OPEN SKIES

Presentation by

Capt. Wim van Beek
Deputy President

Ladies and Gentlemen, good morning

The title of my presentation is ”OPEN SKIES”, but I will only briefly touch that subject itself. My presentation will more generally deal with present and future developments in the Aviation Industry and how we as pilots will be effected by these changes.

But allow me first to go back in history.

The foundation of today’s air transport system were laid at the end of 1944.The representatives of 45 States met in Chicago to develop the basis for international civil aviation, once the second world war was ended.

The outcome of this meeting is well known as the

CHICAGO CONVENTION.

The Chicago Convention itself led to the formation of the ICAO, the International Civil Aviation Organisation.

At the beginning of 1946 the first Bilateral Air Service Agreement (BASA) was developed between the United Kingdom and the United States of America.

This agreement is commonly known as

BERMUDA 1

It was a direct result of the fact that the Chicago meeting in 1944 was unable to agree on a frame work for the economic regulation of the industry.

Today, more than 3000 bilateral agreements are in existence.

Initially, most States shared the opinion that Air Transport Services were of vital economic and strategic interest because of their impact on trade, public service, foreign policy and defence.

This was the reason that during the years following WW 2, most states owned or subsidized their airlines

Of course, the airline industry, like all sectors of the economy has developed over the years.

The shape of the industry began to change in the 50’s and 60’s. Initially, the States bordering the Atlantic were dominating it, but more and more other nations started to claim their role.The late 1970’s saw the deregulation of air transport in the USA.This sent a very important signal to the rest of the world.

IFALPA was very much against this development, and within the Federation there were even discussions for a world-wide stoppage of flights as a protest against de-regulation. We were going to call that day D-day, or De-regulation day. This never happened as we all know.

Today, in Europe there is a fully liberalised air transport industry.

And around the globe, at the same time, more and more Governments have decided that they no longer wish to be owners and managers of airlines. The result is more and more privatisation.

The next step was code-sharing. In the 1980’s, many large airlines came to see themselves as “Global Players” Some of them wished to establish a strong presence outside their home region. This could not be achieved by mergers and acquisition.Code-sharing was a cost-effective way to expand an airline presence in new markets.

This code-sharing was often evidence of a desire for a deeper commitment between partners and resulted in alliances of 2 or more airlines.

The object of course of alliances is to establish a world-wide seamless network.

The next development are the “Open Skies” agreements, where carriers from one country are free to fly to any destination in another country, and vice-versa.Well, so far so good, I think that we all must accept that further changes to the air transport industry will continue, whether we like it or not.

But where does that leave us, what is our position as airline pilots?

With no doubt, the mentioned developments will further lead to increased competition between the airlines and between the alliances.

How this will effect the livelihood, working conditions, jobs and job-security of airline pilots, is exactly the way, IFALPA and it’s members look at it.We believe that when a government allows developments like Open Skies, the pilots and the other workers have every right to ask that government to put in place the right legislation to protect their position, to protect their jobs and to protect their airlines.

Governments should realise that not all airlines are in a position to compete in an Open Skies environment.

Many Companies welcome (at least officially to the public) these developments and the increased competition. It gives them more opportunities they say and the customers, the passengers can expect a better product.

Towards the work force, most of the time they express a totally different view.

Statement:

Most managements say they welcome the changes in the aviation industry, but they want the employee’s to pay for them.What management usually say to us:

- we are not cost-effective enough with the current labour contract, or

- any improvement of your contract will put us in a very bad financial position

Let me give you a good example:

A few years ago, during contract negotiations, the Lufthansa management told it’spilots to moderate their demands, or risk that their flying being transferred to others.Management will also say:

- if you do not agree with a reduction of your working conditions, we will be forced to reduce our network and many of your jobs will be lost.

Another example:

During the negotiations for a new Collective Labour Agreement, a few years ago, KLM management told it’s pilots to be modest with their demands, as it should be obvious to them that because of the KLM Alliance with NorthWest and the existing Open Skies agreement between the Netherlands and the USA, the airline could easily have it’s flying carried out by the Alliance partner.Management will further say:

- we need your co-operation for the company to keep pace with the new development in the industry.

I am sure you have all heard these or similar words.

But what management will never say is:

WE WANT IT

You will never hear them say:

WE WANT IT BECAUSE OUR BONUS DEPENDS ON IT

It is exactly the sort of threats that I mentioned earlier that we, as the Organisation of the World Airline Pilots are trying to prevent.

Of course, we do recognize the airlines desire to maximize the potential of the changes and developments in the industry.

We also understand that this can have significant long-term effects on the pilots, the airlines we work for and our fellow employees in the industry.

We do accept that competition exists between airlines and/or alliances.

But we do not accept:

Situations where pilot groups have to compete with each other.

That pilot’s working conditions are being used as an element in the competition between airlines.So, what are we doing?

- Pilot groups are forming alliances of their own, in order to protect their mutual interest.

- These groups share information, relevant to their working conditions, job security and professional interests.

- Pilots are sharing knowledge and details of their collective agreements, national laws and regulations.

- They also share information on developments within their airlines.

IFALPA is and wants to be the platform for these contacts between pilots

The Annual Conference, the Industrial Committee meetings as well as the Regional Conferences are very suitable for this purpose.

It is therefore important for our Member Associations to attend these meetings, where they can learn from other Associations, from their experiences, from their struggles.

IFALPA and its members will use all lawful – reasonable – and appropriate actions to protect our member’s contractual and lawful rights, career expectations and professional rights.We will oppose any effort by any airline or airline alliance to use the changes in the industry as a tool to transfer work from one pilot group to another, or use these changes as an argument to weaken the position or lower the working conditions of their pilots.

Let there be no misunderstanding

We want to co-operate in order to make our airlines profitable in this rapidly changing Aviation Industry, be it within or outside an alliance.

We do prefer cooperation to confrontation, but as I said earlier, we will confront those managements that are trying to use the changes in the industry like Open Skies Agreements to start a race to the bottom in pay and working conditions.