NetJets Europe labor practices investigated

 - December 6, 2006, 11:01 AM

The French Ministry of Employment has launched an investigation into NetJets Europe flight crews at French airports, after an association of air charter operators alleged the fractional ownership giant is breaking the country’s employment law.

As of November 15, these checks had not revealed any illegal activity, according to the country’s civil aviation authority, the DGAC. Scara, an association of 15 operators including several executive charter companies such as THS, Darta, Alsair and Atlantique Air Assistance, has accused NetJets of not employing French-based pilots under French contracts. The group alleges that French-based pilots commonly fly NetJets aircraft from and to domestic airports and maintains that because duty periods start and end at French airports, the pilots must be employed under French job contracts.

Scara president Jean-Baptiste Vallé told AIN that by avoiding French contracts, NetJets is not making the social security and pension contributions that are mandatory in France. In October, the association officially asked the government to conduct checks on NetJets crews at French airports. The CRPN, the French crew retirement fund that collects contributions from all French-employed pilots, said it intends to file a lawsuit if the inspections yield evidence against NetJets.

The CRPN is to be the plaintiff but Scara, whose president is also on the CRPN’s board, is clearly leading the campaign. Scara member operators see NetJets as an unfair competitor that does not pay mandatory costs that they do.

Responding to the allegations, NetJets Europe has said that it “complies with all applicable regulations, including labor law” and insisted it is not a conventional operator with a base where aircraft are parked. “Our pilots are not based at a given airport,” NetJets said in a press statement in late October. The AOC holder for NetJets Europe is NetJets Transportes Aereos (NTA), a NetJets company based in Portugal.

Employment Tangle
The matter might be more complicated than portrayed by both parties. A source familiar with NetJets Europe’s hiring practices who spoke with AIN on condition of anonymity said that French pilots rarely fly NetJets aircraft from or to French airports.

However, he explained they do use airline flights from and to the nearest airport to position for their NetJets flights. NetJets pays for these positioning flights, and the crews officially start their duty period at the departure airport, which could well be in France if this is where they live. A central question is what constitutes the “departure” airport?

NetJets Europe pilots usually work on a 6/4 roster (six days on/four days off). In fact, the first-day duty time takes into account the airline flight’s departure time. This is for the 14-hour maximum in a day, the source explained. Nevertheless, on NetJets’ roster, the six-day duty period begins upon arrival at the airport where the pilot receives the keys to the NetJets aircraft. It ends half an hour after the last flight of the period.

The maximum duty time allowed per week is 55 hours. On average, NetJets pilots fly 500 hours per year. The summer is much busier than the rest of the year.
The source estimated there are around 30 NetJets pilots in France. Scara has said that there are “over 100.” NetJets has not commented on this figure.

On the pay slip of NetJets pilots, the name of the employer is shown as “NetJets Staff Management Limited.” This company is registered in the Isle of Man, a small island located between England and Ireland. It is a “Crown dependency” of the UK, but it does not belong to the European Union.

Licensing Questions
The DGAC can renew the license of a French-based NetJets Europe pilot, even though he or she is employed offshore. “It is a JAA [Joint Aviation Authorities] license, so [pilots] just have to present their logbook and the result of a simulator check at an authorized TRTO [type rating training organization] in Europe,” the source explained. Under JAA agreements, a pilot has to show the DGAC that he or she lives in Europe, not particularly in France. The DGAC did not respond to AIN’s questions about this issue.

So is it legal for a European air transport company (such as NetJets Europe subsidiary NTA) to have an offshore firm (such as NetJets Staff Management) supplying pilots for the aircraft it operates? The French Labor Inspection division could not answer immediately. “Such a situation sounds weird a priori but we would need a one-year case study to really answer,” a spokesman told AIN.

For NTA, having its pilots employed under offshore job contracts drastically reduces salary costs because the Isle of Man mandates neither employer retirement nor social security contributions. “For a French employer, these charges add almost 80 percent to the net salary,” Vallé emphasized.

French airline pilot union SNPL is supporting Scara’s action. SNPL president Jérôme Bansard hinted that the level of pilot unemployment might make it easier for those operators hiring pilots to set lower standards. “There are still 800 pilots without a job in the country,” he noted.

Some Pilots Satisfied
But perhaps NetJets Europe pilots are content working under the company’s terms and conditions. The CRPN has been in the red for several years. Recovering contributions from all French-based pilots is critical for the survival of the organization. However, AIN understands that some pilots, if they could choose, would not contribute to CRPN. The pension they can hope to receive from the CRPN, they say, is not worth the cost, and they prefer to make their own retirement arrangements through private pension funds.

NetJets Europe offers company contributions into such funds. Similarly, as no company contribution is paid to national health services, the Berkshire Hathaway company offers its staff private health insurance. French-based pilots pay their income taxes in France.

According to AIN’s source, NetJets Europe wages are “very decent.” For a captain, they are close to E7,000 ($8,750) per month. For a first officer, they are E5,000 ($6,250) per month. They do not vary depending on the aircraft types flown.
As stated on NetJets Europe’s Web site, the company name is a collective designation for NetJets Management Ltd. in the UK, NetJets Aviation Lda. in Portugal and NetJets Europe GmbH in Germany. They are the entities in charge of management, marketing and sales.

In Paris, NetJets Europe has only a small sales office. Nevertheless, NetJets Europe’s activities are growing quickly in France. For example, at one of France’s top three business airports, NetJets movements increased fourfold between last year and this year.