Two-tier pay - a controversial concept that sprang up among airlines in the early 1980s - is starting to go out of style. The latest indication came Tuesday, when American Airlines, which pioneered the concept in the airline industry, agreed to eliminate this pay system for its flight attendants. The two-tier system established higher and lower pay scales for the same kind of work.
The tentative settlement narrowly forestalled a two-day walkout during the Christmas rush. The settlement still needs the approval of its flight attendants, which could occur as early as next week.
Although details of the proposed contract were not available, airline observers say the company will retain many of the benefits it has achieved from two-tier pay.
The idea behind the concept is straightforward. To save money in the recession years of the early 1980s, airlines offered their current union workers pay raises if, in return, the workers would allow the company to hire new employees at substantially lower wages.
American first introduced the concept in a 1983 contract with the Transport Workers Union, which represents ground workers. Later that year, the airline got its pilot union to agree to a similar proposal. The concept quickly spread throughout the industry.
Recently, though, the Fort Worth, Texas, company has moved away from the overt use of two-tier pay, having agreed to a single wage scale for both the pilots and ground workers of the airline. The proposed six-year contract for American's 12,000 flight attendants would also merge the two scales. Analysts who observe the airline industry believe the trend will be picked up throughout the industry.
``The two-tier [pay scale] has been devolving very rapidly from its original intent,'' says Kit Darby, vice-president of Future Aviation Professionals of America, a career information service in Decatur, Ga.
Unable to attract enough qualified workers, American and other airlines have increased the wages of the lower scale and agreed to bring them up more quickly to the higher scale of the current workers, he says.
The airlines still benefit, though, because the new wages for entering workers remain significantly below the wages paid prior to the two-tier system.
``I think we are beginning to see movement in that direction,'' says one airline industry expert. ``While they [the airlines] may eliminate it, you won't see a return to the old days of pay rates.''
Russell Mack, a spokesman for American, said the rapidly expanding company was pleased with the proposed contract.
``As long as we continue to have the ability to hire at market rates, the fact of a single scale is all right with us. ... We consider [the new agreement] to be a market-rate scale,'' he said.
One airline industry expert, familiar with the settlement, said the agreement would represent increased pay for flight attendants at the lower scale but perhaps would not match the contracts already in force at other airlines.