European aviation industry threatened by chaos as more strikes planned before tourist season

By Slobodan Lekic, AP
Tuesday, March 23, 2010

European aviation industry faces more strikes

BRUSSELS — Lufthansa and TAP Air Portugal moved closer Tuesday to facing strike action by their pilots’ unions, as British Airways braced for the second work stoppage in just over a week by thousands of its cabin crew.

If the wave of airline strikes spreads or continues into the summer, it could undermine the upcoming tourist season that nations in southern Europe — which have been hit the hardest by the financial crisis — are counting on to boost their recovery.

Portuguese Economy Minister Jose Vieira da Silva warned that a strike by TAP Air Portugal pilots would hurt the tourist industry badly.

“Our tourist sector is coming out of a very deep crisis. (This strike) is not good for it,” da Silva said.

The underlying cause for the strikes are the financial difficulties faced by the industry and the cost-cutting measures airlines have had to resort to in an effort to maintain competitiveness.

In the late 1990s, European airlines invested heavily in new aircraft in order to stave off rapidly expanding competitors — such as Dubai-based Emirates or Etihad from neighboring Abu Dhabi — and to avoid being relegated to the position of second-rate aviation powers.

This was accompanied by a wave of acquisitions or mergers with other European carriers in an attempt to gain market share and squeeze remaining independents out of the market.

But the economic downturn and accompanying fall in passenger traffic, which has cut revenues by 10-15 percent across the continent, has left the carriers scrambling to stave off bankruptcy by cutting costs and slashing services.

“It’s an unusual situation and quite bizarre, but the industry is in its worst state ever,” said John Strickland, director of JLS Consulting, a London-based aviation consultancy firm.

“We’re seeing legacy carriers really struggling to fight in a competitive environment because consumers want lower prices and the low-cost carriers are offering them,” he said.

“All this is putting pressure on costs. And one of the ways they are coping is negotiating with their work forces not just about salaries, but about the ways of working, increased flexibility, and greater efficiency.”

Meanwhile, air traffic controllers in France went on strike last month, disrupting flights and causing huge delays across western Europe. Controllers in debt-plagued Greece also walked off their jobs to protest against painful spending cuts.

Lufthansa, Europe’s largest airline, received more bad news Tuesday, when the annual congress of the 105,000-strong International Association of Airline Pilots Associations voted to back a work stoppage by the carrier’s pilots.

“We salute the exemplary approach of the members of (Lufthansa’s) Cockpit union who are demonstrating strong unity across company borders in their fight to preserve their prospects, jobs and adequate working conditions,” said a statement by the umbrella group of the world’s pilots.

The airline’s pilots went out on strike last month, but the planned four-day walkout was cut short after a day with an agreement to resume negotiations.

The Cockpit union has called a walkout at all German locations from April 13-16. It said the dispute was about salary, working conditions and job security. The union said it was giving advance warning to avoid any disruption to customers during the Easter holiday and to get the airline’s management to return to the negotiating table.

Lufthansa countered that its latest offer to the Cockpit union was to address concerns over job security. Chief management negotiator Roland Busch said the offer was “appropriate to the situation of the company and the economic environment,” and that Lufthansa needed to avoid cost increases in order to maintain its competitiveness.

The dispute also affects Lufthansa Cargo and its budget Germanwings subsidiary.

Meanwhile, in London, British Airways said it was working to get operations back to normal Tuesday following a three-day strike by cabin crew that the airline says cost it about 21 million pounds ($31.5 million).

The airline faces a second walkout this weekend — this time for four days beginning Saturday — by crews represented by the Unite union. No further negotiations have been announced.

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