Canadian government steps in to halt Air Canada strike, proposes binding arbitration

OTTAWA, Aug 17 — The Canadian government moved today to end a strike by Air Canada cabin crew and has requested binding arbitration to resolve the stalled contract talks — a move supported by the airline but strongly opposed by the union.

Thousands of cabin crew members walked off the job shortly before 1am EDT (1pm Malaysian time) in their first strike since 1985, following months of negotiations over a new contract. In response, Air Canada cancelled nearly all of its 700 daily flights, leaving more than 100,000 passengers scrambling to find alternative travel options.

At the heart of the dispute is the union’s demand for compensation for time spent on the ground between flights and while boarding passengers, as attendants are currently paid mainly when the plane is in motion. Jobs Minister Patty Hajdu told reporters she had asked the Canada Industrial Relations Board (CIRB) to require binding arbitration and order an immediate end to the walkout. She noted, however, that it could take 24 to 48 hours for the board to issue its decision, and Air Canada said it may take up to a week to fully resume operations.

“This was not an easy decision, but the potential for immediate negative impact on Canadians and our economy is too great to ignore,” Hajdu said.

The airline had asked Prime Minister Mark Carney’s Liberal government to make this request, but the Canadian Union of Public Employees (CUPE) insisted on continuing negotiations and said compulsory arbitration would remove pressure from the airline to bargain seriously.

The union also said it has asked the chair of the CIRB to recuse herself from the case due to her previous work as a senior counsel for Air Canada. The airline declined to comment while the process is underway.

Hajdu emphasised that the government usually favours negotiated settlements but said the current deadlock made it unlikely that a solution could be reached in time to prevent further economic disruption. She also referenced “unprecedented attacks on trade” — a reference to U.S. tariffs — as another reason for swift action.

The union harshly criticised the government’s intervention, saying in a post on X that the Liberal government was “rewarding Air Canada’s refusal to negotiate fairly.”

Henly Larden, an Air Canada flight attendant and CUPE vice-president, described the decision as “incredibly disgusting,” and urged the airline to re-engage in good-faith talks. CUPE spokesperson Hugh Pouliot told Reuters that the strike would only end once the board issues a binding arbitration notice, which the union believes is likely.

While many travellers have expressed support for the flight attendants on social media, Canadian businesses — already affected by a trade dispute with the United States — have pressed the government to impose binding arbitration to shorten the strike.

“With both parties at an impasse, valuable cargo grounded and passengers stranded, the government made the right decision in referring the dispute to binding arbitration,” said Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce.

In addition to the dispute over compensation for time on the ground, the two sides also remain apart on broader wage issues. Air Canada has offered a 38 per cent increase in total compensation over four years, including a 25 per cent raise in the first year — a proposal the union argues is insufficient.

CUPE says Air Canada offered to pay flight attendants for some currently unpaid work at 50 per cent of their hourly wage. A source familiar with the negotiations told Reuters that the union is seeking wage parity with leisure carrier Air Transat, whose flight attendants recently secured a contract with total compounded raises of 30 per cent over five years — making them the highest paid cabin crew in Canada.

According to union data, a Transat attendant will earn C$40.38 (RM123.16) per hour starting November 2025, compared to C$26.42 at Air Canada’s budget carrier Air Canada Rouge and about C$30 at the mainline carrier.

Air Canada declined to confirm whether such a proposal had been made.

Outside Toronto Pearson International Airport, hundreds of cabin crew members gathered with flags, banners and picket signs. CUPE also organised demonstrations at major airports across the country, including in Montreal, Calgary and Vancouver.

Montreal-based Air Canada said flights operated by Air Canada Rouge were also suspended, while services by regional affiliates Air Canada Jazz and PAL Airlines continued as normal.

Hajdu added that she had asked the CIRB to extend the current collective agreement until a new one is established by the arbitrator. Under the Canada Labour Code, the government has the authority to request binding arbitration in order to protect the economy.

The current intervention follows similar action under former prime minister Justin Trudeau, when the government stepped in to avert rail and dock strikes that threatened major economic disruption. — Reuters