A Wild Union Appears! QANTAS Uses Selfdestruct!

[Babbler]

Does the Australian gov't have the power in enact back-to-work legislation? I don't think relevant here, I'm just asking.

I never understand when people like pilots and air traffic controllers strike for better pay. These are probably the two most overpaid professions in the world (outside the insane world of finance). I'd tell the to STFU and if they quit, hire pilots from abroad. Problem solved.

You could just break their union.

 

[Arwon]

What is back to work legislation?

The Fair Work Act provides for protected industrial action on both sides during collective bargaining negotiations. This typically takes the form of strikes, announcements to customers, stop work meetings and the like. The point is members have to vote to undertake it. On the employer side they can do stuff too, but it doesn't seem like shareholders get a vote, just the board.

It also appears that unions have to give a week's warning and Qantas apparently didn't have to give any. The industrial relations legislation is mostly a holdover from the anti-worker Howard era so it is not particularly union-friendly, especially by this country's standards.

However the FWA also provides for ministerial intervention to rescind protected industrial action, which can mean the lockout or anything else. Ministerial intervention seems a certainty if Fair Work Australia doesn't resolve things quickly. It's pretty clear that's what Joyce and the Qantas board want, they're gambling on the government overriding most of the union demands they find unpalatable such as protections against outsourcing.

They're certainly not doing it because of the cost imposition the dispute is currently having - the TWU has held a total of one 1-hour stop work meeting and the pilots are wearing ties with slogans and making PA announcements. And the more costly dispute with engineers had already been put on hold for two weeks.

 

[Camikaze]

@luiz- Qantas' recently announced net profit was $250 million.

Edit: Just to make it clear, I find that Qantas is making a dumb move on its part, but it is an independent company, it can do what it wants.

Actually, it can't. AFAIK it's bound to the Qantas Sale Act 1992, where you can find such restrictions as:

(g) require that the head office of Qantas always be located in Australia; and
(h) require that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering, flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas; and
(i) require that, at all times, at least two‑thirds of the directors of Qantas are to be Australian citizens; and
(j) require that, at a meeting of the board of directors of Qantas, the director presiding at the meeting (however described) must be an Australian citizen; and
(k) prohibit Qantas, at all times, from taking any action to become incorporated outside Australia.

That's when Qantas was privatised. As an ex-nationalised company, certain restrictions apply.

 

[Arwon]

(The government still owns a non-trivial stake, too)

I'm also really interested in the view some people are advancing that industrial relations rights should differ by the pay level of the workers? That seems a very strange one to take.

 

[Arwon]

It also appears I misspoke before, the minister may not be able to directly rescind protected action but may only be able to make a submission to Fair Work Australia (the new name of the Industrial Relations Commission).

Or he may have that power but may have just chosen to go the "submission to the independent body" route instead.

Edit: It's the latter

Also, some more general background on Qantas' recent woes:

If the Qantas revenue figures for the previous financial year are a guide, its enacting of a plan to lock out its customers as well as three groups of union workers from late yesterday afternoon will cost it at least $30 million a day.

And it had over $3 billion in cash in hand at 30 June this year.

However it also has a fleet of around 140 aircraft, with 108 of them flying for the mainline Qantas operations and thus grounded, while the others continue flying for Qantaslink, or as the Jetconnect NZ based trans Tasman 737 operation.

[...]

Added to obligations to stranded customers, and the thousands of hotel rooms the pilot union alleges that Qantas had pre-booked in preparation for yesterday’s ambush, losses of $40 million per day are not implausible, although reliable information on this and other topics has not yet been provided by management.

What Qantas did confirm, to the ASX on Friday prior to the AGM, was that the loss of revenue attributable to uncertainty over the industrial situation at Qantas was costing $15 million a week, which it described as unsustainable.

That figure may now be somewhere between $210-280 million a week, suggesting that there is much about the state of mind of the board and senior management that remains cause for concern as the hours tick down to the 2 pm resumption of the hearing by Fair Work Australia of an Australian government application for its intervention in the dispute because of the damage it is doing to the national economy.

The evidence given by the Department of Transport and Infrastructure to FWA late last night about the importance of tourism specifically and air travel more generally to the national economy is compelling.

But the Qantas involvement with that contribution is in fact, much less compelling. As the airline often points out, almost with pride it seems, it is also so uncompetitive at the international level that it only carries 18% of the carriage, as flown by Australians and foreign visitors combined.

In aggregate it is the likes of Singapore Airlines, Emirates, Cathay Pacific and Thai International that do the heavy longer haul lifting, which excludes some of the nearer destinations apart from trans Tasman services, across which Emirated punts otherwise idle A380s and 777s that have time to spare between arriving from and departing to its Dubai hub at Melbourne, Sydney and Brisbane.

It is important not to allow history to be rewritten by Qantas in relation to the rise of its foreign competitors. They didn’t force Qantas off routes to what have now become enormously important ‘secondary’ cities in Europe, or the more recently emerging routes to central Asia, northern Africa or ex Soviet era eastern Europe.

Qantas failed serve those routes, except via London, and its competitors filled the gap. If Emirates and Thai International and Singapore Airlines in particular had not demonstrated business acumen in flying one-stop to those destinations from Australia, the really valuable contribution Germany and the continent in general makes to Australian tourism would not have occurred as quickly or efficiently.

That growth has very little to do with the tired old anglo-centric view of the world that has seen Qantas struggle to understand new sources of long haul growth and persist with its ghastly reliance on transferring passengers to British Airways at London Heathrow, or for those who have been especially bad, via London Gatwick.

Emirates, Singapore Airlines and Thai International have been the future of Australian long haul tourism for some time, and now Etihad, in association with Virgin Australia, is also staking its claim in the void that Qantas still fails to address even if it finally understands it.

From next March Qantas actually halves its direct participation in the London market by seeking to hand the completion of two out of four daily flights to Heathrow to British Airways, a clever move that will undoubtedly persuade even more of its customers to switch instead to all-the-way carriers like Emirates or Singapore Airlines.

[...]

Inbound tourism to Australia has been severely impacted by the strong Australian dollar. In fact if the cost differential between Qantas and its most successful foreign carriers is only the 25% its CEO Alan Joyce referred to in public addresses and announcements in May and August is correct it would disappear if the Australian dollar went even halfway down to its lows against the USD, euro, pound sterling and yen in the first decade of this century.

[...]

It can be argued that the problems that Qantas claim to be experiencing are self inflicted, in that it chose not to address its major cost problem, fuel, with an appropriate investment in more fuel efficient airliners, such as the 777, and is now cutting back on its A380 orders, which is even more fuel efficient on trunk routes where slots or demand make a nonsense of services in anything but the biggest jet available.

That is not to avoid taking issue with union demands for ‘job security’. Those demands are way beyond the pale whether the company involved is supremely well run, or being managed poorly.

However there are critical political or public/national policy issues bound up in those demands as they apply to excellence in piloting and maintenance in not just old aircraft, but new more efficient designs.

Also one note on job security: it's not jobs for life or even really protection against outsourcing, the pilots' demand is basically "Qantas flight, Qantas pilot". Would be similar for the air crew and maintainance. Qantas flight, Qantas staff.

 

[Babbler]

What is back to work legislation?

It's legislation used here in Canada to end strikes by "essential services" workers (i.e. postal workers, rail workers, air traffic controllers, transit workers, etc.). I'm just wondering how the laws between Canada and Australia differ.

 

[Arwon]

OK yeah. Minister can intervene to stop a dispute. But of course in this case it's management which has grounded the airline, not the workers.

One other bit of background: On Friday a Senate inquiry is due to begin looking at two Qantas-related bills, one of which would frustrate the off-shoring of maintenance and crews on domestic flights and so forth. Basically, if it's gonna trade off its branding as an Australian icon it stands to reason it should actually have to, you know, be Australian and such. The Qantas Sale Act already prevents it from moving operational control overseas but the new proposals also seek to prevent it circumventing that with "associated entities" and the like.

The risks for Qantas are obvious. It has already made itself of marginal relevance to inbound tourism by shrinking its network and making bad calls on fleet and scheduling. Yet it wants to somehow use a system of shareholder agreements in nominally minority owned Asia based entities to exercise the control that international law prohibits in traffic agreements, while presumably arguing against allowing the same opportunities to Asia carriers, like Singapore Airlines, to set up similar entities here, and directly serve non-stop services to London in the longer term and the existing Australia-US market in the near term.

The business plans made by Qantas could never be effectively discussed in the context of a labor dispute. But all of the stakeholders, the public, the employees, the investors, and government, and in particular its trade and treasury arms, can pursue these matters as they see fit in this inquiry.

Starting this Friday, whether the industrial relations matters are settled or not.

 

[bestrfcplayer]

Ouch. Don't they care on how much money that they will loose by locking out the employees???

 

[dirtyparrot]

I never understand when people like pilots and air traffic controllers strike for better pay. These are probably the two most overpaid professions in the world (outside the insane world of finance). I'd tell the to STFU and if they quit, hire pilots from abroad. Problem solved.

So, you're assuming that the pilots from AUS are well paid b/c the ones from your country are? If I'm not mistaken the airline business has taken a big hit the last decade and so have many pilots as well. In fact, for many the pay is so poor that it doesn't make sense to train to become one.

And if I'm not mistake, during at least some portion if not most of the travel over oceans, airplanes can't communicate with land. And there are times when auto-pilot isn't enough and people have to actually know what they're doing (cf Air France 447).

 

[Synobun]

So, you're assuming that the pilots from AUS are well paid b/c the ones from your country are? If I'm not mistaken the airline business has taken a big hit the last decade and so have many pilots as well. In fact, for many the pay is so poor that it doesn't make sense to train to become one.

Median aviation sector salary in Australia is over 80 grand. Over here that's a pretty darn good salary.

 

[Arwon]

Not sure how that's the point. Industrial relations doesn't change just because someone makes more than subsistence wages.

 

[Arwon]

More bloggage from the always excellent Bernard Keane:

Alan Joyce’s logic is the elegant reasoning of a terrorist.

If the result of his massive disruption of the Australian transport system is the further shredding of the Qantas brand, which began under Geoff Dixon and which has accelerated rapidly under his Irish successor, and leads to further service cuts as Australians turns their back on the airline, that’s fine.

It will merely expedite his plans to offshore-by-stealth Qantas, wrecking the Australian-based operation while he sets about establishing lower-cost, more competitive foreign-based services.

To this end, a furious reaction against the airline for its act of malice toward Australian travellers is a price well worth paying; indeed, it may be part of the longer-term plan.

[...]

For the ordinary Australian, there are no easy choices. Boycott Qantas, and you punish its employees and further Joyce’s plan. Reward it with your patronage, and you’ll be helping Joyce get another double-digit pay rise.

Joyce, after all, holds hostage not just Qantas’s 30,000 employees, but the key transport systems of a continent-sized nation with only 22 million inhabitants.

There are no easy choices for the government, either, but Joyce’s act of industrial terrorism is a superb opportunity for a government under siege.

The government’s first priority will be getting travellers back in the air and its second resolving the ongoing dispute. But there are politics at work here as well, of two different kinds.

Australian business this year has been increasingly aggressive in its attacks on the Fair Work Australia IR framework, and there are constant calls for another round of IR deregulation. The goal of corporate reform spruikers isn’t to improve Australia’s productivity but to enable business to cut costs, further reducing the wage share of national income below its current, historically low level.

Now the Fair Work system faces its firs major test. And Julia Gillard owns it, lock, stock and barrel. She was the Minister who designed it and shepherded it through Parliament.

It’s also a major opportunity for Gillard. If she’s able to authoritatively resolve this dispute, it could be the beginning of a highly-improbable turnaround. This is a crisis big enough to potentially start the restoration of her leadership stocks, or what’s left of them.

[...]

Then again, the Prime Minister is already in deep, deep political water. In a sense, she has nothing to lose from this, given the terrible polling she faces. Anything that alters the political landscape and disrupts the politics-as-usual pattern of an incompetent Labor unable to lay a glove on a deft, profoundly cynical Tony Abbott is good for Gillard.

What should strengthen the government’s hand is the widespread perception that Qantas management is more to blame than the unions it is trying to crush, a sentiment unlikely to have been anything other than deepened by Joyce’s actions. Essential found last week that 36-13% of voters blamed management over unions for the dispute, with 37% saying both equally were to blame. 73% also thought Joyce was overpaid. Essential also found 43-34% support for the government buying back Qantas.

Voters, it seems, just want their old Qantas back. In the view of Joyce and the Qantas board, they can’t get it back in the airline’s current form, not given continuing strong competition from government-subsidised foreign airlines and the high dollar. The only way to get the old Qantas back may indeed be to nationalise it and subsidise it, or to return to the days when competition from foreign airlines was even more tightly restricted than it is now.

And no one in federal politics is pushing those options. Well, not yet.

 

[Tee Kay]

And Qantas made it clear to its customers who's to blame:

 

[Masada]

Also one note on job security: it's not jobs for life or even really protection against outsourcing, the pilots' demand is basically "Qantas flight, Qantas pilot". Would be similar for the air crew and maintainance. Qantas flight, Qantas staff.

Maintenance is a rather different kettle of fish. The union and the engineers recognise that it isn't feasible to keep lower-end maintenance in Australia. The wage differential for operating in Singapore is just that big. So the union and management came to an understanding on how that transition would work. The core points were that that the number of engineers in Australia would be, more or less, fixed with the outflow of low skilled work offset against an increase in the overall size of the fleet and that Australian engineers would have ultimate oversight and certification responsibilities. The engineers reaped benefits in wages terms from the trips overseas while management got a cheaper outcome that was still certified to a high Australian standard.

The problem is that Qantas pulled the plug on this understanding and stopped the on-site inspections, which underpinned the whole system. The engineers as a result lost a lucrative flow of income and management lost control of quality. Funnily enough that coincided with all the planes falling out the sky. The current wages dispute in large part stems back to this initial breach of trust. The union feels quite rightly that the management isn't given to honouring agreements and that this was all a prelude to a more general shipping of jobs overseas. The wages issue therefore is secondary to the more general desire to brow-beat management enough to keep it from this course of action.

 

[aelf]

Maintenance is a rather different kettle of fish. The union and the engineers recognise that it isn't feasible to keep lower-end maintenance in Australia. The wage differential for operating in Singapore is just that big. So the union and management came to an understanding on how that transition would work. The core points were that that the number of engineers in Australia would be, more or less, fixed with the outflow of low skilled work offset against an increase in the overall size of the fleet and that Australian engineers would have ultimate oversight and certification responsibilities. The engineers reaped benefits in wages terms from the trips overseas while management got a cheaper outcome that was still certified to a high Australian standard.

The problem is that Qantas pulled the plug on this understanding and stopped the on-site inspections, which underpinned the whole system. The engineers as a result lost a lucrative flow of income and management lost control of quality. Funnily enough that coincided with all the planes falling out the sky. The current wages dispute in large part stems back to this initial breach of trust. The union feels quite rightly that the management isn't given to honouring agreements and that this was all a prelude to a more general shipping of jobs overseas. The wages issue therefore is secondary to the more general desire to brow-beat management enough to keep it from this course of action.

So you're saying that the unions didn't take action because they weren't willing to compromise and were just being greedy and selfish and pushing to company towards an unprofitable future? Who would have known that.

 

[amadeus]

And Qantas made it clear to its customers who's to blame:

Do you think the union folk are not out there with signs that say "we're not flying because management won't negotiate?"

 

[ParkCungHee]

As a proud unionist, I say bugger off.

I've heard Unionists say bugger off plenty of times before, but this was the first time I liked it.

 

[Arwon]

The sign is technically accurate. A lockout by management is industrial action...

 

[Arwon]

What the unions want

Qantas head Alan Joyce has labelled them “impossible demands” but the unions representing long-haul pilots, engineers and ground staff argue they are trying to save local jobs as management looks to lower costs through foreign and contract labour.

The three unions involved in the dispute, the Australian and International Pilots Association, Australian Licenced Engineers Association and the Transport Workers Union, say they understand the competitive pressures facing the airline and are not asking for a “job for life”.

TRANSPORT WORKERS UNION
■ The TWU, which is negotiating a new agreement for 3800 baggage handlers, ground staff and ramp services staff such as caterers, asked for a 5 per cent rise, but has already indicated this figure is negotiable and it will settle at a lower rate.
■ But the TWU is concerned about Qantas’s use of cheaper contract labour that threatens the livelihood of its members.
■ The union says most of its workers on the agreement are paid a base salary of $38,000 a year and rely on shift penalties and overtime to make a wage that covers the cost of living. It says this overtime work has been undermined by contracting out over the past 18 months.
■ The TWU says it understands the company needs “operational flexibility” but wants only 20pc of work to be done by contractors, compared with Qantas’s preferred level of 55pc.

The TWU is also seeking:
■ Protection for terms and conditions in terms of safety, training and standards – to apply to Qantas staff and all contractors
■ Qantas to resolve what it says are long-standing aviation security issues and a lack of safety protocols for employees
■ Rights of injured workers to be treated with dignity and respect
■ Commitments to a mutual relationship and good faith bargaining

AUSTRALIAN LICENCED AIRCRAFT ENGINEERS ASSOCIATION
■ The ALAEA is negotiating on behalf of 1600 licensed Qantas engineers for an agreement that expired on January 1.
■ It is seeking a 3pc a year pay rise and faster progression by engineers through the payscale.
■ The engineers’ most contentious clause is that Qantas commit to local engineers doing heavy maintenance on the company’s growing fleet of new A380s in the coming years. Local engineers already do line-maintenance, or the day-to-day upkeep of planes, but heavy maintenance engineering starts on an aircraft only after several years of operation. A380s were introduced in late 2008.
■ Qantas management says it does not have the scale of operation to establish a A380 maintenance hangar in Australia that would be viable. But the union says the likely alternative of “offshoring” the maintenance to Philippines raises safety concerns.

AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION
■ The AIPA is negotiating the current agreement on behalf of 1700 long-haul Qantas pilots who fly larger aircraft like Boeing 747s, 767s and Airbus A380s and A330s, and has not staged industrial action in 44 years.
■ The union wants a 2.5pc a year wage rise, which is says is negotiable.
■ The key issue is a Qantas flight/Qantas pilot clause, which would see all Qantas flights operated by Qantas pilots.
■ Without this clause, the pilots group says the airline’s management will look to employ foreign pilots or use the lower-paid Jetstar pilots on Qantas-coded flights. The pilots are worried Qantas’s plans to move to Asia will mean that lower-skilled foreign pilots will be flying Qantas-branded flights, raising safety concerns and reducing the amount of work available for them.
■ Qantas argues it can not continue to operate if it is forced to pay all the pilots the same pay and conditions.
■ AIPA says its industrial action has not cost the company a cent in revenue, delayed passengers or grounded any flights, and that its entire public industrial action over the past four months has been to make positive in-flight announcements and to wear red ties with a campaign message on them.

WHAT QANTAS SAYS
■ There are 15 unions in Qantas and in the past 15 months it reached agreements with more than 10,000 employees represented by four unions on five enterprise agreements – or one-third of the Qantas workforce.
■ Qantas says its TWU staff are the best paid in the country – 12pc higher than their equivalents in Virgin Australia – and its pilots and licensed engineers are among the best compensated in the world with its long-haul pilots, for example, earning 50pc more than their peers at Virgin
■ It claims the three unions are seeking pay and conditions that would put Qantas staff further beyond its competitors and that they want the right to control key elements of how the company is run.

“Quite simply these three unions are not representative of the broader union movement. They want to be paid to do work that no longer exists due to the advent of new aircraft; they want to retain outdated work practices; they want to tell us what we can and can’t change,” CEO Alan Joyce said earlier this month.

“Effectively they are trying to dictate how we run Qantas – whether it is the pilots’ union demanding the right to dictate pilot pay rates in Jetstar, or the licensed engineers demanding a veto on the modernisation of work practices, or the TWU wanting to limit our use of contractors.”

 

[classical_hero]

Thanks for the info Arwon. So basically QANTAS is blaming the unions for bad management decisions for the recent woes. Considering that am not a unionist and unlikely to be one, it is rare that we are agreeing on this issue. Just shows how out of touch Joyce is with the rest of Australia.