Turning to the industry, it should be noted first that many industry interviewees took the view that TC and the industry are in a partnership in establishing the safest possible airline industry – ‘it is in everyone’s best interest’ seemed to be the guiding principle. However, how to continue that partnership was another issue with many larger airlines advocating more delegation of authority and flexibility with regulatory compliance (exceptions and/or minimal equipment lists) and smaller air operators seeking a greater level of regulatory assistance.
In general, all interviewees were satisfied with the professionalism and level of service they were receiving from TC, especially since the creation of the TC Service Centres. In fact, in part due to the professionalism and experience of the CAIs, many industry interviewees stated that they had made informal offers to the CAIs for line positions, but were often turned down due to their inability to offer the inspector a command position with the airline.
This is noteworthy since the union agreements that exist with the large flag carriers often mean that even an experienced pilot will be brought into the line far down the seniority list, thereby affecting salary and working hours. In the case of firms with non-union shops, issues of seniority were not a barrier to recruitment of experienced pilots, including CAIs.
There were some suggestions for improvement, specifically regarding the consistency of the application of enforcement and the level of surveillance by introducing risk management techniques that have been adopted by the industry. There were also general comments that the level and depth of experience among CAIs seem to have fallen recently as TC loses inspectors to industry and retirement. As well, it was suggested that TC not rely on only one source for recruitment, specifically the military, as it is essential to have a good mix of aviation business experience, safety management experience, and technical expertise. Finally, it was noted that TC needs to establish a succession plan immediately before external losses affect service levels and to better communicate the strategic direction of the Civil Aviation Program – to clients and staff.
As noted, it would be incorrect to suggest that industry enjoys complete flexibility and has no restrictions on its recruitment and retention policies. Many of the large carriers, such as Air Canada and Canadian, and their affiliates, are restricted in their human resources management practices by the fact that they are a unionized organization. However, there are some relevant examples of innovative practices that were noted during the industry interviews.
As demonstrated by the recent Air Canada strike, pilots and other licensed aviation personnel have significant influence on the operations of any large operator and can literally shut down an airline indefinitely. As such, pilot unions have been relatively successful in creating labour agreements that are based primarily on level of seniority, job protection, and competitive compensation. Within such a structure, a company is extremely restricted in taking innovative approaches to human resources management so that it maintains enough flexibility to effectively respond to changes in the business environment.
More importantly, unionized air operators tend to not have significant attrition problems, as an equivalent position with the same level of seniority with another unionized airline is not available. There is also a built in incentive to remain with the parent airline and its affiliates as seniority is often transferable and this significantly restricts movement between airlines at the senior levels.
Not all of the industry is unionized and there are many large operators, specifically in the charter industries, which are not. Industry interviewees noted this and invited TC to enter into partnerships with them to allow more opportunities for CAIs to update and maintain their skills while flying the line. Some of the smaller air operators would benefit from the interaction with the inspectors, as they would obtain a better understanding of the regulatory environment in which they operate.
Many of the smaller air operators noted the significant upward drawing of licensed aviators that is occurring as the flag carriers, the charters and regionals continue to hire any pilot with relevant experience and certification. So significant is this draw that some air operators with unions have voluntarily opened contracts to apply across-the-deck wage increases. In this instance, the costs associated with continuos recruitment and training were actually higher than significantly increasing compensation voluntarily. It should be noted that this is an extreme example, but all industry representatives that were contacted agreed that the career progression model had changed significantly and compensation rates were being driven upwards at all levels of the sector. Most industry interviewees noted a significant tightening of the labour market for licensed aviation personnel.
Recruitment policies also are dependent on the segment in which the air operator functions. A smaller operator (commuters, charters, or air taxis) reported having informal recruiting practices and typically targets flight school instructors or graduates. Larger operators (airlines) reported having more formalized recruitment practices, such as placing national advertising campaigns or even recruiting abroad, but interestingly enough they often receive so many applications that they need not even advertise their vacancies. As well, it appears that industry is always in a recruiting mode and will make room for a talented pilot if the seniority issues do not block this attempt.
In order to remain attractive employers, the smaller operators rely on involving the pilot in the everyday running of the company and the provision of the opportunity to fly and gain hours on a variety of aircraft. Many realize that it will be impossible to keep every pilot as they cannot offer the same compensation as the larger airlines and, therefore, these companies will always be recruiting and training new pilots to remain in operation. The larger operators, especially the national flag carriers like Air Canada, know they dominate the market simply by their nature and, therefore, have little competition regarding recruiting and retaining experienced aviators.
6 Overview of Compensation
Throughout the interviews herein undertaken, a majority of stakeholders have noted that compensation has become a major factor in facing the challenges generated by the evolution of the labour market for individuals that possess similar qualifications, certifications, and experience levels as those required by TC for its CAIs. This has been reflected in the increase of salaries throughout the industry as noted in the earlier sections of this report.
In order to record and report this trend, to accurately capture the current salary levels in the industry, and to address the uniqueness of a diverse and complex industry, three methods were utilized: a national compensation survey, a review of secondary sources, and numerous industry interviews. This section documents the results of all three methods used.
6.1 The Compensation Survey
An industry-wide compensation survey of the commercial aviation sector using three benchmark ‘positions’ derived from job descriptions provided by TC’s Civil Aviation Department was completed. The three benchmarked positions were:
Inspector (CAI-03): This position was benchmarked with a "Check Pilot - A Designation" on the market.
Superintendent (CAI-04): This position was benchmarked with a "Chief Pilot of Company and/or Type of Aircraft".
Chief (Manager) (CAI-05): This position was benchmarked with a "Director/Vice-President of Operations".
These three benchmark positions have been drawn from the Commercial and Business Aviation (HQ), recognizing the fact that they will provide reliable comparators for similar positions (working environment, level of responsibility, technical requirements) in the private sector. We noted that the CAIs are engaged in a wide range of activities and responsibilities that include check rides, the certification of aircraft, the regulation of regional, national and international carriers, flying training schools, and airports, and the development/revision of regulatory guidelines. However, the three chosen benchmarks provided a valid measure for industry respondents against which to compare their employees. The primary reasoning behind this line of thought was that no matter in what service line CAIs involved, they all must demonstrate that they possess similar credentials regarding pilot licensing and type certification for these three benchmark positions in the private sector.
Of the 25 air operators that were surveyed, 14 responded, for a response rate of 56%. Those operators who responded included major employers of licensed aviation personnel and provided strong representation of air operators from all segments of the industry (as noted in Appendix D).
It should be noted that we organized the sample of air operators into four ‘tiers’ as follows:
Tier 1: National Flag Carriers. Airline operators, such as Air Canada and Canadian, which provide national and international scheduled services typically using aircraft having 20 or more passenger seats.
Tier 2: National Charter Carriers. Airline operators, such as Canada 3000 and Royal, which provide national and international charter services typically using aircraft having 20 or more passenger seats.
Tier 3: Regional Carriers. Airline operators, such as Air Atlantic and Canadian Regional Airlines, which provide regional scheduled services typically using aircraft having 20 or more passenger seats.
Tier 4: Commuter Operators. Operators, such as Bearskin Airlines and Air Creebec, providing scheduled and charter services typically using aircraft having 10 to 19 passenger seats.
The four tiers better represent how employers interact with the labour market for licensed aviation personnel, to provide relevant competitors for licensed aviation personnel, and to better reflect the career progression model that exists for pilots. It differs slightly from the typical segmentation definition noted earlier in the report. Certain segments of the industry were not included since it was essential to accurately reflect the labour market that all employers face in the industry.
The survey questionnaire (see Appendix E) included a brief description of the benchmarked positions in order to allow the survey respondent to determine and compare an equivalent position in the respondent’s firm. The topics covered by the survey included: salary scales and base salaries, bonuses, schedules, and prerequisites and benefits other than pensions and group insurance.
The Civil Aviation Department also completed the survey questionnaire from an employer perspective in order to ensure the consistency of answers between survey participants and to draw a valid comparison between the Department and the industry.
Compensation survey results The full report output of the compensation survey is included in a separately bounded report titled Survey of Compensation Practices.
The tables on the following page (Tables 1-3) report the average survey results pertaining to base salaries (excluding overtime, allowances and bonuses) as compared with the current TC base salaries (excluding overtime and allowances) for the three benchmarked positions in Commercial and Business Aviation.
The four ‘tiers’, as noted above, organize the reporting tables. The detailed results for all participants are presented in Table 1 while Table 2 reports the survey results by clusters: the first cluster consists of ‘tier’ 1 and ‘tier’ 2 participants and the second cluster consists of ‘tier’ 3 and ‘tier’ 4 participants. Table 3 presents the clustering of participants by the four ‘tiers’ and reports on the national exposure of TC to national competition for attracting and retaining licensed aviation personnel.
The third column of each chart refers to the position of TC on the market. As an example, 0% means that TC is at the minimum market level and conversely, 100% means that TC is positioned at the maximum market level. A percent rank indicator of 50% would mean that TC is at the median of the market. A percent rank of 35% would mean that some 65% of observations on the market are higher than the TC salary package while 35% of observations are lower than the TC salary package. 31 The "market average" does not take into account the bonuses paid by some participants. Even if bonus policies are marginal on the market, they are significant for the total cash value offered by some of the survey participants.
Table 3: Compensation Survey Results - By Tier Participants
Tier 1 Participants
Chief (Manager), CAI-05
Tier 2 Participants
Chief (Manager), CAI-05
Tier 3 Participants
Chief (Manager), CAI-05
Tier 4 Participants
Chief (Manager), CAI-05
Transport Canada vs. the Market Tables 1, 2 and 3 reveal that for all three benchmark positions, TC is at the lower bound of the market (0th percent rank) 13 times out of 21 under the correlation that we have analyzed. (Three benchmark positions correlated against: (1) all participants, (2) by clustered tiers, and (3) tier by tier.)
The closest position of TC to a central market trend is the Superintendent benchmark at the 47th percent rank of the clustered Tier 3 and Tier 4 participants. However, since TC policy is to pay for overtime worked, while the survey participants do not generally pay for overtime, we could presume that the overall position of TC ought to be better aligned with the market practices.
We have tested this assumption. Assuming that it is the practice of TC to pay 12% of base pay in overtime and taking into account that we have to compare total pay indicators32 and not only base pay levels, the current total salary levels of TC are still located at the lower bound of the market 14 times out of 21. Therefore, for the three benchmarked positions that the survey results indicate clearly there is a large gap between the CAI base salary and those measured positions in the industry.
Other survey results that address non-monetary topics indicate that paid overtime is not a frequent practice on the market for any of the three benchmark positions. Additionally, the vacation schedule generally stops at a four week maximum. After one year of service, the industry standard is to offer is two weeks of vacation. Finally, most of the industry requires an annual medical exam.