March 4, 2010
Bearing All the Hallmarks of Oppression
Blog readers interested in labor issues should make a point to read Michelle O'Sullivan & Patrick Gunnigle's Bearing All the Hallmarks of Oppression: Union Avoidance in Europe's Largest Low Cost Airline, 34 Labor Stud. J. 252 (2009) (available from SSRN here).
Ryanair is now Europe’s largest low cost airline. It is also one of the most controversial, due to its outspoken boss, its cost containment strategies and its hostile relations with organised labour. Ryanair has consistently denied accusations that it is anti-union, stating that it respects the right of workers to organise and even claiming to be a champion of its employee’s right to non-unionisation. However, this claim does not hold up in the face of extensive evidence of union suppression. This paper addresses such evidence, particularly the various methods by which Ryanair have avoided and suppressed unions. In Ireland, Ryanair successfully crushed an organising campaign by the country’s largest union, the Services, Industrial Professional and Technical Union (SIPTU), after a lengthy and bitter strike. The only other union continuing to challenge Ryanair is the Irish Airline Pilots Association (IALPA). However, its efforts recently suffered a major setback when the Supreme Court ruled that Ryanair’s non-union ‘Employee Representative Committees’ were a form of collective bargaining, allowing the company to affirm its non-union status.
March 3, 2010
There is an interesting story online from USA Today on consumer loyalty to airline alliances and the place of these joint ventures in the commercial future of international air transport. See Dan Reed, More Travelers Loyal to Alliances, Not Airlines, USA Today, Mar. 3, 2010 (available here).
March 2, 2010
More on the Nationality Clause
Reuters news service ran an interesting story last Friday entitled Airline Alliances Becoming the New "Mergers", Reuters, Feb. 26, 2010 (available here). The piece focused on the all-too-familiar fact that national restrictions on airline ownership and control have impeded the ability of (most) airlines to consummate crossborder mergers. What the story missed is that these nationality restrictions form only one part of what is effectively a double-bolted legal lock to the formation of transnational airlines. As the growing aeropolitcal tensions between Austria and Russia show, see "The Nationality Clause Lives," the demand for citizenship purity in airline ownership at the international level is an equally strong bar to consolidation in the airline industry. Under the current regime of bilateral air services agreements, 90% of which contain nationality rules, see WTO Council for Trade in Services, Quantitative Air Services Agreements Review (QUASAR): Part B: Preliminary Results, at 33, para. 61, S/C/W/270/Add.1 (Nov. 30, 2006), any State desiring to unilaterally open its carriers up to foreign investment would be putting their airlines' rights to fly internationally in jeopardy. The United States, for example, could allow Lufthansa to purchase United Airlines, but would the Chicago-based carrier then find itself locked out of lucrative markets such as China and Japan?
March 1, 2010
The Nationality Clause Lives
If anyone was wondering whether or not nationality still matters to trade in international air services, Russia is willing to provide an answer. The Financial Times reported over the weekend that the geographic giant is threatening to revoke Austrian Airlines’s traffic rights following its acquisition by Germany’s Lufthansa. See Pilitia Clark, Russia Threatens Ban on Austrian Airlines, Fin. Times, Feb. 28, 2010 (available here).
Since 1947, almost all bilateral air services agreements mandate that only carriers which are “substantially owned and effectively controlled” by nationals of their respective home States are eligible for designation to operate international air service. This language, commonly referred to by aviation lawyers as the “nationality clause,” is one of the main barriers to crossborder consolidation in the airline industry. The European Union has had some success in recent years “exporting” its internal legal construct of “Community air carriers” in new and amended bilaterals with third party countries to allow nationals of any Member State to own and control airlines licensed within the EU’s jurisdictional territory. Russia remains an important holdout, however.