Toronto: Air Canada is finalising plans to suspend most of its operations, likely beginning Sunday, as talks with the pilot union failed over "inflexible" wage demands.
Air Canada and its low-cost subsidiary, Air Canada Rouge, together operate nearly 670 flights per day. Unless they reach a settlement with the Airline Pilots Association, the shutdown could affect 110,000 passengers daily.
The airline's pilots have been pushing to close the salary gap with their U.S. peers, who signed lucrative labor deals in 2023 amid pilot shortages and strong travel demand.
"Air Canada should stop threatening to disrupt air travel and come to the bargaining table with serious proposals to keep the flagship Canadian carrier competitive in the global aviation market," said Charlene Hudy, who heads the local union representing the airline's pilots.
"Air Canada believes there is still time to reach an agreement with our pilot group, provided ALPA moderates its wage demands which far exceed average Canadian wage increases," CEO Michael Rousseau said.
ALPA pilots have previously said the current pay rates at U.S. rival Delta Air Lines DAL.N are up to 45% higher than the Canadian carrier's hourly pay rates.
"We appreciate their (Air Canada pilots) frustration, but also note that the situation is not exactly apples to apples given the barriers to entry around pilot supply in the U.S.," TD Cowen analyst Thomas Fitzgerald wrote in a note last week.
Contingency plans
According to Air Canada website report, the airline is finalising contingency plans to suspend most of its operations. Talks between the company and the Air Line Pilots Association (ALPA), representing more than 5,200 pilots at Air Canada and Air Canada Rouge, continue, but the parties remain far apart. Unless an agreement is reached, beginning on September 15, 2024, either party may issue a 72-hour strike or lock out notice, which would trigger the carrier's three-day wind down plan.
Still time to reach an agreement
"Air Canada believes there is still time to reach an agreement with our pilot group, provided ALPA moderates its wage demands which far exceed average Canadian wage increases. However, Canadians have recently seen the chaos abrupt airline shutdowns cause for travellers, which obliges us to do everything we can to protect our customers from an increasingly likely work stoppage. This includes the extremely difficult decision to begin an orderly shutdown of Air Canada and Air Canada Rouge once a 72-hour strike or lock out notice is given, possibly as early as this Sunday," said Michael Rousseau, President and Chief Executive Officer of Air Canada.
"We understand and apologize for the inconvenience this would cause our customers. However, a managed shutdown is the only responsible course available to us. We are publicizing our plans to give the more than 110,000 people who travel with us each day greater certainty and the opportunity to reduce the risk of being stranded by using our goodwill policy to change or defer imminent travel at no cost. We are also alerting the Government of Canada to the potential disruption's impact upon Canadians."
Air Canada Express flights will continue to operate, as third-party carriers Jazz and PAL Airlines provide these services. However, these regional partners only carry about 20 per cent of Air Canada's daily customers, many of whom ultimately connect on Air Canada flights.
For customers
Air Canada's first consideration is the needs of customers and providing peace of mind. For detailed information see www.aircanada.com/action.
All customers whose flights are cancelled by Air Canada would be notified and will be eligible for a full refund, which can be obtained online at www.aircanada.com or through the Air Canada mobile app.
The airline has also been arranging with other carriers to secure space for customers in the event of Air Canada flight cancellations. Customers will be notified by Air Canada or their travel agency if options for travel on another carrier are identified for them. Unfortunately, seats on other carriers are expected to be very limited across all airlines, and refunds or accepting a future travel credit, or agreeing to travel on Air Canada at a later date, may be the only options available.
Goodwill policy
Since August 27, Air Canada has had in place a goodwill policy allowing customers holding bookings on any fare type with travel between September 15 and 23, 2024, to make changes if they wish to at no cost or to receive a credit for future travel. This policy will be expanded as warranted.
Under Canada's Airline Passenger Protection Regulations, customers in Canada are not eligible for compensation for delayed or cancelled flights, meals, hotels or other incidental expenses for situations outside the carrier's control such as a labour disruption.1 Air Canada will in all cases inform passengers of their rights under applicable rules if their flight is cancelled or delayed.
Customers with bookings whose flights are cancelled in the event of a labour disruption are strongly advised against going to the airport without a confirmed booking for a new flight (check your flight's status on www.aircanada.com before going to the airport). Customers are also advised to use self-service tools as contact centre wait times are expected to be highly elevated.
670 flights daily
Air Canada and Air Canada Rouge presently operate close to 670 daily flights on average and carry more than 110,000 passengers within Canada or internationally. Every day, Air Canada flights bring about 24,000 Canadians back home from abroad and return about 15,000 foreigners visiting Canada to their home country.
Under the plan announced on September 9 to potentially suspend flying, an orderly wind down of operations would begin once a 72-hour strike or lock-out notice is issued, which can occur any time after 00:01 EDT on Sunday, September 15. Flights throughout the system would be progressively cancelled over three days, with a complete shutdown as early as 00:01 EDT on Wednesday, September 18. Some activities would need to start as early as Friday, September 13, including the cancellation of some holiday packages and the grounding of some aircraft.
110,000 passengers
Air Canada projects that unless a settlement is achieved within the 72-hour notice period, the number of passengers affected by the suspension plan will increase progressively during the period to reach approximately 110,000 daily after 72 hours. A gradual shutdown is required because it is the only responsible way to manage such a labour disruption for customers and employees alike.
Air Canada operates globally to 47 countries on six continents with a fleet of 252 aircraft, which will have to be repositioned or repatriated along with their crews. By optimally positioning aircraft ahead of a possible disruption, Air Canada will be able to more quickly restore regular service to customers having travel plans at that time. The aircraft will also be properly safeguarded and receive all necessary routine maintenance during this time.
Cargo impact
Cargo operations will also be affected. Each day, Air Canada Cargo carries in the belly holds of its aircraft and air freighters perishable or live commercial goods, components for manufacturers, and other time-sensitive items for Canadians. Already, the airline has begun limiting acceptance of some of these goods given average shipment timelines.
In the event of a suspension of operations, Air Canada will make every effort to resume normal operations as quickly as possible once a settlement with ALPA is reached. It is estimated however it will take up to 7 to 10 days to do so after a complete shutdown.
Air Canada and ALPA negotiations
Air Canada and ALPA have been in discussions for 15 months. Although tentative agreement has been reached on a large number of items for a new collective agreement, the union remains inflexible on its unreasonable wage demands.
The company is committed to maintaining its pilots' historic position as the best paid commercial pilots in Canada and is continuing to negotiate to secure such an agreement.
Alternatively, it has offered to the union to submit to arbitration. To date, the Federal Labour Minister has assisted the negotiation process by appointing a conciliator and mediator, and if a negotiated settlement is not reached, Air Canada would look to the government to intervene, as it has in recent labour disputes, to avoid a major disruption for Canadian travellers and other stakeholders. A timeline of negotiations, backgrounders on the issues, pilot compensation and other information about the negotiations is available on our Media Centre.
About Air Canada
Air Canada is Canada's largest airline, the country's flag carrier and a founding member of Star Alliance, the world's most comprehensive air transportation network. Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. I