Singapore Airlines (SIA) is undergoing fresh turbulence soon after recovering from the SARS epidemic amid disenchantment among its pilots over the way the carrier has treated its staff.
The pilots' union sacked its officers last month as a sign of protest over wage cuts agreed with management when the SARS crisis rocked the travel industry in the second quarter of the year.
The upheaval triggered a sharp response from the government, which took steps to clip the wings of the union but also castigated the state-controlled carrier's management over its human resources policies.
SIA is majority owned by the government through its investment vehicle, Temasek Holdings.
Analysts said SIA's reputation may be at stake if the restiveness among pilots spills over to the rest of the flight crew of an airline known for its high level of customer service and efficient operations.
"The premium that SIA has is its service and if morale is affected, that could hurt the product," said a regional aviation analyst.
"They have to be careful about not affecting morale at the airline," he said.
SARS, a mysterious flu-like disease which originated in China and led to a massive slump in air travel, pushed the carrier into the red for the first time with a S$312.3 million (US$182.6 million) loss in the June quarter.
SIA swiftly returned to profitability in the September quarter when earnings topped US$306 million after pilots' wages were cut by up to 16.5 percent and other staff were forced to take unpaid leave.
The pilots subsequently voted to remove all 20 officials in the Airline Pilots Association of Singapore as they felt the union leadership had given in too easily to SIA management.
Their action was slammed by the government as "confrontational" and a risk to Singapore's status as a regional aviation hub, and the Trade Unions Act will be amended to strip the union members of the right to veto agreements between the union leadership and SIA management as a result.
The pilots' union is the only one in Singapore whose members have the right to ratify any deal made by their leaders, and has been vocal compared to the rest of the organized labour movement.
But while moving against the union, the government also told SIA to improve its remuneration packages or risk hurting employee morale and staff loyalty amid reports that SIA pilots, contrary to popular belief, received considerably less than their counterparts in some rival airlines.
"Employees will be incentivised to be active partners of change if they can share in the rewards when the company performs well," Prime Minister Goh Chok Tong's office said in a statement, adding the carrier "must improve its human resource management."
"SIA will have to pay competitive wages to retain the services of their good staff and gain the loyalty of its pilots and other staff. Such changes will raise morale and increase cooperation," the statement said.
An airline spokesman told reporters the carrier "will continue working towards improving communications with its employees on the challenges facing the industry and the related components of the national economy."
"In the current international operating environment, wage reform is necessary and we will work with our unions and the government to achieve this," the spokesman said.
The outgoing spokesman of the pilots' union said it was now time for the two parties to put the acrimonious past behind them.
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