Airline Weekly - March 1, 2010
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Airline Weekly - March 1, 2010

Scope Opera: Tensions build as pilot outsourcing ruffles union feathers

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Cover Story

Scope Opera: Tensions build as pilot outsourcing ruffles union feathers

For baseball players and European airline passengers, it’s three strikes and you’re out of luck. Last week, France, Greece and Germany all experienced labor strikes that severely disrupted air travel, leaving scores of passengers stranded. Airlines, naturally, were left with big losses.

In Greece and France, government-employed air traffic controllers were the ones striking, leaving the affected airlines little they could do to resolve the matter. But in Germany, the dispute involved Lufthansa and its own pilots, who weren’t demonstrating exclusively about pay and benefits. Instead, the two sides were at loggerheads primarily over a controversial issue that’s now confronting airlines on both sides of the Atlantic and beyond: pilot outsourcing.

For Lufthansa’s pilots, the decision to strike follows the company’s purchase of Swiss, Austrian, bmi and Brussels Airlines, all of which imposed concessions on their pilots before being acquired. That means that Lufthansa—at least in theory—has the opportunity to shift capacity to units with lower pilot costs. Flights between Frankfurt and London, for example, might be transferred from Lufthansa’s mainline operation to bmi, whose pilots recently accepted concessions. Future growth, too, could be concentrated at these lower-cost units.

Since last May, pilots have been negotiating to win guarantees against such practices. But Lufthansa continues to pursue strategies like sourcing certain longhaul business routes to partner PrivatAir and buying CSeries jets for Swiss to fly. Last week’s move to fly four new African routes from Brussels (see page eight) may have caused discomfort for pilots as well.

Lufthansa’s management, for its part, doesn’t deny that it aims to shift some flying. It refuses to compromise on pilot demands for more say with respect to how the company manages its network. At the same time it reminds pilots that it hasn’t cut and furloughed positions like many other airlines have. It also says it’s willing to negotiate some job protection language, though it didn’t give specifics. Nevertheless, the rhetoric is as confrontational as it is conciliatory. At one point last year, management publicly... (345 of 1381 words)

Also Inside this Issue:

Few natural disasters are as devastating as powerful earthquakes, and another huge one struck Chile last week. Aside from the humanitarian disaster, airports including Santiago’s were damaged and forced to temporarily close. LAN, naturally, was most affected.

Most world news about Greece involved mounting government debt and talk of bailouts, but the country’s busy airline sector had a more promising week: Rivals Aegean and Olympic announced a merger, and Ryanair said it would enter the Greek market for the first time.

Speaking of LCCs, Virgin Blue, AirAsia, Tiger Airways and Vueling all reported good financial results for late 2009, joining other winners like Southwest, JetBlue, AirTran, Allegiant, WestJet and SpiceJet. But Malaysia Airlines and Air New Zealand made money too, proving that LCCs aren’t alone in adjusting to the downturn. A handful of laggards remain, however, Japan Airlines and Iberia among them.

India’s Kingfisher is the latest invitee to the oneworld alliance. With JAL staying put and a new transatlantic joint venture close to final approval, oneworld’s last few weeks have been filled with good news.

Boeing and Bombardier got their share of good news last week. Virgin Blue placed a big B737 order and Republic said it will buy a large quantity of CSeries jets. United, meanwhile, confirmed its recent order for B787s.

But the news was less benign for airline passengers, already weary from a host of winter flight disruptions. Another snowstorm hit key markets in the U.S. and labor unions staged multiple strikes in Europe.

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