Air Canada could suspend operations next week as pilots prepare to go on strike, an action that could affect 110,000 passengers a day according to the airline.
Author
Geraint Harvey
DANCAP Private Equity Chair in Human Organization, Western University
Negotiations between Air Canada and its pilots over a new labour contract have stalled. The previous contract, which lasted for a decade, has expired and both parties have been in talks for over a year to establish a new agreement.
Pilots are hoping to negotiate a variety of outcomes in the new deal, including higher pay, retirement benefits and other quality-of-life improvements. All this is happening in light of Air Canada's return to profitability in 2023, following years of financial struggles during the COVID-19 pandemic.
If both parties are unable to reach an agreement by the end of the day on Sept. 14, the pilots could issue a legal strike notice or the airline could decide to initiate a lockout.
Pushing for equal pay
Media coverage of the issue has focused on the fact that pilots are pushing for substantial pay increases to bring their salaries in line with those of U.S. pilots.
While it's true that Air Canada pilots are paid significantly less than their counterparts flying with major U.S. airlines, some have argued the comparison is flawed.
The market for Canadian airlines is different than the U.S., and the cost of living is different in both countries, but piloting remains fundamentally the same in the two countries.
Pilots carry out the same job, flying the same aircraft, operating to the same safety standards and importantly are subject to the same health requirements that can prematurely end their career. All pilots operate at significant risk to themselves, as the recent airline tragedy in Brazil illustrates.
Growing work demands
Aside from pay, pilots have expressed concerns about the intensification of work. Between 2012 and 2019, the number of pilots employed at Canadian airlines increased by 23 per cent, while the number of passengers at major Canadian airlines increased by more than 100 per cent.
Pilots are also seeking reassurance about job security and guarantees against widespread capacity purchase agreements or wet leasing where an airline leases the aircraft and crew of a smaller carrier to fly its routes.
Capacity purchase agreements and wet leasing allow the major airline (the lessee) to reduce the cost of labour essentially by paying the reduced rate paid by the lessor airline. The use of capacity purchase agreements or wet leasing or even the threat of their use undermines the job security of staff at the lessee airline.
FAQs about the pilot strike
1. Are these demands reasonable?
Without access to the exact demands made, this is a very difficult question to answer. However, employees seeking commitments from their employer for wage parity, workload guarantees and job security are generally considered reasonable.
While the entire commercial airline industry was pummelled by the pandemic, airlines have returned to profitability in 2023. With the exception of the pandemic period, Air Canada has performed well over the last decade.
Airline performance is the result of the efforts of employees and managers at all levels in the organization, but especially its front-line workforce like pilots, cabin crew and ground staff who deliver the service. In our economic system, pilots have the right to negotiate terms and conditions that they believe to be reasonable. Ultimately, what matters is the outcome determined at the negotiating table.
2. What are the risks to the airline of securing an unsatisfactory deal with pilots?
The risk of failing to achieve external equity (or comparability with other employers) is the loss of pilots. Although there is some debate about whether there is a shortage of airline pilots, a concern for airlines is the attraction and retention of experienced flight crew.
Airline pilots aren't bound to one airline and can seek employment elsewhere. This risk is tempered by the benefits accrued through seniority or tenure with an airline, but it is not a gamble that airlines will want to make.
3. Should pilots be forced back to work?
The cancellation of flights is a huge inconvenience to passengers and is extremely costly to the airline and indeed to the employees who are on strike. Air Canada along with various business groups are encouraging the government to intervene to stop the strike.
However, to do this would be to take away the major weapon that pilots and their trade union, the Air Line Pilots Association, have in negotiating a satisfactory deal. Just as shareholders are entitled to take dividends from a private firm, so too are pilots entitled to negotiate better terms and conditions.
Prime Minister Justin Trudeau said on Sept. 13 that the federal government is not planning on intervening in the agreement process.
4. Will pilot's terms and conditions of employment increase the cost of flying?
Potentially yes. However, if fares increase significantly then passengers will fly with an alternative carrier. Airlines can only charge what the market will bear. As the Competition Bureau of the Government of Canada is currently exploring increased competition in commercial aviation, competition could soon increase. Additional human resource costs will be borne in part by shareholders.
Geraint Harvey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
