Factors including public opinion and politics pushed Air Canada toward a deal that earned pilots significant pay increases, experts say.
The tentative agreement includes a 42 per cent wage increase over four years, according to a source who was not authorized to speak publicly on the matter. That’s a huge increase by historical standards. The previous deal guaranteed a 2 per cent annual wage increase over 10 years.
The federal government’s refusal to intervene paved the way for a deal, noted John Gradek, who teaches aviation management at McGill University, after Prime Minister Justin Trudeau made clear the two sides would have to negotiate on their own.
“Public opinion has basically put pressure on the federal cabinet, including the prime minister, to stay away from the negotiations and not consider imposing a settlement,” Gradek said.
On Sunday, the country’s largest airline and the union representing more than 5,200 pilots announced they had reached a tentative agreement, averting a strike that would have grounded planes and affected some 110,000 passengers a day.
The relative precariousness of the Liberal minority government and its desire to appear more pro-union influenced the Prime Minister’s non-interventionist approach to the negotiations.
Trudeau had said Friday that the government would not intervene to resolve the impasse. The government intervened in the railway workers’ work stoppage last month and in the WestJet mechanics’ strike over the Canada Day long weekend. The prime minister said the government respects the right to strike and would only intervene if it became clear that no negotiated agreement was possible.
“They felt they really didn’t want to try a third intervention and basically said, ‘Let’s let the airline decide how they want to handle this,'” Gradek said.
“Air Canada ran out of support as the week went on and by Friday night and Saturday morning it was just a matter of trying to get a deal done and get it accepted by [l’association des pilotes d’Air Canada]. »
The Trudeau government was also unlikely to consider back-to-work legislation after the New Democratic Party tore up its deal with the Liberals, Gradek said.
Conservative Leader Pierre Poilievre, whose party has traditionally taken a more pro-business line, also said last week that he would not “support the idea of avoiding these negotiations.”
“We support the pilots and their right to fight for a fair deal and good wages,” he said.
Backed by business leaders, Air Canada President and CEO Michael Rousseau asked Ottawa on Thursday to intervene preemptively by resorting to binding arbitration “to intervene if negotiations fail before travel disruptions begin.”
The demand may have fallen flat. Gradek believes public frustration over thousands of cancelled flights may have been directed at Air Canada rather than Ottawa, prompting the carrier to agree to a deal that offered “unheard of” gains for employees.
“It was really a total collapse of Air Canada’s negotiating position,” he said.
Generalized increases
Pilots are expected to vote on the four-year deal in the coming weeks.
Last year, pilots at Delta Air Lines, United Airlines and American Airlines reached agreements that provided for four-year pay increases ranging from 34 percent to 40 percent, increasing pressure on other carriers to boost wages.
After more than a year of negotiations, Air Canada presented an offer last month centered on a 30% wage increase over four years.
But the final deal, if union members approve it, grants a 26% raise in the first year, retroactive to September 2023, the unnamed source said. Three 4% pay increases will follow between 2024 and 2026.
Passengers are likely to pay for the increases, one expert noted.
“Ultimately, it’s all the consumers who pay,” said Barry Prentice, who heads the University of Manitoba’s Transportation Institute.
The rise in fares could be mitigated by the persistence of low-cost carrier Flair Airlines and the rapid expansion of Air Canada rival Porter Airlines, as well as by declining demand for leisure travel. Business travel also remains below pre-COVID-19 levels.
Air Canada said Sunday that the interim contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”
The union released a statement saying that, if ratified, the deal would generate about $1.9 billion in additional value for Air Canada pilots over the four years of the agreement.
Meanwhile, labor tensions with cabin crew are looming. Air Canada is set to begin negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.