The insurance adjuster practically laughed out loud. My 1981 Datsun 280ZX had seen better days. Born in Minnesota, she had rust around her wheel rims and even had a rust hole where the rear bumper once attached to her right rear quarter.
And she had two deep, ugly-looking gashes on her front hood where the four-wheel-drive pickup with the lift kit and chrome bumper had backed straight into her. These gashes explained the insurance adjuster’s presence.
He took a few notes, snapped some pictures and said he’d get back to me.
He eventually offered me several hundred bucks. He said it reflected the value of a used front hood.
I did not believe it. But not being an expert in the value of Datsun parts or able to determine if the damage affected the car’s frame, I said I’d get back to him.
So I took the car to some auto repair and collision shops and confirmed my suspicions. The insurance company had low-balled me. Objective criteria in the form of auto experts’ opinions confirmed it.
So I rejected his offer, told him about the objective criteria I had found underlying my evaluation of the car’s damage and, eventually, convinced him to cough up more money.
Flight attendants of America West Airlines are using this same strategy as they approach their strike deadline. And America West is countering with its own variation. So what’s going on?
The biggest issue in the America West dispute appears to be the flight attendants’ salaries.
America West’s current offer is apparently $16.5 million less than what the flight attendants seek over five years. So now the union and the airline are attempting to convince each other and the flying public that it has the most “fair” request. How?
By seeking out and using objective criteria that support its salary demands, such as fair independent standards. They will then use this objective criteria – like the auto experts’ opinions about the value of my Datsun’s damage – to argue they have an unbiased, justifiable and legitimate basis for their demand.
Exhibit A for the union: the industry average for flight attendants’ salaries. Their “market value:” a concept most consider a fair estimation of an item’s worth. The average, not surprisingly, is significantly higher than what America West pays. According to the flight attendants’ union, potential purchaser United Airlines’ attendants are paid $18,000 to $46,000, compared with $15,000 to $22,000 paid by America West.
But America West appears to define “market value” differently. Its salary and benefits must already be fair and market value, it appears to argue, because it enjoys low turnover amongst its attendants and because five applicants apply for every attendant opening.
Plus, it argues it should be entitled to a fair level of profitability, another type of objective criteria justifying its “fair” offer. America West says it will run in the red to the tune of $250 million annually should its labor costs be on par with the six largest airlines.
The flight attendants counter with another type of objective criteria – reciprocity – in pointing out that many of them took salary cuts when America West went through bankruptcy in the early 1990s.
It’s now time, they argue, for some payback as the carrier made record profits in 1998.
And it goes on.
This battle over the appropriateness of various types of objective criteria and the fairness of different independent standards is a common negotiation dynamic. It reflects a legitimate and oftentimes effective attempt to independently assess the value of a disputed item to each party’s benefit.
I don’t know the “market value” of the flight attendants’ salary.
And I don’t know if the principle of reciprocity will hold any water with the public.
But as we approach the flight attendants’ strike date, consider who has the most “fair” position based on the objective criteria you’ve heard. Then book your flights on a different carrier, just in case.
Published March 5, 1999 The Business Journal