(FORTUNE Magazine) – We recently flew American Airlines to St. Martin, in the Caribbean, and happened to spend a certain amount of flight time reading about the pilots' plans to strike this carrier in the spring. As we exited the plane, our own pilot was standing in the doorway, smiling winsomely and studiously pantomiming hope for the wonderfulness of our impending vacations. To the mild dismay of Madame Keeping Up, we responded by crossly telling him not to strike, and he shot back something or other about how he hoped his employer wouldn't force him to. We briefly considered explaining to the chap that American Airlines and corporations generally are merely intermediaries responding to market imperatives, that we the consumers are the ultimate employers, and that if the pilots wish our continued patronage, they must not overprice themselves, but behind me in line and panting hard was a behemoth in a warm-up suit who was manifestly less interested in economic theory than in latching on to a pina colada pronto, so we surlily disengaged. The pilots' unions are really quite amazing. Eastern Air Lines is now kaput. Continental and Pan Am are operating but in bankruptcy. TWA seems not far from the selfsame condition, and USAir looks wobbly too. American itself lost $215 million in the fourth quarter of 1990. Against this business background, the Allied Pilots Association has just negotiated what appears to be -- terms are not entirely available as we go to press -- a hefty pay increase as its price for not striking American. The pilots got this deal, it would appear, because American also has to compete with a few healthy airlines (e.g., Delta) that would take over a lot of its business in a strike.

Two aspects of the settlement look especially irksome to us passenger- employers. First, there is the continued invulnerability of our employees to the sanctions that are supposed to come with violations of federal labor law. Under the Railway Labor Act (which also covers airlines), the pilots were clearly prohibited from engaging in any slowdown or strike until a federal mediator proclaimed bargaining to be at an impasse. They nevertheless put pressure on the airline, which was forced to cancel an average of 90 flights a day for ten days in the peak Christmas-New Year period, by engaging in a concerted sickout. The union denies (as it has to) that a slowdown was under way; it says that a lot of pilots just coincidentally got sick. Some coincidence. American Airlines' experience tables show that about 300 pilots out of 8,700 -- a shade over 3% -- could be expected to call in sick on a normal day in December or January. But from December 23 to January 2, the number averaged 525 and never fell below 500. The probability of any such uptick occurring by chance on a single day, much less ten days in a row, is less than one in a quadrillion. In case you are wondering about a possible flu epidemic, sick rates for other American Airlines workers were normal in this period. The settlement also carries some ominous news about the future of the two- tier pay deals that were supposed to bring pilots' earnings down to earth. When these deals first surfaced in the mid-Eighties, they looked like a neat way to enable corporations to switch gradually to market-driven pay rates. The idea was that the existing union rates would be maintained for incumbent employees but that new hires would be paid only what the market required. It hasn't worked out that way. In 1985 a FORTUNE report on two-tier settlements noted that top-seniority American Airlines pilots, then earning $127,900 a year, were expected to make twice as much as lower-tier pilots just about indefinitely. But even before the latest settlement, American management had pretty much abandoned this concept, and the new deal specifies that the two tiers will be combined into one within five years. Meanwhile, the top-tier pilots have more than kept pace with inflation. They now earn over $150,000 at American (and still more at a few other airlines). So fliers, frequent and otherwise, will be paying monopoly rates to those smiling aces at the plane door for many a moon. Possibly that is why they are smiling.