Cathay pilots' industrial action to continue

The Hong Kong Airport Authority says it is prepared from any chaos the action may cause

HONG KONG, China -- Cathay Pacific Airways pilots began a work-to-rule campaign Tuesday, saying they will continue their industrial action "indefinitely" until their demands are met.

Despite the company's management saying the action was designed to cause maximum travel chaos to the public there have been no major disruptions to Cathay flights.

Describing their plan as a "go-carefully" action, John Findlay, general secretary of the Hong Kong Aircrew Officers' Association, said the work to rule policy effectively consisted of adhering strictly to the company's operating manual.

"Members are being advised to work strictly in accordance with the operations manuals of Cathay Pacific Airways," he said.

QUOTE "We put a lot of money on the table. Do they want it or don't they?" - Cathay corporate development director Tony Tyler

"This will include assessing before flying if pilots are in fit mind and physical condition [and] to take the full amount of preparation time before flights."

Cathay handles about a third of all passenger and cargo traffic passing through Hong Kong.

It is the second time in two years that Hong Kong has faced the prospect of air traffic chaos as a result of industrial action by Cathay pilots.

In 1999, 'sickouts' by Cathay Pacific pilots forced the cancellation of hundreds of flights. During that standoff, Cathay chartered about 30 planes and crews from other airlines, costing the company U.S.$64 million.

Contingency plans

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The current dispute over pay and work conditions came to a head when the pilots union failed to a accept a 10.5 percent pay rise offer by a midnight deadline on Saturday.

Cathay have since retracted the offer and put contingency plans in place to minimize disruption to passengers.

"We are prepared to charter additional aircraft and rebook passengers on other airlines," Tony Tyler, Cathay's director of corporate development said.

"For the moment we will continue to operate normally and take bookings on future flights." Passengers were advised to check the status of their flights before leaving for the airport.

Suffer the losses

Tyler: 'We are not the ones making threats'

Although the airline said that the industrial action would probably lead to delayed flights rather than cancellations, analysts believe Cathay will lose some business to its rivals.

"From the passengers' point of view it's an inconvenience," Peter Hilton from Credit Suisse First Boston said.

"Delay is a reason to book somewhere else -- this is one of the forces here in the way that pilots would like to put pressure on Cathay -- by having passengers go somewhere else."

The union warned industrial action will continue indefinitely, while Cathay says it is prepared to suffer the losses.

"Obviously its not good for business," Tyler told CNN. "But what's most important is our long term future and our long term future can only be assured if we keep the cost base under control and we don't become uncompetitive."

Cathay said it would not return to the negotiating table unless the union drops its industrial action.

The pilots union said further talks were pointless unless Cathay handed over information on pilot's working hours.

Ultimatums

Findlay said Cathay was effectively issuing an ultimatum by refusing to provide the union with the information it needed, but Tyler denied this.

"We're not the ones making ultimatums. We're not the ones making threats," Tyler told CNN on Monday.

"We simply offered a lot of money. We put a lot of money on the table. Do they want it or don't they? That's the question for them."

The rejection of the airline's offer by the union means that Cathay's 700 most senior pilots face a three percent pay cut from Sunday, the last installment of cuts agreed to end the 1999 dispute.

The union, which represents about 1,200 of Cathay's 1,400 pilots, demanded the airline reverse the pay cuts and make significant improvements in rostering, the effect of which would be to hire more pilots.

As well as an up-to 10.5 percent increase, Cathay said it had offered overtime premiums of 2.5 times basic hourly pay and pension contributions equal to 15.5 percent of the pay rise.

Cathay is 45.3 percent-owned by Swire Pacific Ltd and 25.5 percent owned by CITIC Pacific Ltd.

Reuters contributed to this report.