Mr. Speaker, I am here today to explain why we put an act to provide for the continuation and resumption of air service operations on notice. The reasons for introducing this bill are threefold.
First, we are acting to protect the Canadian economy. A work stoppage at Canada's largest airline would be detrimental to our economic recovery.
Second, we are acting to protect the public interest. March break is one of the busiest travel times of the year and a work stoppage right now would affect hundreds of thousands of Canadian families who have made travel plans. In fact, over one million passengers are scheduled to travel with Air Canada over the course of this week.
Third, we are acting to protect all of those additional employees who would be affected by a work stoppage at Air Canada. Air Canada directly employs 26,000 people, but its operations have an indirect impact on an additional 250,000 employees. Many of these people have families and these families rely on the livelihoods of these employees for their daily living expenses.
As members may recall, last June there was a three-day strike by Air Canada's customer service and sales agents. It was quickly resolved by the parties and Canada's economy was spared unnecessary harm.
Also, in 2011, when talks broke down between Canada Post and CUPW, the union representing Canada Post employees, we acted decisively by introducing and passing the Restoring Mail Delivery for Canadians Act. Again, Canada and its hard-working businesses and workers were spared from continued hardship in that case.
Canada faces a new challenge today: Canadians are faced with two potential work stoppages. Talks have broken down between Air Canada and the International Association of Machinists and Aerospace Workers. Talks have also broken down between Air Canada and the Air Canada Pilots Association. Just as they did last year, these developments create uncertainty and doubt where we need stability and certainty, because stability and certainty help keep Canada in business.
I would invite members to ask their constituents or in fact anyone in Canada right now about this and they will hear what I have been hearing, that we cannot afford this work stoppage. It is that simple. The risks are too great and we have a responsibility as parliamentarians to act. That is why I would like to ask this House to support an act to provide for the continuation and resumption of air service operations.
This is an important bill. We have tried to avoid the need to step in, but this measure is necessary because there is something vital at stake. As parliamentarians, we have to take a stand on this issue. We need to take a stand for Canada's recovering economy. We need to take a stand against uncertainty in this matter. We need to take a stand and demand a better solution in the interests of all Canadians.
I will take a few minutes to elaborate on each of these points.
Like other industrialized economies around the world, Canada is coming out of a difficult recession. Our economy has weathered the storm well, but we are mindful that these are uncertain times and that we cannot afford to take our relative good fortune for granted.
Our government is proud of its record of sheltering Canadians from the worst effects of the downturn and laying a foundation for recovery. As of February 2012, our employment rate was at 7.4%, which is an improvement over last year. There is definitely some wind in our sails, but that also means it is a risky time for Canada.
We cannot afford to have disruptions that draw attention and resources away from a growing economy because there is so much potential there. We cannot let a labour dispute in a major industry get in the way, and a labour stoppage that cripples a major transportation sector is certainly no exception. We depend on air service; that is a fact.
It is not just industry that depends on air service, but individual citizens as well. They depend on air service for work and for leisure. The sheer size of our country means that Canadians depend on air service more than citizens of most other nations do.
A work stoppage would have important financial implications for Canada's economy. There is no doubt it would adversely affect our efforts to revive our economy and create new jobs for citizens. A 2009 working paper by the International Labour Organization, ILO, states that for every job lost in the airline sector, up to 10 jobs could be lost elsewhere. Estimates of the impact of a stoppage on the Canadian economy vary, but some put it as high as $22.4 million for each week of work stoppage.
Consider what this could mean to businesses. A work stoppage at Air Canada could mean the loss of sales at home or abroad. Would businesses be able to recoup those losses? There is really no way to know. Would a business be able to quickly adapt and find alternative solutions? Again, we cannot say, because a labour dispute creates a ripple effect, one ripple of uncertainty after another.
What is clear is that a work stoppage at Air Canada would be bad for Canadians. It would be bad for the workers, and it would be bad for business. Even a short strike could be very costly. For example, in 2005 a one-day wildcat strike involving ground crew workers at Air Canada in Toronto saw 60 flights delayed and 17 cancelled. We have to take a stand against uncertainty.
Let us talk about what a labour stoppage could do to the company as well. The airline business has high fixed costs and it has a low profit margin, and that is at the best of times.
In April 2003 the financial pressures on Air Canada became so severe that the corporation applied for bankruptcy protection. Air Canada emerged from that protection in September 2004 under a court approved plan which saw it stripped of its assets and restructured under the name, ACE Aviation Holdings Incorporated.
Consider what happened after the 2008 global financial collapse when commercial credit markets all but froze. Companies like Air Canada which provided defined benefit pension plans suddenly faced much higher funding obligations. The combined effect of the recession, less air travel, and Air Canada's contractual obligations led to further challenges for Air Canada.
In 2008, in order to avoid the threat of bankruptcy again, Air Canada had no choice but to secure additional loans to keep it going. The company at that time was also able to get the co-operation of its unions to extend its collective agreements without any work stoppages.
The potential for a work stoppage involving Air Canada's pilots and the technical maintenance and operational support employees is creating more uncertainty and more instability for Air Canada.
Air Canada has indicated that it is already feeling the effects of the labour uncertainty. It has to cancel flights on a daily basis and cargo shipments are suppressed. That could be the tipping point for an airline already operating on the very edge of profitability.
Let me take a moment to recapitulate the developments in these two separate disputes that we are talking about today.
The IAMAW, the machinists, represent a unit of approximately 8,200 employees. They are responsible for the technical, maintenance and operational services, including the mechanics who service Air Canada's aircraft and those who handle the baggage and the cargo. Their collective agreement expired on March 31, 2011.
On December 2, 2011 a notice of dispute was sent by the employer to our offices at the Federal Mediation and Conciliation Services. On December 21 Madame Louise Otis, a conciliation commissioner, was appointed to assist the parties in their negotiations from outside of the labour program. Madame Otis is a very respected former jurist in the province of Quebec.
On February 10 the parties reached a tentative agreement. In her report and recommendations which she shared with me, Madame Otis said the following:
Taking into consideration the situation of the Parties, the tentative agreement is reasonable and fair. The negotiation process, which was carried out diligently and competently, has been exhausted. I do not recommend that negotiations be resumed or that a mediator be appointed. Under the full circumstances, I consider that a reasonable agreement had been reached.
Unfortunately, she wrote this in response to the fact that this tentative agreement was rejected by 65.6% of the union members, having had the tentative agreement unanimously recommended by the negotiating committee. Therefore, on March 6, 2012. the union provided me with its strike notice.
I want to reiterate that one point I made. These parties reached a deal which the union membership did not ratify. That is very important to remember because a similar situation has occurred with the Air Canada Pilots Association. The collective agreement covering a unit of approximately 3,000 pilots expired on March 31, 2011. On March 17, 2011, the parties reached a tentative agreement in direct negotiations without the help of the Federal Mediation and Conciliation Service. The negotiating team recommended the deal because it was subject to ratification by the union membership. On May 19, the union informed the employer that the membership voted to reject the tentative agreement. In October 2011, a notice of dispute was received by our program from the employer in the matter, and on November 10, 2011 a conciliation officer from the Department of Labour was appointed.
This conciliation period was extended three different times in an attempt to provide more time for the parties to reach a deal. A mediator from the Federal Mediation and Conciliation Service was appointed and met with the parties on a number of occasions. On two separate occasions, February 6 and 13, I met with both parties to urge them to reach an agreement and stressed the importance of a deal for the Canadian public.
During the last meeting with the parties, I informed them that I would be appointing two new co-mediators to assist them in reaching a deal and that they would be entering into a process that could take up to six months because they had indicated to me they needed the time. However, despite all this assistance and despite both parties confirming in writing that they would co-operate with the co-mediators and comply with the six-month mediation process, the union sought and received a strike mandate from its membership. The pilots voted 97% in favour of strike action.
On February 17, the two co-mediators, Madame Justice Louise Otis, who had just been successful with the machinists, and Jacques Lessard from my department, met with the parties. However, following this meeting, Madame Otis determined that it was necessary for her to tender her resignation, the reason being that the details of the mediation on that first meeting were made public by the pilots association. Madame Otis, being a well-respected former member of the judiciary, felt this failure to observe confidentiality would further hamper the efforts of any mediator to assist the parties in reaching a deal. This breach of confidentiality by one party at the table was instrumental in the resignation of a well-respected former judge. That speaks volumes about the state of bargaining in this matter.
Finally, this brings us to the reason for introducing the bill. On March 8, the employer gave notice of its intent to lock out the pilots on Monday, March 12 at midnight.
I want to take a moment to stress to members of the House that the parties in the case of the pilots association had reached a deal too. They had concluded their collective bargaining process but again, that deal could not be ratified.
As a matter of interest, Air Canada has reached a deal with every bargaining unit that it negotiated with over the course of this fiscal year, six bargaining units. Eight times within those six bargaining units, Air Canada came to the table, reached a deal and shook hands with the respective union bargaining teams, only to find that four of those deals were rejected by the union membership.
This has gone on long enough. This labour uncertainty is eroding the public confidence in travelling. While it goes on, Canadian businesses, travellers, workers, students, parents, seniors and professionals and many others are feeling the pressure. How will businesses manage their travel obligations? How will families take their vacations? What about the 45,000 passengers who fly across the oceans daily? What will Canadians do? We just do not know. In all fairness, these are not questions that Canadians should have to be asking themselves, especially at a time when Canada's economy is still in recovery.
It is important to remember that there is more at stake than the matters being dealt with at the bargaining table.
The employees represented by the International Association of Machinists and Aerospace Workers, IAMAW, want to be treated fairly, and the pilots represented by the Air Canada Pilots Association, ACPA, want to be treated fairly. I understand that. It is very important. What I also understand is there are millions of Canadians who depend upon air service. They want to be treated fairly too. In fact, as I stated earlier, over one million passengers are scheduled to fly with Air Canada over the March break period. This is an incredibly bad time for hundreds of thousands of families with travel plans to be faced with work stoppages. Additionally, Air Canada is simply not in a position where it can afford the risks associated with a prolonged work stoppage. Our economy is also vulnerable.
As stated in the preamble to the Canada Labour Code, free collective bargaining is the basis for sound industrial relations. The code gives the parties in a dispute the right to strike and walk out. The federal government only intervenes in situations where the public interest is negatively affected. This is true, for example, when the national economy is affected by the threat of a work stoppage, as in this case.
I have no doubt that a work stoppage at Air Canada is contrary to the best interests of Canadians and Canadian businesses. I have no doubt that a work stoppage could cause serious harm to the health of our recovering economy. The economy and the public interest would certainly be affected in this case and the legislation is clearly necessary. That is why the bill must be passed. It would protect our economy and would ensure that Canadian businesses and communities would not continue to suffer.
Some would say that we should do nothing and that we should let this dispute come to its natural end, whatever that may be. That would certainly be easier for all of us, but I say that we must do the right thing rather than the easy thing. Canadians expect us to show leadership and they expect us to act.