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Wednesday, Dec. 8, 2010

Forced firings hitting JAL crews in prime

High seniority now a liability; options elude

Staff writer

The 51-year-old copilot's career at the once high-flying national flag carrier went south on Sept. 25 when he received his schedule for the following month: no flights.

"I couldn't understand why it was blank. But later, I learned I was one of the candidates for forced dismissal because of my age," the Japan Airlines International Co. copilot said, on condition of anonymity.

He was one of many JAL employees who received blank schedules that day. Although nothing has been finalized, the recipients of the blank schedules will probably soon be fired if they don't accept the early retirement packages being offered.

Although the exact number of those who received a blank schedule is not known, according to the JAL Flight Crew Union and Japan Airlines Cabin Crew Union, some 100 members in each group got one.

Union members said the blank schedules were sent to copilots age 45 and older, cabin crew members age 52 and above and employees who took sick leave for at least 81 days in the previous 29 months.

The copilot, who has been with the carrier more than two decades, was called in twice in October for interviews with two superiors who told him there no longer was a place for him. He said they gave him the blank schedule to give him time to consider early retirement. He said he had been on the verge of going through the process of qualifying as a captain, which would have entailed a raise.

"I have two children, one in a university and the other in high school. I need to pay for their education, and I still have a home loan to pay," the copilot said, adding he still can't tell his children about his situation.

JAL, which filed for bankruptcy protection on Jan. 19, announced Nov. 15 it would start firing employees, after applicants for its third offer of voluntary early retirement fell 110 shy of the goal of 130 pilots and 90 short of 140 cabin crew members. It plans to terminate the contracts of 200 pilots and flight attendants as well as about 50 other employees now on long-term unpaid leave.

Although the airline recently re-extended the deadline for early retirement to this Thursday, the severance package — amounting to six months of salary and other benefits, including an initial retirement sum — is unlikely to attract more employees, experts say. While they acknowledge those on the chopping block face a tough choice, they also note deep cuts are a must if JAL is to survive intensifying competition.

"There are many reasons behind JAL's failure. But one big reason is its labor costs. They should be cut down, especially at a time when foreign carriers are entering the Japanese market with very low labor costs," aviation analyst Kazuki Sugiura said.

According to Sugiura, the combined costs for JAL — and likewise for All Nippon Airways Co. — are about double those of Asian carriers such as Hong-Kong based Cathay Pacific Airways and quintuple those of low-cost AirAsia X based in Malaysia.

Sugiura said if JAL is to truly recover it must eliminate its negative legacy, including bloated labor costs.

According to an annual JAL report for fiscal 2008, the average salary was around ¥18 million for a pilot and about ¥5.8 million for a cabin crew member.

Some captains were paid more than ¥30 million a year and veteran flight crew members were paid about ¥10 million, Sugiura said.

"Japan (previously) had a pilot shortage. Management feared pilots would quit if their pay was lowered," Sugiura said, adding that the situation drastically changed after the economic crisis kicked in with the Lehman shock in 2008, sending the domestic aviation market reeling while it was still trying to recover from such events as 9/11, SARS and other epidemics.

Aside from their basic salary, pilots received generous fringe benefits, including a guaranteed 65-hour monthly flight allowance regardless of how much time was spent in the cockpit, according to Sugiura.

JAL also provided flight crews with limousine service between home and airport, and even provided pantyhose for female flight attendants, Sugiura said.

Hajime Tozaki, a Waseda University professor and former JAL employee, stresses the importance of meeting the job-reduction target.

"Forced dismissal is harsh. . . . But as Haneda airport goes international and Narita International Airport increases its landing slots, (competition is) going to intensify," Tozaki said. "So when looking into the future, such dismissals are inevitable."

JAL must stick to its rehabilitation plan to better prepare for "event risks," such as SARS or other disease outbreaks or otherwise disruptive incidents, Tozaki said.

While personnel downsizing is a crucial step toward JAL's revitalization, the unilateral termination of labor contracts is no easy option in Japan.

A forcible dismissal must meet four criteria established by legal precedent: whether such termination is really necessary; whether the employer has made as much effort as possible to avoid firing; whether people who were asked to leave were "appropriately" selected; and whether the company has pursued a reasonable course before terminating a labor contract.

Even for a company under bankruptcy protection, all four criteria must be met, labor lawyer Ichiro Natsume said.

Because some employees are considering legal action if they are axed, the biggest hurdle for JAL will be to prove the job cut is necessary, Natsume said. "The necessity part cannot be vague. . . . The number of redundant staff should be assessed down to one person," he said.

If JAL can provide solid objective data to prove the job cuts are needed, the dismissals will probably be considered valid, Natsume said.

The Cabin Crew Union, comprising around 870 members, is also planning a Dec. 24-25 strike if the company doesn't drop the firing plan.

"In the case of forced dismissals, the employees basically are not at fault," he said, noting that swinging the ax is a company survival tactic under which management bears the burden of proving it's necessary.

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