The agreement brought welcome relief to air travellers. After more than 20 days of cancelled travel plans and long lineups at other airlines, Air Canada reached a settlement last week in a bitter labor dispute with 8,500 locked-out ground workers. The pact allowed Canada’s largest airline to resume passenger flights in time to narrowly avert further travel chaos during the hectic Christmas travel season. “I am very excited,” said Edwin Hawley, 43, a Toronto hardware salesclerk who had booked a Dec. 23 flight to Halifax on his way home to Port Hood, N.S. “I didn’t want my money back, I wanted to get home.”
Representatives of the airline and the International Association of Machinists and Aerospace Workers signed the pact in an Ottawa hotel suite at 3 a.m. on Dec. 16. The agreement emerged only after both sides accepted compromises that federal mediator William Kelly proposed. Kelly worked out a pension indexing formula that will apply immediately to about 2,000 retired workers—resolving the issue that had provoked the Nov. 26 strike and subsequent shutdown of the airline. And Air Canada executives said that they were confident that the deal was reached before the airline had lost a significant number of regular customers. Said company spokesman Denis Couture: “If it had gone on much longer, we would have had serious
problems with our commercial customers, frequent flyers and travel agents.” In the end both sides made compromises to reach the three-year accord. Union negotiators eased their demand for a 7.2-per-cent raise over the next year. Instead, the ground workers— who now earn $15.02 per hour on average-settled for increases of four per cent in each of the first two years of the new agreement and five per cent in the third. But Kelly convinced the company to bend on the pension indexing issue, the union’s central demand. The formula—which will be in effect for the next five years and will cost the company $12 million a year—provides for pension payments to rise annually by half the rate of inflation, up to a maximum increase of four per cent. Said Ronald Fontaine, chairman of the union’s negotiating committee: “It is definitely a first in this industry.”
Both sides acknowledged that the impending Christmas crush was a key factor in the settlement. Said George Smith, chief negotiator for the airline: “We faced a very real deadline—that forces both sides to reassess their positions.” In fact, 40,000 people use Air Canada on peak Christmas season days. And the possibility of not being able to get home for the holidays made travellers increasingly nervous. At the height of the travel panic, some customers resorted to desperate measures to get seats on the already heavily booked competitor airlines.
Said Guy Backmann, a supervisor for Canadian Airlines International: “People start claiming their mother died and it’s an emergency.”
The precedent-setting agreement on pensions is the latest success in Kelly’s 32-year career as a labor negotiator. He began work as a brakeman with Canadian Pacific Railways in 1945, and he is widely regarded as Canada’s most capable mediator. Already this year he had been instrumental in resolving labor strikes at Canadian National Railway Co. and CP Rail, and at Canada Post Corp. Said one senior government official experienced in labor negotiations: “Bill is an incredible magician. A friend asked me whether I thought he would get home for Christmas. I told him, ‘They’ve brought Kelly in—you can pack your bags.’ ”
Although Air Canada executives said that they were pleased with the agreement, they acknowledged that the company will have to fight hard to retain customers. To that end, the airline immediately announced a 60-per-cent reduction in the ticket prices of 100,000 seats until Jan. 3. But Wardair Canada Inc., another major passenger carrier, immediately took similar action. “We may never determine what the strike cost us,” said Couture, “but for the rest of the season, the name of the game is intense competition.” For Canadian travellers, that resumed competition was a welcome Christmas bonus.
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