SIA operational management never wanted bases, they felt they were losing control and rosters became very fragmented. Basings were thrust upon them by the bean counters after an ex BA captain brought a so called 'expert' out from the UK to convince them. As soon as operations could they closed down the bases, full roster flexibility is returning, now expat terms in Singapore are fading fast also.
As the management in CX becomes more local I suspect you are looking at the same CX that existed thirty years ago, everyone based in HKG, if you want the job you move to HKG, if not, "next please". Not very encouraging, I know, but I think you will find that 'HKG only' on ever reducing T & Cs is the long term reality.
Last edited by parabellum; 17th Jun 2012 at 00:58.
The closure of the Paris base has been driven by recent legislation emanating from the European Union and some proposed legislation expected soon in France.
By way of background, the Double Taxation Agreements between various European countries as they relate to aviation and shipping say that aircrew and sailors will pay tax where the enterprise is based. If tax is not so paid, then tax will be paid where you are resident. For example, the agreement between UK and Denmark is quite specific on that latter provision, so that if you are aircrew working for a European company operating within Europe you will normally pay tax in your employer’s jurisdiction. Note that this does not cover Social Security.
The agreements meant that you could work for Ryanair, based in Paris and pay tax in Dubln. The problem arose when an Easyjet Captain, based in Paris, retired and asked for his pension. The French government said that no Social payments had been made and therefore he could not have a pension, whereupon Easyjet were taken to court and, as I understand it lost the case. Something similar has happened to Ryanair.
Cathay were not a European airline and therefore the judgement did not apply to them and still may not apply. It is all a bit grey at the moment. However, in April the European Union ruled that, whilst the Double Taxation agreements were for the individual countries to decide, Social Security should be paid by the employer and employee where the crew member’s roster begins. You would therefore be covered for Social Security by the state in which you worked and supposedly lived.
Again, this was only meant to apply to European based airlines, but as with all EU legislation it can be open to interpretation by individual countries. Another factor is that not all European countries have signed the legislation, Britain being one of them.
French social costs are enormous as a percentage of salary and if there were any suggestion that France would apply the legislation to overseas carriers with a French base there would be a scramble for the exits. That is what we are seeing with CX. I have included a table of French social costs for employer and employee. They amount to a tax on jobs, unless you work for the government.
Charge Employer Employee Family Benefits 5.40% 0% Health/Sickness 13.10% 0.75% Social Charges (CSG/CRDS etc) 0% 8.0% Accident at Work 3% 0% Unemployment Benefit 4.40% 2.40% Main Pension 9.90% 6.75% Complementary Pension 16.45% 11% Total 52% 29%
(Sorry that is slightly scrambled in the copy and paste)
Faced with an additional cost of 52% per employee it is not surprising that CX are closing the base.
Another unknown factor, now that the socialist Hollande is in charge, is the effect that future legislation within France will have. He has already said that he wants to introduce legislation making it more difficult to sack an employee. Such legislation already exists, so the fact that he wishes to tighten the rules must have any employer thinning out his workforce before the laws are passed.
When CX crunched the numbers Paris ceased to viable as a base. The French have succeeded in removing 41 well paid jobs from their economy at a time when there are no aircrew jobs in Europe. Frankfurt could be next if they follow the same path as the French in respect of Social legislation.
As far as the UK is concerned, all is not well there. The HKIRD have stated that Cathay Pacific is a Hong Kong enterprise and that full HK tax should be paid by UK crew under the terms of the Double Taxation Agreement. That includes the Cabin Crew. HMRC want to ignore the DTA, so they are to be taken to a Tribunal. If CX get caught up in a tug of war between governments they are likely to pull the plug on LHR and MAN. The bureaucrats would then have sent more jobs overseas. When we have all left, who pays for the bureaucrats?
As far as I know/understand the HMRC accept that UK based pilots( and UK PAYE) have to pay HKG tax and any tax demand from the HKIRD is being refunded to all that put in the paperwork. You also get a credit from the HKIRD for time spent in the UK. So even though it is a paper pain in the ar%e to do, you still only pay the total tax you would have paid to the UK tax man anyway, it is now being split.
I am only stating this for pilots that are living and paying UK tax, anyone else might have a different story.
You are correct for the tax year April 2010 to March 2011. For 2011 to 2012 the HKIRD assessors are saying that, in the light of the DTA between UK and HK we are now liable for full HK tax. In fact they are saying that we should not be paying UK tax as HK are the pre-eminent authority. This has been stated by an assessor in a face to face meeting.
It will certainly be interesting to see what the result of the tribunal will be. I can't see it ruling in favour of UK based pilots only paying HK tax, but then again, given the wording of the DTA it should rule that this be the case. If this does happen, whether or not Cathay would then have to pay some form of national insurance employee contributions remains to be seen. I'm thinking that something was obviously agreed back in 2008 during the on-shoring process with respect to NIC's, and I assume that Cathay would fight damn hard for this to remain unchanged.
Ref NICs there is a written agreement between CX and HMRC that we do not pay NICs. It was used by one of our crew members recently when dealing with an Inspector who did not believe that we were exempt.
HMRC need to be careful. If CX close the base then a lot of spending power will go overseas.
I hate to break it to you, but I don't think countries care much about 40 or 200 or 1000 people's jobs. They certainly care a whole lot less than all the people in HK who don't care, including the company. I'm not saying it's right, just that's the way it is.
Countries have tens/hundreds of millions of other residents to extract taxes from and waste tax money on, billions or trillions of dollars/euros/pounds/etc. of debt, million and with billions squandered every day on insane nonsense, almost universally growing deficits and debts that are not fixable, almost all countries relevant countries are/are going bankrupt, unemployment is through the roof and not a priority, insanely huge bailouts with numbers nobody understands barely make the news, gigantic fraud is everywhere, 99% of politicians only care about getting elected and re-elected, endless wars are going on all over the place killing and maiming so many people that nobody pays attention anymore, "free" countries are torturing and detaining people indefinitely without evidence/charges/hearings/habeus corpus/lawyers/communications/acknowledgement, first world/freedom rights that were fought hard for at great cost are evaporating/have evaporated overnight and nobody cares, and nobody remembers the lessons learned from history while watching all it repeat itself because they don't care.
When a few jobs disappear, they won't know and won't care, and even if they did, they won't and can't do anything about it anyway. No country's government or people is the least bit concerned about a few airline pilots being relocated by some semi-obscure foreign company. Just like all other foreign airlines, the crew manning will take place from that company's foreign hub and more hotel rooms, meals and beers will be sold to them.
Last edited by Iron Skillet; 17th Jun 2012 at 19:18.
Can anyone elaborate on the CityJet situation? Has France just given them a fine for €1M + for years 2007/8 for less than two dozen flight attendants? This would be for the time before CityJet introduced correct French contracts for the Fance based crews.
If the above were to apply to CX, there would be a much larger fine in the pipeline.
Of course there is something huge going on behind the scenes, the same type of huge something ($$$) that led to the onshoring in the first place. But we won't read about it in any Friday update. The DFO even failed to mention the closure of the base last week! For years there have been rumours of multi-$10's-of-millions fines and some deals to avoid such fines (like Canada/Aus/UK)....who knows?
I don't think it is any accident that the DFO didn't mention the Paris base closing last week. If he does, I am sure a team of Swire lawyers will vet whatever he says. They weren't afraid to give an excuse for the Amsterdam closure and now: complete silence. My hunch is that the base closed for potential legal reasons, that is a failure to pay French social security, and what has happened to Easyjet and Ryanair has the lawyers running scared.
Whispers in "The Street" is that CX was in for a whopping 30+ MILLION EURO fine by the French Govt, unless the PAR base was closed by 31 August! - for breaking just about every EU and French Laws since allowing crew on that base. It would have helped to do a bit of homework, but that's not exactly managment's style
I suspect there is much more substance to the whispers on The Street than many want to believe. CX has skirted the laws in many jurisdictions, but the noose is now quickly tightening around them. Why do you think there was so little notice and the urgency to close the Paris base? Surely no one believes it was because of type changes. Hopefully we are smarter than that.
I say take them on. The new lefty French government would love to squeeze CX until their pips squeaked. Let the French make a lesson of them. Unfortunately, the GC is still too busy berating the Canadians for being decisive.
Why would 'type changes' necessitate a base closure anyway? Why would 'multiple type changes' be necessary? Why does the base have to close so quickly? Why can't some of the encumbents stay where they are and fly out of France but from a LON (CDG) base? Surely the AOA lawyers could challenge this, delaying the process so that deadlines are missed. Concessions are more likely if the underprepared and under researched CX Basings Office is staring into a €30million abyss.