Pursuing more flexibility and lower expenses for labour, until ‘death do us part’?! That might happen, in the aviation industry!

This morning, the Dutch newspaper Volkskrant printed an article about “fake labour constructions”, which rookie pilots enter into, in order to acquire a necessary position in the aviation industry.

These very unfavourable “strangulation contracts”, especially at pricefighters like Ryanair and Norwegian Airlines, could put the safety of passengers and air personnel under jeopardy eventually.

Here are the pertinent snippets of the article in the Volkskrant:

Advancing fake labour constructions jeopardize the safety of aviation. The majority of rookie pilots, in service at price fighters, works as a freelancer or even has to pay for ‘receiving the favour’ of getting flying hours at these companies. ’It is very scary that these pilots do not dare to call in sick, afraid as they are to lose their job’, according to Member of European Parliament and ex chairwoman of Dutch labour union FNV, Agnes Jongerius.

Jongerius and her colleagues Peter van Dalen (ChristenUnie) and Wim van de Camp (Christian Democrat Party) want Brussels to make an end to these fake constructions. Jongerius: “Flying inexpensively is pleasureable, but it has to be safe!”

An investigation by the Belgian University of Ghent disclosed that especially young pilots at pricefighters don’t receive a traditional labour contract anymore, but work with special labour constructions, which prohibit them to make critical remarks or refuse work.

According to the University of Ghent, the safety regulations become under jeopardy. Not only at Ryanair, but also at Norwegian Airlines, a pilot starts working with a debt. The pilot pays back this debt by flying the airplane ‘for free’ during the first two years of his assignment, using a so-called ‘pay-to-fly construction’. According to the investigation, half of the pilot corps at the so-called pricefighers works under this construction.

This investigation shows the effect of the ‘double whammy’ that is currently happening in the aviation industry:

Within Europe, a massive overcapacity in aviators has mounted during the last decade. Simply too many young boys (and perhaps some girls) followed their childhood dreams to become an aviator at an aviation company. They invested heavily in these extremely expensive trainings, only to find out that they were stuck eventually: without a job as airliner pilot, but with a gargantuous debt of €100,000+ and hardly a chance to earn it back as a pilot.

Common aviation companies often only want to have experienced aviators with sufficient flying hours and all the necessary certificates and trainings for the most popular plane types and don't want to spend time on training these rookie pilots anymore. 

This circumstance makes these young, rookie aviators an easy bait for the price fighters, which are always looking for possible ways to save a penny or a pound, in order to offer even cheaper airline tickets and still maintain a profit. These pricefighters offer those jobless aviators the flying hours for which they are craving, in exchange for an extremely unfavourable ‘strangulation contract’ and a ‘no sickness / no critical opinions’ policy:´shut your mouth and fly your darn plane or face the consequences’.

Especially in the case of Ryanair, it is important to realize how much impact their ‘no critical opinions’-policy for aviators can have upon the safety of the airplane and the environment under the flightpath in general. This pricefighter became infamous a few years ago, when within one week three of its airplanes had to make an emergency landing in Spain, after being redirected to another airport in this country, due to stormy weather at their original destination. 

After investigation it became clear that the Ryanair airplanes had flown on kerosene fumes during the moments before the emergency landing procedure: their initial available amount of fuel had been so frugal, that there had been virtually no room for any deviations whatsoever. 

While the general, bargain-hungry public might have forgiven Ryanair for these incidents and this behaviour, or might even have forgotten about it, this airliner is the last one that should have silenced and scared aviators, in my not so humble opionion.

During the last few years, I had the pleasure of talking twice with the distinguished Fred Bruggeman, chairman of the association Aircraft Engineers International, about the things that bothered him in today’s aviation industry. He repeatedly stated at these occasions that:

• Aviators generally report in their flight logs many more incidents and malfunctions during the returning flights back to the hub of their airliner, than during the departing flight away from it. Definitely much more than could be expected from the statistical standard deviation, applicable in these situations. According to Bruggeman, the differences have been so great that ‘a kind of fraudulent behaviour had to be involved in order to explain these erratic data’.
• Official Aircraft Engineers are more and more ‘downgraded’ to being administrative supervisors of repairs and maintenance executed by non-certified mechanics, instead of being in the lead during active checkups of such repairs and maintenance.

Suffice it to say that both of Bruggeman’s issues could cause serious accidents among the tens of thousands of airplanes that are in the air on a daily basis; especially when pilots are too afraid to speak up loudly, scared as they are to lose their job at these pricefighters and thus their financial future.

And please don’t underestimate the problem of ‘silenced’ aviators flying possible faulty planes with – on top of that – too little fuel aboard. This is probably not a neglectable problem, even though it did not clearly lead to particular accidents yet.

When a two hour flight with Ryanair yields €28,000 (f.i. 255 passengers times an average ticket price of €110, including surcharges), it means that everything must be paid from this money alone, including a 10+% profit for Ryanair itself:

• the aviator, as well as other air and ground personnel;
• airport (handling and landing) fees;
• ticket and airport taxes;
• luggage handling;
• fuel;
• airplane lease;
• mandatory trainings, assessments and inspections;
• maintenance costs.

The only way to make aviation a profitable business with such narrow margins, is to keep these planes in the air virtually around the clock and staffed with pressured, scared and inexperienced aviators, who virtually work for free, as well as undertrained (?) auxiliary personnel that costs their airliner as little money as possible. 

And the worst thing is that all other airliners have to slowly adapt similar business models, when they don’t want to be run over by these pricefighters and lose their business to them.

This means that the room for additional margin is extremely narrow in the aviation industry and that such pricefighters as Ryanair and Norwegian Airlines squeeze the last penny and cent of margin out of their ticket yields, in order to remain more profitable than their competition.

In the process, Ryanair, Norwegian Airlines and many other pricefighters, and perhaps common airliners as well, try to cut back on anything that does not crash the plane (service, meals, air and ground personnel) and perhaps sometimes even on things that theoretically could, like mandatory maintenance and the critical fuel amount for safe flights.  

The last thing that you want in this situation is a gagged pilot, who remains silent about truly dangerous situations emerging during his working day! 

In other words: while flexible labour contracts and lower labour expenses are not per sé a bad thing, in theory, they could very well lead to excesses. 

Flexible contracts seriously weaken the position of the employee, in favour of the employer. In the aviation industry this circumstance could theoretically lead to dangerous and even fatal situations and accidents in which “death does passenger and personnel part indeed”. 

Update 18 May, 2015

After I finished my article this morning, I received information through email from the University of Ghent; in particular from Professor Yves Jorens and academic assistant Dirk Gillis, who have been responsible for the creation of the very important report, mentioned in the aforementioned article of De Volkskrant. 

I am very grateful for receiving this additional information and therefore I want to offer you a link to the full report, which is a very interesting and also disturbing read for inquiring minds.

The following snippets contain the two page summary of this report, which I print here in full for the purpose of information:

Key findings:

• More than 1 pilot out of 6, among the surveyed, is under ‘atypical’ employment conditions; i.e. working through a temporary work agency, as self-employed, or on a zero-hour contract with no minimum pay guaranteed. 
• Low Fares Airlines (LFA) are the largest ‘users’ of atypical employment, in what the researchers see as a clear divide in the employment market between the traditional network carriers and LFA:
  
• In LFAs only half of the pilots are directly employed (53%), while 15% are self-employed, 11% fly for an airline via an own (e.g. limited liability) company, and 17% are working on a temporary agency contract. As regards self-employment, 7 out of 10 of all self-employed pilots surveyed state they work for a low fares airline.
  
• In network carriers, these “atypical practices” represent a significantly lower share of their workforce: only 0.6% of pilots are self-employed pilots, 0.4% fly via an own company and 1.7% work on temporary agency contract.
  
• Young pilots are most affected by precarious employment. With more respondents from the 20-30 year age category reporting to fly for LFAs, almost 40% of these young pilots have no direct employment contract with their airline. Some airlines offer cadets a position at deplorable conditions, or even resort to ‘Pay-to-Fly’ schemes where the pilot actually pays the airline to fly (revenue-earning) flights. This shows the labour market is deeply segregated between young and more experienced pilots.
  
   
• Greater diversification in contracts can, on the one hand, be a tool for more flexibility, on the other hand it can be used for “social and fiscal engineering”, i.e. schemes to ‘shop’ for more lenient laws, to avoid high social security contributions and reduce taxes for companies. For example, almost half of pilots working via an own company are mainly paid per hour with a minimum of hours guaranteed, which can be an indicator for a ‘bogus situation’; and many selfemployed pilots state they have no say in the amount of hours they fly. These findings cast doubt on the genuineness of their self-employment status. 
• Almost half (46.6%) of self-employed pilots (strongly) disagree with the statement ‘I can amend the instructions of the airline based on e.g. objections regarding flight safety, liability, or regarding health & safety’. This could raise serious flight safety concerns. The lack of control on flight hours, health & training are other matters linked to safety highlighted by the study. 

Key issues highlighted by the study & conference:

•  Applicable labour law and social security legislation remain problematic. The ‘home base rule’ as the basis for the coordination of social security systems has solved some of the legal issues but others remain unresolved, and needs to be further improved to bring legal certainty. 
• Civil aviation legislation dates from World War II and is not adapted to take into account the different forms of atypical work and outsourcing. This is also the case for labour law and social security regulations, which allow complex subcontracting chains and contractual bogus constructs to replace direct employment. 
• Atypical work forms are frequently in tension with aviation safety culture. The ‘dependency’ created by conditional and precarious employment arrangements could place an employer’s commercial imperatives in conflict with the pilot’s legal duty to take independent professional safety judgments before other considerations. 
• Young pilots are in a particularly weak and vulnerable position, due to the amount of financial debts they incur to finance their studies, combined with the (mostly low fares) airline policy to recruit young pilots only if they have a type-rating. In a context of a mala fide management style this could degrade some safety nets. 
• Aviation risks drifting to the maritime model of ‘Flags of Convenience’ with ‘regulatory shopping’, tax and social engineering and hiring air crew from outside the EU to man and fly EU aircraft. Fair competition and worker rights are compromised by this development, safety could be difficult to monitor effectively and the current legislative framework is clearly inadequate. According to the Ghent University, “its minutes past midnight” and urgent action is needed. 

Initial policy recommendations:

•  Amending Reg. 987/2009 on the coordination of social security systems to strengthen the principle of home base. The establishment of European occupational pension funds and a better coordination of social security systems to improve confidence and control between Member states regarding the really applied criteria for issuing any social security forms. Ideally, the development of a dedicated European social security system for highly mobile workers should be pursued.
  
• Limitation and continuous monitoring and control through technical and labour regulations of the air crew operating aircraft as service providers or through a temporary contract. Restricting subcontracting in the civil aviation sector to meet a temporary increase of the workload and not a usual workload, and better regulating liability and crew management.
  
• Active prevention of bogus situations, especially of bogus self-employment by strengthening cross-border cooperation and oversight as well as an enhanced legislative framework that provides for a default assumption of direct employment for mobile workers unless concrete and robust criteria are met that prove otherwise. 
• Better protection of whistleblowers, both legally and economically, through establishing adequate reporting mechanisms in tax, labour and social security. 
• Development of global or European oversight system allowing for effective oversight of the social, labour and safety situations of aircrews. 
• Banning Pay-to-Fly schemes at European level and/or globally. Revision of aircrew training structures and financing of such training.
  
• Mandatory publication by companies with more 1.000 employees, of an annual social report including data defined by the European social partners of air transport. 3 ? Development of a plan to prevent Flags of Convenience in Aviation, based on the Maritime experience covering safety, tax and social aspects.