Companies that have to buy lots of expensive, long-term assets are at a huge disadvantage in business life: They're acutely vulnerable to labour action.
Look at Air Canada. The airline has an effective monopoly on lucrative business travel in Canada, and in economy travel enjoys an effective duopoly with Westjet.
And yet every few years, like clockwork, Air Canada's employees, be they pilots, maintenance workers, ticket agents or flight attendants, either threaten labour action, disrupt travel or outright strike. Westjet, which isn't unionized, has thrived since it was formed, and produced tremendous wealth for its shareholders and jobs (with bonuses) for its employees. Air Canada has done the opposite: It has destroyed value and its employees are chronically unhappy.
I'm a frequent flier, and fly Air Canada. I know some of the flight attendants by name and by and large I find the service is very good. I showed up late once and a ticket agent personally rushed me through security so I could make the plane. The flights tend to be on time and the people are friendly (friendlier than they used to be a decade ago, to be sure). The pilots are professional and (I think, having flown other airlines around the world a few harrowing times) very experienced.
But I find the labour actions deplorable and applaud the government forcing Air Canada's employees back to work. I suspect many Air Canada unionized employees feel the same, although maybe for different reasons.
Federal labour minister Lisa Raitt has enacted back-to-work laws against Air Canada unions. On Thursday, a wildcat strike by grumbling ground crews in Toronto and Montreal was stopped dead in its tracks by an arbitrator. Minister Raitt had warned that the illegal strike could bring stiff fines.
None of this stopped pilots from calling in "sick" on numerous occasions over the past couple of weeks.
Here's why these actions are reprehensible: First, they are expressly timed to inconvenience as many travellers as possible, and that means families trying to get away for spring break. Nothing new there: Unions have always put their own interests first.
But what makes it wrong is these same unions and their members have benefited tremendously from the taxes these families pay. Recall that during the financial crisis, Air Canada went to the federal government cap in hand and got a $250-million bailout. The reasoning for giving the money was the company was essential to the lives of Canadians.
Now that Raitt is intervening in the labour disputes on the grounds that Air Canada is an essential service, the firebrands in the unions claim they're being denied a fundamental labour right.
The detached person can see how hypocritical that is. You either are essential or you're not. You can't take government money, which helped pay wages and pensions and presumably avoided considerable employee hardship, and change your tune to justify a strike.
What makes it worse is the families these unions have no problem inconveniencing are the ones who gave the company the money. It's tax dollars; it doesn't grow on trees. The government took it from the pockets of these families and gave it to the airline, which in turn gave it to its employees. Now those same employees (not all of them, I'm sure, but their union leadership) have no problem biting the hand that fed them.
What makes it worse is we subsidize Air Canada in other ways, too. Plenty of international airlines would gladly expand their flights in Canada, but the federal government blocks them, which protects Air Canada. Lots of countries do the same, to be sure, but so what? These employees (and the shareholders, let's be fair) benefit from this protection, which costs us money in the form of higher fares. Those higher fares are the price of this subsidy. And yet the unions have no trouble turning their backs on travellers when it suits them?
Unions had a place in the workforce, but a comparison of Westjet and Air Canada suggests, to me anyway, that they're no longer nearly as vital.
Their own seniority rules are as much an impediment to workers as any other factor. Besides, if you don't like your job, if you think you're worth more, get another one.
It's considered un-Canadian to speak out against labour. It's not; on the contrary. Canadians should not be subsidizing Air Canada's unions or shareholders.
Fabrice Taylor is an award-winning financial journalist and analyst, and author of the President's Club Investment Letter. Email him at: