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Aviation on the brink over welfare row

By Wole Oyebade
14 August 2020   |   4:21 am
The colossal losses in the aviation sector should not have come as a surprise. Air travel is a high end, tight budget industry where every minute counts and is accounted for. Three months of lockdown could only mean collateral doom.

The drumbeat of welfare agitations is getting louder in the aviation industry. But more unions’ pressure on insolvent airlines may win the battle and lose the war. WOLE OYEBADE writes.

The colossal losses in the aviation sector should not have come as a surprise. Air travel is a high end, tight budget industry where every minute counts and is accounted for. Three months of lockdown could only mean collateral doom.

The unexpected was the workers and management’s face-off that has since dogged the tedious recovery phase since flight services resumed a month ago. In fairness to the workers, they have been the first set of victims when businesses started heading south. They were either furloughed without compensation or retained on meagre allowance.

The fortunes of their employers were not better either. Even prior to the March lockdown, local airlines had been operating at about 30 per cent capacity. Lockdown brought it to zero. Flight services resumed but the all-important load factor has been stuck on 25 per cent average. So, it is tough luck for everyone and hardly the time to seek cost-related demands.

But when aviation unions get into the mix, and in-between workers-management tango, battles become hard-won and peaceful resolution is more of wisdom for all. Stakeholders have, therefore, warned parties that the entire industry faces a grim future unless they could moderate their demands, tailor expectation along the COVID-19 realities, and bargain for peace.

Love takes a flight
Signs of brewing tension emerged last week when Air Peace airlines fired about 70 pilots citing financial difficulties in the COVID-19 era. Some of the affected workers, however, said their disengagement was not unconnected with a row over pay cut and mild protest by the pilots.

A day after, Bristow Helicopters also terminated the contract of over 100 pilots and engineers in its operations. Some of the affected workers, in collaboration with the union, had embarked on indefinite strike action, picketing the airline’s office in Lagos over welfare issues and alleged infractions.

Air Peace is the leader of the industry, flying the largest fleet and accounts for about 40 per cent passenger traffic in the country. The airline wears the shoes, and its Chairman, Allen Onyema, can tell where it pains the most.

Onyema noted that the prevailing “unfavorable” circumstance warranted the rejected 40 per cent pay cut option, which was designed to take effect for 90 days in the first instance.

He said the management planned to return to status quo when passenger traffic improves. Yet, “the pilot still chose not to fly. Thus, embarrassing the company and also portrayed the airline in an unpleasant image in the estimation of its esteemed passengers.””

Onyema, in a memo to the pilot, said: “It is very unfortunate that some of you chose to embarrass this airline at this point in time through various flimsy excuses such as refusal to come to work on very spurious reasons.””

The management, in a reaction to the sack, described the move as a very painful but rightful decision in the circumstances the airline has found itself as a result of the devastating effects of the COVID-19 pandemic on its operations and financial health.”

It explained that the decision was taken for the greater good of the company and its almost 3000 direct workforce, the affected pilots inclusive.

“The airline cannot afford to toe the path of being unable to continue to fulfill its financial obligations to its staff, external vendors, aviation agencies, maintenance organisations, insurance companies, banks and other creditors hence the decision to restructure its entire operations with a view to surviving the times.

“The pandemic has hit every airline worldwide so badly that it has become very impossible for airlines to remain afloat without carrying out internal restructuring of their costs. Anything short of what we have done may lead to the collapse of an airline as could be seen in some places worldwide during this period.””

Aviation under threats worldwide
The weight shedding measures are not peculiar to Air Peace or the local airlines. It is a global storm predicated on insolvency. The clearing house for 280-plus airlines worldwide, the International Air Transport Association (IATA), recently estimated that the airline industry’s global debt could rise to $550 billion by year-end.

The debt is a $120 billion increase over debt levels at the start of 2020. The details showed that about $67 billion of the new debt is composed of government loans ($50 billion), deferred taxes of $5 billion and loan guarantees of $12 billion.

The global debt crisis is forcing operators to explore difficult reforms, which will affect 25 million direct and indirect aviation jobs. For instance, Turkish Airlines has implemented a 55 and 30 per cent pay cut for senior and junior staff in April, while some employees were dismissed.

Some 200 jobs are going at Gatwick Airport as it “protects the business” against the impact of Covid-19. Stewart Wingate, the chief executive officer, and his executive team will take a 20 per cent salary cut and waive any bonus for the current financial year.

Dublin-based Ryanair has begun reforms that may result in the loss of up to 3,000 mainly pilot and cabin crew jobs, unpaid leave, and pay cuts of up to 20 per cent, and the closure of a number of aircraft bases across Europe until traffic recovers. The British Airline Pilots Association recently announced that British Airways pilots have accepted a deal that will temporarily cut their pay by 20 per cent and limit job losses to just about 270, as against the initial planned 1,255.

Unions’ pushback
The workers unions are not giving a buy-in, and they insisted on the sanctity of rights. The Nigeria Labour Congress (NLC) has threatened to mobilise its members against the trio of Air Peace, Bristow Helicopters and Turkish Air, in protest against alleged anti-labour activities and recent mass sack by the airlines.

The union, which condemned the furloughed of over 170 professionals, said the airlines had a two-week ultimatum to reverse the action. The NLC, in a letter signed by its National President, Ayuba Waba, condemned the actions, and sack of National Union Association Transport Employees (NUATE) union executives working with Turkish Airline, describing the move as insensitive, callous, and unjust.

Waba said, as agreed between labour and Employers’ Associations, social dialogue should be used to resolve industrial concerns instead of the current resort to unilateralism.

On Wednesday, the trio of NUATE, Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) and Association of Nigeria Aviation Professionals (ANAP) gave backing to the NLC’s plans to ground the aviation sector.

General Secretary of NUATE, Ocheme Aba, said in spite of their efforts, and numerous interventions of the Ministry of Labour, most Nigerian airlines had allegedly made it impossible for their employees to freely join trade unions of their choice, describing it as a clear violation of the Constitution of Nigeria and the Labour Act.

He said: “We, therefore, serve notice to them all that freedom for the employees is not negotiable, and must be obtained by whatever means possible under the law. Air Peace, Azman Air, Dana Air, Max Air, Jed Air, Skypower Airlines, Med-View Airlines, and the rest of them should take note.”

Deputy General Secretary ATSSSAN, Frances Akinjole, explained that they were not against pay cuts, but the move should not be unilateral, rather a product of consensus among all the parties concerned.

How not to agitate
The stakeholders keen on the development were of the view that another clampdown on the distressed airlines and sector at large would further worsen the plight of the industry, force it down the brink, leaving all with nothing to fight over anymore.

The chief executive officer of Mainstream Cargo Limited, Seyi Adewale, observed that some of the local operators did tow the path of peace, but the workers wanted it their own way.

Adewale said instead of the unions shutting down their own sector, they should sit-down with the operators and agree on a win-win for all.

He said: “For instance if an airline has 100 pilots but had to scale down its fleet as a result of low passenger patronage, then they have to allow for redundancy, pending when it can fully utilise its fleet again and call back these workers.

“There has to be a form of negotiation between the owners of the business and the pilots and this was exactly what Air Peace was trying to do then.

“The pilots said the owners of the business should not only be focused on making profit but I would like to ask, who would pay for the losses? Airline operators are going through a lot now and they need to be considered,” Adewale said.

Olumide Ohunayo, an aviation analyst, hinted that in this era, everybody needs to calm down; from the unions, to the workers, to the airlines, most importantly to the regulators and the supervising ministry.

Ohunayo said the airlines at this time cannot be threatened, abandoned or left on their own. He condemned the action of the unions, who recently threatened that the airspace will be unsafe for flight just because they had disputes with two airlines.

“What we are having now is a 40 to 50 per cent confidence level in passengers. This means we are having 40 to 50 per cent load factor compared to what it was before the COVID-19. This pandemic is the worst ever for the industry. We have SARS, 9/11, financial meltdown and all these affected airlines but for the first time, this pandemic affected the whole region and aircraft were grounded.

“The priority here is for airlines to get back to full operations. There is very little happening in the Nigerian airspace now. Even Lufthansa that has collected palliatives from their government is downsizing. So, what is the big deal? There is a need to re-orientate the unions, the government and the agencies to see that it is a time that we all need each other,” Ohunayo said.

A stitch in time…
The Minister of Aviation, Hadi Sirika, has lately intervened in both Bristow and Air Peace workers’ brouhaha. Sirika called for calm, urged all to see through the lens of COVID-19 pandemic, and appealed to Onyema to absorb some of the dismissed pilots without hurting his financial threshold. Fair enough.

The minister needs to do more. He needs to engage all the parties more and facilitate the release of aviation bailout to help the operators steady the ship and stand better chances of survival, both for the sake of the agitated workers and the economy at large.