Negotiations, culture to change with new long-term agreement
Following years of thorny negotiations, Air Canada and the Air Canada Pilots Association (ACPA) recently ratified a 10-year agreement.
Signed on Oct. 31, the deal marks the first collective agreement reached by the two parties without any outside influence since 1996. The current government-imposed agreement is set to expire on April 1, 2016.
"We’ve had a relationship with animosity for quite some time," said Craig Blandford, president of ACPA. "We haven’t had a good relationship for many, many years… I think it really is significant that we’ve worked really hard to change the culture with Air Canada."
The union reports 92 per cent of its almost 3,000 members voted on the agreement, with 84 per cent of those votes in support of the deal. The agreement provides improvements to compensation, pensions and work rules. Additionally, it provides the company with a mechanism to gain labour stability until September 2024.
Considering the bitterness that defined past negotiations, both parties see the deal as a positive step forward.
"The new agreement provides greater stability and long term cost certainty as well as a framework for a strong partnership with our pilots. It is also the most tangible indication of the shift in culture underway at Air Canada," said Air Canada’s president and CEO Calin Rovinescu in a statement. "This 10-year agreement with the Air Canada Pilots Association is a ground-breaking development which allows us to accelerate the implementation of our business strategy on a win-win basis with our pilots."
According to the ACPA, pilots will receive a $10,000 signing bonus under the new agreement. Pilots will receive an annual pay increase of two per cent over the life of the agreement with an additional two per cent cash bonus in the years 2016 and 2017.
The pilots’ defined benefit (DB) pension was improved and Air Canada agreed not only to implement a protection plan for the union’s narrow-body fleet, but also to expand its wide-body planes.
The company has agreed to a floor for flying time, guaranteeing pilots will spend a minimum number of hours in the air each year. The new deal also allows for a significant profit-sharing scheme, based on the same metric used by the company’s senior management.
Michael Lynk, an arbitrator and mediator and professor at Western University’s Faculty of Law in London, Ont., called the deal a "milestone in modern Canadian industrial relations."
"A 10-year agreement is, maybe not unprecedented, but certainly extremely unusual," Lynk said. "For them to have a 10-year agreement — particularly after their last round of bargaining went so poorly with all of their major unions — I think this was probably an achievement for Air Canada."
During the last round of talks, dozens of Air Canada flights were disrupted or cancelled after pilots staged a sick-in and baggage handlers and ground staff held a 12-hour illegal walkout. A back-to-work bill was tabled by government and a final-offer selection resulted in an arbitrator siding with the airline.
Lynk said the volatility of the airline industry was likely a driving factor for Air Canada during the negotiations. Labour is one of the few costs the company can control, and this deal will provide some structure and long-term predictability.
The union, however, sees the agreement in a slightly more optimistic light.
"What we’ve done is facilitated a contract that gives the company flexibility to grow," Blandford said. "We’ve basically invested in the airline so that they can do that. We have invested, and we’ve done it in spades."
The key to the agreement, according to Blandford, are a number of growth targets agreed upon by both parties. If those targets are met— in 2017, 2020 and 2023 — there will be no strikes and no lockouts. Should the company fail to meet its expected outcomes, however, the contract is null and void and the union regains its full rights under the Canada Labour Code, including the right to strike.
Blandford said the ACPA considers the agreed-upon benchmarks to be more than achievable, with many believing Air Canada will far surpass expectations. This confidence in the company is an integral part of the agreement, he said.
"We’ve invested in the company’s future by agreeing to a 10-year plan that gives them some assurances and some guarantees. They know where they’re going and they don’t have to worry about negotiating an agreement with probably the most important employee group," Blandford said. "When you’ve got the pilots on board, the leaders of the airline, then it’s a safe bet that any business plan can succeed."
While the deal was a distinct improvement in labour relations between the two parties, Lynk said he remains skeptical whether it will hold weight with other workers.
"The pilots tend to be the most powerful of the Air Canada unions but also the most conciliatory with the employer," Lynk said. "The real test would be to see whether or not those terms have any legs, if Air Canada would try to sell those terms to any other unions."
It is likely the company will approach the mechanics and baggage handlers unit, the flight attendants unit and the ticket agent unit with similar proposals as additional long-term agreements will build even greater cost certainty for Air Canada. Lynk, however, said he would be shocked to see other employees — at Air Canada or elsewhere — strike comparable deals in the future.
"What the length of this agreement and the terms of this agreement tell us is that unions have not, in recent years, been able to regain their militancy or self-confidence in wanting to take on employers," he said.
"I don’t see any great sign that unions are on the offensive, either in terms of the wage gains or benefit gains that they’re making at the bargaining table. Mostly, it’s been defensive victories that they’re winning. It’s indicative of the direction some unions are headed in."