Labor disputes stymie airline industry
Associated Press
HONG KONG — A rash of job actions is hitting carriers across Asia, Europe and the Americas during the busiest flying season of the year — tripping up travelers and hurting industry profits already weakened by a slowing world economy.
In Hong Kong, a dispute with pilots led Cathay Pacific Airways to cancel nearly a fifth of its flights on Tuesday. Italy's Alitalia scrapped three-quarters of its flights late last week when air traffic controllers, pilots and flight attendants walked off the job for eight hours.
Pilots recently disrupted Spain's Iberia, LOT Polish Airlines and two of Japan's three major airlines. Airline workers in Argentina repeatedly held demonstrations against the nation's flagship carrier, which is buckling under massive debt.
Negotiators for American Airlines and its flight attendants agreed on a tentative contract last month — just hours before President Bush planned to step in and block a threatened walkout. They formally approved it yesterday.
But many airlines insist they can't afford the extra pay and benefits demanded by protesters. And passengers, meanwhile, are getting caught in the crossfire.
Take Liang Juan-Chung, a Taiwanese traveler who was delayed at the Hong Kong airport last week as a pilot slowdown against Cathay Pacific entered its third day. Vowing not to fly the airline in the future, she changed her flight to avoid more problems.
"I've been frightened by the labor action," Liang said. "The two parties should have a good talk and tell each other what their demands are. They shouldn't cause the passengers any inconvenience."
Labor disputes long have been a way of life for the world's airlines. Pilots are in a particularly strong position to push for more from their employers because planes can't fly without them.
But the recent string of disruptions may be feeding on itself, as disgruntled workers try to duplicate successful job actions elsewhere.
"Human nature would suggest that people are going to look around to see what people are getting elsewhere and try to push for the same, and the airline industry is no different," said Jonathan Wober, who follows the industry for Deutsche Bank in London.
Consider Germany's Lufthansa, whose pilots staged two 24-hour strikes in May that grounded hundreds of flights and cost the airline more than $23 million. They recently won pay raises of nearly 30 percent.
The big payoff could embolden cockpit crews at other European carriers, including Air France and KLM Royal Dutch Airlines, to stand firm for more money, said analyst Yan Derocles at Credit Lyonnais Securities in Paris.
That will create more of a squeeze for airlines hurt by economic weakness and fuel prices that remain stubbornly higher than in the 1990s.
"The airline industry — that is, business and leisure travel — is very closely linked with the health of the economy in general," Derocles said. "Less money means less travel."
The job actions against Cathay are particularly painful.
Pilots have been working exactly according to the rules for a week, meticulously checking every safety detail before they take off. Aggravating things, numerous cockpit crew are calling in sick, according to management. Even after 29 of 143 flights were canceled on Tuesday, many services that got off the ground did so with jets and crews chartered from other carriers.
Cathay responded to the crisis Monday by firing 49 pilots and announcing new pay and working conditions for remaining ones. Cathay said it would pay them up to 9 percent more, lower than its previous offer of up to 10.5 percent, because the job action had left it with less money.
Mark Webb, an airline analyst at HSBC Securities in Singapore, estimated Cathay could end up losing $4.9 million a day. The dispute is similar to a pilot sickout that cost the airline $64 million two years ago.
Cathay has declined to discuss its red ink and refuses to return to the negotiating table until pilots end their slowdown.
Such standoffs come at a perilous time for airlines in Asia. Travel and cargo shipments already are depressed in the region, which is heavily dependent on exports to the lethargic U.S. economy.
"Basically, it's global trade phenomenon," Webb said.
