Qantas CEO JOYCE ....... sorry saga continues

[Thruster87]

Get set for the new Qantas anthem ‘I-now-call-Singapore-home’

 

 

 

The rhetoric in the Qantas pilots dispute today is more bitter than anything heard in airline circles since the infamous pilot strike of 1989.

 

But it is not otherwise similar to that brawl, which provoked the strongest anti-union reaction from a Labor Government since Ben Chifley used troops to break a coal miner strike in July 1949.

 

Instead this brawl, whether it leads to a Qantas pilot strike or not, is one that is set to force Canberra to deal with the ‘I-now-call-Singapore-home’ effect in which Qantas is shifting its flying and its resources offshore, in contravention of the purpose of the Qantas Sale Act, and preparing to import foreign pilots to undercut Australian pilot pay.

 

The business plan of the current Qantas management, to de-Australianise Qantas, and continue to sacrifice ‘costly’ legacy flight and maintenance arrangements through outsourcing, is something the Gillard government and Abbott opposition haven’t been prepared to contemplate.

 

But in this sense, that of forcing itself into the political arena, it is an incredibly risky dispute for both Qantas and the pilots to engage in.

 

Both sides know this.

 

They had their lobbyists on the ground in Canberra at various times this week and last.

 

As far as strike action goes, even if there is an overwhelming vote for protected action on the floor at off duty pilot meetings tomorrow and on Monday, a formal ballot will be required of all pilots, and any consequent disruption to Qantas flights would be weeks away. (Easter sounds good.)

 

The reality for Qantas has already been signaled by its CEO, Alan Joyce. The international business is unsustainable, and in need of serious investment. Less clearly signaled was the culpability of his management in further running the product up against the wall by failing to correct (so far) the disastrous fleet planning errors by his predecessors, and removing the engine shop that actually kept the aged Rolls-Royce engines reliable on its clapped out 747 fleet, followed by a cluster of failures that has damaged customer confidence in the carrier.

 

As for the world headline grabbing A380 incident, Qantas under Joyce has learned nothing about avoiding self harm, embracing a power-by-the-hour deal for those Rolls-Royce engines in which it found itself left ignorant of issues that were known to the manufacturer.

 

Internationally Qantas is being destroyed by better product being flown more directly to more destinations, and has tried to find an answer across its overseas and domestic networks by transferring assets to a Jetstar product that its higher yielding customers detest.

 

These management failings give the pilots nowhere to go other than to take their skills and experience to Emirates, Cathay Pacific or Singapore Airlines, all of whom are carving up Qantas up in terms of product and schedule.

 

At yesterday’s meetings between the Australian and International Pilots Association and Qantas management including Oldmeadow Consulting ((a firm associated in the union’s mind with the supplying of strike breakers) both sides dug in deeply.

 

Neither side agreed on how much a proposed pilot pay and productivity deal from the association would cost, and the key point was that the company refused point blank to contemplate any deal which wrote in job security.

 

This morning Qantas had not made any further comment on the dispute.

 

However the association hardened its language, with a statement headed

 

‘Tragedy looms for QANTAS as hard line management trashes its brand, seeks to smash its pilots.’

 

It said:

 

QANTAS is on the brink this morning as a questionable management team shows its contempt for its workforce by refusing to negotiate job security in return for improved flexibility and productivity.

 

President of the Australian and International Pilots Association Barry Jackson said the situation was a tragedy, with management seemingly eager to destroy its relationship with loyal workers.

 

“We are witnessing the demise of an icon through mismanagement. This is not the first time some of the Qantas managers have been through this. Many were centrally involved in the destruction of Ansett and Australian Airlines and back then, as they are today, the same industrial consultants are advising them. If Qantas disappears they will have wiped out all of the founding entities in Australian aviation.”

 

“This dispute is about jobs and whether there will be a recognizable aviation industry based in Australia in the future.

 

Mr. Jackson said that the degradation of QANTAS mainline has not stopped at the first subsidiary.

 

“Jetstar is now being undercut and off-shored at every opportunity, with the imminent formation of more off-shore bases proudly announced by Mr. Joyce at recent Company roadshows.”

 

 

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Is Qantas ditching unaffordable excellence?

 

Here is something risky to think about in the context of the dispute between Qantas and the Australian and International Pilots Association over job security.

 

If Qantas were to remove the burden of excellence from its balance sheet, those pilot training, maintenance and standards costs that do more than just tick the boxes that make the carrier legal, what are the chances of disaster striking?

 

The answer is obvious. They would be the same chances that apply to other carriers who do the absolute minimum but claim to be conforming with ‘world’s best practice’, because in the weasel words of air safety standards, ‘best practice’ and ‘minimum required practice’ are identical.

 

The probability of a ‘hull loss’ which is a euphemism risk assessors use for a heap of dead people on world wide newscasts is probably one disaster every 25-30 years for a large airline.

 

This means that any such airline might not have a very bad accident for 50 years, or not until tomorrow. But if the company is saving $200 million a year by dispensing with excess excellence, meaning anything which is in excess of the minimum required to be able to claim conformity with ‘world’s best practice’, it will be more than several billion dollars ahead within a decade, and an accident could happen anyhow. Because ‘**** happens’ as Tony Abbott so lucidly put it the other day.

 

This is what is troubling about the apparently urgent need for Qantas to put an end to the unsustainable losses on its long haul operations, as flagged by Qantas CEO Alan Joyce a week ago in an address to the Melbourne Press Club.

 

The company has persisted with a failed network concept and a failed re-equipment program and uncompetitive products and seems determined to try and solve these issues by off shoring some of its assets and costs through the device of basing Australian registered aircraft in Singapore. The small beginnings of a major shift in strategy. It closed an engine shop that was critical to keeping its aged fleet of Rolls-Royce powered 747s safe over the far southern ocean routes or across the Pacific to North America. It deals itself out of knowledge and oversight over the engines Rolls-Royce put on its flagship A380s, only to put better versions on those supplied to other A380 operators without telling Qantas a thing until one of them rips itself apart, and tears 27 holes through the wing in the process, on the November 4 flight of one its A380s from Singapore to Sydney.

 

At the tense meeting between itself, its strike breaker contractor and the union yesterday Qantas refuses to consider anything that might give job security to the pilots that are the best trained in the world.

 

Why? There are several possible reasons for this. The widely discussed possible reason is that Qantas is determined to end the employment of pilots under ‘legacy’ terms and conditions and churn them back, through Jetstar, under different agreements. The less widely discussed reason refers to nebulous statements from Jetstar about the setting up of a pilot resource from which non Australian pilots flying elsewhere on the Jetstar franchises could perform flying in Australia for Jetstar at favorable rates. No doubt like those of guest workers in the building industry employed on temporary visas.

 

If such an arrangement is set up for Jetstar there is no reason why it then couldn’t be applied to Qantas, what’s left of it.

 

The bizarre situation arises now that Qantas has a cadre of pilots who appear to have a longer term loyalty to the carrier than its management. The former are prepared to put standards ahead of remuneration if it keeps the carrier truly Australian. The latter don’t want to know about it.

 

It isn’t clear if Qantas has thought through the consequences of undercutting and severing those legacy costs that are its brand ‘premium’. It is clear however that Alan Joyce has calculated the immediate consequences of not lifting productivity at Qantas, and this is where there is considerable pain and bafflement and anger in pilot ranks. They are prepared to lift productivity and keep pay in check.

 

Surely there must yet be room in this stand off for Joyce to make different, more constructive choices, that will engage and retain that part of the Qantas legacy which is priceless.

 

 

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