Authors: Nia Williams and Rajesh Kumar Singh
(Reuters) – Air Canada and its pilots are at an impasse over a up-to-date labour contract and have until Sunday to reach an agreement that would avoid a strike.
WHAT STATUS ARE THE CONVERSATIONS?
If both sides fail to reach an agreement by the end of Saturday, September 14, both sides will have the option to declare a strike or lockout, which will trigger Air Canada’s three-day plan to cease operations.
The airline will gradually cancel flights over three days, with the complete closure occurring at 00:01 ET (04:01 GMT) on Wednesday, September 18 at the earliest.
Air Canada CEO Michael Rousseau said Thursday the airline remains committed to reaching a deal but accused the pilots union of making excessive wage demands.
The union said the strike could be avoided if Air Canada negotiated a fair agreement.
WHAT CONSEQUENCES COULD A STRIKE HAVE?
Air Canada and its low-cost carrier Air Canada Rouge together operate nearly 670 flights a day, and a potential closure could negatively impact 110,000 passengers a day, as well as cargo.
It is Canada’s largest airline, flying to more than 180 airports worldwide. The strike will also likely result in fewer flights for American travelers, as the airline carries passengers from U.S. cities to Europe and Asia through its Canadian hubs.
Desjardins economists in a research note estimated that the two-week pilot strike could result in a loss of about C$1.4 billion ($1.03 billion) in real GDP for Canada in September, or a daily loss of about C$98 million.
An Air Canada spokesman said as the airline begins implementing its wind-down plan, it will cause disruptions that will last for days and weeks.
Air Canada estimates it could take the maintenance team close to eight hours to prepare each aircraft for return to service. That means it would take four to five days to return all aircraft to service.
WHAT ARE THE ISSUES INVOLVED IN THE DISPUTE?
Air Canada’s 5,400 pilots are demanding rates that close the pay gap with their counterparts at major U.S. airlines such as United Airlines.
Pilots at U.S. airlines have negotiated large pay raises in up-to-date contracts over the past two years, helped by a tourism boom and labor shortages. A up-to-date United pilot contract, for example, included a pay raise of about 42%.
As a result, some United pilots now earn 92% more than their Air Canada counterparts, according to the Air Line Pilots Association, which represents the carrier’s pilots. In 2013, the pay gap was just 3%.
The association says Air Canada pilots work under pay rates and living conditions negotiated in 2014.
Rousseau said Air Canada has offered a pay raise of more than 30 per cent in the up-to-date contract, as well as better pension and health benefits.
IS THE GOVERNMENT INTERVENING?
Prime Minister Justin Trudeau said Friday the government does not intend to intervene and intends instead to put pressure on both sides to prevent a strike.
On Thursday, Air Canada took the unusual step of saying the federal government should be ready to intervene to prevent a strike. While Ottawa has intervened in labor disputes several times over the past few decades, it did so only after the strikes began, not before them.
Federal Labour Minister Steven MacKinnon has wide-ranging dispute-resolution powers and last month intervened within 24 hours to end a strike at two major rail companies, Canadian Pacific (NYSE:) Kansas City and Canadian National Railway (TSX:)
The move was condemned by unions and criticized by the federal New Democratic Party, which helped keep Canada’s minority Liberal government in power with a deal offering automatic support. Earlier this month, NDP Leader Jagmeet Singh withdrew that support.
WHAT HAPPENS IF MY FLIGHT IS CANCELED?
If Air Canada cancels a flight due to a strike by its own employees, the airline must offer passengers a free rebooking on the next available flight operated by any carrier or provide a refund and transportation to the original departure airport.
Air Canada has offered adaptable travel fare waivers to passengers scheduled to fly between Sept. 15 and 23. The airline said it is also working with other carriers to keep passengers seated and mitigate the impact of flight cancellations.
However, customers have been advised to accept refunds or future travel credits as seats on other airlines are likely to be confined.
Under Canadian air passenger protection laws, customers will not be entitled to monetary compensation for expenses incurred as a result of delayed or cancelled flights due to labor disruptions if they are flying within Canada. Passengers traveling internationally may be entitled to compensation.
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