Chinese airlines in dogfight for scarce pilots By Robert Hartmann
HONG KONG - The rapid development of China's civil-aviation industry in recent
years has led to a serious shortage of pilots.
According to published figures, 11,000 pilots serve in China's civil airlines,
flying more than 800 planes. It is predicted that by 2010, China will have
1,250 aircraft in service, meaning that the industry will require at least
6,500 more civilian pilots by then.
To help ease the increasingly acute shortage, the government has
given the green light for airlines to recruit senior pilots from abroad,
including Taiwan. The first group of eight Taiwanese pilots hired by Sichuan
Airlines began to fly last December 20. Shenzhen Airlines has also brought in
59 captains from Brazil and Russia.
The Beijing Morning Post hailed the introduction of senior pilots from
overseas, saying it could save Chinese airlines the time and cost of providing
pilot training. However, at this stage, the introduction of overseas pilots is
occurring on a scale too small to meet the growing demand.
There are 14 private airlines operating in mainland China, most of them
concentrating on air-cargo shipment, and at least another three new ones are
awaiting government approval to take off. Therefore, Chinese airlines,
particularly the private ones, have to compete to offer better salaries and
benefits to lure native pilots from their rivals. The competition has led to
the problem of "job-hopping". As a countermeasure to prevent the drainage of
pilots, airlines now impose large "compensation for the cost of training"
charges when pilots quit to work for a competing airline.
China's labor-arbitration authorities have been busy settling disputes between
pilots who have quit and their original employers over job-hopping charges.
According to Spring Airlines vice president Chen Genzhang, the amounts of the
job-hopping compensations have skyrocketed to 5 million to 6 million yuan
(US$620,000-$760,000) for an assistant pilot and 12 million to 14 million yuan
for a captain. However, despite the high compensation fees, which would
normally be paid by the new employer, and other severe restrictions,
job-hopping among pilots has increased significantly since 2004.
To prevent "vicious competition" among the airlines, the General Administration
of Civil Aviation of China (CAAC), China's civil-aviation regulator, has
established limits for job-hopping charges ranging from 700,000 to 2.1 million
yuan. But the guidelines are simply ignored.
The legal issue concerning the disputes over compensation fees attracted public
attention when a job-hopping assistant pilot was taken by his former employer -
a big airline based in southern China - to the local labor-arbitration
department. The airline demanded a compensation fee of 13 million yuan, six
times the upper limit set by the regulator.
The airline gave the breakdown of the compensation as follows: 300,000 yuan for
breach of contract; 12 million yuan for training costs, even though the real
cost of training was only 1.1 million yuan; and the remaining 11 million yuan
demanded was to cover the flying hours the pilot had spent in the cockpit. The
company argued that without the flying hours it provided the pilot, he could
never have become skilled at his job. However, the pilot argued that he had
spent the flying hours merely doing his job and therefore owed the airline no
compensation for time spent in the cockpit.
This represents a gray area in China's existing labor laws and regulations,
which do not explicitly provide for the resolution of such a dispute.
Chen Genzhang has made a comparison on costs for training an assistant pilot in
two training schools - the Guanghan Civil Aviation College and the Fanmei
Aviation College. He concluded that the training cost in China is about 1
million yuan. Hence, he argued, except where expenditures could be traceable by
bills and receipts, the state-owned airlines should not ask for exorbitant
compensations.
On the other hand, some Chinese lawyers and law experts hold the view that
expenditures on pilot training should be taken as a production cost of the
airlines and therefore should not be regarded as a training cost. Moreover, in
some of the training processes, the pilots do create production values for the
airlines and therefore cannot be simply regarded as pure training.
According to industry insiders, CAAC initially encouraged "job-hopping" by
pilots to facilitate exchange and competition among the airlines. Partly for
this purpose, pilots are now given national certificates that enable them to
work across the country. Previously a pilot would only be given a local
certificate that allowed him to work in a certain region.
Although amid the upsurge of job-hopping many pilots want to change employers,
in practice it is still not easy for them to do so. In addition to huge
compensation charges demanded by the current employers, the state-controlled
airlines, which dominate the industry, also set other obstacles. For instance,
they may refuse to release a pilot's personal dossier (including flying records
and health records) to the potential new employer.
According to Chen's estimation, so far the number of pilots who have
successfully "jumped the trough" to other airlines is only between 20 and 30,
while another 100 job-hopping pilots who have submitted their resignations are
still staying put, being trapped in labor arbitration or lawsuits. This
constitutes a great waste of human resources, especially under the current
acute shortage of pilots.
Xiao Shengfang, a lawyer in Guangzhou, said that up to now, remarks of "not
approved" by the current employers were stamped on all the resignation letters
filed by their pilots. He said this was in conflict with the Labor Law,
according to which no one can force any person to work and the worker can quit
without needing to give any reason, providing he or she gives a one-month
notice of resignation. Furthermore, the law does not provide for charging a
breach-of-contract fee, said Xiao.
Finance and Economy Daily's Guo Jinhui pointed out that the skyrocketing
job-hopping compensations demanded by state-controlled airlines were not just a
matter of money, they were indeed among the few viable measures left at the
disposal of the state-owned enterprises to keep their talented employees in the
face of heated market competition.
Ceng Yanyuan, a professor in labor and personnel affairs with Beijing-based
Renmin University, expressed the optimistic view that the current acute
shortage of pilots could be eased in five years, as China has embarked on a
large-scale pilot-training program.
Robert Hartmann is a freelance writer based in Hong Kong.
