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WestJet pilots reject new tentative agreement

Friday was profit share day at WestJet — one of two days in the year
in which millions of dollars are doled out to the airline’s employees in
profit share cheques.

But before the celebration could begin, the airline’s pilots sent a
signal that all is not well at the carrier that prides itself on its
employee relations.

The pilots voted nearly 59% against a new labour contract that was
endorsed by both management and the leadership of the company’s
non-unionized WestJet Pilots Association. While the vote was far from
overwhelming, the turnout was strong at 96%.

The outcome also added fuel to simmering unionization efforts
underway at the airline, including that of its pilots by a group calling
themselves the WestJet Professional Pilots Association.

Both sides in dispute were tight-lipped Friday about what was at the
centre of the conflict. But those with knowledge of the situation told
the Financial Post it revolved around a few issues, including
the expansion to a multi-base model next year, management’s claims that
the pilots are among the highest paid in North America, and the rapid
pace of change underway at the airline in the past year.

“We are disappointed with the results of the vote,” Gregg Saretsky, WestJet chief executive, said in a statement.

He said management and the pilots would regroup in the coming weeks
to identify the pilots’ concerns and try to reach another agreement.

There is little to no chance at this point that the dispute will lead
to labor unrest because non-unionized employees lack the right to
strike in the country.

But Ann Frost, an associate professor of organizational behavior at
the Ivey Business School, said if the matter isn’t resolved, it could
very well lead to the organization of WestJet’s pilots.

“Non-union forms of employee representation are all nice and good as
long as they don’t have conflict,” she said. “The minute they have a
conflict that can’t be resolved through this mechanism, they need
something else.”

That “something else” is often the right to strike, which comes from unionization, she said.

Ms. Frost said management may be inclined to simply give a little
more to avoid the pilots’ organizing. She noted that while unionized
employees use the threat of a strike to win concessions in bargaining,
non-unionized workers use the threat of organizing toward the same goal.

“Maybe this is the thin edge of the wedge, and maybe WestJet’s management needs to be concerned about that,” Ms. Frost said.

WestJet’s pilots are not the only ones amidst an organization drive
at the airline either. The Canadian Union of Public Employees is also
currently trying to organize its flight attendants as well.

Both drives come at a time when WestJet is under pressure to cut its
costs as the airline matures and its employees gain seniority and are
paid more.

WestJet has already launched a new low-cost regional carrier, Encore,
to address its creeping costs. But others have already started to take
notice, including a new group in Vancouver that aims to launch its own
ultra-low cost carrier, Canadian Jetlines Ltd., next year by utilization
a lower cost structure to be more competitive on fares.

Ricardo Miranda is leading CUPE’s organization drive at WestJet, and
said the flight attendants have many of the same concerns the pilots do,
including the impact opening bases in Toronto and Vancouver in 2014
will have on them.

WestJet’s only base is currently in Calgary.

Ben Cherniavsky, Raymond James analyst, said he didn’t believe the
pilots rejecting their tentative agreement necessarily meant they would
organize.

“It does show that the culture is changing, and some stress is showing up from the rapid change that is going on,” he said.

But he didn’t think management was wrong to dig in its heels a bit, he said.

“In the past, these agreements have tended to be rubber stamped,
maybe it’s appropriate that management is putting more scrutiny to the
process,” he said.

“But that isn’t an easy task because there are consequences to that,” he added.