BA pilots to strike?

[SelectSys]

It looks like the pilot's union is moving towards striking again. Does anyone have an idea how likely this really is and when they would be likely to walk off their jobs? Would anyone expect this possible strike to impact the summer cruise season?

 

http://www.balpa.org.uk/Media---Pr/BA%20Pilots%20Strike7.htm

 

BREAKDOWN OF TALKS

 

British Airways and BALPA have been engaged in talks led by ACAS aimed at resolving the dispute concerning the outsourcing of pilots’ jobs and which led 86% of pilots to vote for strike action.

Despite BALPA’s willingness to accept the terms and conditions proposed by BA to ensure the establishment of the new OpenSkies service, BA was not prepared to provide the employment security and career development opportunities which are at the heart of the dispute.

BA has said it intends seeking a High Court injunction preventing BA Pilots from taking strike action. BALPA is considering its response.

[Globaliser]

Does anyone have an idea how likely this really is and when they would be likely to walk off their jobs?

I still think that this is unlikely. Remember, this isn't about the union asking for anything more for themselves from the airline than they already have. So actually striking is unlikely to bring them any real benefits.

[SelectSys]

I still think that this is unlikely. Remember, this isn't about the union asking for anything more for themselves from the airline than they already have. So actually striking is unlikely to bring them any real benefits.

 

While not an exact match, it seems like this is similar to some of the disputes in the US where mainline pilots are trying to protect themselves from being replaced by lower pay scale regional jet pilots.

 

What would be the "tipping point" to cause an actual strike? Is BA management likely to back down or would it be the pilots that retreat? Any possible win-win compromise?

[Globaliser]

I just don't know where the dynamics of the dispute are. The oddity of the strength of the pilots' reaction is that the new airline is going to be a tiny operation compared to the mainline fleet. BA has been working for years with franchisees using lower pay scales, and owning subsidiaries using lower pay scales.

 

So while you're certainly right about the dispute being similar to US airline "scope clause" disputes, the dynamics must be very different: in the US, pilots could have lost their jobs if mainline operations were to be farmed out to the lower-pay regional airlines.

 

I also don't know what BA's calculations are for the new operation, and how critical it is to have a lower pay scale for it. If it is critical, I can see BA just canning the new operation altogether. It's only an experimental gamble, after all.

[Globaliser]

FWIW, at the moment it seems that the pilots have blinked first.

 

When BA announced that conciliation had broken down, there was Delphic comment to this effect:-

We felt it right and fair to give BALPA private notice that we have a valid legal claim against them before they took the disproportionate step of calling a strike. If strike dates are issued, we will act to protect our customers by applying for an injunction.

The pilots have now given much more of a clue as to what this is about:-

British Airways is now claiming that BA pilots cannot legally pursue their job security concerns because of a piece of European legislation. Jim McAuslan added ‘British Airways should be at the negotiating table and not using European legislation designed to ensure free competition between companies and not to restrict the freedoms of Trade Unions in industrial disputes. We have sought to place this matter before the courts ourselves in order to resolve the question as quickly as possible. This is an unprecedented move by a union and demonstrates the responsible way in which BALPA has approached this.’

 

Footnote:

 

BA is asserting it has a fundamental right under Article 43 of the EC Treaty (“Article 43 EC”) to establish operations in another EU Member State. This right includes both establishing new airline services in other EU Member States, as well as acquiring existing operations from third parties. BALPA is seeking a Declaration from the Court as to whether Article 43 does apply and whether it may rely on the strike ballot to avoid a claim for unlimited damages.

It is obviously not good for industrial relations in the long run if you prevent a strike taking place only by hammering the union on the basis of a piece of legality. History shows that pilots have a great "sickness" weapon to wield in response. But this does show how fluid the situation is.

 

Nevertheless, one thing is clear: no strike over Easter.

[SelectSys]

FWIW, at the moment it seems that the pilots have blinked first.

 

It's probably hard for the pilots to walk out now over an issue that will not significantly impact this generation of workers.

 

Regardless of what management says, a successful OpenSkies would impact demand for BA flights out of London. I could see OpenSkies pairing up with AA to expand European service from DFW and ORD in addition to JFK.

[Globaliser]

Regardless of what management says, a successful OpenSkies would impact demand for BA flights out of London. I could see OpenSkies pairing up with AA to expand European service from DFW and ORD in addition to JFK.

If the operation is successful, there might be a marginal effect on connecting traffic via London, but the primary aim is to take traffic (or at least market share) away from the native European airlines on the routes - primarily Air France and Lufthansa. The likely target market is going to be that which would prefer to fly non-stop irrespective of airline, which is a market that is not particularly price sensitive. The most price-sensitive travellers - the low-budget economy passenger - aren't really supposed to have a place on these aircraft. After all, look at the seat mix on the aircraft: 24 in business, 28 in premium economy, and 30 in economy. So this venture ought to be incremental growth for the company, not cannibalising any existing traffic or market share.

 

The idea of operating this together with AA is an intriguing one. The airlines have just started talking again about the possibility of applying for antitrust immunity, so that they can cooperate and codeshare across the Atlantic, now that Open Skies (the treaty) is about to become a reality. But OpenSkies (the airline) will also be competing against AA metal, and if AA's competetive advantages (fundamentally, FF lock-in) were removed by AA placing premium passengers onto OpenSkies metal, it would definitely tend to cannibalise premium traffic from AA. So I wonder whether AA would actually be keen to do it.

[SelectSys]

Time will tell if OpenSkies is both successful and sticks to small aircraft. It makes sense that the original goal is to compete more against AF and LH but things have a way of changing overtime. Who can say they will stick to the 757 as their only aircraft?

 

AA linking up with OpenSkies would be a way of competing with both CO and DL that have used the advantage of Chapter-11 bankruptcy to purchase newer aircraft, refresh cabins, and open stations at a pace that AA can't match. It would probably only make sense for destinations not currently served by AA today where competitors offer non-stop service. Also, OpenSkies in DFW and ORD would require a move to longer ranged aircraft - either used 767/a330 or new 787.

 

Again, all of this would be off in the future...

[Globaliser]

AA linking up with OpenSkies would be a way of competing with both CO and DL that have used the advantage of Chapter-11 bankruptcy to purchase newer aircraft, refresh cabins, and open stations at a pace that AA can't match. It would probably only make sense for destinations not currently served by AA today where competitors offer non-stop service.

Difficult to imagine which destinations might have the high value premium O&D traffic that OpenSkies will want. Remember, in contrast to testosterone-laden North American airline boardrooms, BA philosophy is that profits are more important than size, and profits are more important than fighting the competition. This is the airline that dragged itself out of the post-2001 financial mire and propelled itself back into the ranks of the most profitable airlines of the world by deliberately shrinking, and deliberately refusing to grow again until this year.

[SelectSys]

Difficult to imagine which destinations might have the high value premium O&D traffic that OpenSkies will want. Remember, in contrast to testosterone-laden North American airline boardrooms, BA philosophy is that profits are more important than size, and profits are more important than fighting the competition. This is the airline that dragged itself out of the post-2001 financial mire and propelled itself back into the ranks of the most profitable airlines of the world by deliberately shrinking, and deliberately refusing to grow again until this year.

 

Testosterone-laden leadership is neither a uniquely North American nor totally undesirable trait in business. Certainly MOL is not lacking in the testosterone category and has done reasonably well for himself and a large segment of the travelling public. EK's Ahmed bin Saeed Al-Maktoum shows "balls", or at least the UAE's national wealth, in terms of growing his airline. Tony Fernandes certainly showed something in getting AirAsia off the ground and moving into the long haul business. While not an airline specific example, I would suggest that the UK must have had a fair amount of testosterone to create and manage its former empire.

 

I agree that BA has done a really good job in terms of rationalizing their business post 9/11. They also realize, as the OpenSkies announcement suggests, that their business model needs to change as a static business model is doomed to fail in a competitive marketplace. My own view is that they will find themselves in a position where they need to grow again more aggressively to compete on a world-wide basis. Eventually this could be a "merger" with AA or another carrier.

 

Only time will tell...

 

BTW - AA's leadership has certainly being measured in its action to the benefit of its shareholders and employees - no bankruptcy, no elimination of pensions.

[Globaliser]

Testosterone-laden leadership is neither a uniquely North American nor totally undesirable trait in business.

...

BTW - AA's leadership has certainly being measured in its action to the benefit of its shareholders and employees - no bankruptcy, no elimination of pensions.

I agree about AA, and one of the things that is most aggravating to the outside observer is seeing how financial and management prudence at AA simple means that must compete against other companies who by rights should be out of business, having mismanaged themselves into bankruptcy.

 

But then, I take the same view about other places where it's happened. Air New Zealand ought not to be alive, either, after its spectacular display of testosterone over sense. Yes, you need some balls to do business. But being reckless or stupid ought to be punished, especially in an industry which par excellence is all about numbers.

[SelectSys]

I agree about AA, and one of the things that is most aggravating to the outside observer is seeing how financial and management prudence at AA simple means that must compete against other companies who by rights should be out of business, having mismanaged themselves into bankruptcy.

 

But then, I take the same view about other places where it's happened. Air New Zealand ought not to be alive, either, after its spectacular display of testosterone over sense. Yes, you need some balls to do business. But being reckless or stupid ought to be punished, especially in an industry which par excellence is all about numbers.

 

We are in total agreement. The reckless and stupid should not be rewarded whatever the source of inspiration.

 

BTW - EK announced the start of its LAX service for September 1st - http://www.latimes.com/business/la-fi-dubai14mar14,1,3749254.story