The federal government says that it's preparing to table legislation that would compel striking Air Canada staff back to work, if the air carrier and the union can't agree to a deal.

Finance Minister Jim Flaherty said a notice of intent will be put to the House of Commons Tuesday night, paving the way for the government to introduce back-to-work legislation as early as Thursday.

The announcement came less than a day after 3,800 customer service and sales staff walked off the job.

Air Canada customers faced minor delays Tuesday as the airline attempted to limit the impact of a labour dispute, which has left 1,700 managers doing much of the work usually handled by thousands of their subordinates.

The strike began at midnight on Monday, after the Canadian Auto Workers union was unable to come to an agreement with Air Canada before a late-night deadline.

CTV's Merella Fernandez reported that more than 20 flights had been delayed at Toronto's Pearson International Airport by the mid-morning on Tuesday.

Fernandez said many customers showed up early for their flights and found that they had no trouble getting to the check-in area.

Air Canada spokesperson Peter Fitzpatrick said the airline contingency plan "is working as we expected it would."

But lineups were getting longer as the morning progressed.

"It looks good right now," Air Canada customer service agent Dawn Moreau told The Canadian Press.

"Is it going to stay this way? No."

Moreau said the lines would continue to build as the strike drags on.

"We're on Tuesday morning, it's probably the slowest morning of the week. You get into your afternoon shifts, you get into your evening shifts, you get into snowball effects down the line," said Moreau.

Despite the presence of 100 or so striking Air Canada workers outside Terminal One, union members were not blocking customers from getting to their flights on Tuesday.

Airline, union want to keep talking

Both the union and the airline have signalled a desire to keep talking, but they have yet to find common ground on key issues of pensions and wages.

Air Canada chief operating officer Duncan Dee said the airline is ready "to resume discussions at any time to achieve a negotiated settlement."

CAW president Ken Lewenza said the union also wants a deal that will benefit its members and allow them to return to work.

"We have a responsibility to push for an agreement because it's in the interests of our members of course, but more importantly it's in the interests of the customers who need the services of Air Canada," Lewenza said.

But the divide between the union and Air Canada on pensions remains the major sticking point in negotiations.

Facing a reported pension shortfall of $2.1 billion, Air Canada is pushing for change.

But the union opposes the airline's plan to force new employees to accept a defined contribution pension plan, rather than the defined benefit pension plan that is in place for current employees.

With a defined benefit plan, employees have a predictable income, but the airline is on the hook for additional costs if the pension fund's assets can't pay for the benefits.

A defined contribution plan limits the amount of money the airline has to provide, while the payout to workers depends on the performance of the pension fund's underlying investments.

Sue Harris was one of the thousands of Air Canada employees to walk off the job after the strike deadline passed.

She told CTV's Canada AM Tuesday that union members are simply trying to protect what they have and to ensure that all Air Canada workers are treated equally.

"When we were hired by Air Canada, we were forced to take part in the pension plan," Harris said in a telephone interview from Pearson International Airport.

"We believe that it should be with us until we retire, it should stay the way that it was originally intended."

While some critics say that new hires should simply be excluded from the prior pension arrangement, Harris said it is necessary to keep the status quo "to be fair to everybody."

BNN's Michael Kane said the strike comes at a time when Air Canada is also trying to grow its business at a secondary Toronto airport where competitor Porter Airlines has been successful at wooing corporate travellers.

"All of this is ongoing now while Air Canada wants to stay in business day to day, keep the traffic numbers up, expand the business and of course, look after the fine employees who got you to this position in the first place," Kane told CTV News Channel.

With files from The Canadian Press