Lufthansa Strike - Timely Reminders Of The Past The two-day strike by Lufthansa pilots that began yesterday makes this the ninth time this year that they have walked out. The strike by pilots belonging to the Vereinigung Cockpit (VC) trade union at this, one of Europe’s largest flag carrier airlines, has led to the cancellation of 1,350 flights and impacted on 150,000 passengers/customers. One thing is for sure, a strike on this scale makes very little, if any, sense in the world of 2014 and it is time for some common sense to prevail. In the competitive world and viscous world that is air transport today and one that no longer has room for glamour, you have to move with the times if you wish to survive. British Airways under the superb management of Willie Walsh, long ago learned lessons of the need to abandon historic collective agreements that had been holding the airline back, so why is it that pilots at Lufthansa have failed to get the message and continue to feel that they can retain a stranglehold on airline management in the name of the past? The answer is that maybe they still consider themselves as the elite amongst airline pilots due to the stringent physical and emotional requirements demanded by Lufthansa to get the job in the first place. Apparently, only five in every one hundred candidates get through the Lufthansa test that includes risk averseness, stress and three-dimensional reasoning. Unless Lufthansa pilots accept the need to adapt to change and choose to become more flexible, I fear that the current round of hostility might eventually lead to the loss of a substantial number of jobs. While I may doubt that communication between the airline and staff and the VC trade union has been absolutely perfect and that, if true, this may have helped to make a bad situation worse my view that having it taken Lufthansa management so long to realise that staff retiring at 55 and who then receive 60% of their pay until the standard retirement age of 65 is a situation that is no longer affordable, is amazing. They are right though to stand their ground. The old adage that ‘when you reach the top the only way is down’ has some merit here. The problems that have manifested themselves for Lufthansa management today, probably had their roots sown back in 2007/8 when the airline was seemingly, against the odds, making pretty good profits. A year later though Lufthansa which, apart from having diversified a little too much back in the 1980s and 1990s, had been considered by most as not only consistent but also to have been well run was, along with other airlines, hit by the growing recession in the Euro area. Lufthansa responded by calling for EUR 1 billion of cost cuts in 2009 and having secured some kind of agreement with pilots and staff during August 2008 the airline began cutting pay of pilots and others by as much as 12%. Following on from the rather silly purchase of BMI in 2008 two years later in 2010, Lufthansa then acquired the loss-making Austrian Airlines – both of which have arguably been something of a drag. Lufthansa eventually shed its interest in BMI but by then the damage of the Euro recession really was taking hold. It is worth noting that following the 2008 negotiations, a co-pilot’s salary at Lufthansa started at around EUR 60,000 per year. I am reliably also told that a captain at the top of his flight game could also earn as much as EUR 21,000 per month which when added up over a 12-month period comes to over EUR 250,000. With competitive pressures on the airline, with the high, albeit reducing, cost of fuel, with rising airport and environmental charges not to mention the need to purchase more fuel-efficient and quieter aircraft it seems to me that the pay of Lufthansa pilots is well out of line with the market of today. There can be no elite in the airline industry today, although with the forecast shortage of pilots worldwide, I see no reason why salaries should fall further if ticket prices are, as they should be, allowed to rise as a reflection of this. No wonder then that if such figures are true that Lufthansa management should be seeking ways to cut the cost of the overall pilot packages and close the early retirement pension loophole. No wonder that the airline management is just as it should be, standing its ground. In moving to the wider issue that German employers appear to be being threatened by an increasing number of strikes in a manner reminiscent of Britain back in the 1970s and 1980s and as employers attempt to make themselves more efficient, competitive and affordable, one notes that talks between Germany’s rail operator Deutsche Bahn and the train drivers union GDL have also just broken down, making the threat of another strike similar to the one that paralysed the rail network for two days back in October all the more likely and real. In this case, my understanding is the issue is that of a demand for a 5% pay increase at a time when German inflation is running at half that rate and still falling. There have also been strikes at Frankfurt Airport this year and also at Amazon and these may also go some way to suggesting that in an environment in which trade unions have lost a considerable amount of power and are much shrunken from the powerful trade unions of yesteryear, that something of a last stand is being fought out in Germany by its trade unions in the hope of proving to members that they are still a credible force. But Britons shouldn’t run away with the notion that we are anywhere near as efficient as we need to be yet. There is a long way to go, with the Euro area struggling and our own competitiveness and efficiency waning. CHW (London 2 December 2014) Howard Wheeldon FRAeS hwheeldon@wheeldonstrategic 26 November 2014
Posted on: Wed, 03 Dec 2014 06:21:35 +0000
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