Airline Labor Relations and the Wage Effects of Deregulation

This paper attempts to give the reader background on the airline industry and deregulation with an analysis of the economic theories surrounding deregulation. Theories surrounding the wage effects of deregulation would suggest that wages could have increased or decreased depending on which effect is dominant. The increased competition in the industry and emergence of new non-unionized air carriers should have reduced wages. On the other hand, the demise of the mutual aid pact, the establishment of the hub and spoke system and local monopolies should have increased wages. The conclusions of this paper were that wages did in fact decline after deregulation of the airline industry. This can be seen most clearly by looking at longer range trends and observing wages by craft. Cremieux (1996) found that pilot wages were reduced 22 percent and flight attendants wages 39 percent