Canadian Public Needs a Protracted Air Canada Strike

Author: Michel A. Bell
Published: March 11, 2012 at 4:00 pm

Here we go again. Unions demanding more from Air Canada, and Canada's myopic federal government dashing to stop a strike. When I listen to Minister of Labor Lisa Raitt talk about this matter, she reminds me of a first-year business student who does not grasp the subject. The minister justifies this meddling act by claiming the government must guard the economy and shield the public.  Has the minister forgotten that Air Canada is a publicly traded corporation? Government must allow it to act within the law, and in its best interest. Air Canada must be free to lock out its employees. Similarly, government must let workers strike, if they have that legal right. Air Canada’s workers do.

Why is government interfering with Air Canada, preempting it from acting to solve this challenge? It is highly likely that this government decision will destroy long-term shareholder value. It hampers the corporation’s latitude, and curbs unions' flexibility. Notably, it could be the tipping point hastening Air Canada’s trip to bankruptcy protection.

If the government believes an Air Canada strike harms the economy, it has other options. It can change Air Canada's foreign ownership limits and other pertinent constraints, and allow more competitors. WestJet, with Southwest Airlines' successful business model, does well without unions. Why not allow room for others to compete head-to-head with Air Canada, and give the public more choices? This might lead to a smaller Air Canada, fewer workers, and fewer unions. Besides, it might entice unions to focus on Air Canada's long-term viability.

Why do Air Canada and its unions keep battling? Air Canada has outdated human-resource management practices. Surely, it takes two parties to bargain. Even so, Air Canada must realize that the hostile labor relations environment has failed. To survive long term, union-management relationships must change drastically. What will it take for Air Canada and its unions to realize that they must work as long-term partners? They have fought many battles using the current failed model. 

Maybe a protracted strike that leads to bankruptcy might be the catalyst for Air Canada's break up. Other players could pick up pieces of Air Canada and define new engagement rules. This would have negative, manageable short-term effects on the economy. WestJet could ramp up its services, and government could allow foreign carriers to transport passengers between Canadian airports. In the long-term, Air Canada would not have unions snapping at its heels, constantly holding the public at ransom.

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Article Author: Michel A. Bell

Michel A. Bell is a Christian, Canadian, conservative, former senior business executive, founder and president of Managing God's Money. He held many senior finance, strategy, and planning positions in the Alcan Inc. …

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