Widespread confusion about Norwegian Air Shuttle’s pilot employment contracting processes has been raising temperatures at flightcrew associations in Europe for more than a year, and is now having the same effect at American pilot unions since the company recently applied for transatlantic services.
I’ve just returned from the 8-9 April Flyoperativt Forum at Oslo Gardermoen, and one of the things the organisers did was to assemble four people who have an interest in the Norwegian pilot employment issue, which is a hot topic in Norway. Each was to state his case, then all the conference delegates could get involved.
There was a representative from Norwegian, from one of its crew contracting agencies ARPI, from the Norwegian Civil Aviation Authority (NCAA), and from the local airline pilots association Norsk Flygerforbund.
The main subjects of contention were the alleged erosion of employee rights by airlines that extensively hire agency aircrew on limited term contracts, and the potential effect of the associated job insecurity on aviation safety and piloting as a career.
Norsk Flygerforbund’s Petter Førde said that contract pilot jobs who are managed via crewing agencies in a third country for employees working at one of Norwegian’s overseas bases, but exclusively contracted to the airline, face confusion about where to pay their income and social taxes.
He added that the situation also robs pilots of the kind of job security that would give them the confidence to take part in safety reporting procedures, and removes any assurance that their job is a step toward a career.
The NCAA’s spokesman Stein Erik Nodeland confessed that the “tempo of change” created by Norwegian’s spectacular growth rate and the arrival of alternative crew employment models leaves the regulators struggling to keep up.
But, he said, temporary employees tend to be “less motivated to report” and observed that “uncertainty generally affects people in a negative way”.
If these fears were to be borne out in practice, he hinted, legislation might have to be considered to require direct employment by the air operator’s certificate (AOC) holder. He said, however, leadership from the airline could have a positive effect despite some temporary contracting which, he conceded, was inevitable.
Norwegian’s director of operations Tomas Hesthammer said the confusion over the carrier’s pilot employment policies has largely been created by misinformation. The company’s policy, he explained, was to contract pilots locally via agencies whenever it set up a new base.
It initially uses contract crew at new bases, said Hesthammer, because of the uncertainties surrounding the success of the new venture. If, however, a base turns out to be successful, after three years pilots will migrate to the airline’s payroll.
Since Norwegian is expanding so fast and intends to continue doing so, said Hesthammer, it needs pilots and wants to attract and retain them, but it also needs the flexibility that it gets from hiring a proportion of its pilots through agencies. The carrier retains five agencies around its network, he pointed out, but its policy is that pilots pay their income and social taxes in the country where they are based.
Norway-based multinational agency ARPI fielded one of its UK-based executives Jo Alex Tanem to explain how it manages the pilots at Norwegian’s relatively new but fast growing London Gatwick operation.
He said all the 222 Norwegian pilots at the Gatwick base are directly employed by ARPI UK, which deducts UK income tax and national insurance dues from salaries before paying them to the pilots, according to UK law.
ARPI UK does not have a pension scheme yet, said Tanem, but when UK law requires it in 2016, it will provide one. According to Tanem: “Our people are our employees and we want to keep them. We don’t have any self-employed pilots on our books.”
Meanwhile Flightglobal has been provided with a pilot contract drawn up by ARPI’s Warsaw, Poland office, which contains the sentence: “Nothing in this contract shall be deemed to create any employee relationship between Crew Member Consultant and ARPI or the Present Lessee [the airline customer]”. Tanem said he did not recognise this, but it must be an old contract. He was right. I don’t know what its date was, but it must be at least two years old.
ARPI Holdings partner Frode Finnøy told me it was indeed an old contract, probably relating to Norwegian’s Finland base, and that no contracts like that now exist there or anywhere else in the ARPI group.
Hesthammer added that Norwegian does not have any pilots on self-employment contracts. He also said that Norwegian’s policy of hiring pilots through agencies was not a policy intended to prevent pilots forming unions, as Ryanair’s Michael O’Leary has admitted it is at his airline. Norwegian is not anti-union, said Hesthammer.
It seems that some of the confusion and anxiety has come from Norwegian’s recent venture into long haul, setting up a Dublin-based company within the group called Norwegian Air International. This would have no operating base in Ireland, but that country’s recent acceptance that NAI’s Boeing 787s will be Irish-registered gains the company the valuable European Union status that Norway does not have, giving it EU rights in its negotiations with the US Department of Transportation for setting up transatlantic services.
Hesthammer said the company’s employment policies as he has explained them also apply at NAI.
EasyJet also has a policy of hiring new pilots through agencies for two years or so, and then taking them onto its payroll. Ryanair has operated through agencies for a long time, and the vast majority of its pilots work for an agency, or have self-employed status and interface with Ryanair via an agency except for operations and training arrangements.
So if that early ARPI contract for Norwegian was an indicator of how things might have been, it seems they are not that way any more. Norwegian and EasyJet’s arrangements look as if they might be the pilot employment model for the future, and Ryanair remains the wild card.
If there’s anyone out there who wants to tell me I’m seeing the world through rose-coloured spectacles supplied by Norwegian and ARPI, I want to hear from you.