Unofficial strike by flight crew hits Austrian

In August 2004, negotiations between the management of Austrian Airlines (AUA) and its works council over a new, uniform collective agreement for two AUA companies - Austrian and Lauda - appeared to reach a deadlock, and flight staff at Austrian took limited strike action on 13 August. However, this action was not authorised by the Austrian Trade Union Federation (ÖGB).

On 13 August 2004 - as in the previous August (AT0309202F) - Austrian (the former Austrian Airlines national air carrier) was hit by limited strike action involving flight crew. As a consequence, according to management, a number of the day’s scheduled flights had to be cancelled at short notice, which disrupted the travel plans of some 6,000 passengers who had booked a flight with Austrian. The financial costs caused to the company by the action amounted to at least EUR 650,000.

The background to the strike is a long-running conflict between the management of the Austrian Airlines (AUA) group and its flight crew over the merger of Austrian’s air traffic business with that of Lauda- the former Lauda Air, which is a subsidiary of Austrian, specialising in charter flights - as well as over a planned 'uniform' collective agreement covering both Austrian and its subsidiary. This conflict emerged in December 2002 when AUA management unilaterally cancelled a works agreement on job demarcation, which protected the better-paid personnel at Austrian from competition with the significantly lower-paid Lauda staff, and announced the introduction of a less favourable payment scheme for newly employed pilots at Austrian (AT0301201N).

Company-level bargaining in air transport

Although Austria law grants collective bargaining capacity almost exclusively to employers’ and employees’ organisations above company level (AT9912207F), with most collective agreements thus concluded at sector level, there are a few exceptions for certain categories of individual employers specified by law, empowering them to conclude collective agreements at company level. This applies to companies in the air transport sector. As a result of this fragmentation of bargaining, pay levels within the sector vary widely according to the provisions of the particular single-employer agreements, in particular within the AUA group, which consists of Austrian and its subsidiaries Lauda and the regional carrier Austrian Arrows (formerly Tyrolean Airways). With regard to the pilots, the current payment scheme within the AUA group is set out in the table below.

Pilots’ gross incomes (without premium payments) within the AUA group
. Austrian Lauda Austrian Arrows
No. of employed pilots 472 210 356
Total direct labour costs per year in EUR million (approx.) 90 20 30
Maximum salary per month in EUR 12,745 8,282 5,916
Initial salary per month in EUR 2,218 1,887 1,850

Source: AUA, 2004

The inequality in remuneration highlighted in the table has provoked unrest among the employees of Lauda and Austrian Arrows, in particular among the pilots. However, flight staff at Austrian have also demanded a single, uniform collective agreement, at least covering both Austrian and Lauda. This is because AUA management has begun to shift services and flights traditionally performed by the staff of Austrian to employees of the cheaper subsidiaries, in particular Lauda, in order to reduce labour costs, which means - in the long run - a replacement of Austrian’s staff by Lauda staff. Thus, the former have come under considerable pressure to accept the AUA management’s demand for substantial pay reductions.

Disputes over 'uniform' collective agreement

After strike action taken by Austrian's flight crew in August 2003, AUA management and works council agreed to draw up a uniform collective agreement for both Austrian and Lauda. On 31 March 2004, the two sides, after intense negotiations hosted by leading representatives of the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) employers' organisation and the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), signed a framework agreement. According to this agreement, the current unequal payment schemes for the 'old' workforce remain almost unchanged (with slight increases in the Lauda employees’ salaries), whereas newly engaged employees will all be covered by a new, less favourable payment scheme which is oriented towards the modified Lauda scheme. Newly employed flight crew will perform flight services for both airlines. Furthermore, a less favourable rest period scheme (compared with the present one) for all flight crew, in particular in the case of long-haul destinations, is planned to be introduced.

However, in the course of July 2004, during the final detailed negotiations over the formulation of a single, uniform collective agreement, new demands were put forward by the employees’ side. In compensation for its acceptance of the introduction of a 'two-tier system' in payment, the works council demanded several guarantees for the flight crew at Austrian. These should comprise an effective 'infiltration protection' against competition with lower-paid employees (under the Lauda scheme) as well as a binding clause obliging the parties to collective bargaining to provide for equal pay increases for 'old' and 'new' staff in order to prevent 'undermining effects' to the detriment of the former. These demands, however, have been rejected by the management. On 13 August 2004, when the negotiations seemed to be deadlocked, the works council, which has been suspicious of the management’s willingness to conclude a uniform collective agreement at all, convened a staff meeting that decided to hold a two-hour token strike.

Strike not authorised by ÖGB

The strike action was taken by the flight crew at Austrian with the support of representatives of the Commerce and Transport Union (Gewerkschaft Handel, Transport, Verkehr, HTV). However, it emerged a few days after the strike that the ÖGB president, Fritz Verzetnitsch, had issued an internal order to the HTV representatives two days before the action was taken. This order explicitly denies ÖGB's authorisation for any militant action by the workforce of Austrian and Lauda in the context of the current dispute. Apparently, neither the works council nor the HTV representatives informed the employees about this order at the meeting held on 13 August. This is notable, because the framework agreement concluded by AUA management and the works council in March 2004 contains a provision stating that any strike action has to be authorised by ÖGB in advance. AUA management thus deems the strike action on 13 August as a breach of the framework agreement as well as being an unofficial strike, which may raise possible claims for payment of damages, as Vagn Sörensen, the chief executive of the AUA group, has stated.

However, while the classification of the industrial action taken by the flight crew as a 'wildcat' strike is widely undisputed, many experts do not question the legitimacy of such an action in legal terms, since the right to take strike action derives from general national and international legal or quasi-legal provisions. Moreover, contrary to other countries such as Germany, Austria has no codified national law governing the right to strike (or any related procedural aspects). Nor is there any Supreme Court case law on the lawfulness and the consequences of industrial disputes (AT0312103F). For this reason, experts argue, AUA management is unlikely to sue for damages caused by the strike. Provisions on the procedural aspects of strike action are, however, laid down in ÖGB’s statutes. Hence, the most far-reaching sanction which the HTV representatives involved in the strike will probably have to face is an internal reprimand for neglecting both ÖGB statutes and the orders of the president.

Commentary

In principle, a single, uniform collective agreement for Austrian and Lauda, if not for the whole AUA group (not to mention the whole sector), would be a slight improvement in the air transport sector’s industrial relations. This is because the current system of each airline bargaining separately has perpetuated significant pay inequalities within the sector. However, if the new collective agreement covering both Austrian and Lauda is eventually signed despite the current conflicts, it will not overcome the existing pay gap between the two airlines. Rather the new, less favourable payment scheme will only apply to newly employed flight crew. Only in this respect can the agreement be described as being 'uniform'. This reflects a problematic position taken by the representatives of the pilots at Austrian, who arguably understand solidarity as a device for maintaining their relative privileges rather than pursuing company- or sector-wide egalitarian bargaining goals for the benefit of current and future employees of the whole company or sector. This is possibly the main reason that ÖGB did not support the recent strike action taken by the flight crew. (Georg Adam, University of Vienna)

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