In late June, EVA Air announced that it was canceling another 400 flights in early July due to a strike by its flight attendants. That would bring the total cancellations to 1,400 flights and the number of passengers affected to more than 200,000 since the strike began June 20.

The paralysis over Taiwan’s skies was set to continue, but the momentum in the confrontation between labor and management was reversing course.

With one simple line – “We can talk if you want, but bring a tangible proposal to the table” – EVA Air had successfully taken back the agenda in the dispute. After softening its attitude and making a major concession by saying its “no free ride,” board membership, and increased allowance demands were negotiable, the seemingly powerful union was then forced to go back to members and discuss what they were willing to settle for. 

It was a stunning reversal of the union’s domineering manner during the first round of negotiations after getting the green light from its members to strike.       

Even worse, faced with management’s uncompromising position, some 200 striking flight attendants got cold feet and asked the airline to help them recover three key documents they need to work (passport, travel permit to China, and employee ID) that had been turned over to the union. Under those circumstances, the union was forced back to the negotiating table to accept whatever scraps it could before bringing the dispute to an end.

The situation appeared even more dire as of July 3, when EVA Air said 400 striking flight attendants had already reclaimed their documents and returned to work and another 200 were in the process of doing so, enabling the airline to operate 70 percent of its normal flight schedule, up from 40 percent initially.

The union, on the other hand, was on the defensive, and had to call a press conference on July 4 simply to explain how the documents were being held.

Unlike three years ago when China Airlines, EVA Air’s main competitor in Taiwan, gave its striking flight attendants a major victory by agreeing to all of their demands, the EVA Air action has seemingly lacked leverage and was unlikely to achieve the results union members had hoped for.

The China Airlines and EVA Air flight attendant strikes were both initiated by the same union – the Taoyuan Flight Attendants’ Union – so why has this labor campaign delivered so little when the union’s previous action was so successful? CommonWealth has identified six main reasons. 

                       

Reason 1: 8 Major Demands, No Concessions

Throughout the negotiating process prior to the strike, the union insisted on eight major demands and showed no interest in compromise, resulting in a complete standoff with management in which no common ground could be established.

Labor-management negotiations typically involve “give and take” and “back and forth” as the two sides test each other’s bottom line and discuss their differences, eventually allowing them to find room to maneuver and cut a deal. For the most part, however, that has not happened in these negotiations.

One example: The union asked that flight attendants’ allowances when working overseas flights, called international per diems, be raised to NT$150 per hour from NT$90 per hour. The airline agreed to pay a NT$200 “flight safety service bonus” per flight. That may have been a drop in the bucket compared to what the union wanted, but if the union had conceded on this point in exchange for airline commitments on a more democratic management system or better conditions on flights the union argued are particularly hard on flight attendants, it may have come away with more benefits.

Instead, in the first round of negotiations after the union secured the right to strike, which were broadcast live, no consensus was reached on the first of the union’s eight demands and talks were broken off without any of the other seven issues discussed. Two hours later, the union announced it was going on strike, citing management’s lack of sincerity in the talks. 

The impression given by the union at the time was pretty much “our way or the highway.” The union was basically saying “do everything we want or there will be no room for negotiations,” and there were no signs that attitude had changed after the strike began, making it hard for the union to amass public support.

Reason 2: Union Talking Points Hard for Public to Support

Though many of the union’s talking points and demands may have been legitimate, they were not well focused or explained, and Taiwanese had a hard time associating with the causes the union was fighting for.

In their strike three years ago, flight attendants conveyed with laser-like precision the message that they were fighting for more rest, similar to the focus on overwork voiced by China Airlines pilots during their strike earlier this year. In both cases, the unions tied their demands to flight safety, something that was easy for the public to get behind.

The major bones of contention between EVA Air flight attendants and management, on the other hand, were “no free ride” (the insistence on non-union flight attendants being excluded from any gains on allowances for overseas flights won by the union) and “board membership” (giving labor a seat on the board or a voice in management) – demands that were hard for the public to understand.

In addition, in the negotiations aired live that precipitated the strike, the issue the two sides failed to agree on before the talks broke off was the increase in international per diems, leaving many people with the mistaken impression that the strike was about money.   

Photo by Kuo-Tai Liu/CW

Workers typically fight for better pay, so there was nothing unusual about the union’s demand. But a closer look at the numbers reveals that EVA Air flight attendants may not have had a strong case in asking for additional financial benefits.

While EVA Air’s base pay for flight attendants is higher than that paid by China Airlines, its overall compensation averages less than at its main rival because China Airlines’ flight pay rate and international per diem are higher. That’s why the union wanted the international per diem increased to US$5 (NT$150) per hour paid by China Airlines from US$3 (NT$90) per hour.

The problem is that the two airlines calculate their international per diem differently, with EVA Air paying the allowance for two to three more hours per flight.

“EVA Air starts calculating the allowance from the time people report for duty two hours before the flight until they clock out at headquarters after returning home. China Airlines only pays it from takeoff to landing,” says an aviation industry insider.

In addition, EVA Air has paid four months’ salary as an annual bonus for the past four years along with performance bonuses, higher than China Airlines’ annual bonus of 2.2 months’ salary. And while China Airlines gave substantial raises to all of its workers after its flight attendants went on strike in 2016, EVA Air’s standard annual pay raises since then have been about double those offered by its rival.

Those measures have generally evened out the gap in pay between the two airlines, making it hard for EVA Air’s flight attendants to win over public opinion on the international per diem issue.   

Reason 3: EVA Air’s Working Environment Getting Better

EVA Air has also made headway in improving another area that offered the best argument for going on strike and has implications for flight safety – the working environment.

For example, the airline has changed its longstanding anti-union position, setting up a company union after the China Airlines flight attendants strike. Also, after it was slammed for putting passengers at risk by landing flights during typhoons in September 2016, it responded to public opinion by improving its practices.

Then there are the “overwork flights” that offered the union its best talking point. The flights refer to regional routes, such as Taipei-Tokyo, on which cabin crew are required to work both the outbound and inbound legs in the same day. That can lead to flight attendants working more than 12 hours in a day, violating Taiwan’s Labor Standards Act.

EVA Air has acknowledged those flights exist but said they account for only 0.12 percent of all flights. Also, the airline has offered a monthly plan to deal with the problem, allowing flight attendants who work only those more tiring flights in any given month to work only 10 days and have 20 days off during the month. The program has earned the support of mothers of young children and made it harder for the union to turn those flights into a public relations advantage.

The head of a publicly listed travel agency observed that the biggest complaint EVA Air flight attendants have should be the company’s traditionally high pressure management culture that has leaves them highly stressed and constantly tired.

“The union should have fought for making the management system more democratic. That would have the most direct influence on the union members’ working conditions,” the travel agency boss said.

In contrast to the union, which has had trouble finding pressure points and was consigned to a covered outdoor area outside EVA Air headquarters shouting for unity, management declared its determination to fight to the end by cutting flights from the outset of the strike. 

It followed that with a carrot and stick approach to put pressure on the union. On the one hand, it sued the union for compensation and announced that it was recruiting new flight attendants, while on the other it sent comforting messages to the striking workers, saying it would pay mid-year bonuses and help them get back the three documents they needed to work. 

Throughout the process, the company has not budged on its main positions to not accept the “no free ride” and “board membership” demands, helping it gain the upper hand in the public relations battle. 

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Reason 4: Misjudgment of Airline’s Ability to Make Concessions

Another key factor in the union’s struggles was its misconception that EVA Air was making a big profit but was unwilling to share the spoils with employees.

In fact, although the airline has paid year-end bonuses of four months’ salary for the past four years, its profitability has not been as strong as people on the outside might think. Its financial statement alone suggests EVA Air’s management did not have much leeway to make concessions. 

Dai Dzwo-min, an associate professor in National Cheng Kung University’s   Department of Transportation and Communication Management Science and a longtime observer of the aviation industry, said the airline business is capital intensive, labor intensive, technology intensive and risk intensive but operates on thin margins, and EVA Air is no exception.

Photo by Kuo-Tai Liu/CW

A quick look at EVA Air’s annual report shows it had total assets of NT$241.2 billion and total liabilities of NT$171.1 billion as of the end of 2018, and recorded consolidated operating revenue of NT$179.9 billion and consolidated after-tax profit of NT$7.21 billion for the year.

In other words, despite having considerable assets and shouldering major liabilities, the company’s consolidated profit amounted to 3 percent of its total assets and 4 percent of its revenues, relatively low yields. And nearly a quarter of the company’s consolidated profit was contributed by subsidiary Evergreen Aviation Technologies Corp., in which EVA Air has an 80 percent stake. 

Of EVA Air’s consolidated revenue in 2018, 55 percent came from passenger services, and just over half that (51 percent) was from long-haul routes to the United States and Europe, double the contribution of long-haul routes to China Airlines’ revenue from passengers. That explains why EVA Air was unwilling to increase international per diems – its flight attendants spend a lot of time on long-haul overseas routes and any increase in their allowances would drive costs considerable higher.

EVA Air has ranked as the leader in passenger revenue among domestic carriers mainly because it has generated annual double-digit growth in transit passengers between North America and Southeast Asia and attracted business travelers, helping drive up passenger fare revenue. In 2018, the passenger yield, or average fare per passenger mile, rose NT$0.05 from a year earlier. (Read: EVA Air Aims High with 'Taiwanese Quality')

Flight attendants, of course, are indispensable to passenger service, and their strike has struck a direct blow to the passenger segment, the airline’s competitive strength. At the same, though, flight attendants are fairly replaceable, and at a press conference after the airline’s shareholders meeting on June 24, EVA Air said it would recruit 200 flight attendants later this year, including males for the first time, and another 300 foreign flight attendants. The announcement clearly signaled the airline’s intention to replace striking workers.

“It takes three years to train a pilot, but only three months to train a flight attendant, and there are huge numbers of new applicants every year. EVA is not in the least worried that it won’t be able to hire new people,” says one airline industry expert. 

Though EVA Air does relatively well on the passenger side, it has struggled to build revenue on the cargo side. Compared with China Airlines, which ranks in the world’s top 10 in cargo services, EVA Air’s cargo services account for about 15 percent of its consolidated revenue, about half that of its rival. 

To improve the profitability of its cargo operations, the carrier decided to maximize utilization of its baggage holds on passenger aircraft by storing cargo in space not being used for passenger luggage, generating more cargo revenue.

As much as EVA Air has worked to improve the revenue side of its business, it has also focused on keeping costs under control. Fuel costs represent the biggest operating cost of an airline, but because EVA Air has aggressively modernized its fleet since 2015 and added newer aircraft that use 20-30 percent less fuel than older models, fuel costs now represent 25 percent of its total costs, down from 27 percent, providing a boost to profitability.

After EVA took these many steps to generate steadier profits, it was highly unlikely to turn around and give some of those gains away by agreeing to the union’s demands. 

Reason 5: Management Determined, Union Boxed In

Management’s strategy was clear from the beginning. It was willing to wait out the striking workers and lose money for a year rather than giving in and running losses many years into the future, especially in the wake of the China Airlines example.

The ability of China Airlines flight attendants to extract major gains from the airline three years ago has had a ripple effect, with pilots, ground crew and maintenance workers leveraging the situation to secure additional benefits of their own. The airlines’ concessions have led to a NT$2.4 billion annual increase in personnel costs. 

Photo by Kuo-Tai Liu/CW

One example: In 2015, a new office worker for the airline earned NT$30,000 a month. After pilots quietly threatened to strike that year and gained benefits, China Airlines gave other employees raises of NT$5,000 per month. They got another NT$10,000 pay boost after the 2016 flight attendants strike, bringing their pay to NT$45,000 a month, a 50 percent increase in just 18 months.

Following those moves, China Airlines’ personnel costs accounted for 15.23 percent of its total costs in 2017, up from 10.26% in 2014.

“The two strike situations really drove up the company’s labor costs, resulting in its profitability lagging behind that of its competitors,” analyzed a manager at an asset management firm.

EVA Air was determined not to fall into the same trap and has taken a consistently hard line on protecting its bottom line. Sources say the airline was fully prepared from the beginning to lose NT$2 billion if necessary (it estimated its losses in the first 11 days of the strike at NT$2.1 billion) and wait out the union without flinching while giving it no room for maneuver.

“The logic is pretty straightforward. An annual loss of NT$2 billion means a loss of NT$10 billion over five years. Is there any way they will suffer NT$10 billion in losses from the strike?” the asset management company manager said, the answer self-evident. 

The China Airlines experience also left EVA Air well-positioned to be thoroughly prepared for a strike, helping it repel the union’s repeated attacks and backing it into a position from which it has struggled to extricate itself.

EVA Air was able to avoid the mistake made by China Airlines three years ago, when in response to the flight attendants strike it deployed all available cabin crew staff to labor-intensive long-haul flights, forcing it to cancel short-haul flights for the following three to four days.

EVA Air adopted the model China Airlines used when its pilots went on strike earlier this year, canceling unprofitable, labor-intensive long-haul flights to New York and London while concentrating its available manpower on profitable routes to China and Northeast Asia. Although the carrier was only able to operate 40 percent of its normal schedule, every flight maximized the benefits to the company. 

Reason 6: No Government Intervention

The union made another fatal miscalculation, ignoring that EVA Air was a private company fully responsible for its finances, unlike state-invested China Airlines, which had a major shareholder – the Ministry of Transportation and Communications – pressuring it to settle with the union.

No matter how much the union sought its helping hand, the government was unable to intervene other than exercising its limited powers of persuasion. As long as EVA’s shareholders did not object to losing money, the airline was not going to make concessions.

In fact, the union’s defeat was almost predictable. But despite winning big, EVA Air cannot ignore the warning given by more than half of the union’s EVA Air members participating in the strike.

The shadow warrior behind the union, the Taoyuan Confederation of Trade Unions, was deliberately stoking up demands to provoke a strike. What really laid the groundwork for the labor action, however, was EVA Air’s high pressure, authoritarian, top-down Japanese management style, which sparked conflict between flight attendants and company management. 

One former EVA Air flight attendant has said the internal seniority system was pervasive, with senior flight attendants, for example, getting priority in the assignment of beds to rest on long-haul flights, making it harder for younger employees to get real rest.

Even those unfamiliar with the inner workings of EVA Air have gotten glimpses of management’s hardline approach from several incidents in recent years, including selecting flight attendants who said in interviews they were against unions and insisting on flying into and landing in typhoons, and more recently suing the union for striking and announcing it would hire new flight attendants.

The fact that almost all of the younger union members participated in the strike suggests that EVA Air’s authoritarian management style may not resonate with a younger generation that wants management to be open and transparent and deal with employees honestly. 

So while the strike appears to have lost steam and is winding down, EVA Air’s challenges may be just beginning. Setting aside its authoritarian manner and communicating in earnest with employees to narrow labor-management differences may be the best way the airline can avoid another strike in the future.

Translated by Luke Sabatier
Edited by Sharon Tseng