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Dozens of flight attendants and their supporters hold a demonstration outside Lisa Raitt's office in Milton, Ont., Oct. 13, 2011.Kevin Van Paassen/The Globe and Mail

Air Canada and its 6,800 flight attendants have avoided a strike, agreeing to allow the Canadian Industrial Relations Board to settle their labour dispute through a binding process.

Although it could take a couple of weeks, it means the two sides will accept a deal that is determined by CIRB chairperson Elizabeth MacPherson. She will take submissions from the company and the Canadian Union of Public Employees.

More importantly, it means no strike, disruption of air service or chaos at airports for the travelling public.

And for the Harper government – and Labour Minister Lisa Raitt – it means that it has neatly avoided having to resort to controversial back-to-work legislation.

What Ms. Raitt has done is unprecedented. Last week, she controversially referred the labour dispute to the CIRB and was accused of using this as a ploy to try to buy time.

She told The Globe Thursday that her decision to refer the dispute to the CIRB was the correct one.

"I am very pleased that the parties have agreed to a process to resolve their dispute. Our job is to ensure the parties avoid a work stoppage which would be detrimental to the national economy," she said.

"In this case, I believe the referral to the CIRB was appropriate and ultimately helped achieve this result."

At a meeting at the Canada Industrial Relations Board, the parties agreed that arbitration is the best way to resolve the contract dispute in order to come up with a binding agreement, according to a release issued by CUPE Thursday evening.

In the statement, Paul Moist, national president of CUPE, said he was pleased that the parties were able to come to an agreement on a process.

But he was critical of Ms. Raitt.

"Our members deserve a fair collective agreement, and I believe in the present circumstances arbitration is the best way to achieve that goal. These have been difficult negotiations in particular, because of threats of back-to-work legislation by the federal government and the Minister of Labour's referral to the CIRB, which blocked the legal right to strike of flight attendants," Mr. Moist said. "In this context, arbitration is the best option."

The CUPE statement says hearings will begin Oct. 28 and a binding arbitration award will be issued on or before Nov. 7.

The parties will meet to discuss a mutually agreeable arbitrator.

Duncan Dee, executive vice-president and chief operating officer of Air Canada, said in a release Thursday night: "Air Canada is pleased to have a process in place whereby we can avoid any disruption of service and eliminate uncertainty for our customers. I wish to thank the Department of Labour, the CIRB, and their staff for their assistance in helping Air Canada and its flight attendant union find a process that will enable both parties to move forward together."

The flight attendants have twice refused to ratify negotiated contract offers.

The sticking points are wages and working conditions, as well as a proposal by the company to launch a new, low-cost air carrier with lower pay for the new flight attendants.