UPDATE: Air Canada Declares Impasse. Calls for Binding Arbitration with FAs, CUPE Rejects Proposal

Air Canada has called for its labour dispute with flight attendants to shift to a binding arbitration process. The Air Canada Component of CUPE, the union representing 10,000 Air Canada and Air Canada Rouge flight attendants, has “respectfully declined.”

“After eight months of negotiation we have been unable to reach a tentative collective agreement despite our best efforts and those of the Federal Mediation and Conciliation Service,” Air Canada wrote in a letter signed by Air Canada vice-president and human resources chief Arielle Meloul-Wechsler on Monday.

In a later statement issued Tuesday afternoon, Air Canada says they now “believe the talks are at an impasse,” and the union submitted a counteroffer seeking “exorbitant increases beyond those presented in earlier submissions.”

“Air Canada has been negotiating with CUPE for eight months and although we have settled many items, none of which required concessions, we remain far apart on key issues,” said Meloul-Wechsler.

“We are disappointed our proposal to resolve the outstanding items fairly through arbitration has been rejected by the union and it is instead insisting on unsustainable wage increases. We are now at an impasse in talks, with the union in a position to issue a strike notice at midnight tonight, creating tremendous uncertainty for hundreds of thousands of travellers and companies shipping critical, time-sensitive goods. Air Canada is now looking at all remaining options, including a request for government-directed arbitration, to prevent a disruption or at least remove this intolerable uncertainty for our customers.”

Air Canada said they tabled a revised comprehensive settlement to the union on August 11 that provided for a 38 per cent total compensation increase over four years, with 25 per cent in the first year and sought no concessions from the union in return. The offer also addressed the issue of ground pay, improved pensions and benefits, increased crew rest and contained other improvements, including those to enhance work-life balance.

CUPE had responded earlier with a letter signed by the president of its Air Canada component Wesley Lesosky. In part it read:

 “We therefore respectfully decline the proposal to proceed to binding interest arbitration at this time. Instead, we urge Air Canada to continue bargaining at the table with a view to making meaningful progress toward an agreement.”

In an update posted on the bargaining committee’s website – preceeding Air Canada’s statement on Tuesday – the Canadian Union of Public Employees (CUPE) described Air Canada’s proposal to refer the matter to binding interest arbitration. That would bring a third-party arbitrator into the talks to mediate on specific items that haven’t been agreed on by both sides and render a decision.

“While we appreciate your acknowledgment of the efforts made at the bargaining table over the past nine months, the Air Canada Component of CUPE firmly believes that the most effective way to achieve a fair and equitable Collective Agreement is through continued direct negotiations between the parties, supported as necessary by the Federal Mediation and Conciliation Service,” the CUPE letter stated.

“Interest arbitration, while utilized in specific past circumstances, is not an appropriate path in this round of bargaining,” CUPE added. 

“Our membership has been clear in providing us with a strong strike mandate, reflecting their determination to secure a contract that addresses the key issues, including wages, unpaid work, per diems, pensions, work rules, and rest provisions, many of which are still outstanding. We remain committed to using all available tools within the bargaining process to reach a negotiated settlement that meets the needs of our members.”

In its letter, Air Canada stated: “Engaging in interest arbitration will let the flight attendants, CUPE, Air Canada and Air Canada Rouge move forward without further delay and uncertainty, both of which weigh on us all. An experienced arbitrator will be able to appreciate quickly our respective positions and either assist us in reaching an agreement through mediation or issue a fair reward.”

Air Canada further proposed that if the two parties cannot agree on an arbitrator within 30 days, “we ask the Minister of Labour to name one.”

Binding arbitration would suspend the chance of a lockout or strike, despite the fact that CUPE members voted overwhelmingly in favour of a strike mandate last week, setting up a potential strike to begin as soon as 12:01 a.m. ET on August 16.

Travel Market Report Canada reached out to a respected labour arbitrator and mediator who served the bar as a labour lawyer for over 30 years. He did not wish to be identified, but added some factual clarity to the story.

Perhaps most importantly, the labour official noted that Air Canada cannot force arbitration on CUPE flight attendants. However, the Federal Minister of Labour, has the right to impose arbitration on parties unsuccessful in finding agreement. Such a case has to be grounded in the best interests of the economy and the citizens of Canada.

Air Canada could be viewed by the Minister of Labour as a national carrier providing an essential service and would then be able to send the parties to arbitration if they can’t find agreement through negotiation. There’s a precedent for this in recent history — WestJet and the union representing its mechanics were sent to binding arbitration last June, after being unable to negotiate a first contract.

The veteran labour lawyer said that it’s not surprising CUPE doesn’t want arbitration, as that could be viewed as succumbing to the employer. He said union members would also prefer not to have an agreement imposed on them, rather than something that was fought for and won.

The labour official noted that federal anti-scab legislation passed in June would make it difficult for Air Canada to replace striking workers.

One this is for sure — all labour disputes and all strikes come to an end, either by one side or the other capitulating or the government stepping in. It remains unclear how this one will end.