Case Study: the Muse/Transstar and Southwest Airlines Batna

Case study: The Muse/TransStar and Southwest Airlines BATNA

Case Overview

Transtar was struggling amid the 1982 traffic controllers’ strike. By the end of 1984, they were looking for a merger to keep it afloat. In 1985, Southwest Airlines acquired the company and a series of complex negotiations between Southwest Airlines and Transtar instigated. An agreement on combined master seniority list is reached in the last negotiation between pilot groups. Nonetheless, Transtar Pilots Association (TPA) Board of Directors (BOD) rejected the proposed Integrated Seniority List (ISL) believing that such act would create more leverage for their Merger Committee to obtain a more favourable ISL. The rejection however, resulted in escalation of anger and distrust between union presidents and causing entire breakdown to the negotiation.

Analysis

In the first round of discussion, in 1985, Transtar were unrepresented causing unfavourable outcomes of the negotiation.

In November 1986, an agreement on combined master seniority list was obtained resulted from negotiation between pilot groups. The agreement placed an advantage on the Southwest pilots comparative seniority of 1 ½ years to a Transtar pilots which includes fences, Captain seat protections and brought the Transtar pilots to pay parity no later than December 1990. This agreement is seen as more favourable comparing to the earlier proposed Integrated Seniority List (ISL) which placed the Transtar pilots to the bottom of the list regardless of their seniority.

The rejection on the proposed ISL made by TPA BOD indeed reflected that the TPA BOD failed to properly assess their BATNA by perceiving that their BATNA is superior to the agreement their merger committee was able to negotiate. On the contrary, the act also portrays uncertainty of the capabilities of their own negotiating committee.

Strategies/ Steps

According to Lewicki, Barry and Saunders in their book entitled Negotiation (Sixth Edition),...