Boeing Workers Go on Strike: Will Flight Tickets in India Become Costlier?

One of the most discussed recent events is the workers' strike at Boeing, the largest aerospace company. The strike by Boeing machinists has now become a matter of concern for the airplane maker.

Efforts are being made to end the strike as union negotiators are reportedly set to meet next week, as per Reuters. Meanwhile, the U.S. Federal Mediation & Conciliation Service (FMCS) has decided to step in to facilitate negotiations between Boeing and the union. In the era of globalisation, it is unlikely that a strike of more than 30,000 workers in the USA will not have an impact on India.

The strike began after union members overwhelmingly rejected Boeing's contract proposal. Amid slogans of "Strike! Strike! Strike!” in the Seattle area of the United States, workers claim that this is a strike for their future.

Why are Workers Protesting? 

“I’m willing to strike for two months or even longer. Let’s go as long as it takes to get what we deserve,” said a worker to Reuters. Workers from the Seattle and Poland area went on a strike on September 13 after the contract offer by the airlines was rejected by them. 

As per the contract negotiated by Boeing and the International Association of Machinists and Aerospace Workers (IAM), workers would have received a pay raise. As part of the contract, the aerospace company would have increased the pay of workers by 25 per cent over the next four years, provided a ratification bonus of $3,000 and decreased the healthcare bill of workers.

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Workers had earlier expressed anger over the re-location of the production of its aircraft line Boeing 787 Dreamliner to a non-unionised plant in South California. Following this, Boeing proposed as part of the deal that they would move their next jet to Seattle. 

However, the workers rejected the offer, with 94.6 per cent of them voting against it. Additionally, 96 per cent of them backed the strike. The demand of the workers includes a 40 per cent pay rise, strong assurance from the company that the production process would not move out of Seattle and more. As per the union members, the raise proposed by the company is not enough considering the increased cost of living. 

What is significant is that this is the first strike by the workers since 2008. In 2008, Boeing machinists went on strike for eight weeks. As a result, it led to a loss of $2 billion for the company. The strike happened from September 6 to November 1, 2008, due to several demands by the workers ranging from demand for better healthcare, increased wages, protection of workers against layoffs and more. Eventually, a new contract ended the strike. 

How Will It Impact Boeing? 

The strike is happening at a time when the airline is already in mounting trouble. The company's problems worsened when a door plug panel on a 737 Max jet blew out while in flight in January. As a result, the Federal Aviation Administration (FAA) launched an investigation into the airline, focusing on allegations of noncompliance.

Eventually, Boeing also had to pay a fine of $160 million to Alaska Airlines as compensation after the incident. Post this, the company had to slow down the production of its 737 Max jet.

The company’s public image already suffered a setback after the fatal crashes of 737 Max in 2018 and 2019, which resulted in the deaths of 346 people. To add to it, the company's losses have continued to grow, with a $1.4bn loss reported in the April-June quarter. It has not reported a profit since 2018.

In terms of what this strike means for the company, as per Boeing chief financial officer Brian West, the impact on the company will be co-related to the duration of the strike. Also, the strike could reduce orders and deliveries of the loss-mapping company as production will halt. While the production of Boeing 787 Dreamliners might not be affected as it was built by non unionised workers, that of 737 Max, which is also the best-selling airliner, might be reportedly affected due to the strike. 

Speaking to AP, aerospace analyst Cai von Rumohr said that the strike might cost the company up to $3.5 billion in cash flow.

How Will it Affect India?

When it comes to India, a sense of uncertainty prevails, as a lot at this moment depends on the duration of the strike. Akasa Air, Air India Express, and SpiceJet that are dependent on Boeing for delivery might see a delay in deliveries, which in turn will affect their growth plans. SpiceJet, for one, is already in financial trouble and thus is relying on leased aircraft. Now, with the strike, as per Mint, there are chances that the delays in aircraft deliveries could make leasing planes more expensive.

With regards to Akasa Air, it recently added another Boeing 737 MAX to its fleet. The aircraft arrived in Hyderabad on September 12. The company already operates 24 Boeing 737 Max aircraft. Further, it has 200 more of the type in order.

Air India Express also added 26 new Boeing 737-8 aircraft to its fleet in July this year. Currently, it has 52 Boeing 737s and 28 Airbus A320s. As of October 2023, the company planned to implement 50 more planes during a 15-month period. Although thirty deliveries have been made, there's a chance that the protest will interfere with the remaining deliveries, as per reports.

For Indian airlines, the fears range from losing airport slots to competitors, not being able to meet expansion targets and suffering losses as a result.

Now, if there are delays in airplane deliveries, airlines may find it challenging to adequately meet the high demand, which could potentially lead to an increase in airfare prices. This comes at a time when passengers are already complaining about the high prices charged by airlines. There were also discussions in Parliament about the issue. Following this, Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu promised to look into allegations of excessively high prices being charged by airlines in July this year

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In recent years, there have been strikes by workers of several airlines in India. The most recent one was on September 7 this year when ground staff of Thiruvananthapuram International Airport went on a strike demanding better pay conditions, which in turn led to a delay of several flights.

Additionally, in May this year, the cabin crew of Air India Express protested against mismanagement at the airline' as per a PTI report. Ever since the start of the merger process between Air India and Vistara, the discontent among the mismanagement has reportedly increased.

Strikes could result in the weakening of unions, a compromise between the parties, or significant disruption to the company. As the strike continues for Boeing, it's a wait-and-watch process for everyone linked to it.