Aviation Outlook

But for aviation in Australia, the issues of who negotiates with whom, which hats are worn and around which table, are nowhere near as significant as the outcome of whatever negotiations finally do take place. Whether the airlines employ new pilots, reemploy old ones as individuals, or as a group under the older and restructured award, what matters for the future of Australian aviation are the terms of that employment. It is the changes made to job structure, productiviity, remuneration and therefore to the economics and efficiency of getting ‘bums on seats’ from A to B which will influence Australia’s experience of deregulated aviation from November next year Deregulation itself is already a winner. Regardless of outcome, things have happened during the last weeks that few could have predicted. One senior executive of an American international carrier told us just twelve months ago that he did not expect to see foreign carriers flying domestic travellers around Australia in his lifetime. We are seeing it now, albeit under emergency conditions. And the relative ease with which many travellers have obtained intercity seats shows just how many empty seats travel around the country every day. Every one of them ultimately adds to the cost of an international fare. Existing attitudes among policy makers mean that there is obviously little likelihood of the internationals continuing to fly domestically. Nevertheless, the dispute has weakened the case against the traditional view.

Of more immediate importance, the dispute has changed the relationship between existing and potential players. In the longer term, the relative position of regional carriers such as Eastern Australia and Hazelton may have been strengthened, while potential carriers have both lost and gained.

In the US, labour costs (including payroll tax and benefits) fell from 43. 7% of total airline costs before deregulation to 36. 5% after. By contrast, both Ansett and Australian in their evidence to the 1986 May Enquiry doubted that such costs would be possible in Australia.

How things change. With deregulation imminent, both domestic carriers are now engaged in restructuring in just the way they had previously rejected. In so doing, they are undermining one of the central assumptions in the previously held view that deregulation was likely to bring few changes to the Australian scene. This view suggested that new entrants would inevitably face identical labour cost structures to existing players, given the existence of industry wide awards. This meant that new entrants would have to survive by ‘cream skimming’, concentrating on a limited service on heavy density routes.

There is no award today for airline pilots. There is every chance that there will be one again tomorrow, but it is likely to have very different terms from the last. And, of course, the outcome for pilots will have implications for other aviation employees. Consequently, the scope for competition has been widened. Whether this will benefit existing carriers or the potential competition has yet to be determined. Potential competitors will have gained greater flexibility but so will Ansett and Australian. The net effect can only be determined by the actual outcome of the competition.