I've just read the
Far East Economic Review article, and it makes a great deal of sense to me.
If you're running a company with high overheads and your competitors are lean and mean, one of two things have to happen. If you continue as you are, you'll go bust; and if you want to stay in business, you need to trim costs.
CX's pay scales (especially the A scale) were notorious for being the best in the business - in order to attract crews in the days when the expat lifestyle wasn't as normal as it is today. It was part of the Swire Group culture which has now all but disappeared post 1997.
According to the article, the crux of the problem seems to be the issue that has really crippled the industry - that of seniority. The union's position is that any contract crews have to join the seniority list at the bottom - regardless of their experience; and as it rightly says, this results in a lose:lose situation for both the company and the union with no end in sight.
Most people don't realise how low operating margins of airlines are.
Above all, it's a fight being waged against the backdrop of radically changing economics in the airline industry. Rapid growth in airline fleets in the 1990s--both in Asia and in the rest of the world--has turned the supply-and-demand equation on its head. Too many aircraft have knocked passenger yields and profit margins at the world's carriers ever lower--on average,
most commercial airlines squeak by with profit margins of just 2%-3% of revenues. But at the same time, the growth has also created a worldwide shortage of pilots, demanding higher pay even as the world economy slows. In North America, pilots' salaries have jumped at double-digit rates this year, just as the airlines brace for a sharp drop in demand.
My views on the insane pay demands by the likes of pilots working for LH, DL, UA, AA etc are well known - and whilst it is true that employment costs are only the second or third highest component of an airline's costs, that 2% gross margin can be wiped out very, very quickly with any minor change whether it's increased overheads in the form of pay or decreased revenues in the form of a reduction in the number of business passengers paying high yielding full fares.
On the other hand, the poor rostering and lack of crews has taken its toll on CX's pilots. But that's largely due to the unions demanding that the seniority system be retained - if that was scrapped, then putting in place the extra crews and producing workable rosters would be very straightforward.
As an outsider, I'd suggest the following solution:
1) Scrap the existing seniority system in favour of one where there's incremental pay increases based on time worked at the company.
2) Recruit additional pilots and slot them in based on their experience and expertise.
3) Limit reserve time to no more than one in four; with the reserve time being rostered a minimum of three months in advance - and increase reserve pay rates to 1:3 or 1:2.
It seems clear to me that both sides are currently at fault. The union for its usual Luddite attitude to change - especially regarding the seniority system; and management for treating their people poorly over the rostering/reserve issue.
As for the 49/52 - we still haven't heard both sides of that story. Were they the most militant people; those blocking possible progress and/or compromise? Or were they genuinely chosen at random? If so, why?
I suspect that this particular show is going to run and run...
