Opening the Seam to 然egime Shopping' and 全ocial Dumping': Airline Operations, Business Strategies and Industrial Relations in Europe and Beyond

Low fares airlines (LFAs) have transformed the market for air travel and with it the nature of employment in the civil aviation industry, most notably in terms of union recognition and collective bargaining, precarious contracts, working time and intensity, work-life balance, and of course pay and benefits. LFAs have captured a much larger share of the market in Europe compared to North America and the Asia-Pacific region, and have adopted a very different operational (multi-base) and business strategy to their counterparts elsewhere around the world.

While all European workers are susceptible to ‘social dumping’ – a ‘strategy geared towards the lowering of wage or social standards for the sake of enhanced competitiveness, prompted by companies and indirectly involving their employees and/or home or host country governments’ (Bernaciak, 2012) – mobile transport workers are especially at risk. The creation of single European aviation market (SEAM) opened the industry to low cost business strategies pioneered by the LFAs, but it is the different industrial relations systems and social standards of EU Member States that creates opportunities for ‘regime shopping’ and results in ‘social dumping’. For example, Europe’s largest airline, Ryanair, the Irish ultra-low cost carrier, hires workers recruited from across Europe via agencies that offer only short term contracts and draconian conditions of service (e.g. crew pay for all their own training and can be transferred, without compensation, to any of the airline’s 60 plus bases across Europe). As all Ryanair aircraft are registered in Ireland, and all staff are employed on Irish contracts, their “place of work” (the aircraft) is Ireland, and so Irish employment laws, social obligations and the like apply. As a vehemently anti-union airline, Ryanair has exploited non-territorial forms of sovereignty to redefine employment relations, exert control over labor, and extract surplus value.

Norwegian Air Shuttle (NAS) has taken this new form of off-shoring a stage further by creating a new subsidiary, Norwegian Air International (NAI), registered in Ireland and flying with an Irish Air Operator’s Certificate (a “flag of convenience), but no direct flights or even an office in Ireland. Instead, NAI offers flights from Asia (Bangkok) to Europe (Oslo) and onwards to the USA, exploiting the US-EU open skies agreement and employing Thai crew via an agency in Singapore (a “crew of convenience”). These new low cost business strategies have accelerated a “race-to-the-bottom” in European civil aviation through social dumping and other forms of anti-social competition.

Our paper draws on two major studies for the European Transport Workers’ Federation (ETF), funded by the European Commission under the programme of work of the Civil Aviation Sector Social Dialogue Committee (Harvey and Turnbull, 2012 and 2014), and a current 10-country study of the “bogus self-employment” of flight crew coordinated by the European Cockpit Association (ECA) and also funded by the European Commission under the programme of work of the Civil Aviation Sector Social Dialogue Committee. The focus of the paper is on ‘social dumping’ and in particular when and how some workers/ trade unions become ‘complicit’ in social dumping and thereby undermine international trade unionism and attempts to curtail anti-social competition.

References

Bernaciak, M. (2012) ‘Social Dumping: Political Catchphrase or Threat to Labour Standards?’ Working Paper 2012.06, Brussels: European Trade Union Institute.

Harvey, G. and Turnbull, P. (2012) The Development of the Low Cost Model in the European Civil Aviation Industry. Brussels: ETF.

Harvey, G. and Turnbull, P. (2014) Evolution of the Labour Market in the Airline Industry due to the Development of the Low Fares Airlines (LFAs). Brussels: ETF.