By Nia Williams and Rajesh Kumar Singh
(Reuters) – Air Canada and its pilots are locked in a standoff over a new labor contract and face a Sunday deadline to reach a deal that could avert strike action.
WHERE ARE THE CONVERSATIONS?
If the two sides do not reach an agreement by the end of Saturday, September 14, they will both have the option to issue a strike or lockout notice, which would trigger Air Canada’s three-day plan to wind down operations.
The airline would gradually cancel flights over three days, with a complete shutdown as early as 00:01 EDT (0401 GMT) on Wednesday, September 18.
On Thursday, Air Canada CEO Michael Rousseau said the airline was still committed to reaching a deal, but accused the pilots’ union of making excessive wage demands.
The union has said a strike can be averted if Air Canada reaches a fair agreement.
WHAT IMPACT WOULD A STRIKE HAVE?
Air Canada and its low-cost subsidiary Air Canada Rouge together operate nearly 670 flights a day, and a closure could affect 110,000 passengers a day, as well as freight.
It is Canada’s largest airline and flies to more than 180 airports around the world. The strike will also likely result in fewer flights for American travelers, as the airline flies passengers from American cities to Europe and Asia through its Canadian hubs.
In a research note, Desjardins economists estimate that a two-week pilot strike could result in a loss of about C$1.4 billion ($1.03 billion) in Canada’s real GDP in September, which equates to daily losses of about C$98 million.
An Air Canada spokesperson said once the airline begins implementing its phase-out plan, it will cause days and weeks of disruption.
Air Canada estimates it could take nearly eight hours for the maintenance team to get each plane ready for service again. This means it will take four to five days to put all aircraft back into service.
WHAT ARE THE ISSUES IN THE DISPUTE?
Air Canada’s 5,400 pilots are demanding pay rates that would narrow the pay gap with their counterparts at major U.S. airlines such as United Airlines.
Pilots at U.S. airlines have negotiated big pay increases in new contracts over the past two years, helped by a travel boom and staff shortages. For example, United’s new pilot contract included pay increases of about 42%.
As a result, some United pilots now earn 92% more than their counterparts at Air Canada, according to data from the Air Line Pilots Association, which represents the airline’s pilots. In 2013, the pay gap was only 3%.
The association says Air Canada pilots are working under pay rates and quality-of-life benefits negotiated in 2014.
Rousseau said Air Canada had offered a pay increase of more than 30% in the new contract, as well as enhanced pension and health benefits.
Will the government intervene?
Prime Minister Justin Trudeau said Friday the government would not intervene and instead wanted to put pressure on both sides to avert a strike.
On Thursday, Air Canada took the unusual step of saying the federal government should be prepared to intervene to prevent a strike. Although Ottawa has intervened in labor disputes several times in recent decades, it did so only after the strikes began, and not before.
Federal Labor Minister Steven MacKinnon has broad powers to address disputes and intervened within 24 hours last month to end a strike at the two largest rail companies. Canadian Pacific (NYSE:) Kansas City and Canadian National Railway (TSX:).
The move was denounced by unions and criticized by the federal New Democratic Party, which has helped keep Canada’s minority Liberal government in power through a deal that provided automatic aid. Earlier this month, NDP Leader Jagmeet Singh withdrew that support.
WHAT HAPPENS IF MY FLIGHT IS CANCELLED?
If Air Canada cancels a flight due to a strike by its own employees, the airline must offer to rebook passengers free of charge on the next available flight offered by an airline, or offer a refund and transportation to return passengers to their point of departure .
Air Canada has offered flexible travel waivers to passengers flying between September 15 and 23. The airline has said it is also working with other airlines to secure seats for customers to soften the impact of the flight cancellations.
However, it advised customers to accept refunds or future travel credits as seats are expected to be limited on other airlines.
Under Canadian Air Passenger Protection Regulations, customers are not entitled to cash compensation for costs incurred as a result of delayed or canceled flights due to labor stoppages when flying within Canada. Passengers traveling internationally may be entitled to compensation.
($1 = 1.3580 Canadian dollars)
