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China's airlines threaten to bankrupt pilots who try to quit
Published: Jul 11, 2008 

Chen Jianguo quit his job as a pilot for Xiamen Airlines Co. after working 90 days straight. His employer demanded the equivalent of more than $1 million in compensation, and he's been banned from the cockpit ever since.

"The company has adopted all kinds of unfair methods to punish me,'' said Chen, 35. "It's to give notice to their other pilots that the same thing could happen to them.''

China's largest carriers, including Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co., are struggling to hang onto crews, enforcing lifetime contracts as they expand at a time when increasing demand for air travel is creating opportunities abroad. To protest their treatment, pilots have staged hunger strikes and turned flights around in mid-air.

"It's unrelated to reality, somewhat like slavery,'' said Gideon Ewers, a London-based spokesman for the International Federation of Air Line Pilots' Associations.

China, the world's second-largest market for air travel, is expected to expand its fleet by about 30 percent to 1,550 aircraft by 2010, according to the nation's aviation regulator. Bottlenecks at flight schools may leave a shortage of 2,000 pilots by that time, said Gao Hongfeng, vice director of the General Administration of Civil Aviation.

To prevent a bidding war for talent, the government issued a regulation in May 2006, allowing airlines to demand compensation for losing staff. Pilots are required to pay their employers 700,000 yuan ($102,300) to 2.1 million yuan if they quit.

"Everyone should follow the rules,'' said Chen Feng, the Harvard University-educated chairman of Grand China Air, the parent of Hainan Airlines, China's fourth-largest carrier. "If someone insists on leaving, he should pay the price.''

Pilot Shortage

A 30 percent shortage of pilots may result in significant increases in staff costs for Chinese airlines this year and next, said Ally Ma, an analyst at Citigroup Inc. in Hong Kong. Ma rates Air China and China Southern "sell,'' and has a "hold'' rating on China Eastern.

Narrow profit margins limit the ability of airlines to raise salaries. China Eastern's operating profit margin was 0.7 percent last year, Air China's was 0.8 percent and China Southern's was 2.9 percent. That compares with 13.8 percent for Singapore Airlines Ltd. and 6.3 percent for Cathay Pacific Airways Ltd.

The rising cost of fuel is cutting those margins. The Chinese government, which sets domestic prices for jet fuel, has raised prices by 37 percent this year.

Compensation Demands

While airlines such as Emirates and India's Kingfisher Airlines Ltd. may recruit pilots from other countries, Chinese carriers are enforcing lifetime contracts to keep their flight crews at home.

In April, Shanghai Airlines sued nine pilots, asking for 35 million yuan after they resigned, according to the city's Jingan district court.

Zheng Zhihong, a former captain at China Eastern, was initially ordered to pay as much as 12.6 million yuan when he resigned last year. Zheng agreed to pay 1.4 million yuan in April after arbitration and hearings that lasted almost a year.

Chen's arbitration case has lasted so long he's now in a race to protect his flying privileges. He has been out of the cockpit since December 2006. His license will expire if he doesn't fly for two years.

"The airlines are trying to make the process long and difficult,'' Chen said. ``It's an alert or threat to their pilots on position.''

Aborted Flights

Gao Huiling, the official at Xiamen Airlines' legal department who is in charge of the case, declined to comment before another round of court hearings.

Arbitration for labor disputes should be solved within 90 days, according to court guidelines. Guan Qingyong, a director at the arbitration center in Xiamen, said he couldn't talk to the media about Chen's case.

Pilots are fighting back.

The pilots of 21 China Eastern flights from southeastern Yunnan province turned their planes around and returned to their departing airports on March 31 and April 1, the carrier said April 7. The airline punished 13 of the pilots. The government fined China Eastern 1.5 million yuan and gave some of its slots for flights to the region to Air China and China Southern.

It isn't the first time the airline has faced protests. As early as in 2006, six pilots went on a five-day hunger strike outside the carrier's headquarters in Shanghai. They called off the strike for health reasons.

Chen continues to fight his case through the courts.

At an arbitration hearing in Xiamen, the pilot sat on a stained sofa with migrant workers quarreling with their employers over sums of $100. Though he waited for two hours for his case to be heard, Chen said the principal was worth the struggle.

"No matter how much I earn, I should have the basic right to quit or give up the earnings,'' Chen said.

On March 31, 18 flights returned to their departure points in southwestern Yunnan province, affecting more than 1,000 passengers. Media reports said that the pilots, who work for China Eastern Airlines' Yunnan branch, were protesting over their pay and working conditions. In the past years, more and more pilots put forward resignation. What lies behind it is a pilot shortage and the out-of-date pilot management system in China. China has 12,000 civil pilots. But official figures predict that the total number of flights would increase 80 percent by 2010 and 6,500 more pilots would be required.
Mr. Yang Yuanyuan, Minister of CAAC

Mr. Yang Yuanyuan, former Minister of CAAC , was there at Aviation Expo/China 2007 with us

Mr. Gao Hongfeng, Vice Minister of CAAC,

Mr. Gao Hongfeng, Vice Minister of CAAC, was there at Air Show China 2002 with us

Mr. Yang Guoqing, Vice Minister of CAAC

Mr. Yang Guoqing, Vice Minister of CAAC, was there at Aviation Expo/China 2005 with us | Video

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