Flight crews get new offer from NetJets Europe

 - December 20, 2006, 6:47 AM

NetJets Europe (NJE) has offered its flight crew new onshore contracts and improved pay. Proposed raises for pilots and flight attendants range from 4.6 percent to 26.7 percent, and new roster arrangements will limit maximum duty days to 50 days per quarter. AIN obtained a copy of the contract offer, which was sent to NetJets staff on December 1. (See box on page 30 for details.)

In addition, NJE is ending its longstanding practice of employing flight crew under contracts in offshore jurisdictions such as the Isle of Man and the Cayman Islands. These contracts have excluded staff from European Union (EU) employment rights and have resulted in serious tax, social security and pension concerns (see AIN, December 2006, pages 1 and 18). The new contracts are permanent, rather than renewable at three-year intervals, which should allay some employee concerns about job insecurity.

NJE is also standardizing rosters for most flight crew to a 6/5 pattern of six days on and five days off, with a maximum of 50 mandatory workdays in any quarter. Previously, staff worked variable rosters of 6/5, 6/4 or 6/3 with a maximum of 18 days in any month.

Under the new arrangements, which take effect January 1, NJE flight crew will be required to work nine fewer duty days each year. At the same time, they have the option of working up to an additional six days at supplementary daily rates of between €550 and €1,000 ($715 to $1,300).

However, flight crew of both existing long-range Gulfstream V/550s and on-order Dassault Falcon 7Xs will work a combination of 7/6 and 6/5 rosters, albeit with the same maximum quarterly duty time. According to sources who are familiar with the NJE staffing situation, some of these pilots have objected to this differentiation and have also stated that the proposed pay increases do not bring them in line with colleagues flying similar aircraft for other operators. These pilots, according to several sources who spoke on the condition of anonymity, would like to work on 7/7 or 8/8 rosters, citing the time it takes to recover from jet lag when flying intercontinental missions.

Flight Crew Unionizes
The new contract offer has not deterred flight crew from forming their own union representation through the new NetJets European Pilots Association (NEPA). At press time, the group was about to be incorporated as a trade union under French law and it will soon formally affiliate to the UK-based Independent Pilots Association. NJE declined to respond to questions from AIN about the new contract or the union-organizing efforts of its employees.

According to Jérôme Bansard, president of French pilot union SNPL, 30 founding employees are needed to create a union in a company in France. However, if a company’s management opposes the move, a new process starts, generally calling for a total of 100 employees to support it. According to French labor law, a union representative cannot be fired without approval from the government’s labor inspection administration.

Separately, João Ferraz, president of Portuguese pilot union APPLA, told AIN that 17 NJE pilots, themselves Portuguese citizens, are already members of his organization.
The pilots behind NEPA are pushing NetJets to increase pay to at least match that of pilots in Europe’s booming airline sector. And they have concerns about the new onshore contracts, which they say will leave some pilots paying more taxes that will seriously erode the pay increases.

Under the new NJE proposal, there will essentially be three groups of flight crewmembers:

• Those who are now on a Portuguese contract will get a new Portuguese contract and will continue to pay social security and taxes in Portugal (where NJE’s AOC holder NetJets Transportes Aéreos is based).

• Crewmembers who are now on a Cayman Islands contract will get a new UK contract and will continue to pay taxes and national insurance in the UK.

• Crewmembers who are now on an Isle of Man contract will get new UK-based contracts but will pay income tax in Portugal under non-resident status at a flat rate of 25 percent and social security contributions in the UK.

Sources close to the NJE pilots argue that pilots paying flat-rate tax in Portugal will lose tax deductions for factors such as children and military service and will therefore pay higher taxes than they would in their own countries. However, in its December 1 letter to staff, NJE management insisted that these pilots will in fact get tax relief in their own EU states.

Apparently recognizing that the revised contracts may not have completely eliminated the tax and legal headaches that have made the existing offshore contracts so problematic, NJE has also offered flight crew ?2,000 ($2,600) to pay for them to get advice from specialist accountants or lawyers.

The December 1 letter to staff from NJE chairman and CEO Mark Booth and NetJets Transportes Aéreos CEO William Kelly states that staffing issues have not been handled correctly in the past. It says that under Kelly and new head of human resources Ricardo Peres, the company is determined to improve employment terms and conditions.

A Step in the Right Direction
According to sources close to NJE flight crews, pilots have generally welcomed the company’s new initiative as a sincere attempt to address their longstanding grievances. However, most indicated that they view the December 1 contract offer as an opening offer that will need to be improved to win final acceptance by the workforce.

Pilots have indicated that they want the right to pay taxes and social security directly in their countries of residence so that they can more readily benefit from all deductions and avoid complex tax-planning work. They also feel that the improved pay offer should include further compensation for what they regard as shortfalls in employer contributions to pensions over the past 10 years and excessive exposure to tax and social security costs under the offshore contracts. In fact, NJE has promised to further revise the new contracts to address pension issues.

Meanwhile, some pilots are continuing to vote with their feet by leaving NJE for other flying jobs, including at low-cost airlines and flag carriers. According to sources familiar with NJE’s staffing situation, “significant numbers” of the company’s flight crew already have firm offers of work at other operators (many of them with provisional start dates) and many others are now actively looking for different positions. Some pilots have told AIN that NJE flight crew have longer duty periods than their airline counterparts because they have direct responsibility for overseeing handling arrangements such as catering and aircraft servicing.

Another concern NJE management seems to be addressing is internal communications. According to sources familiar with NJE staff, some pilots have complained that they have little relationship with their colleagues, apart from sharing the same cockpit. To improve this situation, the company organized briefing sessions in London, Paris, Amsterdam and Brussels early last month. In addition, two teams of employees are working “to redefine [NJE’s] performance measurement system and helping [the company] to define what qualities, competencies and skills [NJE] should value in [its] people,” according to the December 1 letter.

NJE has acknowledged that it is having to improve its employment packages at a time when it is working both to retain experienced flight crew and to recruit a further 180 staff to operate its growing fleet of business jets this year. The December 1 letter to staff referred to an “unacceptably high turnover rate among flight crews.”
According to a source familiar with NJE hiring practices, the company could face a pilot shortage more quickly than others because of its policy of employing only crewmembers with high levels of experience. The offer of improved terms and conditions is a clear signal that NJE is boosting its buying power to retain and recruit employees with experience levels commensurate with its standards. The company currently employs around 670 flight crew and operates 114 aircraft. It plans to add another 30 jets to its fleet this year.