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Airline News 8 | Commentary 10 | Airframers 11 |
European airlines inch forward through union challenges
New Air France-KLM Group CEO Ben
Smith appears to have begun on a right
footing with the head of Air France’s
main pilot union, who spoke positively
after their first meeting.
Smith, a Canadian and former COO
at Air Canada, took up the AF-KLM
post mid-September, immediately
pledging to invest half of his fixed salary into the airline group’s capital.
While the SNPL pilots’ union had previ-
ously expressed concern about a non-French citizen heading the com-
pany, union president Philippe Evain described a first meeting as “short
but extremely interesting” and said Smith was “a breath of fresh air . . .
Smith succeeded Jean-Marc Janaillac, who resigned four months
earlier having unsuccessfully bet his future at the group on resolving
the pay crisis after 15 strike days and several hundred million euros of
Air France unions are still pushing for a general 5.1% pay increase
and warned through the summer there could be more strikes in the fall,
but no dates have been announced and Evain confirmed there were no
strike dates planned for the moment.
Irish LCC Ryanair, meanwhile, had faced calls for a management
shake-up in September as it went into its annual shareholders’ meeting
in Dublin, with two unions strongly criticizing Ryanair leadership. The
British Airline Pilots Association (BALPA) British pilots' union called on
shareholders to immediately replace Ryanair CEO Michael O'Leary and
chairman David Bonderman.
But Ryanair’s shareholders backed all resolutions, easing some
pressure on the budget carrier.
However, they did send a clear
signal of discontent about how
management has been handling the
airline’s labor relations crisis by re-
electing its chairman with a much
smaller majority than before.
Ryanair has been locking horns
with pilot and cabin crew unions,
leading to strikes in several European
markets since a pilot rostering mix-
up sparked a flight cancellations crisis in September 2017, leading to
the airline’s decision to recognize unions for the first time.
Ryanair shareholders voted to approve all resolutions put forward
by the airline at the AGM, but Bonderman garnered only 70.5% of
the vote, compared with 89.1% last year. Independent director Kevin
McLaughlin got only 66.8% of the vote this time round, compared
with 93.7% last year.
CEO O’Leary, however, was backed by 98.5% of shareholders, just
a slight drop compared with 99.3% in 2017.
Paul Doughty, executive member of Ryanair shareholder
Local Authority Pension Fund Forum (LAPFF) who attended
the meeting said the message to Ryanair management had got
through. “The significant vote against Mr. Bonderman appears
to have prompted a welcome change of approach by Ryanair . . .
Based on the mood of the meeting, we would expect Ryanair to
announce plans for Mr. Bonderman to step down in due course.
Ryanair should recruit an independent chairman who will
strengthen the board, work closely with and provide the right
level of challenge to Mr. O’Leary.”
Flag of convenience amendment hangs over FAA reauthorization bill
A coalition of airlines, airports and manufacturers have written to US lawmakers urging
them to ditch a provision in the bill to reauthorize the FAA that would target so-called
“flag of convenience” carriers, warning it
would “undermine the basis for the Open
Skies agreements” that underpin the global
The groups said the provision—Section
530 of the House’s FAA Reauthorization Act
of 2018—would “threaten the foundations of
the Open Skies Agreements that the United
States has entered into with 125 countries
since 1992 by unilaterally imposing new conditions on entry of foreign carriers to the US.
It would also invite retaliation by US Open
Skies partners, leading to significant negative
impacts on the US aviation industry, manufac-
turers and the local economies that enjoy the
benefits of access to aviation services.”
Section 530 would forbid any airline
deemed a flag of convenience by the US
Department of Transportation (DOT) from
operating in the US and would require DOT to
determine new entrants to the market do not
undermine labor standards and operate on
behalf of the “public interest.” Because neither
test has any basis in the text of any Open
Skies Agreement, the industry groups charge
they run afoul of the treaties.
They also allege the amendment’s defini-
tion of “flag of convenience” is so broad as to
“capture any carrier that has operations out-
side its home country.”
The provision has the support of US
labor groups, including the Air Line Pilots
Association (ALPA), whose president Tim
Canoll writes in an ATW op-ed: “Foreign
airlines establish flags of convenience busi-
ness models to skirt tax, labor and safety
regulations to gain an unfair advantage over
US airlines and workers. These schemes are
threatening our global aviation system and
have the potential to destroy thousands of
existing jobs and billions of dollars’ worth of
our nation’s GDP.” (see page 11).
The industry coalition, disputing those
claims, said “all carriers today are able to
access labor from less-expensive markets,
as long as they satisfy licensing and immi-
gration laws. The fact is that no airline has
done this in the US, including Norwegian,
and that US airline employment is growing,
not declining, suggests this is a solution in
search of a problem.”
Labor groups fear that without government
intervention, the aviation industry could suffer
the same fate as the US maritime shipping
industry, in which foreign flag of convenience
firms contributed to a steep drop in US market
share and employment in the second half of
the last century. “It is not hard to imagine a
similar fate for US pilots, flight attendants
and mechanics if this business model suc-
cessfully grafts itself onto our airline sys-
tem,” Canoll wrote.
The industry coalition called that
comparison a “false analogy,” because
Open Skies agreements protect the US
commercial aviation industry from unfair
or unsafe competition, whereas shipping
is governed by the principles of “freedom
of the seas,” which does not afford it the
The industry coalition’s letter was signed
by Airbus, Airports Council International-North America, Atlas Air, Corporate Aircraft
Association, FedEx, IATA, Greater Orlando
Aviation Authority, JetBlue, Memphis
International Airport, National Association
of Manufacturers, United Parcel Service and
the US Travel Association.
Congress has until Sept. 30 to pass either
a long-term bill reauthorizing the FAA or a
short-term extension. The Senate’s multiyear reauthorization bill was recently stalled
over a dispute over meal and rest breaks for
truckers. The House and Senate have been
pre-conferencing a compromise bill that
could be quickly passed by both chambers.
But with a such a tight-deadline to act,
industry-watchers are skeptical whether
they can cross the finish line in time.
Air France A380