago, they promised the pilot ranks “kick-ass” pay. But the TA falls well short of most NetJets pilots’ expectations that their pay scales would be more closely aligned with those found in the NBAA Salary Survey.

In fact, MEC chairman Vermeulen addressed this very subject in an announcement early last month: “The negotiated rates of pay fell short of many members’ expectations, including ours, but the analysis cannot stop there. What we were able to achieve was limited by [NetJets’] modest profitability in recent years, the realities of the pilot labor market, a general economic downturn, price competition in the fractional market and the need for greater operational profitability. These factors do not go away if the TA is rejected.

“Despite the obstacles we faced, we were able to secure immediate base pay increases averaging more than 13 percent initially and year-over-year increases. Every pilot on the seniority list will make more under the TA over the next three years than he would make under the current agreement. While the negotiating environment was less than optimum, the [IBT] airline division director Don Treichler stated that this TA is ‘the richest processed by the NMB in recent years.’ That is important, as we’ve previously stated, because that is how the NMB will likely view it. Ultimately, it is the NMB that controls the negotiation process.”

But the salt in the wound is that what NetJets calls “industry-leading pilot pay” is barely half of the NBAA-reported salaries for those flying identical equipment in the corporate world. This despite the fact that fractional crews fly much more per month than typical corporate pilots and routinely have 14-hour duty days, in addition to being on the road for longer periods.

As an incentive, part of the TA includes a signing bonus, which ranges from $5,000 for a pilot with less than two years’ seniority to $25,000 for a pilot who has been at NetJets for more than five years. Still, many pilots were expecting a retroactive pay increase, which would have fewer tax implications than a lump-sum bonus.

However, pay is but one problem that many NetJets pilots have with the TA. Some pilots are distributing (via e-mail, Web or fax) a laundry list of pitfalls in the TA. While it’s beyond the scope of this article to point out every detail of the agreement, some of the more prickly items include the possible use of cockpit voice recorder data for disciplinary actions by the company; potential loss of many “gateway” airports, which is an important factor in where a NetJets pilot can reside; scope language that recognizes NetJets, Inc. as the parent company of NetJets Aviation when in fact it’s Berkshire Hathaway, allowing the true parent to acquire additional air carriers without being subject to scope provisions; and numerous scheduling issues that erode current protections.

In spite of the shortcomings, the NetJets MEC urged its members to ratify the agreement. MEC members even held a series of road shows to convince pilots that it was in their best interest to vote for the TA. However, one NetJets pilot told AIN that the road shows “got ugly” since there are several vocal opponents of the TA.

Organized Opposition

Leading the charge to shoot down the TA is a group called Strong Union. Five NetJets pilots–Amy Vidovich, Tim Nelson, Bill Olsen, Jim Brady and Greg Rountree–started Strong Union earlier this year to run as a slate in the October 28 MEC election (MEC members are elected every two years). All have pilot union experience from their previous airline or freight-hauling jobs, and all offered to help the current MEC members during the contract negotiations. They became disillusioned when, one by one, those offers of help were turned down.

Vidovich told AIN that the underlying philosophy of Strong Union is to include as many NetJets pilots as possible in the activities of the union. She said her group is now recruiting volunteers for committees, so that if the Strong Union slate wins the MEC election it will be able to hit the ground running. Since NetJets pilots don’t live in a concentrated area, the group uses its Web site (www.strongunion.org) as an outreach platform.

The bond that holds Strong Union together became more solidified when the TA was released in August. The organization’s Web site has become the focal point for the opposition to the agreement, listing bullet point items that detail why pilots should reject the proposed agreement. It appears Strong Union has much support from the NetJets pilot community, which has collectively donated about $14,000 to the organization.

While the current MEC contends that the TA is the company’s best offer, Strong Union thinks it can negotiate a better deal for the pilots, especially when it comes to pay. If the TA is rejected, Strong Union believes that it will have the upper hand during follow-on negotiations. “We believe we have a lot of leverage because of the implementation of Subpart K in February. The company can’t execute its business plan then under the current contract,” Vidovich said. Because of this, it’s highly unlikely that the NetJets pilots will get to the point where they’ll initiate a strike.

But the TA and current MEC aren’t the only targets in Strong Union’s crosshairs. The group also wants to decertify from Local 284 and form its own chapter under
the IBT, asserting that Local 284 has, among other faults, “consistently failed to protect and meet the needs of our pilot group.”

Here again, support is strong for the grassroots organization. After only a word-of-mouth campaign, more than half of the nearly 2,000 NetJets pilots at press time had signed and returned a petition to decertify from Local 284 and form an independent local. Vidovich said she expects to have 1,300 to 1,400 signed petitions following a mailing last month.

If Strong Union has the solidarity and support it claims to have, and the TA is thus voted down, then the next round of contract negotiations could have a profound effect on the entire fractional industry. If NetJets is as eager as the group claims to put the labor issue behind it, then the unionized pilots could see a substantial pay increase in the next TA. This in turn could very well force the non-unionized fractional providers to increase pilot pay and benefits to retain their own workforces.

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