|http://business.financialpost.com/2012/ ... ine-union/
The union representing Air Canada’s pilots is alleging the airline is exploring the possibility of launching its proposed low-cost carrier offshore, circumventing negotiations to launch it with its employees.
Capt. Gary Tarves, chairman of the Air Canada Pilots Association master executive council, said this week in a memo to the airline’s pilots that the union has received information in recent weeks suggesting Air Canada plans to launch an offshore subsidiary modelled on the international Jetstar subsidiaries launched by Australia’s Qantas Airways Ltd.
“Put bluntly, the company wants to outsource much of our current flying while failing to provide any assurances as to how many Air Canada pilot jobs would actually remain at the mainline when the dust settles,” he said in the memo. “Some might dismiss this threat as just a trial balloon floated as a negotiating tactic. That would be naïve on our part.”
He did not elaborate on the source of the information.
Air Canada would not comment on the allegations. “We do not comment on rumours and speculation,” said Priscille Leblanc, Air Canada spokeswoman, in an email.
But Calin Rovinescu, Air Canada chief executive, has repeatedly pointed to the Jetstar model as a successful example of the sort of low-cost subsidiary he is hoping to launch at Air Canada.
He has also said, however, that he believes the low-cost carrier (LCC) is pivotal to Air Canada’s sustainability and would prefer to negotiate its launch with the airline’s employees, including its pilots.
Air Canada aims to use a fleet of up to 50 A319s and Boeing 767s at the subsidiary LCC, with which it said it hopes to serve the leisure markets down south and to Europe.
The pilots’ union, which is currently in contract talks with management, said it has twice asked for a formal response to detailed claims about the formation of an offshore LCC.
“The company refused to provide any details other than to state that it is exploring options that do not include Air Canada pilots,” Capt. Tarves said in the memo to pilots.
In recent years, Qantas has set up a series of offshore, low-cost airlines under the Jetstar brand, including Jetstar Asia Airways in Singapore, Jetstar Pacific Airlines in Vietnam and the recently announced Jetstar Japan, which is being launched in partnership with Japan Airlines Co. and Mitsubishi Corp. and is expected to take to the sky later this year.
The offshore airlines are not wholly controlled subsidiaries. Rather, Qantas only owns up to 49% of its various offshore Jetstar subsidiaries.
Daniel Tsang, founder and chief analyst at Hong Kongbased Aspire Aviation, said the Qantas models have been successful, in part, by leveraging cheaper local workers.
“Setting offshore bases is also a cost issue, since it cannot afford to have a high cost base by using Qantas mainline pilots yet selling low airfares,” he said.
Other carriers are also adopting the model, including AirAsia, Singapore Airlines, and All Nippon Airways, he said.
But these subsidiaries, and the elimination of jobs in Australia for their offshore counterparts, have come up against stiff opposition from Qantas’s workforce.
The announcement of plans to launch two more subsidiaries last year led to a series of job actions that resulted in Qantas grounding its entire fleet for two days last October until the government intervened.
Capt. Tarves pointed to several concessions the airline’s management has been seeking in its labour talks that might support efforts to launch an offshore subsidiary.
These efforts are ways to get around the so-called “scoping clauses” in the pilots’ contract that prevent the airline from outsourcing certain types of flying.
The airline is looking at contracting out Air Canada’s pilots’ flying for Air Canada Cargo, Air Canada Vacations, and Aeroplan, and “a potentially massive reduction in transborder and overseas flying,” Capt. Tarves said in the memo to pilots.
He said he has requested a meeting with Mr. Rovinescu to discuss that.
“We requested this meeting late last week and are still awaiting confirmation of time and location,” Capt. Tarves said.
Air Canada’s pilots rejected a tentative agreement with the airline last May, in part due to the proposed pact’s support for the company’s plans to launch a new subsidiary LCC using Air Canada pilots at lower wages and benefits.