What's your number? Interpreting the “fair and equitable” standard in seniority integration for airlines and other industries

This paper develops an analytical framework for assessing the effects of workforce seniority integration resulting from a merger or consolidation of two firms, with a focus on the airline industry. In addition to developing the first formal model that can be used to analyze the relative equity effects of integrating two workforces following a merger, we demonstrate why the interpretations of the “fair and equitable” standard embedded in the two most commonly proposed methods of seniority integration used in the airline industry (the so-called “date-of-hire” and “ratio” methods) are in conflict, thereby necessitating binding third party arbitration. We also demonstrate that measures of aggregate equity distortion can often be reduced using a hybrid method that combines elements of both the date-of-hire and ratio methods.