Zacca
Dennise Williams, Staff Reporter
IN AN effort to cut operational costs and secure financing from the Government, this month Air Jamaica has asked all their pilots to take a 25 per cent reduction in overall pay.
However, the Jamaican Airline Pilots Association (JAPA) has informed Wednesday Business (WB) that the members have not acquiesced. Speaking on condition of anonymity, a spokesman for the JAPA said their membership had a number of contentious issues with Air Jamaica (AJ) in addition to the pay cut issue.
"All the pilots have been asked to take a pay cut," the spokesman said. "As explained to us, the company is in a financial dilemma. To get additional loan guarantees from the Government, the pilots must take a pay cut. But no agreement has been reached as yet. We are waiting for the company to present additional documentation to us for consideration."
Christopher Zacca, deputy chairman and CEO of Air Jamaica, confirmed the requested pay cut, but clarified that it was not a straight salary cut. "Air Jamaica, as everybody knows, has been forced to maximise its efficiency and reduce its cost per seat mile ratio," Mr. Zacca said. "The effects of competition and September 11th have given us no other option. And we have been successful in this drive. In four years we have brought down the cost per seat mile from US$0.12 to a projected US$0.09 for 2004. We have looked at every area of the company and have cut costs to the tune of billions of Jamaican dollars. Now we are saying to the pilots that we need to cut the cost of flight operations."
AMICABLE
Mr. Zacca explains that all the negotiations between the pilots' union and the company have been amicable to date. "We are looking at the overall strategy where salary, benefits and productivity are being examined. I will not conduct salary negotiations in the press but it is not a flat 25 per cent cut of pay."
Still the JAPA believes that a pay cut will be detrimental. Said the JAPA spokesman, "There has been a rumour spread by the company that AJ pilots are the best paid in the world. That is incorrect. The proof is that if an American Airlines (AA) pilot's contract was offered today, we would jump at it."
The spokesman declined to state what AJ pilots' salary scale was.
Despite the secrecy about the pay scale, Zacca states that AJ pilots are among the highest paid persons in the company and their pay is on par with the rest of the world.
"The AJ pilots are very highly compensated in comparison to the company's executives and their peers in the other airlines. We have the best pilots in the world and we are in bi-lateral and amicable discussions to ensure the viability of the airline."
The JAPA spokesman admitted that salary wrangles between airlines and pilots happen internationally. Zacca agreed.
"Most of our competition have been able to obtain concessions from their pilots in joint negotiations in the region of 10 - 25 per cent," Mr. Zacca said.
Nonetheless, the spokesman informed Wednesday Business that the effect of the proposed pay cut is deeper than the company realises.
"The pilots have the most to lose," the JAPA spokesman said. "Everyone who is here is a professional pilot who wants to fly in Jamaica. Because of the pay at the current level, some Jamaican pilots have gone to work in the United States and the Middle East. So it means that if Jamaican pilots leave AJ, in order to continue in our profession, we have to leave Jamaica. We are not like accountants and marketing managers that can just leave one Jamaican company and work for the next."
However, AJ does not employ only Jamaicans. According to the spokesman, there are about two dozen overseas-based pilots, which he said that the company should exercise more care in hiring.
Zacca dismissed that statement.
"The foreign pilots go through the same training and supervision as local pilots," Mr. Zacca said. "They must have the same qualifications as local pilots. We have truck-loads of documentation as to the safety and professionalism of all our pilots."
CONTENTION
As to the contention that foreign-based pilots are cheaper to hire than Jamaican based pilots because the company does not have to pay health insurance and other benefits, the JAPA spokesman said that is not true. But Zacca says that is very much the case.
"We hire foreign pilots at the captain level simply because there is a shortage of Jamaican captains, due to the fact that we are growing company and we do not have enough local pilots with the number of years and flight hours required to become captains. In fact, out of 250 pilots only 25 are foreign and we do this in conjunction with the pilots union and not behind their back. But as soon as we train the local pilots we will immediately place them in the position. And it is true that the foreign contracted pilots are cheaper. They earn less in their pockets because they are willing to take less money."
And Zacca stresses, "The company's policy is not to hire foreign pilots on contract where there are qualified local captains available."
Another contentious issue between AJ and the members of the JAPA concerns pensions. Said the spokesman, "At the present time, the senior pilots who retire get approximately J$6,000 per month."
It was explained that less than half of AJ pilots' pay is pensionable, but all of it is taxable.
"We went to the company for a substantial increase on this amount," he said. "There was even a heads of agreement signed where the entire salary would be pensionable. But nothing came of it, the company reneged. The matter is now with the Ministry of Labour. Now, we are hearing that AJ is expressing a willingness to abide by the contract but nothing has happened."
Mr. Zacca disputes the amount of the monthly pension received.
"I am not in the position to confirm the figures of J$6,000 monthly, but those numbers are exaggerated."
REGULATORY APPROVAL
Zacca also explained that the company has agreed to change the way pensions are calculated but must await regulatory approval.
"It is true that pilot's pension, prior to negotiation a year ago, was calculated on only a portion of the pay. The portion of their pay that is the incentive part was not included in pension calculation. But we did agree to include the incentive as pensionable. Our position is this: We are in the process of applying to Government for approval of this change. Both the Income Tax Department and the Bank Of Jamaica must approve because the incentive pay is foreign exchange based."
In terms of the effect of these contentious issues on the customer, the JAPA spokesman noted that the membership would put the customer first. "First, to my knowledge, there are no plans for industrial action by our members. We are hoping that everything will be solved amicably. We are key players in the tourist industry even though the powers that be leave us out. Remember we bring in the tourists here. And AJ is the best and safest way to get where you are going. AJ is always the right choice for customers."
The JAPA spokesman acknowledged that profitability for the company was key. "We need to get AJ profitable," he said. "But the pilots are not the reason AJ is not profitable. Other, more knowledgeable persons can tell you the reason why the company is not making money. All I can say is that the word on the street is that this year, the company will make an operational profit."
Mr. Zacca refutes this. "No, we will not make an operational profit. This year, international events have reduced the demand for travel. There was the Iraq/US war and SARS that caused our revenue to fall short."
