Phelan M. Ebenhack via AP
JetBlue and Spirit have claimed that joining forces would force prices down across the industry, though no other merger in the airline space in the past two decades has really led to that result.
The first Cabinet opening of the Biden administration is at the Labor Department, after Marty Walsh left to take a high-paying job as the head of the National Hockey League Players’ Association (thanks in part to his pal and political funder, the head of the owners’ association). Last week, The Washington Post revealed that two replacement candidates are being vetted: the current deputy secretary Julie Su, and Sara Nelson, the charismatic leader of the Association of Flight Attendants.
Either choice would be a historic advance. Su would put an Asian American in a prominent Cabinet slot, someone who cut her teeth in labor enforcement in California, fighting for exploited Thai garment workers. Nelson has risen to become to one of the most well known and outspoken labor voices in the country, who used a strategy of unannounced strikes known as CHAOS to triumph over the powerful airline industry. The labor movement would have an unusually bold and progressive ally in the White House in either case.
But Cabinet officials also must exemplify all of the administration’s goals. And Nelson recently broke with the administration’s commitment to reduce concentration in the U.S. economy when she came out in favor of a merger between JetBlue and Spirit airline companies.
Now, there’s no question that should Nelson be nominated, she would support an anti-monopoly agenda inside the Biden administration. It’s just worth understanding why she took the other side in one critical case—namely, because she was serving her membership by getting them the best possible deal.
JetBlue and Spirit are two so-called low-cost carriers that have used very different business strategies. JetBlue stresses comfort while Spirit stresses the exact opposite, advertising low prices and then charging for everything from a cup of water to a blanket.
The two companies have claimed that joining forces would force prices down across the industry, though no other merger in the airline space in the past two decades has really led to that result. JetBlue’s CEO says the merger will allow JetBlue-Spirit to compete with the four dominant domestic carriers. But he has also acknowledged that the deal would lead to fewer seats on Spirit and JetBlue flights, which the merged company could make up for by raising fares. Moreover, the new company would gain market dominance over some routes to Florida, where both airlines fly frequently. It’s somewhat likely that the government will sue to block the merger, and we’ll probably find out soon.
Stuck in the middle are the unions whose members work with the two airlines. Two high-profile unions reached opposite conclusions. The Transport Workers Union came out in strong opposition to the deal, citing skepticism that JetBlue (whose management would take over the combined carrier) would honor Spirit workers’ collective-bargaining agreements, a lack of staffing on JetBlue flights, and job loss from the combination of operations. “Every public and private statement we’ve received from management has led us to believe a combined carrier will undermine the pay and benefits of the current JetBlue flight attendants and Spirit gate agents,” TWU’s letter concludes.
In the JetBlue-Spirit case, Nelson attempted to defuse the power of consolidation by making a deal with organized money.
As labor statements go, it’s pretty standard: TWU believes that consolidation will limit opportunity for their members, causing layoffs and putting downward pressure on wages and benefits. They base this on past experience and the current state of cost-cutting in the industry. Fewer carriers would reduce the pool of companies bargaining for labor; therefore, TWU opposes it.
But under Nelson, the Association of Flight Attendants endorsed the merger, after winning several key items for their members. (AFA represents Spirit flight attendants, while TWU represents attendants at JetBlue.) This includes an immediate raise for flight attendants of between 10 and 27 percent and more wage increases over the next two years; no furloughs for AFA members and integrated seniority into the merged company; a guarantee against a “two-tier” wage system; and reconfigured seating to the JetBlue model (meaning better seat pitch rather than the worst-in-class sardine-can model of Spirit), which AFA says will reduce passenger anger and abuse of flight attendants.
“We agree with skeptics that consolidation has accrued extraordinary power to a few airlines,” Nelson said in a statement. “However, this merger will help to correct that,” she added, citing the alleged ability for the new company to compete with the dominant carriers.
As Matt Stoller explained, this was a transaction. Nelson accepts the argument that the merger will in fact improve airline competition in exchange for a better deal for her members. Just a couple of weeks ago, Nelson appeared at the Open Markets Institute’s daylong conference on concentration, saying that “the more mergers and acquisitions concentrate power into a few hands, the more power they’re able to wield in the public sphere … there is only one effective check on organized money, and that’s organized workers.”
In the JetBlue-Spirit case, Nelson attempted to defuse the power of consolidation by making a deal with organized money. TWU appealed to government to put the brakes on consolidation and organized money altogether. Both approaches have validity to them. A union leader seeks to improve conditions for the union, after all. But it’s also the case that weakening corporate power and influence will arguably benefit workers over everyone else. The difference is between a narrow or transactional view of improving worker conditions, and a broader one that sees the inevitable consequence of consolidation as increased layoffs and constrained bargaining power.
The labor secretary has a different position than a union leader, of course. They are afforded a bigger platform, to set policies that will make lives better for all workers. The Biden administration has specified, in fact, that there ought to be a whole-of-government approach to promoting competition across the economy. Accepting mergers in exchange for parochial benefits would not be consistent with that.
That’s not a fatal black mark against Nelson, who is one of organized labor’s best voices right now. It’s actually more of a commentary on the poor state of the modern labor movement, and a lack of faith in government action during four decades of concentration.
It makes perfect sense for labor leaders, in a time where leverage for workers is in short supply, to seize any opportunity to make gains for membership. They don’t have the luxury of taking the long view. But TWU’s position is equally valid. The overwhelming evidence is that workers lose, sooner or later, when airlines merge. That’s more in line with a policymaking viewpoint, a desire to set strategy in worker’s favor.
This isn’t a new dilemma for unions, which have bounced back and forth between supporting and opposing mergers depending on their personal circumstances. In the past few years, a lot of scholarship has gone into reinforcing that monopolies are extremely destructive to worker rights and liberties. That solidarity, as the JetBlue-Spirit situation shows, hasn’t become fully ingrained throughout the labor movement. Who is chosen to lead the Labor Department could go a long way to settling the question.
