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Comair Pilots Flying High
Subject Union-management negotiations
Topic Labor Markets
Key Words Strike, contract, salaries, seniority, contract, benefits, work rules
News Story

Pilots for Comair, a Delta regional carrier, recently voted to accept the company's latest offer after a strike of 89 days. The five-year contract makes Comair pilots the highest-paid in the regional-jet industry. Their salaries will rise from between $16,000 and $69,000 to between $21,000 and $85,000. The raises will vary according to seniority. The new contract will also give an additional 10 to 12 percent for pilots flying new 70-seat planes as opposed to the customary 50-seat planes. Retirement benefits will be enhanced. While some work rules will be made more favorable for pilots, others will be unfavorable.

Comair expects to build up its schedule again gradually. It has agreed to recall all 1,243 pilots on its seniority list. Previously it employed approximately 1,350 pilots, but some left to work elsewhere during the strike. In the first month of operations, Comair plans to call back 1,300 of the 2,400 non-striking employees to work. It will also need to negotiate to reclaim some of the 37 planes it had turned over to the manufacturer for re-marketing, and to resume deliveries of new planes.

(Updated September 1, 2001)

Questions
1. Draw a labor supply and demand diagram of the market for Comair pilots. Mark the initial equilibrium wage and employment level.
a) Show the effect of the strike on the wage and employment level assuming the supply and demand curves were unchanged.
b) How did the fact that some pilots left to work elsewhere reduce the disequilibrium in the labor market? Illustrate.
c) Some travelers have deserted Comair due to the strike. Service levels to most cities are lower than before the strike. What effect is this having on the disequilibrium?
2. a)Explain how the wage elasticity of demand for labor affects the bargaining power of a union.
b) What determines the wage elasticity of demand for labor in general terms?
c) Explain why the pilots were relatively powerful in the Comair strike with reference to the factors influencing the elasticity of demand for labor and your general impression of the nature of the airline industry.
Source Martha Brannigan, "Comair to Resume Limited Flights After Strike," The Wall Street Journal, June 25, 2001.

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