03/09/2012 12:55 EST | Updated 05/09/2012 05:12 EDT

Air Canada Strike: Harper Defends Decision To Intervene

TORONTO - The federal government needed to intervene in Air Canada's labour disputes because a shutdown at the country's largest airline at a peak travel time could have taken a toll on the economy, Prime Minister Stephen Harper said Friday.

"The position of Air Canada is different," Harper said, speaking at Toronto's Billy Bishop Airport.

"It is far and away the largest airline in the country and a shutdown of service on that airline would have significant impact not only on airline service to Canadians but on the transportation system as a whole and potentially on the economy."

He said the parties need to find a way to resolve their disputes without affecting the Canadian public — a message also delivered by Labour Minister Lisa Raitt on Thursday when she blocked actions by the airline and two of its unions.

Raitt sent the disputes to the Canada Industrial Relations Board to see how a work stoppage would affect the health and safety of Canadians — a move she has used before to prevent a work stoppage by the airline's flight attendants.

On Friday, the government took the additional step of adding back-work-legislation to the order papers for Parliament that would allow the Conservatives to table a bill as early as Tuesday if needed.

Raitt's intervention came as Air Canada (TSX:AC.B) threatened to lock out its pilots on Monday and the union representing its mechanics, baggage handlers and ramp crews threatened to strike on the same day.

While the board reviews the case, the airline cannot lock out its employees and the unions cannot start a strike.

The pilots union and the machinists are the last two major unions without reaching new collective agreements since Air Canada restructured under court protection nearly a decade ago.

Critics have said the Harper government — which implemented back-to-work legislation when the airline's customer service agents walked out last year — could throw Canada's entire system of labour relations into disrepute.

The International Association of Machinists and Aerospace Workers, the union representing some 8,600 Air Canada employees who threatened strike action earlier this week, has accused Air Canada of relying on the government's willingness to intervene instead of working out a solution at the bargaining table.

But George Smith, former Air Canada director of employee relations who's now an industrial relations professor at Queen’s University, said when the government gets involved, it also threatens to make Canadian unionized business uncompetitive.

"Air Canada is at more risk than any of its unions," he said.

"Employers rely on free collective bargaining to make significant changes in their collective agreements in order to remain competitive and you're just not going to get a competitive agreement through binding arbitration."

That's because arbitrators tend to find a middle ground, he said pointing out that the Canadian Auto Workers union appeared to celebrate the binding agreement between the company and flight attendants as a victory for its members.

The prime minister said Friday that a part of him doesn't want to intervene, but it is essential to keep the airline flying, especially during the busy March Break travel period.

"My concern is not management or labour. My concern is the broader Canadian public and I think the broader Canadian public overwhelmingly expects the government to act."

But Smith said he doesn't buy the government's argument that a work stoppage at the airline would jeopardize the economy — or even travel plans to any significant extent.

"It's farcical to suggest that the Canadian economy depends on Air Canada operating," he said, adding that West Jet (TSX:WJA) had plans to increase its own seat capacity to accommodate travellers during a potential shutdown at its rival.

Smith said there were several work stoppages when he was at the company — even when it was a Crown corporation and had a monopoly on Canadian air travel — and the government didn't intervene then.

Smith said the government is setting a dangerous precedent by intervening in the disputes.

But Ian Lee, a policy expert at Carleton University, said government action in labour disputes involving the transportation and communications sectors is nothing new.

In a soon-to-be published study, Lee found that 35 back-to-work bills have been enacted since 1950 with Harper passing just four of those. Of those, 33 legislated workers in ports, airlines, post offices, railroads, grain handlers and airports. The other two were public workers.

"In other words they didn't legislate back any other sector, not once, not ever," he said.

"Parliament sees these two sectors as very very special, so special that we will legislate them back to work."

The difference is Harper is legislating those employees back to work faster, almost instantaneously, Lee added.

Lee suggests Harper is working to classify those as essential services and therefore cannot strike. However, the government is working piecemeal, rather than formally amend the Canada Labour Act to avoid public fallout.

"So they've decided 'why go beat our heads against the wall on a generic version, when we can introduce on a case-by-case basis on these particular strikes, in particular companies and we'll get all kinds of brownie points and kudos for saving the day'," he said.

"Right now all kinds of mothers and fathers are happy because they saved their winter break."