Wednesday October 22, 2014

COMMENT: Qantas grounding – who will blink first?

(Seth Jaworski)

Qantas CEO Alan Joyce’s decision to ground the entire mainline fleet of 108 aircraft yesterday afternoon was a stunning display of brinkmanship, one which will likely decide his fate as CEO.

The airline says it is losing an “unsustainable” $15 million a week due to ongoing and “cynical” industrial action by the ALAEA and TWU. But the grounding is going to cost at least $20 million a day, and probably much more in accommodation for stranded passengers, in reduced forward bookings, and in longer term overall customer confidence in the airline.

There’s little doubt the unions’ actions have been deplorable at times, and much of their rhetoric about their demands, about Joyce’s salary, and about warning passengers away from the airline has clearly been questionable or just plain malicious.

(Seth Jaworski)

My idea of a union has always been that they should negotiate the terms of employment on behalf of a group of workers, but that unionism should neither be compulsory nor militant. If a union calls a strike, then as far as I’m concerned, they are no longer negotiating and have therefore failed in their duty. Similarly, it’s in a company’s interests to keep a union at the table.

But in many ways the unions are living in the past. In the past 10-15 years Australia has become a globalised economy, and Qantas operates in that globalised economy against some airlines that are government funded, that pay little or no company tax, and some that operate on the back of cheap expat labour. If Qantas is to survive in this environment, it will need to offshore some work to countries with cheaper labour rates, and will need to diversify its business by opening new subsidiaries in growing markets. The unions need to accept that at Qantas – just like in the public service and at the Commonwealth Bank – there is no such thing as a guaranteed job, and that the more efficient a workforce can be, the more chance that workforce has of hanging on to their job.

Alan Joyce is right in saying that the unions should not be allowed to dictate the future direction of the company. It is great that employees feel some ‘ownership’ of the organisation they work for – something for which Qantas was renowned - but unless they actually own shares in the business, they have no right to try to influence its future. Joyce told me himself a couple of weeks ago that the pay claims aren’t the issue, and that the airline was willing to agree to the unions’ pay claims if that was all that was at stake.

(Seth Jaworski)

Joyce said he had “no choice” but to force the issue yesterday. I don’t know if that’s true, but I suspect there were other, less drastic actions open to him, one of which was of course to go back to the negotiation table. But having worked in the hospitality and travel industry for nearly 20 years, I sincerely hope that in taking the decision he did, that he took into account not only the massive disruption he would be causing to some 70,000 passengers in Australia and across the globe (two of whom are Australian Aviation staff stuck in Melbourne and in the US), but also the grief his own frontline staff at check in counters and in call centres have been suffering at the hands of disgruntled passengers.

It’s difficult to believe that Saturday’s decision was just taken without some planning beforehand. Anecdotal reports of hotel rooms being booked by the airline last week notwithstanding, the ramifications of such a move must have required some significant forethought. Therefore, much of what was said at Qantas’s AGM on Friday and what has been said by Qantas to government officials in recent days or weeks could be interpreted as being a lie if the option of a lockout and grounding was not mooted. Perhaps Joyce and the board would not have received the support of a reported 96 per cent of shareholders at the AGM had those shareholders known the airline would be grounded the next day!

And as for criticism of the government for not stepping in sooner, I’m yet to see Tony Abbott or any of the talkback radio shock jocks or anyone else offer up any solutions to the issues. Rest assured there has probably been much going on behind the scenes, with the government exploring all of its ‘what if’ options.