BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT

INTRODUCTION
BRIEF HISTORY OF MUSE/TRANSTAR AIRLINES
TranStar Airlines, was a domestic United States airline operatin !rom
"#$" to "#$%& T'e compan( was )rst esta*lis'ed as a Te+as,*ased
comm-ter called M-se Air, *-t m-c' li.e So-t'west Airlines, onl( /(in
larer mainline e0-ipment& M-se Air1s name oriinates !rom its !o-nder
and t'e one time president o! So-t'west Airlines, Marion Lamar M-se& It
*ean ser2ice *etween Dallas and 3o-ston in "#$4 wit' two Do-las D5,#
aircra!t&
An air tra6c controller1s stri.e almost immediatel( made t'ins di6c-lt
!or t'e compan(, and M-se stepped down as 5EO to let 'is son Mic'ael
ta.e o2er t'e compan(& B( t'e end o! "#$7 t'e compan( was still
str-lin, and acti2el( loo.in !or a merer to .eep it a/oat& At t'e end
o! t'e (ear, 3arold Simmons, president o! t'e Amalamated S-ar
5ompan( o8ered t'e airline t'e mone( to contin-e, on t'e condition t'at
Mic'ael M-se resin, and t'at 'is !at'er ret-rn as 5EO& Despite t'e new
in/-+ o! cas' and Lamar M-se in c'are aain, t'e compan( was not a*le
to enerate a consistent pro)t despite its -se o! non,-nion la*o-r and
competiti2e !ares&
On 9-ne 4:, "#$:, So-t'west Airlines ac0-ired M-se Air, and M-se Air
contin-ed to operate as a separate airline& In ;e*r-ar( "#$< its name
c'aned to =TranStar&= Lamar M-se was remo2ed !rom 'a2in an( acti2e
role in manaement, and t'e compan( was restr-ct-red& >it' t'e addition
o! MD,$? aircra!t, its ro-tes c'aned to sc'ed-led ser2ice /i'ts !rom
5ali!ornia t'ro-' Te+as to ;lorida, and t'e( were restricted !rom carr(in
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
mail, air !rei't, and an( interline passeners tra2ellin partl( on ot'er
airlines& Amon ot'er c'anes were a new corporate imae, replacin
M-se Air1s *eie aircra!t li2er( and colo-r sc'eme *randin, wit' a dar.
*l-e tone, accent-ated *( concentric m-lti,'-ed pinstripes *andin t'e
!-selae&
Attempts were made to interate t'e Transtar pilots wit' So-t'west
Airlines pilots, *-t in a classic e+ample o! misapplied BATNA an interated
seniorit( list was reAected *( t'e Transtar Bilot1s association&
SUMMARY OF THE CASE STUDY
In "#$7, t'e TranStarCM-se air was str-lin d-e to t'e tra6c controllerDs
stri.e w'ic' lead t'em to loo. !or a merer& In t'e same (ear, t'e 3arold
Simmons 'as o8ered t'e mone( wit' t'e condition t'at M-se Lamar 'as
to *e t'e 5EO o! t'e compan(& 3owe2er, t'e compan( was not a*le to
enerate a sta*le pro)t e2en t'o-' t'e compan( o8ered competiti2e
!ares and emplo(ed a non -nion la*o-r&
In "#$:, So-t'west Airlines ac0-ired M-se Air& Initiall(, t'e M-se Air was
not representated& As s-c', t'e neotiation was ens-red *( So-t'west
Airlines and So-t'west Airlines Bilot Association ES>ABAF& Based on t'e
neotiation, t'e seniorit( list interation was not parit( *etween t'e two
companies w'ic' made M-se Air operation was -na*le to pa( t'eir
emplo(ees *ased on So-t'west Airlines pa( scale& T'-s, S>ABA p-rs-ed
t'e strate( o! interatin t'e M-se pilots to t'e *ottom o! t'e list, wit'
pa( parit( in )2e (ears and a card campain to represent t'e M-se pilots&
3owe2er, t'is strate( was reAected *( t'e compan(&
In "#$<, M-se air was c'aned to TranStar and t'e( 'ad c'ose to *e
independent representation t'ro-' TranStar Bilots Association ETBAF
w'ere t'e( 'ad to neotiate to com*ined t'e master seniorit( list&
In No2em*er "#$<, t'e areement was reac'ed w'ere t'e !ollowin were
concl-dedG
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
"& Bilot 'ired in 9-ne "#$4 *( So-t'west will *ecame a senior to a
TranStar pilot w'o were 'ired in 9an-ar( "#$"
4& Impro2e t'e relati2e seniorit( o! all So-t'west Airlines pilot
@& ;ences
7& 5aptain seat protections
:& T'e TranStar pilots pa( parit( no later t'an Decem*er "##?
Ne2ert'eless, t'e TBA Board o! Directors 'ad reAected t'e proposed
Interated Seniorit( List EISLF *( ass-min t'at reAection will in/-ence t'e
Merer 5ommittee to o*tain more !a2o-ra*le ISL& As a res-lt, t'e
neotiation was *rea.down and t'e neotiation was ne2er res-med&
In A--st "#$%, t'e TranStar was ceased down w'ic' lead to "7< pilots
Ew'o 'ad seniorit( in So-t'west Airlines, seat protection and s-*stantial
risesF 'ad no Ao*s&
BATNA IN GENERAL
T'e case st-d( 'ad s'own t'at t'e TBA Board O! Directors 'ad misapplied
and o2erestimated t'eir BATNA& T'e( 'ad ass-med t'at t'e( 'ad t'e
s-perior BATNA *( reAectin t'e proposal o8ered to t'em&
T'e power o! BATNA is a matter o! scale& >'en t'e compan( 'as a stron
alternati2e sol-tion to a lo-s( proposal, t'e compan( will 'a2e le2erae to
*-ild a more potent proposal& I! not, t'en t'e( can t-rn to t'eir *est
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=T'e reason (o- neotiate is to prod-ce somet'in
*etter t'an t'e res-lts (o- can o*tain wit'o-t
neotiatin& >'at are t'ose res-ltsH >'at is t'at
alternati2eH >'at is (o-r BATNA ,, (o-r Best Alternati2e
To a Neotiated AreementH T'at is t'e standard
aainst w'ic' an( proposed areement s'o-ld *e
meas-red&= Roger Fisher and William Ury
BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
alternati2e sol-tion& A stron BATNA is li.e a warm, !-II( ins-rance polic(&
A stron alternati2e pro2ides t'e compan( wit' two possi*ilities& Eit'er to
settle an areement wit' more !a2o-ra*le terms, or t'e option to simpl(
sa(, 1No deal1&
3owe2er, BATNA doesn1t come in a pac.ae& It comes !rom plannin and
preparation& T'e compan( 'a2e to determine all t'eir a2aila*le options&
T'en, t'e( also 'a2e to realisticall( estimate t'eir co-nterpart1s
alternati2es& Eac' is e0-all( important& Ot'erwise, it will *e impossi*le to
a-e t'e strent' o! t'e *est alternati2e in relation to t'eir *est
alternati2e&
T'e plan s'o-ld *e a /e+i*le approac'& It is important to remem*er t'at
*ot' approac' and alternati2es, s'o-ld *e a*le to *e c'aned or *end& A
neotiator ma( enter t'e tal.s wit' a preconcei2ed idea o! t'e *est
alternati2es a2aila*le to *ot' parties, *-t m-st not *e *o-nd *( t'em&
Une+pected c'anes can *e an(t'in !rom new in!ormation on t'e ta*leJ
a s-dden rise in costs d-e to political sit-ationJ new leislationG or, e2en a
climatic inter2ention s-c' as an -ne+pected and -ntimel( !rost& A s-dden
s'i!t in conditions can immediatel( a8ect t'e strent' o! eit'er parties
BATNA d-rin t'e neotiation process&
STRATEGIES TO ACHIEVE BEST NEGOTIATION/AGREEMENT
Based on t'e case st-d( i2en, i! I were appointed as one o! t'e
neotiatin team representin t'e M-se CTranStar, t'e )rst step t'at I
s'o-ld do is to determine t'e new BATNA as it pla(s a maAor role in
determinin t'e s-ccess neotiation&
;is'er and Ur( o-tline a simple process !or determinin t'e BATNAG
"& de2elop a list o! actions t'at mi't concei2a*l( ta.e i! no areement
is reac'edJ
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
4& impro2e some o! t'e more promisin ideas and con2ert t'em into
practical optionsJ and
@& select, tentati2el(, t'e one option t'at seems *est&
Re!erred to t'e process 1 a*o2e, t'e M-seCTranStar pilots s'o-ld list
down some ot'er alternati2es especiall( to Interated Seniorit( List s-c'
asG
Option 1
T'e seniorit( s'o-ld *e t'e same !or t'e pilot 'ired in 9-ne
"#$4 *( So-t'west Airlines and 9an-ar( "#$" *( TranStar
Airlines
OR
Option
T'e pilot 'ired in 9-ne "#$4 *( So-t'west Airlines senior to a
TranStar pilot 'ired in 9an-ar( "#$4
OR
Option !
t'e seniorit( s'o-ld *e t'e same !or t'ose 'ired in 9-ne "#$4
*( So-t'west Airlines and 9an-ar( "#$" *( TranStar Airlines
BUT t'e pa( parit( is not later t'an 9-ne "#$%
T'ese options can *e impro2ed Eprocess F w'ic' can i2e more
promisin ideas to t'e co-nterpart E So-t'west AirlineF w'ic' are listed as
!ollowsG
Option 1
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
T'e seniorit( s'o-ld *e t'e same !or t'e pilot 'ired in 9-ne
"#$4 *( So-t'west Airlines and 9an-ar( "#$" *( TranStar
Airlines
t'e pa( parit( no later t'an Decem*er "#$$
!ences
5aptain seat protection
[the seniority gap is still the same but the pay parity
would be early by 2 years]
OR
Option
T'e pilot 'ired in 9-ne "#$4 *( So-t'west Airlines senior to a
TranStar pilot 'ired in 9an-ar( "#$4
t'e pa( parit( no later t'an Decem*er "#$$
!ences
5aptain seat protection
[the seniority gap is small (diference by 6 months)
but the pay parity would be early by 2 years]
OR
Option !
t'e seniorit( s'o-ld *e t'e same !or t'ose 'ired in 9-ne "#$4
*( So-t'west Airlines and 9an-ar( "#$" *( TranStar Airlines
BUT t'e pa( parit( is not later t'an 9-ne "#$%
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
*ene)ts Emedical careCwel!areCann-al lea2eCallowancesF wo-ld
*e t'e same !or TranStar pilotsCemplo(ee compared to
So-t'west Airlines
!ences
5aptain seat protection
[the seniority gap is the same but the pay parity would
be early not later than !une "#$% and the bene&ts
earn]
T'e last process o! BATNA is selectin t'e *est option !rom all t'e options
i2en& As t'e main iss-e o! t'e case st-d( is Interated Seniorit( List
EISLF, I wo-ld s-est t'at t'e team o! neotiation s'o-ld also to consider
some o! t'e most cr-cial !actors *e!ore selectin t'e *est options w'ic'
incl-deJ
T"e cost , 'ow m-c' it will cost to ma.e t'e deal relati2e to t'e
cost o! t'e *est alternati2e& 5ost estimation ma( entail *ot' t'e
s'ort term and t'e lon term& ;or e+ample, i! t'e seniorit( and pa(
parit( will a8ect t'e cost operation o! t'e compan(H I! t'e pa( parit(
will *oost t'e le2el o! prod-cti2it( o! t'e pilotsH Is t'ere an( increase
in !-els cost and airport d-t( in a s'ort term or lon termH
Fe#si$i%it& , >'ic' option is t'e most !easi*leH >'ic' one can (o-
realisticall( appl( o2er all t'e rest o! (o-r a2aila*le optionsH >'ic'
option will eas( to implement and need not an( maAor restr-ct-rin
in TranStar Airlines H
I'p#ct , >'ic' o! t'e options will 'a2e t'e most immediate
positi2e in/-ence on t'e c-rrent state o! a8airsH Is t'e TranStar
Airlines will enerate a sta*le pro)t *( implementin t'e optionsH
Conse()ences , >'at do (o- t'in. or estimate will 'appen as (o-
consider eac' option as a possi*le sol-tionH Is t'e options will *e
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
accepted *( So-t'>est AirlinesH I! t'e M-seCTranStar team reAected
t'e o8er *( S>ABA, does t'e TranStar can operate t'e *-siness in
t'e lon termH Does t'e compan( will lose t'eir emplo(eesH
T'-s, t'e team mem*er o! t'e neotiation s'o-ld consider all t'e !actors
a*o2e *e!ore determinin t'e Best Alternati2e to a Neotiation
Areement&
D-rin t'e process o! determinin t'e BATNA, t'e team mem*er s'o-ld
also consider t'e alternati2es a2aila*le to t'e co-nterpart ESo-t'west
AirlinesF& Sometimes, t'e co-nterpart ma( *e o2erl( optimistic a*o-t w'at
t'eir options are& T'e more t'e team mem*er can learn a*o-t t'e
co-nterpartDs options, t'e *etter prepared t'e team mem*er will *e !or
neotiation& B( doin t'is, t'e team mem*er will *e a*le to de2elop a
more realistic 2iew o! w'at t'e o-tcomes ma( *e and w'at o8ers are
reasona*le&
Alternati2el(, t'e neotiation team can also re2eal BATNA to t'e
So-t'west AirlinesCpilots as t'is mi't *e t'e *est wa( in ettin t'e *est
res-lt !or *ot' parties& Alt'o-' ;is'er and Ur( do not ad2ise secrec( in
t'eir disc-ssions o! BATNAs, accordin to Mc5art'(, =one s'o-ld not
re2eal one1s BATNA -nless it is *etter t'an t'e ot'er side t'in.s it is&= B-t
since t'e neotiation team ma( not .now w'at t'e ot'er side t'in.s, t'e
team co-ld re2eal more t'an t'e( s'o-ld& Ne2ert'eless, i! t'e BATNA
t-rns o-t to *e worse t'an t'e co-nterpart t'in.s it is, t'en re2ealin it
will wea.en M-seCTranStar standpoint&
I! t'is sit-ation occ-rred, w'at can t'e team do wit' a wea. BATNAH T'ere
are two wa(s to resol2e t'is matter& T'e )rst possi*ilit( is to strent'en
BATNA& T'e second wa( is to red-ce t'e BATNA o! t'e co-nterpart& As
s-c' t'e team mem*er s'o-ld G
Be cre#ti*e , Simpl( as. t'e team mem*er w'at ot'er options t'e(
mi't emplo( t'at co-ld increase t'eir *arainin position&
Brainstorm t'e sit-ation wit' all t'e .e( pla(ers in M-seCTranStar
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
pilots& T'e plannin m-st also !actor in t'e co-nterpart1s interests
and options&
I'pro*e t"e BATNA , Endea2o-r to e+pand t'e team mem*erDs
options& One possi*ilit( is to consider *rinin into t'e mi+, ot'er
interested t'ird part(& T'e t'ird parties interests ma( coincide wit'
.e( components o! t'e M-seCTranStar interests, or o! t'e
co-nterpart1s& I! t'e team wea.en t'e ot'er side *est alternati2e *(
inAectin anot'er element into t'e mi+, t'e ame ta.es on a w'ole
new slant&
Use e+perts , Ne-tral parties wit' t'eir own rele2ant e+pertise
mi't *e a*le to -nra2el t'e pro*lem into a newl( desined, *-t
more attracti2e perspecti2e& I! t'e team side lac.s some area o!
e+pertise, et t'e e+perts to lend a 'and&
As !rom all t'e options EOption ", 4 and @F a2aila*le, it is ad2isa*le to et
ot'er options or ideas !rom t'e team mem*ers and all .e( pla(ers in
M-seCTranStar pilots& B( doin t'is, t'e team will et t'e stron BATNA
w'ic' will *e *ene)cial to all parties& T'ere!ore, t'e team can impro2e
BATNACoptions a2aila*le *e!ore presentin t'e BATNA to t'e co-nterpart&
B-t eac' mem*ers m-st also incl-de or consider all t'e !actors Ew'ic'
'a2e *een disc-ssed a*o2eF in selectin t'e stron optionCBATNA& In
addition, t'e team s'o-ld also re2eal t'e options to t'e ot'er parties as it
will et more positi2e neotiation o-tcomes& 3owe2er, timin can mean
e2er(t'in in determinin w'en to p-t t'e BATNA on t'e ta*le&
CONCLUSION
BATNAs are critical to neotiation *eca-se t'e neotiation team cannot
ma.e a wise decision a*o-t w'et'er to accept a neotiated areement
-nless t'e( .now w'at t'e alternati2es are& BATNA =is t'e onl( standard
w'ic' can protect t'e compan( !rom acceptin terms t'at are too
-n!a2ora*le and !rom reAectin terms it wo-ld *e in t'e interest to
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
accept&= In ot'er words, i! t'e proposed areement is *etter t'an o-r
BATNA, t'en t'e team s'o-ld accept it& On t'e ot'er 'and, i! t'e
areement is not *etter t'an o-r BATNA, t'en t'e team s'o-ld reopen
neotiations& I! t'e team cannot impro2e t'e areement, t'en t'e team
s'o-ld at least consider wit'drawin !rom t'e neotiations and p-rs-in
ot'er alternati2e Et'o-' t'e costs o! doin t'at m-st *e considered as
wellF&
3a2in a ood BATNA increases t'e neotiatin power& T'ere!ore, it is
important to impro2e t'e teamDs BATNA w'ene2er possi*le& Good
neotiators .now w'en t'eir co-nterpart is desperate !or an areement&
>'en t'at occ-rs, t'e( will demand m-c' more, .nowin t'eir
co-nterpart will 'a2e to i2e in& I! t'e opponent apparentl( 'as man(
options o-tside o! neotiation, 'owe2er, t'e( are li.el( to et man( more
concessions, in an e8ort to .eep t'em at t'e neotiatin ta*le& T'-s
ma.in M-seCTranStar pilot BATNA as stron as possi*le *e!ore
neotiatin, and t'en ma.in t'at BATNA .nown to t'e co-nterpart will
strent'en t'e neotiatin position&
;ailin to 'a2e a2aila*le options d-rin a neotiation is simpl( -nwise&
3a2in a ood alternati2e empowers t'e team wit' t'e con)dence to
eit'er reac' a m-t-all( satis!actor( areement, or wal. awa( to a *etter
alternati2e& B-t, M-seCTranStar pilots is at t'e wea. position as t'e
compan( was still str-lin in maintainin t'e consistent pro)t& As s-c',
t'e M-seCTranStar pilots s'o-ld consider ot'er alternati2es t'at wo-ld *e
*ene)cial to t'em rat'er t'an t-rn down t'e o8ered or wal. awa(&

REFERENCES,
'ttpGCCwww&neotiations&comCarticlesC*est,alternati2eC
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BEST ALTERNATIVES TO A NEGOTIATED AGREEMENT
'ttpGCCwww&*e(ondintracta*ilit(&orC*i,essa(C*atna
'ttpGCCen&wi.ipedia&orCwi.iCTranStarKAirlines
Roer ;is'er and >illiam Ur(& Getting to Yes: Negotiating Agreement
Without Giving In& ENew Lor.G Ben-in Boo.s, "#$"F, "?7&
Ro( 9& Lewic.i, Br-ce Barr( and Da2id M& Sa-nders, Negotiation& EMc Graw
3ill, 4?"?F :?#,::%,::$
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