AsiaPac airlines and unions: strikes rarer than other regions

Summary:

• Airline strikes over the years have been relatively common in Australia, India, Japan and South Korea but for most of the Asia Pacific region strikes are not common.
• Taiwanese airlines have endured two strikes this year and three strikes since 2016, starting a new trend in a country that previously never had to endure an airline strike.
• There have also not been any significant airline strikes in India, Japan and South Korea in recent years, suggesting a possible improvement in airline-employee relations.
• Airline unions are generally smaller and not as strong in Asia than in other regions.
• Australia is an exception and has a history of airline strikes but unionisation levels and labour laws in Australia are different from Asia.

Flight attendant strike impacts EVA at critical time

EVA claimed the strike impacted around 300,000 passengers. As EVA flew 12.5 million passengers in 2018 the impact was equivalent to over 2% of its annual traffic.

The strike came at a critical time for EVA as is contending with intensifying competition, including the planned launch of a new airline in early 2020 established by its former chairman. The damage both financially and reputationally is severe and could have long term repercussions.

TFAU gained the legal right to strike following a vote which was held from 13-May-2019 to 6-Jun-2019. The union has nearly 6,000 members but only 2,200 participated in the strike.

Several round of negotiations for a new collective agreement failed, leading to the strike vote. TFAU particularly citied EVA's refusal to increase overseas hourly allowances, which covers flight attendants when overseas between flights.

Taiwan has been hit by three airline strikes since 2016

Labour strife has become common in the Taiwanese airline industry after decades of relatively good relations and no strikes.

In Feb-2019, China Airline (CAL) pilots, represented by the Taoyuan Pilots Union, had a week-long strike over working conditions and benefits. The strike, which included more than 600 pilots, occurred during the Chinese New Year peak travel period, impacting around 50,000 passengers.

As part of the agreement ending the strike, CAL pilots promised not to strike for three and a half years and the airline increased the number of pilots rostered for long haul flights. CAL now rosters three pilots on flights over eight hours, up from two pilots previously, and four pilots on flights over 12 hours, up from three pilots previously.

CAL was also impacted by a flight attendant strike in 2016. That strike was the first in Taiwanese airline history, creating a precedent that has clearly become a concern for the Taiwanese airline sector.

The 2016 CAL flight attendant strike lasted less than 24 hours as the airline quickly gave into the union's demand to improve working conditions and benefits. However, the 2016 strike has had a far-reaching impact.

Unionisation is on the rise in Taiwan

EVA flight attendants were unionised only a few months after the CAL strike, which is hardly surprising given the success of the strike at CAL. CAL and EVA are the two largest airlines in Taiwan.

The recent strike at EVA was the longest in Taiwan history (all industries), another discouraging sign for Taiwanese airlines. More airline strikes in Taiwan are likely given the precedent now established.

The Taiwan examples show how unionisation and strikes can proliferate when they effectively addressing employee concerns. However, it is rather unlikely that Taiwan's recent history of labour discord will spread to other Asian countries.

Korea and Japan have been unionised for much longer

Airline employee groups in Asia are not generally aligned. In some countries strikes are not permitted at all. In several countries they are extremely rare - for cultural or historic reasons.

Unionisation is relatively common in Asia but in many countries airlines have relatively loose employee associations rather than actual unions.

Besides Taiwan, the other strongest Asian examples of airline unions are also in North Asia. Airline strikes have a much deeper history in Korea and Japan than Taiwan but in recent years the situation seems to be improving while in Taiwan it has clearly been going in the opposite direction. Hong Kong also has a brewing pilot dispute that could become nasty in the coming years.

Korean Air and Asiana have endured pilot strikes in the past

Korean Air pilots went on in late Dec-2016 after wage negotiations broke down, marking the first time in 11 years Korean was impacted by a pilots' strike. However, only 180 pilots were included and the strike ended earlier than initially scheduled (after six days).

The previous strike, in Dec-2005, was much bigger, impacting more than 1,000 flights over four days. Korean Air incurred over USD150 million in damages from that strike, highlighting how a strike can cripple an Asian airline.

Korea's second largest airline Asiana also endured a strike in 2005. Around 500 Asiana pilots, representing 60% of its total pilots, went on strike for 25 days in Jul/Aug-2005.

The Asiana strike only ended after the Korean government intervened, ordering the pilots to return to work. The Asiana Pilots Union and the airline subsequently were required to negotiate a new agreement or face binding arbitration.

Much more recently, Asiana pilots reached a new deal with its pilots in Oct-2018 following a relatively smooth negotiation.

While there has been some unrest in recent years in Korea, including protests organised by Korean Air employee groups to express outrage over the Cho family, labour relations have generally improved.

ANA and JAL also have been hit by pilots but not recently

The Japan airline industry has similarly enjoyed several years without strikes.

Japan Airlines (JAL) pilots last engaged in a strike in 2000 but the strike only lasted one day. JAL pilots and flight attendants planned a one-day walk out in Nov-2004 but called it off.

All Nippon Airways (ANA) pilots struck for two weeks back in 1998, costing the airline around USD12 million.

While labour unions are common in Japan union membership has declined significantly in recent years and strikes have become a much less frequent occurrence.

Cathay Pacific relations with pilots are acrimonious

Cathay Pacific and its pilots probably represent the most acrimonious current relationship between an Asian airline and union although a strike has so far been avoided.

Cathay Pacific pilots, represented by the Hong Kong Aircrew Officers Association (HKAOA), overwhelmingly rejected early this year a proposed contract. Negotiations have dragged on for five years and this was second time a deal forged by HKAOA and Cathay Pacific was rejected. The two rejections highlight internal union issues as well as pilot frustration with the airline.

Forging a new pilots deal is an important component of Cathay's restructuring initiative. However, it will be difficult coming up with a deal that satisfies a majority of the pilots without impacting the airline's financial turnaround.

The Hong Kong flag carrier has not faced major industrial action since 2001, when 49 pilots were fired after engaging in work-to-rule action by delaying flights through meticulous safety checks. Cathay chose a hardline response in sacking the pilots and imposing a new pay and rostering package, essentially ending a nasty drawn out dispute.

In 1999, during the Asian financial crisis, Cathay adopted a similar hardline tactic by imposing a series of pay cuts following a two-week sickout.

The fact Cathay Pacific has survived nearly two decades without any industrial action is noteworthy. However, this hardly provides any solace given the current situation and the acrimony that has built up after so many years of sour relations.

Air India has been impacted by strikes but not recently

Strikes are also relatively common in South Asia, particularly India.

Air India was hit by pilot strikes in 2011 and 2012, significantly impacting operations. The second stripe involved a group of over 400 pilots and lasted 58 days. A court facilitated settlement finally ended the impasse.

In 2011 about 800 Indian Airline pilots went on strike demanding pay parity with Air India pilots. The two government owned airlines merged in 2007.

There have been several threatened strikes by Air India pilot groups over the last few years but no strike has materialised. Jet Airways pilots also threatened to strike several times in the months prior to the airline's collapse.

Air India contract ground workers in Mumbai went on strike in Nov-2018 but the strike only lasted one day.

In Southeast Asia and China airline strikes are very rare

In Southeast Asia there also has not been any significant industrial action against airlines in recent years. The region generally has less fewer strikes than North Asia or South Asia.

Thai Airways was hit by a Bangkok airport employee strike in early 2013 but the strike only lasted three days, delaying some flights.

A small group of Garuda Indonesia pilots waged a strike in Jul-2011 but it lasted less than a day as management quickly reached a settlement with the union. More recently, Garuda pilots and flight attendants threatened to strike in Jul-2018 but the strikes were called off after both unions forged an agreement with the airline.

Singapore Airlines has never been hit by a strike, which ais very unusual in Singapore. However, SIA's relations with its employees have been problematic over the years and arbitrators have had to be brought in on a few occasions to settle impasses with the pilot union.

In China, organised labour strikes are similarly very unusual. Perhaps the closest example of an airline strike in China came in 2008, when China Eastern grounded pilots who deliberated turned around 21 flights in an unofficial strike.

Australia has a history of airline strikes

Australia has a more chequered track record for airline labour strife but is very different from most of Asia in terms of employee culture and unionisation. Australia and New Zealand are more like Europe or North America in this respect rather than others part of the Asia Pacific region.

Australian and New Zealand carriers have endured several major strikes over the years.

In a now famous end to the last significant industrial action in Australia, Qantas CEO Alan Joyce grounded the airline's entire fleet in Oct-2011, locking out all employees.

The grounding ended a series of sporadic and crippling strikes over a restructuring plan as it prompted the Australian government to intervene. The unusual strategy worked as Australia's labour tribunal intervened, ordering unions to end their strike. Flights resumed only three days after the grounding.

Without the grounding the series of strike that Qantas had been enduring for three months would have likely dragged on for several months. Mr Joyce said at the time that Qantas could not have survived such strikes from continuing and "the only solution for Qantas was to take our own industrial action".

Ansett endured a pilot strike in 2000, one year before its collapse, as nearly 150 pilots protested the airline's restructuring plan.

In 1989 pilots working for several Australian airlines went on strike in what turned out to be one of the largest and most costly labour disputes in Australian history. The pilots were represented by the Australia Federation of Air Pilots (AFAP), which still represents several pilot groups in Australia.

AFAP represented pilots at Tigerair Australia stopped working for four hours on 25-Jan-2019, protesting a longstanding pay dispute with the Virgin Australia subsidiary. Tigerair Australia and its pilots agreed to a new contract in Mar-2019, finally replacing a contract that had expired in 2017.

While the Tigerair pilot stoppage represents the only industrial action against an airline in Australia or New Zealand in more than five years it was not significant given its very short duration.

New Zealand has not had any airline strikes in recent years

The last strike in New Zealand was back in 2005 when some of Air New Zealand's flight attendants, represented by the Flight Attendants and Related Services Association, engaged in industrial action.

Air New Zealand came close to enduring a strike in Dec-2018, when unions representing maintenance and logistics workers issued a strike notice. The unions were planning to strike just a few days before Christmas but a settlement was reached about a week prior to the planned action.

A strike by Air New Zealand ground staff in 2004 was also called off at the last minute as a settlement was reached.

Air New Zealand planned to strike in 2002 but the action was averted as the airline initiated legal action claiming the strike was unlawful.

Airline strikes are generally less common in Asia Pacific than other regions

Union-airline relations in Asia Pacific overall seems to be less acrimonious than in Europe or North America. Airline unions in many Asian countries are not strong and, in many cases, only represent a small portion of employees. Unions in other regions are generally larger and stronger

Union-airline negotiations often drag on for years in Asia Pacific. In many Asian countries the legal and regulatory framework is not in place to accelerate the process and ensure a fair outcome.

Unionisation in the Asian airline sector could expand over time as employees look at what unions have achieved in other regions. For aviation markets in Asia Pacific that are not developed from a union perspective lessons from the more developed markets such as Australia, Hong Kong, Korea and Japan could play a role.

Recent strikes in Taiwan could have repercussions

The recent experiences in Taiwan may also contribute to shaping future union-airline relations in the region.

In announcing the end of the flight attendant strike in early Jul-2019, EVA urged the Taiwanese government to come up new regulations to mitigate the impact of potential future strikes. EVA claimed the strike was launched without prior notice, causing widespread disruption to the travelling public.

"EVA shares views expressed by the Ministry of Transportation and Communications in a recent proposal that would require advance strike notice in the airline industry," EVA stated. "The airline is hopeful that appropriate authorities and the Legislative Yuan can adopt the advance strike notice regulation as soon as possible to help safeguard passenger interests."

EVA added that: "Over the past three years, external trade unions have launched three labour actions against airlines in Taiwan. Each of these strikes has caused widespread disruptions for thousands of passengers and the general public. EVA urges the government to amend laws so that such incidents can be prevented from happening again and to protect the local economy."

Asian governments are generally corporate friendly and may be more receptive to airline views on strikes than governments in other regions. Airlines in several Asian countries therefore have the opportunity to lobby governments to draft new regulations that could potentially combat unions and a potential increase in unionisation.

What plays out in the Asia over the next several years will likely be different than what has taken place in other regions. What transpires in each country in Asia Pacific is also likely to be distinct given the vast differences within the vast region although it is possible some common themes will emerge.