Jazz Aviation, the main regional partner of Air Canada, is talking down plans by its parent Chorus Aviation to launch a second regional carrier, following successful negotiations with several trade unions.
Air Canada had been demanding unit-cost reductions at Jazz in order to increase its competitiveness with Encore, the newly launched regional subsidiary of WestJet.
Chorus’s strategy of shifting capacity to Jive was, in effect, a contingency plan for side-stepping its existing labor agreements with trade unions.
Jazz Aviation, the main regional partner of Air Canada, is talking down plans by its parent Chorus Aviation to launch a second regional carrier, following successful negotiations with several trade unions.
Chorus announced its intention to launch a new regional airline – provisionally named Jive – in February 2015, shortly after unveiling its updated Capacity Purchase Agreement (CPA) with Air Canada. That CPA details the terms of future cooperation between Air Canada and Jazz, which operates regional flights for the flag-carrier under the Air Canada Express brand.
Air Canada had been demanding unit-cost reductions at Jazz in order to increase its competitiveness with Encore, the newly launched regional subsidiary of WestJet.
Chorus’s strategy of shifting capacity to Jive was, in effect, a contingency plan for side-stepping its existing labor agreements with trade unions.
“We needed to find a solution that would allow us to reach a CPA agreement with Air Canada,” Colin Copp, president of Jazz, told me in early February. “The only solution in the initial discussions … in the CPA process was to say, ‘Look, we’ll start a new operation. We’ll ensure that the costs are lower. We’ll guarantee those lower costs’.”
Although the CPA agreed by the two partners laid down a roadmap for cost savings, enforcing change was contingent on several trade unions ratifying their own, parallel agreements.
“Once we got the CPA in place, then we sat down with the unions,” Copp affirmed.
The Air Line Pilots Association (ALPA) was the first group to give the green light last year, followed by the Canadian Flight Attendant Union (CFAU). On 19 February 2016, Union for Canada (UNIFOR), which represents maintenance and engineering employees, became the third major group to update its collective bargaining agreement with Jazz.
Jazz Aviation, the main regional partner of Air Canada, is talking down plans by its parent Chorus Aviation to launch a second regional carrier, following successful negotiations with several trade unions.
Chorus announced its intention to launch a new regional airline – provisionally named Jive – in February 2015, shortly after unveiling its updated Capacity Purchase Agreement (CPA) with Air Canada. That CPA details the terms of future cooperation between Air Canada and Jazz, which operates regional flights for the flag-carrier under the Air Canada Express brand.
Air Canada had been demanding unit-cost reductions at Jazz in order to increase its competitiveness with Encore, the newly launched regional subsidiary of WestJet.
Chorus’s strategy of shifting capacity to Jive was, in effect, a contingency plan for side-stepping its existing labor agreements with trade unions.
“We needed to find a solution that would allow us to reach a CPA agreement with Air Canada,” Colin Copp, president of Jazz, told me in early February. “The only solution in the initial discussions … in the CPA process was to say, ‘Look, we’ll start a new operation. We’ll ensure that the costs are lower. We’ll guarantee those lower costs’.”
Although the CPA agreed by the two partners laid down a roadmap for cost savings, enforcing change was contingent on several trade unions ratifying their own, parallel agreements.
“Once we got the CPA in place, then we sat down with the unions,” Copp affirmed.
The Air Line Pilots Association (ALPA) was the first group to give the green light last year, followed by the Canadian Flight Attendant Union (CFAU). On 19 February 2016, Union for Canada (UNIFOR), which represents maintenance and engineering employees, became the third major group to update its collective bargaining agreement with Jazz.
UNIFOR’s ratification has removed the last hurdle to the new cost structures agreed between Jazz and Air Canada, extinguishing the need for Chorus to establish a second airline with a clean slate.
“As we finalize this maintenance agreement … we may very well have a different outlook on what we need to do … Whether or not we really need to launch the smaller Jive operation,” Copp said in the days leading up to the ratification. “It doesn’t necessarily lend itself to a lot of value being added, if you’ve [already] got the right cost structure.
“The final decision on what we do with this Jive thing is really one that will be made in the coming months.”
(Culled from www.forbes.com)
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