Benjamin Smith’s early days at Air France–KLM will be anything but easy. The incoming CEO faces public opposition from the airline’s unions, most notably the pilots who forced the resignation of former Jean-Marc Janaillac following multiple strikes and a rejected contract. Other union groups are also on edge, seeking to unfreeze pay rates (the last change was in 2011) and to limit the growth of low-cost carriers within the operation. And even the low cost side of the business might not stay that way too long. Unrest within Joon may bring about further troubles.
Late last week a “malaise” among the flight attendants at the group was reported, suggesting that the crew will seek parity with Joon’s pilots and mainline Air France flight attendants on aspects of their contract. Given that Joon’s very existence is based on cabin crews costing significantly less than those at Air France this development could prove troubling to the operation.
So, the Joon cabin crew, knowing that they were hired to be paid significantly lower wages than AF mainline crew, are now complaining that they are not being paid the same wages as mainline crew. 🤔#AvGeek #PaxEx #RooftopBar https://t.co/bDDUlj0wxt
— Seth Miller (@WandrMe) August 25, 2018
The crew object to work schedules, both the number of block hors scheduled and the way they are booked. Crew receive pay for a minimum number of guaranteed hours and then additional pay if they work additional flights. The extra pay came up short, according to crewmembers, as the hiring levels to ramp up operations exceeded the number necessary to operate the schedules. Flight attendants are also concerned about the mixing of short-haul and long-haul routes within a schedule, an arrangement that makes it harder for the crew. Fatigue analysis and management is being added to the scheduling process to reduce these issues but it is not happening quickly enough for the staff.
For its part, Joon management suggests that the pay rates are in line with what is disclosed during the interview process. The past few months also showed greater stability operations-wise than Q2 where disruptions associated with the introduction of long-haul service were more significant. Bonuses were paid to cabin crew to offset some of the shortcomings but even those were lower than similar bonuses paid to mainline crew. Not surprisingly that also upsets the Joon crewmembers.
Joon’s existence is predicated on lower crew costs. Despite the marketing hype around targeting millennial passengers and a more casual on-board experience the real value comes from the lower crew costs. Losing that will bring even greater pressure to an operation that does not really fit in the group’s range of products. And that’s where Smith might be able to bring some useful experience to bear.
Smith oversaw the introduction of the Rouge brand at Air Canada. Unions raised strong objections there as well but ultimately he was able to fashion a deal that worked for all involved. Rouge’s growth since it began flights five years ago has been impressive and successful both as a standalone operation and within the larger Air Canada portfolio. Some of that comes from selection of routes that better support the LCC approach and some comes from the unions negotiating their deal in good faith. Being forced to pay flight attendants 40% more will almost certainly be a failure for Joon but perhaps Smith can find a way to soothe some of those sore points.
If not, expect the strikes and massive associated costs to continue, and that cannot last too long before the carrier really starts to struggle. The company took a $380+ million hit in the first half of 2018 owing to labor unrest and other increased costs (i.e fuel) aren’t helping.