TTD Testifies on Mounting Pressures Facing Aviation Industry and its Workers Before Senate Subcommittee

WRITTEN STATEMENT OF
EDWARD WYTKIND, PRESIDENT
TRANSPORTATION TRADES DEPARTMENT, AFL-CIO
_____________

BEFORE THE
SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY AND SECURITY
HEARING ON
“THE U.S. AVIATION INDUSTRY AND JOBS: KEEPING AMERICAN MANUFACTURING COMPETITIVE” 

November 5, 2013

Chairman Cantwell, Ranking Member Ayotte, and members of the Senate Commerce, Science, and Transportation Committee’s Aviation subcommittee, thank you for the opportunity to testify today on the international competitiveness of the U.S. aviation industry.

As the President of the Transportation Trades Department, AFL-CIO (TTD), I am honored to speak on behalf of the workers who operate, maintain, service and build our nation’s aviation system.  By way of background, TTD consists of 32 affiliated unions that represent workers in every mode of transportation, including those who work in aviation[1].  Today, America is confronted with enormous challenges as the globalization of aviation gains momentum.  The policy and trade decisions of our government and the business decisions of our air carriers in the next few years will determine the fate of this vital sector of the U.S. economy.

With trade liberalization policies taking hold around the world, our government – with appropriate congressional oversight – has the responsibility to promote the competitiveness of the U.S. aviation industry and protect the interests of its workforce.  Specifically, the Administration must understand the land mines and pit falls of unscrupulous liberalization, protect against the outsourcing of critical safety and security work, oppose regulatory overreaches by foreign states, and provide stable and robust financing for our aviation infrastructure and workforce.

A pending trade issue that is vital to our aviation sector is the U.S.-European Union (EU) negotiations over a Transatlantic Trade and Investment Partnership, better known as TTIP.  These negotiations encompass a wide variety of trade liberalization issues, yet despite the historical precedent of excluding air services in these types of broad trade negotiations, the EU is attempting to include aviation liberalization in these talks.  We are strongly opposed to this approach, as it is an attempt by the EU to force changes to U.S. rules that limit foreign ownership of U.S. airlines and reserve domestic point-to-point service, or cabotage, to U.S.-controlled carriers.  Because the EU has failed in its attempts to force unwanted reforms to these U.S. laws, it is attempting to do so in complex TTIP talks with hopes that somehow our aviation interests would be “traded away” for other trade objectives.  This strategy must be rejected and we have communicated these views to the Administration and the EU.[2]

The good news is that risking our aviation interests in a broader trade negotiation isn’t necessary if the objective is opening aviation markets and expanding trade and jobs.  Over 100 trade liberalization pacts, referred to as “Open Skies” agreements already exist between the U.S. and various governments, and new and expanded agreements are on the table.  In other words, aviation trade is expanding through existing negotiating frameworks.  There is no need for our government to throw aviation into a larger, more complex pot of trade issues.

What is clear is that globalization is moving fast, and how America handles and addresses an array of issues over the next several months and years will determine if a strong and vibrant U.S. aviation industry and middle class workforce are preserved.

We know that the expansion of international air transportation opportunities can offer lucrative business opportunities for U.S. airlines and, if done the right way, create good aviation jobs.  At the same time, we know that globalization without checks and balances can have devastating effects on entire industries and middle class American jobs.[3]  TTD has always rejected efforts that seek aviation liberalization at any cost and without adequate protections for the men and women who work in our aviation industry.  Decades of unfair trade policy have ravaged workers in many U.S. industries, and we will not relent in our commitment to ensuring that aviation liberalization does not have the same result for U.S. aviation employees.

As noted above, liberalization of air transport services has traditionally been negotiated within the framework of bilateral “Open Skies” agreements overseen by the experts at the Departments of State and Transportation.  This process, led by those with a deep understanding of the unique nature of this industry, has shown in the past to produce positive growth opportunities for U.S. carriers, passengers and aviation employees.  When the U.S. and the EU negotiated the bilateral Air Transport Agreement (ATA) we were pleased to see the inclusion, for the time ever, of a labor article and a process through which the parties can seek to address adverse effects of the agreement on aviation employees.  The U.S. also wisely rejected efforts by the EU to force changes to our rules and regulations governing foreign ownership and control of U.S. airlines.  It was decided by our government that foreign investment in our airlines was appropriate but not to a degree that ceded actual control to foreign investors.

Foreign ownership and control rules, and prohibitions against foreign carriers engaging in cabotage have ensured a viable U.S. airline industry and have protected U.S. aviation workers against unfair competition, preserved workers’ rights and ensured our nation’s status as the world’s leader in air transportation.  Foreign states have long lobbied to loosen these restrictions in order to gain a foothold in the lucrative U.S. aviation market, the world’s largest, and syphon away good middle class jobs.  In rejecting these proposals, despite the heavy-handed tactics of the EU, the final U.S.-EU accord proved again that responsible liberalization agreements can promote international growth while also protecting vital U.S. industries and good jobs.

Unfortunately, one must only look to our friends in the EU to see the negative impacts (on jobs and our nation’s strategic economic interests) of aviation liberalization when built-in protections fail to work as intended.  Norwegian Air Shuttle (NAS), which is incorporated in Norway and holds an air operators certificate (AOC) in that country has developed a business model that is designed to exploit European aviation and labor laws in order to undermine collective bargaining by the NAS pilots and flight attendants.  Rather than register its 787 aircraft in its home country, NAS has registered them in Ireland and is seeking to obtain an Ireland-issued AOC.  The airline is using pilots who will be based in Thailand and employed on individual employment contracts that are governed by the laws of Singapore to crew these flights.  The pilot crew will not be employed directly by NAS but by a pilot recruitment company that will then contract, or more accurately “rent” them to NAS.  A similar arrangement will apply to the flight attendants who will work on the 787s.

In addition, the airline apparently takes the position that because its aircraft are registered in Ireland it does not need to obtain Norwegian work permits for its Asian-based crew.  While the union that represents the non-787 crew is challenging this assertion, the government of Norway has indicated that registration of the aircraft in Ireland will postpone the need for Norwegian work permits for the Asian-based pilots and has indicated that obtaining an Irish AOC may take those pilots completely out from under coverage by Norwegian social laws.  It is also unclear whether Irish social laws will cover these airline workers, or if they will be required to obtain Irish work permits.

The goal here is clear.  NAS is using the unique nature of EU aviation laws to effectively shop around for the labor laws and regulations that best suit its bottom line.  It’s using a “Flag of Convenience” strategy at the expense of decent labor standards.  We raise this, not just to complain about a foreign airline operator, but to demonstrate that what happens in the global aviation industry impacts U.S. aviation employees.  It is significant that NAS now serves routes from London to New York City and Fort Lauderdale, with plans to serve Los Angeles, Oakland and Orlando in the near future.  By using a “Flag of Convenience” operating model designed to chase cheap labor costs, NAS is undercutting U.S. carriers and their employees that serve those same markets by as much as 50 percent.

The previously referenced labor article in the U.S.-EU ATA was drafted with this type of abusive conduct in mind.  The evasive tactics taken by NAS remind us, however, that even with certain safeguards in place there will still be those who seek to undermine good jobs and evade labor law and collective bargaining obligations in order to scour the globe for cheap labor and lax regulations.  The NAS operating scheme must be derailed.  Our government, and hopefully members of this committee must make it clear that these tactics run contrary to the faith and intent of the US-EU ATA.

The expanding web of aviation liberalization agreements throughout the world is making the global aviation system increasingly interconnected and integrated.  With this comes a host of regulatory issues and concerns that will need to be addressed.  One such issue is the impact of aircraft carbon emissions on the environment and global climate change.  TTD is committed to working with U.S. carriers and the U.S. government to seeking a global solution to reducing aviation emissions, but we believe that any solution must be truly global in order to provide meaningful results and ensure competitive balance.  Piecemeal unilateral attempts to curb carbon emissions would place an unreasonable financial burden on U.S. carriers and their employees and only further delay the process of reaching an international, consensus-based agreement.  This includes the EU’s Emissions Trading Scheme (ETS), a plan that if implemented would apply to all flights entering and leaving EU airspace.

I would like to thank Senators Thune and McCaskill for leading the effort last year to pass legislation that allowed the Secretary of Transportation to combat the harmful effects[4] of the EU ETS and ensured that U.S. airlines were not subject to the EU cap-and-trade tax penalties.  Because of this legislation and other international pressure the EU postponed implementation of ETS for a year to give the International Civil Aviation Organization (ICAO) an opportunity to draft a global plan.  We were pleased, then, when earlier this month ICAO’s general assembly approved a plan that will provide for the development, over the next three years, of a global framework for addressing aviation’s impact on climate change, with the goal of implementing the plan worldwide by 2020.  The ICAO action was an important step toward implementing a global solution to this problem, and we look forward to working with ICAO to develop a framework that will substantially reduce global emissions, improve the efficiency and cost-effectiveness of our aviation system, and promote sound environmental stewardship while maintaining competitive balance and fairness in the international aviation marketplace.

We are concerned, however, that despite the international commitment to a global framework for reducing carbon emissions, EU officials have expressed disappointment with the ICAO agreement and continue pushing the misguided ETS scheme.  In the aftermath of the ICAO general assembly meeting, the European Commission (EC) proposed revising the EU law so that the ETS would cover all flights over EU airspace, including those flown by international carriers.  While we continue to support the responsible reduction of carbon emissions, the latest EU proposal only complicates the goal of reducing emissions on a truly global scale, and we hope that the U.S. government continues to work toward a truly global solution through ICAO.

We also must ensure that the more than 700 foreign-based aircraft repair stations certified by the FAA to work on U.S. aircraft are held to the same safety and security rules that we require for work done in this country.  Too often this has not been the case.  For example, aircraft mechanics working in the United States either employed at air carriers or at domestic contract repair stations are required to undergo various drug and alcohol screenings to ensure their ability to perform safety-sensitive repairs.  Yet employees working at repair stations based overseas are exempt from these tests despite the fact that they work on the same U.S. aircraft and at repair stations certified by the FAA.  To address this and other safety loopholes, Senator McCaskill championed a number of reforms to aircraft repair station regulations in the context of the FAA Modernization and Reform Act of 2012.  I want to thank and recognize the Senator for her leadership on this issue.  Specifically, the final law included a provision (Section 308(d)(2)) directing the FAA, within one year of enactment, to issue a proposed rule requiring all repair station employees responsible for safety-sensitive maintenance on U.S. aircraft to be subject to an alcohol and controlled substance testing program.[5]  While we are pleased that Congress moved to address this safety issue, the FAA is now almost nine months late in fulfilling this mandate and the provision will have no impact until it is formally implemented by the FAA.  This delay is unacceptable and particularly grievous since additional time will be needed to implement the final regulations after the proposed rule is finally released.

We are also still waiting for the Transportation Security Administration (TSA) to issue a rule, now nine years late, to issue security rules that govern foreign and domestic repair stations.  While the TSA issued an NPRM in 2010, we have significant concerns that the proposal does not go far enough to address the security questions that have been raised.  As we stated in our 2010 comments we agree with TSA’s assessment, noted in the NPRM, that as the agency “tightens security in other areas of aviation, repair stations increasingly may become attractive targets for terrorist organizations attempting to evade aviation security protections currently in place.”  With this in mind, we are disappointed that nothing in the proposed rule requires stations to determine if a worker is a security threat; instead, stations are only required to “verify background information through confirmation of prior employment …” (Section 1554.103(a) (6)).  This stands in stark contrast to the extensive criminal background checks and threat assessments imposed on in-house U.S. carrier mechanics.

We are also concerned that security plans submitted by contract repair stations would not be approved or even filed with TSA.  This problem is compounded by the fact that the mandates of the security plan appear ambiguous and will change based on the perceived risk of each repair facility.  We noted that TSA must have the ability to conduct unannounced inspections to ensure compliance with security rules in place and that the NPRM offered a conflicting statement on whether and how inspections would occur.  The absence of unannounced inspections at foreign stations would again create a double standard with domestic facilities.  More to the point, unannounced inspections make good sense as part of a comprehensive aviation security oversight program.

Under current law, the FAA is barred from certifying any new foreign repair stations until the security rule is finalized.  We strongly support continuation of this ban and urge TSA to make needed changes to its proposed rule before a final rule is issued.

Beyond TTIP, Open Skies negotiations and ICAO global aviation emission issues, the U.S. government must embrace policies that promote the competitiveness of U.S. airlines and protect and expand U.S. airline jobs.  It also must not advance policies that provide a competitive advantage to foreign airlines, particularly state owned or subsidized airlines.  Unfortunately the Department of Homeland Security (DHS) has been doing the latter.  Earlier this year DHS announced plans to open a Customs and Border Protection (CBP) pre-clearance facility at the Abu Dhabi International Airport in the United Arab Emirates (UAE).  This facility will be staffed by U.S. customs agents at significant cost to the U.S. taxpayer.  CBP pre-clearance facilities are popular with passengers and can help relieve congestion at customs check points in U.S. airports.  However, no U.S. carrier currently flies between the U.S. and Abu Dhabi.  A preclearance site in Abu Dhabi would benefit only Etihad – the state-owned air carrier of the UAE – and is a significant departure from the current construct of preclearance operations, which is to facilitate U.S. travel and to benefit U.S. travelers.  Preclearance should not be a vehicle to put U.S. air carriers and U.S. airline jobs at risk by advantaging a foreign competitor exclusively.  And given that Etihad only operates three routes between Abu Dhabi and the U.S., we believe CBP resources and personnel would be better used here at home to relieve overburdened customs lines in U.S. airports.  We urge DHS to reconsider the planned pre-clearance facility and hope that committee members will oppose this plan.[6]

In order to remain competitive in the global marketplace and continue in our commitment to serving the flying public, the U.S. must invest in the Federal Aviation Administration’s (FAA) workforce and aging infrastructure, ensure enhanced oversight of the industry and airspace, and continue modernizing the National Airspace System (NAS) through the Next Generation Air Transportation System (NextGen) initiative. We’ve already witnessed the impacts that government shutdowns have had on these programs and each time this occurs, these initiatives, designed to make air travel safer and more efficient and to expand capacity, are grounded or idled.  This must end.  In addition, the FAA must be able to meet growing industry demands with its manufacturing and certification process.  Unfortunately, under the current budgetary constraints, we have concerns regarding the FAA’s ability to fully function and operate without sufficient and predictable funding.

The FAA continues to operate under a hiring freeze and one-third of its workforce, including air traffic controllers, aviation safety inspectors and systems specialists, will be eligible to retire starting in 2014.  With a hiring freeze in place, the FAA lacks the ability to replace retiring employees and respond to the influx of future retirements.  Furthermore, even when the FAA is permitted to hire new employees, the training for employees throughout the agency is extensive and it can take two to five years to fully train new hires.  In addition, FAA operations within the current budget environment are presenting major challenges for the FAA workforce and the aviation system, which is resulting in limited funding for travel, challenges performing inspections and other surveillance activity, and reduced or delayed maintenance of critical systems and equipment.  Without clear funding in place to ensure the current workforce remains on the job and a new generation of employees is in place with access to thorough on-the-job training, there is no way the FAA can guarantee there will be enough aviation safety inspectors, air traffic controllers, systems specialists and other employees in place to secure the safety and efficiency of the system.

Investment has been severely reduced at the FAA for new and existing manufacturing certifications.  Current reductions in the FAA’s certification process are expected to have serious economic impact on the aviation industry and ongoing aircraft and part manufacturing products.  In fact, the FAA estimates that as many as 1,480 ongoing aircraft and parts manufacturing projects will be impacted as long as sequestration remains in place.  Adequate FAA staffing must be in place to support a robust certification process.  The global aviation marketplace is expanding at a rapid pace and the FAA must continue to move forward confidently without the continuing uncertainty associated with threatened shutdowns and sequestration.

The U.S. must also foster programs that will help develop a workforce with the skills and expertise necessary for the manufacture and maintenance of modern, technologically advanced aircraft.  U.S. aviation cannot compete globally without maintaining its world leadership in producing the highest quality aircraft.  To that end the International Association of Machinists and Aerospace Workers (IAM), a TTD affiliate, has partnered with the Boeing Company to create the Quality Through Training Program.  The IAM and Boeing jointly design and administer a host of programs designed to continually upgrade the skills and abilities of the incumbent workforce.  These programs comprise career planning, education assistance, and a variety of onsite training programs including apprenticeships.

We also want to refer the committee to the Modular Manufacturing Development Project, developed by IAM in collaboration with Goodwin College, the Connecticut Center for Advanced Technology (CCAT) and other manufacturing organizations.  This project is a shining example of a program designed to increase our manufacturing capabilities to meet the demands of U.S. aviation and around the world.  This project has identified gaps in our manufacturing capabilities and brings together industry stakeholders, including labor, to recognize and address the needs of our manufacturing workforce.  I commend IAM, led by President R. Thomas Buffenbarger, for its leadership and vision in collaborating on this project, and hope that it will serve as model for workforce development and technological advancement in aviation manufacturing.

The U.S. aviation industry and its workers face significant challenges and opportunities as globalization and liberalization become more prevalent.  Already, U.S. aviation crews have seen their jobs threatened by corporate schemes such as alliances between U.S. and foreign air carriers, and the “flag of convenience” scheme being advanced by NAS.  Similarly, foreign outsourcing of aircraft maintenance and passenger service functions is sending good U.S. aviation jobs overseas, while our own FAA remains paralyzed by sequestration and budgetary uncertainly.  The U.S. aviation system remains the best and safest in the world, however, and through smart government policy that promotes U.S. competitiveness we can thrive in the international marketplace while creating and protecting high quality U.S. aviation jobs.

Thank you for the opportunity to testify today, and I look forward to working with the committee to promote the competitiveness of the U.S. aviation industry and to protect and expand our middle class aviation industry workforce.