Air Canada is under attack on at least four fronts in its takeover of Canadian Airlines.
Everything is coming to a head at once as Air Canada tries to integrate labour contracts with Canadian Airlines, the UK launches its own investigation, Ottawa plans to toughen its aviation law, and creditors battle Air Canada over Canadian's restructuring.
Air Canada faces a brewing storm with unions over its plan to merge labour contracts. Workers at Canadian welcome the move because it improves their lot, but Air Canada employees are upset. A key issue is how much seniority credit under Air Canada's system should Canadian workers earn for their time at Canadian Air Canada's largest union has already rejected a contract extension, and its powerful and sometimes militant union of 2,200 pilots is disgruntled with the company's proposal.
Complaints from British Airways have prompted the UK competition commission to launch a review into the effect of Air Canada's takeover on North Atlantic competition between London Heathrow and Canada. This followed complaints to Ottawa's transport committee from BA, Cathay Pacific and Air France that Air Canada is gouging on interline fares, a charge Air Canada has ridiculed. Toronto-based International Courier has filed a separate complaint with Canada's competition bureau accusing Air Canada of gouging on cargo rates.
Complaints from communities and consumer groups, meanwhile, have brought a strong reaction from the parliamentary transport committee, which accuses Air Canada of abusing its new power. MP Joe Fontana of the governing Liberal Party, says: "You've made us realise what a monopoly should not be."
A bill with tough new provisions supported by the government could become law by the end of May. It creates a government-appointed ombudsman and empowers the competition bureau to issue cease and desist orders against predatory airline conduct.
Source: Airline Business
