Deregulation and collectively bargained wage outcomes in the domestic passenger airline industry

The purpose of this study was to determine if deregulation of the airline passenger product market has had a negative effect on collectively bargained wage outcomes in the airline industry. A model was developed that included a set of independent variables theorized to be determinants of wage outcomes. Therefore, in addition to the central hypothesis regarding deregulation, there was a hypothesis on each of the explanatory variables of wage determination in the model.

The data collected consisted of annual values for the variables for the years 1971 through 1980, across ten airlines (seven trunks and three local service carriers), for each of four occupational groups (pilots, flight attendants, dispatchers, and mechanics). The sources for the wage data were the various airline unions. Data for the independent variables were obtained from the American Airlines Airline Analyst Information Management Systems, the Air Transport Association, and the Bureau of Labor Statistics.

Generalized least squares multiple regression results were obtained for the pooled time series and cross-sectional data. Deregulation was found to be significant and of the expected negative sign for the two ground occupations, dispatchers and mechanics. None of the firm variables included in the model were significant in explaining the wage outcomes of these two groups. Only two firm variables were statistically significant in explaining the wage outcomes of pilots. No variables were statistically significant in explaining the wage outcomes of the flight attendants.

The test results suggested that, at least for the dispatchers and the mechanics, deregulation may negatively affect wage outcomes. What influenced wage outcomes for each group differed, with the most commonality within the ground occupations. This was attributed to the nature of the employment of the four occupational groups.

The test results of the effect of deregulation on wage outcomes may have been affected by the limited period of deregulatory experience for which data were available. Replication of the regressions with several years of additional data should result in stronger conclusions and could have implications for other formerly regulated modes of transportation.