The radical action taken by Qantas over the past weekend and subsequent ruling from Fair Work Australia to terminate all industrial action is being seen by many as a major win for the Flying Kangaroo. But given the collateral damage it has caused, I think that they have won this battle, but may ultimately lose the war.
From an industrial relations perspective, the ruling by FWA is a major win for Qantas, and no doubt where Alan Joyce wanted it to go. The airline now has “certainty” that there will be no more industrial action, and it has the option in the case of a full breakdown to head to arbitration where it could expect to gain more than it gives away. While it will not safeguard it against more action during the next enterprise bargaining period, it no longer faces the threat of the stoppages and phantom stoppages that have already cost it close to $70 million.
The three unions must be reeling from the decision, and the TWU is reportedly mounting an appeal against the termination of industrial action. I am not qualified to comment on whether it may win an appeal, but for the moment that will be a side issue as Qantas moves to restart its operations.
I think what has become abundantly clear is that the Qantas brand has now been trashed and has a long way to recover. While it has weathered a number of issues in recent years, from the QF72 uncommanded dive right up to the 32 QFA380 engine incident over Batam Island, the kind of stunt pulled by Joyce over the weekend would test the resilience of any brand, and given that the grounding and lockout was a management decision I’m not sure that the travelling public will be that forgiving.
For all his boasting of emails of support for the industrial campaign from a number of large company CEOs, Joyce knows that it is not these people who are necessary travelling every day and filling up his aircraft. Those are the lower level managers, road warriors and others who for one reason or another need to be in a place at a time, and it is those people who have had to deal with the groundings, and in some cases have had to make drastic moves to get there. Where not bound by travel contracts, I would imagine that many may choose another carrier for their next trip.
Further than that, it now seems that the perception of the Qantas brand internationally is now toast. While it could be argued that this just hastens the decline of Qantas International, it will in the short term have difficulty in selling itself as a premium and trustworthy carrier, particularly when there is so much competition in the market. Crucially for the wider Qantas Group, that could have a major impact on Frequent Flyer, which over the past years has been the goose laying golden eggs to keep the wider Group in profit. And I also have my doubts that RedQ or OneAsia could replace the lost brand equity of the Qantas Group.
Then there is the impact on the diverse range of Qantas workers who faced being impacted by the lockout. While they will be happy to get back to work, whatever feelings of engagement and loyalty to the company will most certainly be destroyed, particularly from those staff whose unions were not involved in the industrial action. Asking the frontline staff to cop the abuse and discontent of many disgruntled passengers after they have just been strongarmed by the company will be a major ask.
At a higher level, the weekend will have placed a great strain on Qantas’s relationships with its partner airlines. While British Airways will stand by the Flying Kangaroo, I can imagine that American Airlines’ senior management must be reeling, having been left to look after the large number of Qantas passengers who were disrupted in the US (including Australian Aviation’s own editor, Gerard Frawley). Those passengers had little alternative but to wait, given that AA does not operate its own metal to Australia. Indeed, this little stunt may cause it to rethink that decision, and very soon it will have 777-300ERs capable of operating across the Pacific. I can only image that the joint venture arrangement would be the only reason for AA not to consider this.
The biggest winner over the weekend was undoubtedly Virgin Australia and its chief John Borghetti. The move to quickly add flights and use its alliance partners to provide additional capacity may be financially costly, but will be a major windfall for its brand. And let’s not forget that there are a number of Qantas passengers who have now travelled on Virgin and no doubt like what they see. Winning those customers back will be difficult for Qantas.
Overall, while Joyce may have won an important battle against three unions who had threatened to “slowly bake” Qantas, the fallout will be much bigger. It is now up to Joyce to show that while he may be able to deal with three unions threatening to kill his airline, can he now heal the wounds with his staff and the travelling public? I have my doubts.
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