Cathay eyes 15pc allowance cut

PUBLISHED : Sunday, 01 February, 2004, 12:00am
UPDATED : Sunday, 01 February, 2004, 12:00am

Expat captains and first officers will receive less housing benefit if a proposal is approved at an extraordinary general meeting this month

Expatriate Cathay Pacific pilots face having their housing allowances of up to $58,000 a month cut almost 15 per cent under a formula agreed by the airline and the union.

Pilots are expected to vote on the proposal later this month.

Captains and first officers hired overseas have all their monthly rent paid, as long as it does not exceed $41,500.

If they choose to live somewhere more expensive, all but 8 per cent of rent on homes costing up to $63,000 is paid.

Under the new formula, those ceilings will be cut back to $35,000 for rent-free living, a 15 per cent drop, and $55,000, a 12.69 per cent drop, for bigger homes where pilots pick up 8 per cent of the rental cost.

The new levels will be pegged to the Hong Kong Government Rental Index for luxury accommodation - meaning they will go up or down according to the prices of rented property in Hong Kong.

If the new formula is agreed, pilots will be able to stay on in their rented homes under the old agreement for up to four years before their allowances are reduced, according to the deal reached between Cathay and the Aircrew Officers' Association.

The change will replace a 10-year formula for working out rental allowances whereby Cathay set the ceiling for rent-free living at a level of 90 per cent of the most expensive monthly rent paid by all pilots.

This system, updated on a six-monthly basis, had the effect of keeping allowances high as pilots tended to choose properties that used their allowance. The level has remained at $41,500 despite the precipitous fall in rental prices since 1997.

Some pilots are expected to oppose the cut in allowances when they are asked to give it their approval at an extraordinary general meeting of the union due to be held this month.

Pilots have been told about the proposed new formula for housing allowances by the union.

The union's general secretary, John Findlay, declined to comment on the issue, saying it was still under negotiation.

However, one union member said: 'This is a contentious issue. Some pilots will not be happy about accepting the cut, especially after the disputes with management over rosters and entitlements in recent years.'

Cathay Pacific spokesman Kevin Bubel said the new formula would give pilots security - at present they have no contractual agreement with the company over housing allowances since the previous formula lapsed in 2002 - and stability because it was pegged to the government index.

'It is pegged to the market. It goes up with the market, it goes down with the market. It is transparent and responsive,' Mr Bubel said.

He said: 'The union is happy with it. We are happy with it. It is a good step in union relations.'