21 FEB 2012: Air Canada's pilots union says the federal government has a role in ensuring that Canadian jobs don't get shipped overseas if the airline acts on its plans to create a low-cost carrier.


"There is a genuine public policy interest here and I think government really needs to pay attention," Capt. Paul Strachan, president of the Air Canada Pilots Association, said Monday.

Strachan said the airline's 3,000 pilots need to see a roadmap on how the airline sees the new carrier operating over the next five to 10 years.

The union is concerned that Canadian jobs will be lost to cheaper overseas workers, much as it happened in the shipping industry years ago when companies started sailing under flags of convenience.

"Do we want planes registered in Liberia, flown by crews that come from wherever?" Strachan said in an interview.

Failing to include Canadian pilots would simply mean proceeding with "a Trojan Horse on wages and working conditions, which is really not in anybody's best interests," he said.

The low-cost carrier would look artificially profitable if the mainline airline is weighed down with fixed costs while revenues are moved to the new entity, said Strachan in an interview.

That's is current the situation happening in Australia between Qantas and low-cost subsidiary Jetstar, which Air Canada has said is one of the models it is considering. The effort is to get around pilot union scope clauses that limit who can fly its planes.

Air Canada declined to comment and reports that it has a team of 60 employees and 30 consultants and lawyers assessing the situation.

Other points of disagreement are possible pension changes and the desire by the airline to raise the mandatory retirement age.

Pilots are in the midst of federally mediated talks with Air Canada to avert a labour stoppage and reach a new collective agreement.

Benoit Poirier of Desjardins Capital Markets reportedly said any Air Canada low-cost venture won't likely be in place until 2013, at the earliest.

"We view this development at Air Canada as a slight negative for Transat," he wrote in a recent report.

Air Canada's plan to use 50 aircraft would slightly increase capacity on leisure markets, but would not be as large as some industry participants suspect.

Air Canada CEO Calin Rovinescu is determined to create a new lower cost business model to help the carrier ensure its long-term profitability to compete against rivals such as Air Transat, WestJet, and Sunwing.

He has previously said it would only set up a low-cost carrier if it had the support of its employees. Partnering with a foreign partner would seem to signal a change in the airline's approach.


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