Impending Strike: Canada Reluctant to Intervene in Dispute between Air Canada, Pilots

FILE PHOTO: Air Canada pilots represented by the Air Line Pilots Association, Int’l (ALPA), who voted to authorize a strike, hold an informational picket at Toronto Pearson International Airport in Mississauga, Ontario, Canada August 27, 2024. REUTERS/Carlos Osorio/File Photo

A government source informed Reuters this week that Canada is hesitant to compel Air Canada's pilots back to work in the event of a strike, despite having taken similar measures to resolve a work stoppage at the nation's two railroads earlier this month.

The airline's approximately 5,400 pilots, who are advocating for salaries comparable to those of their U.S. counterparts, indicated on Friday that they may initiate a strike as soon as September 18 if necessary.

Their contract, which has been expired for nearly a year, has not seen any scheduled negotiations, according to the pilots. Prolonged strike action could lead to significant disruptions for travelers and further economic repercussions.

The Air Line Pilots Association, representing Air Canada pilots and those from most U.S. airlines, expressed concerns about potential federal intervention similar to that experienced by the two major freight railways.

However, the government source emphasized that Ottawa is dedicated to collective bargaining and is not inclined to hastily utilize its authority to resolve labor conflicts.

Labour Minister Steven MacKinnon, who previously intervened to end the rail dispute, stated on Wednesday that he was compelled to act due to the severe economic consequences of the rail stoppages, a decision that the Teamsters union is contesting in court. "We found ourselves in exceptional circumstances," he remarked.

The two rail companies effectively held a duopoly, while Air Canada commands approximately 44% of the domestic air travel market, with the remaining capacity shared among at least three other airlines.

The government's reluctance to intervene with Air Canada may also be influenced by political factors, as Prime Minister Justin Trudeau's minority Liberal government relies on the support of the pro-union New Democratic Party in parliament and aims to secure union backing ahead of the upcoming election scheduled for late October 2025.

Air Canada pilots are advocating for salaries that align more closely with those of their peers at airlines such as United Airlines and Delta.

However, neither the airline nor its pilots have revealed specific salary proposals. The pilot contract ratified by United in September 2023 resulted in a pay increase of approximately 42%, which is projected to cost the Chicago-based airline over $10 billion within four years.

In the past two years, pilots at various U.S. airlines have successfully negotiated significant pay raises, driven by a surge in travel demand and a shortage of pilots. Nevertheless, the demand for flights has recently diminished, putting pressure on earnings.

Air Canada has advertised senior captain salaries reaching up to C$350,000 ($259,567) annually and stated on Thursday that it aims to finalize an agreement that acknowledges the contributions of pilots while also considering the growing hesitance of travelers to accept higher airfares.

The airline, based in Montreal, is already experiencing a decline in earnings, having reduced its full-year earnings forecasts by 18%. Analysts from Raymond James have estimated that a 5% increase in pilot wages would raise Air Canada’s costs by C$70 million.

Under their previous contract, Air Canada pilots reported receiving annual wage increases of around 2% following back-to-work legislation that prevented a strike in 2012.

A comparison by Reuters between the wages of United’s latest contract and Air Canada’s expired contract, which is still in effect, indicated that United pilots earn higher hourly wages across all levels, with a more pronounced difference among junior pilots.

For instance, a third-year first officer at United operating the A320 narrow-body aircraft earns $196.03 per hour, while Air Canada offers C$81.02 per hour. "Air Canada has been benefiting from a lower cost for our pilot labor," remarked airline union President Charlene Hudy.

Strikes in the North American commercial aviation sector are uncommon but can be effective; a recent dispute between WestJet Airlines and its mechanics was resolved in just one day after the union threatened to strike until a resolution was reached, following government intervention to mandate binding arbitration.