Philippine Airlines labor problems

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Contents

Woes of Airphil Express

In the mid-1990s, the rules of the aviation game changed. Philippine Airlines had the monopoly of the Philippine skies before but this was no longer the case. The deregulation of airline industry paved the way for the entry of Cebu Pacific, Air Philippines, Asian Spirit, Seair and Grand Air. To date, Cebu Pacific is still standing and has overtaken PAL as the largest airline that flies domestic and international passengers. Asian Spirit has become Zest Air, and just like Seair, still flies passengers to leisure destinations such as Boracay, Batanes and Busuanga. Air Philippines has since been acquired by PAL and eventually was renamed as Airphil Express.

Airphil Express, which also has been called PAL express, is PAL’s budget airline. PAL's transfer of its pilots to its budget airline is the alleged reason for the resignation of the pilots.

PAL had to beef up its operations in order to compete with Cebu Pacific. However, instead of hiring new pilots for Airphil, PAL came up with a different strategy. PAL declared some of its pilots, most of whom were on the verge of retiring, redundant. This meant that these pilots would not be eligible to avail of PAL’s retirement package. PAL then was “kind” enough to offer these pilots “another job” --- to be pilots but this time for Airphil Express. As Airphil Express pilots however, they would receive lower salaries and fewer benefits. Some of the pilots with families to support and mortgages to pay settled for the Airphil post.

Not all pilots accepted the “job offer.” The pilots anticipated the next “job offer” to come by September or October of 2010. This “job offer” was supposed to be the next round of redundancy. The pilots, instead of waiting to be declared as redundant or to be offered a job at Airphil and thus meet the same fate as the other pilots, decided to resign.

According to resigned PAL pilot, First Officer Henry Claveria, when he was interviewed at ANC's Headstart, those who refused to accept the pilot post at the Airphil would be compensated but would not be allowed to use their flying skills for other airlines.

In the last two weeks of July, there was an almost simultaneous resignation of 26 pilots, and on short notice.

Enticed by higher-paying jobs at foreign airlines, some 26 pilots left the PAL wing. The mass resignation took a toll on PAL flight schedules on the last Saturday of July. PAL cancelled several 150-seater Airbus A320 Manila flights en route to Bacolod, Iloilo, Cagayan de Oro, Cebu and Hong Kong because there were not enough pilots to fly the planes.

PAL'S Statement

The resignations took place in the last two weeks of July and disrupted PAL operations. Days after the cancellation of flights, PAL said it was willing to take back the 26 pilots and would not file charges against them. On August 2, the pilots were given seven days to return to work but the pilots remained unfazed. This statement then changed to PAL not wanting them to come back but only to recover the training cost of some P2 million. But for the 26 pilots, there was no turning back. According to them, their resignation was not just about the money, but it was also about respect, and their disappointment in the kind of treatment they received from PAL.

But whatever drove the pilots away, the PAL management said that the pilots should have given the airline six months to find and train their replacements as stipulated in their contracts. According to PAL spokesman Jonathan Gesmundo, most of the pilots that left were new hires as they were flying A320, the first jet assigned to the new aviation graduates. As most of them were new hires, they still owed service contracts to PAL.

Not one of the 26 pilots returned to PAL. To date, PAL management has accused 16 of the 26 pilots of breach of contract, abandonment of duty while the rest will be sued for civil cases that seek damages amounting to some P5.5 million. The case will be heard at the Makati Regional Trial Court.

To prevent more resignations, PAL submitted to the Department of Transportation and Communications a list of commitments. In the list of commitments are the following: (1) the pledge not to transfer PAL pilots to Airphil; (2) to publish daily flight schedule to ensure that affected passengers are informed about changes in their bookings; and (3) pledge to keep an open line of communication with its pilots are not represented by a union unlike other PAL employees.

Problems with the flight attendants

In another PAL-related development, PAL’s flight attendants have their own plight too. The Flights Attendants’ and Stewards’ Association of the Philippines (FASAP) have been at odds with the PAL management on matters of “sexist” policies and unrealized compensation. Among these sexist policies are mandatory retirement at the age of 55 for women compared to 60 for men; and for new hires, 40; and deduction of the 60 days of maternity leave from the years of service.

In terms of compensation, FASAP is demanding a 7-percent pay increase, which is valued at P260 million.

To date, the PAL management has offered to expand maternity benefits. On these, both parties have agreed in principle. On the increase of the mandatory age of retirement, PAL offered to increase the retirement age to 45 from 40 on the condition that FASAP will allow junior cabin crew to be mixed with senior cabin crew in international flights. The current collective bargaining agreement favors the assignment of senior crew to international flights for them to enjoy perks and allowances.

In November 2010, PAL announced it would start outsourcing in-flight catering, cargo handling and call center reservations. 2,600 workers are expected to be retrenched as a result. PAL offered P1M as severance benefit for the employees to be retrenched. PAL will also give free tickets to the affected workers and their families. PAL is expected to save P600 million a year from this scheme and pass on the savings to the customers by providing lower fares. The move caused an uproar among labor groups citing that long-term job security is more important than the P1M.

Resolutions

Outsourcing conflict

The Department of Labor and Employment ruled in favor of PAL citing that saying that PAL’s outsourcing is a legal exercise of managerial prerogative and that the move was just, humane and reasonable.

The ruling provides for an additional gratuity of P50,000 per employee and 125 percent separation pay instead of 100 percent. Other entitlements include allowing vacation leave and sick leave balances to be convertible to cash, their absorption to the respective service providers for one year, among others.

Retirement age

The DOLE ruled in favor of the Flight Attendants and Stewardess Association of the Philippines setting the retirement age at 60. Among the provision in the DOLE resolution include:

  • Compulsory retirement age for all FASAP members at 60 years old
  • Two pregnancy leaves for a maximum of seven months for each leave, to be credited in computing the length of service for retirement, 13th month pay, Christmas bonus, rice allowance, and trip passes
  • Maternity leaves for a maximum of four (4) deliveries already being enjoyed will be credited in computing the length of service for retirement, 13th month pay, Christmas bonus, rice allowance, and trip passes;
  • Prospective application of pregnancy and maternity leave crediting;
  • Grant of monthly rice allowance in the amount of P1,800 for the period covering 16 July 2007 to 15 July 2010, estimated at P25 million; and
  • Grant of three-year salary increases estimated at over P200 million.

References

Citation

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