Going South by Northwest

Northwest Airlines has an iron grip on air travel out of Minnesota. Unless you're flying to Chicago, for $99 from the other major airlines or the few discount airlines that have a smattering of gates in Minneapolis, you will pay a premium. Back in 2001 when I was flying out to the inauguration with some friends, we found that a NWA flight out of Milwaukee, that connected through Minneapolis, to DC cost $200. For my friends to catch the same connecting flight in Minneapolis cost them $400. My friends drove to Milwaukee, except for the guy who works for Northwest airlines and flew for free.

Northwest is undergoing a very bitter strike by the mechanics union - AMFA. The Minnesota Daily provides this knee jerk article on how we should support the union against the evil corporation. The Star Tribune, via the New York Times, reports that NWA and Delta will be filing for chapter 11 bankruptcy this week. Northwest, along with Delta, United, and US Air are all about to join Eastern Airlines on the trash heap of history. This is a terrible thing for anyone who works for the airline or relies upon them for a pension. Check that last statement, it is a terrible thing for the taxpayers who will have to pay pensions instead of Northwest Airlines. For air travelers based in the twin cities, this is a glorious day. While direct flights with no connections will diminish somewhat, the twin cities will become a non-hub such as the Raleigh-Durham area where dozens of major and discount airlines engage in epic fare wars.

But it will be awhile. These airlines are losing money hand over fist every day. However, United Airlines has found the business quite profitable so long as they stay in the cozy protection of Chapter 11. So long as the airlines don't have to repay their billions in loans, the old hub and spoke airlines work! This will work for the short term, but eventually the patience of creditors, judges and aging aircraft will take their toll.

Northwest is also crushing the mechanics union and reaping millions of savings. NWA walked away from the table again this weekend and today began the process of permanently replacing striking workers. I believe AMFA has 4400 employee members, NWA has 1500 replacement workers on the job, and plans to operate at 2200 with or without the union. If NWA can convince a fifth of the AMFA members to come back to work without the union, AMFA is finished.

One might think that the AFL-CIO and every other union at the airline, such as the pilots and stewardesses, would show some good old solidarity and join the mechanics. But they won't, thanks to AMFA's tactics in the late 90's. Back then, the mechanics were represented by IAM, which was the official AFL-CIO union for airline mechanics. AMFA came charging into NWA during a contract dispute and promised a more militant approach. The rank and file threw out the IAM (and AFL-CIO affiliates) and jumped to AMFA. This poaching of their union did not sit well with the AFL-CIO types, and now they distinctly do not stand with AMFA. In fact, the AFL-CIO will let NWA liquidate the mechanics union just to eliminate AMFA. I suppose the AFL-CIO is confident they can reorganize after the failed strike, but it will be on NWA's terms - such as half as many jobs and reduced pay.

Even with the savings at the expense of mechanics, NWA will not survive. The problem isn't simply one of reducing costs. The problem is structural. If NWA wasn't burdened with the existing debt, a structural change would be possible. As it stands, the best thing for the airline industry and Minnesota air traveler is for NWA to be liquidated and its assets cheaply assumed and re-organized by someone else.