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COMMENT – Who will really win the Qantas war?

written by australianaviation.com.au | October 31, 2011

Qantas - now boarding. (Patrick Murray)

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.


Ellis Taylor

Comments (20)

  • PeterL


    Ellis aren’t you a Qantas pilot?

  • craig simpson


    while he might be smirking over the victory, I think that for Qantas to regain it’s reputation alan joyce needs to fall on his sword. A new CEO to help bring the company closer to it’s employees instead of the infighting that has casued this issue.

  • No, and never have been. I was a full-time reporter for three years at AA, and currently contribute when and where I can. Prior to that I worked in another part of the QF Group, but never as a pilot.

  • BrHut


    Whilst you are entitled to your opinion, I don’t agree with your analysis.

    In my opinion, I wouldnt be suprised if Joyce was employed by the board to fix QF’s perceived union issue for good. I would not be suprised if in a few years after (and if) the Asian plan is launched, Joyce gets a golden handshake and is replaced by a CEO designed to rejig QF’s image… if they are around in 10 years, I doubt the travelling public will remember this incident. Australians tend to have short-term memories. However this just speculation.

    There is little doubt that some customers will be lost for good… but most lost customers can be recovered.

    The situation is a mess, but in my opinion it is something that needed to happen. It could have been done better, but it needed to happen.

    I strongly disagree with your belief that cash-strapped American Airlines might consider flying across the pacific to Australia. There is no evidence to support this.

    I do agree the Virgin is a winner. However, looking at their product, unless QF reduces its cost base to ensure improved service, I think they may easily exceed their 20% business target anyway.

  • Camster P


    I hope that the passengers win. However, in the short term, I think that VA will be the TKO winner of this fight.

    This ‘situation’ can’t be won by anyone in the long run. The Unions because of their demands and Qantas management with their recalcitrant reactions are both at fault. They (should) both want to keep the birds in the sky. Not one plane makes any money whilst it is sitting on the tarmac unless it is a museum piece and the planes that Qantas has are not ready for that yet (although some of the older 767s and 737-300 & 400s might be close).

    The pilots want to fly, the cabin crew want to do their magic, the ground crew want to turn the planes around (yes even the bloke who operates the sh!t truck!), the LAMEs want to extend their records and Qantas management want to be off the public and news radar. They all want to get on with it but they all want some form of security which in this day and age with a lot of ‘open skies’ above Australia a little bit hard to find.

    Profitability for any business is equal to job security for its employees. It happens in every business sector from small businesses, to franchises, to resources, to medical, to tourism, to engineering, to construction, to services and even to aviation. The Unions shouldn’t want to bring down the company that gives the employees the jobs that paid their union fees by making unrealistic demands and Qantas Management shouldn’t want to keep their employees on unrealistic conditions.

    Everybody needs to work together, put their dummies back in and move forward, because I don’t want Qantas to go the way of Ansett.

    Sadly, this wont be sorted out quickly.

  • Dave


    The whole process and outcome smacks of a premeditated plan to finish off the influence of the unions involved. Joyce as Ellis has pointed out may have won this round, but, the disenfranchising of the workforce is definitely a reality. Workers who have been involved in the negotiations and taken on industrial action will be exposed to latent retribution, this will be the way that QF management will continue to push and punish. It won’t be an open attack on individuals but a subtle process of denying promotion, being moved to other areas of lesser responsibility and general harassment in the work place.

    Make no mistakes people, Qantas has for a very long time lacked any integrity when it comes to negotiating and EBA.

    I have been involved with them in a previous life and have seen the belligerent, antagonistic, tactics they use, there has never been, and after this dispute, never will be, any successful negotiations on an EBA again. The QF management will now feel they have carte blanche to dictate an outcome regardless of any representation from negotiators.

  • Simperous


    The customers will continue to book on price, if qantas remains competitive, it will retain Market share. Business bookings will continue as there is no instant alternative.

    The action qantas took was well planned and executed and got them the result they wanted. The next logical step is to start driving wedges between the 3 unions.

    Qantas will survive this. Those not affected won’t desert. Most of the others will get over it.

    What qantas really needs to do is fix their uncaring check in staff and weed out the hopeless stewards and fix inboard service to match the competition.

  • Michael Angelico


    The whole situation is a major slap in the face for Qantas passengers. Blaming the unions could have worked, up until management decided to inconvenience the customer in order to beat the union.

    For an airline, more than any other business, the #1 priority in every situation is the customer. If someone at Coles can’t get what they want they can go across the road to Woolies and get it without all that much inconvenience. But if an airline leaves its customers in the lurch, they might miss connecting flights, lose hotel reservations, or (especially for the high paying business customers) be late for a very important meeting, which would cause them to lose face in a big way.

    Also, flying is (for most of us) a relatively rare experience. McDonalds can make a customer forget a bad Big Mac by serving a good one when they come in next week. But if an airline ruins someone’s annual holiday they’ll remember it for years.

    Further, flying is something people tend to tell their friends about. Hey I went to Japan for the school holidays. Nice, who did you fly with? Qantas. Were they any good? – and so the whole story comes out and that’s a dozen more customers lost.

    If you think about it, there are very few problems a business can face which can’t be solved by having more customers. To get more customers, you have to treat them like they’re a priority.

  • BRHut, thanks for your comment. I personally doubt that Joyce had been brought in to take on the unions, but no doubt that the memory of how QF was done in by ALAEA during the last EBA has informed Joyce in this situation. Does make you wonder if Dixon was turfed for not being harder on them. Hmmmm…

    As for AA, there have been some suggestions from other publications that the 777-300ERs could do Australian services. Valid point re their cash situation, but who knows what could happen in this industry. I mean, a Top 10 airline just shut down for a couple of days!

  • Rowan


    Michael, while I agree with you in the sense that the passenger side could have been handled MUCH better by Qantas, I think there’s a couple of important points here. One is that Qantas took its decision, in part, because management was concerned about the safety risk associated with key operational staff whose minds, understandably, might be elsewhere at times.

    The other is that Qantas now has a period of certainty, albeit a short period, where it knows there can be no disruption to its published schedule. In fairness, that’s a luxury Qantas hasn’t had for several months. Fingers crossed in that time agreements can be reached & the work to rebuild trust, brand loyalty etc can get underway.

  • Mark


    Qantas and the Unions need to take a long hard look at themselves before there is no airline for the customers to come back to (particually on an international level). Both are wanting too much out of negotiations.

    Dick Smith made a good point on Brisbane radio this morning, (the Australian traveling public are partially to blame as they want the best aircraft, best service etc, but are not willing to pay that extra cost to fly with Qantas and have the Australian crew.

    He also commented when you have the Asian and Middle Eastern airlines paying upto 30% – 40% less for there staff, how can you expect to charge the same price for a ticket to Europe etc? Some very valid points I must say!!

    Lets just hope all parties can wake upto themselves and sort this MESS out.

  • Matt


    I’m not sure you could say the collateral damage caused by the grounding of the fleet has been as disruptive as the union actions.

    Sure the grounding damaged reputations and images, but it was two days worth of chaos. Not months and months of chaos which preceded and would have continued at the hands of the unions if their unreasonable demands were not dropped. I don’t know of any industry that guarantees jobs. It simply doesnt happen.

    If they don’t like the working conditions they can always do what everyone else does and go look for a better job somewhere else. We know they won’t do that because they won’t find one that’s better. No point looking to Virgin or Jetstar or Air NZ or Emirates or Singapore.

  • Darren


    Ellis you have written a very readable and thought provoking piece. The trouble is that speculation about the future – although interesting and in many cases necessary to build strong and convincing arguments – is very often challenging and based on dynamic and fluid assumptions.

    For instance, I was convinced that shareholders (at least a significant minority) would desert Qantas management at the AGM…hardly the case.

    I was even more convinced that the Qantas share price would plummet on Monday (at least initially)…again, I was wrong (I also thought Virgin Australia would get a big bounce in share price…well, not yet anyway).

    Statements like the following are built on strong assumption which may not turn out to be accurate: “the Qantas brand has now been trashed” (a brand with greater certainty is surely better than one slowly bleeding to death) ; “whatever feelings of engagement and loyalty to the company will most certainly be destroyed” (Staff may very well also be relieved to have greater certainty, and many, contrary to union claims, may actually support management strategy – at least to a higher degree than unions might want us to think); “the weekend will have placed a great strain on Qantas’s relationships with its partner airlines” (Saturday start, Monday end, and direct logistical consequences for let’s say until Friday – great strain? Partners might even make a buck).

    These are just a few random examples.

    Again, I really did enjoy reading this well written and considered opinion piece – I just think that it is based (in places) on a number of assumptions that are not only difficult to quantify at the moment, but may result in conclusions that miss the resilience of the brand (including internationally), the resilience of the workforce, and what actually unfolds in the coming weeks (and months).

    One side note: I have found Dick Smith’s comments across a range of TV programs in the last few days extremely practical and realistic; I particularly liked his observation that Qantas domestic is making a profit and growing market share because it operates on a level playing field (all domestic airlines have to pay at least minimum wages, etc); in contrast, open skies liberalisation means that the Gulf and Asian airlines (aka EK & SQ, etc) compete with Qantas on very different terms, consequently, 8 out of 10 Australians chose to fly the cheapest option (aka EK & SQ, etc).

  • Ron


    All very good comments above & a good & civil discussion all round. Most of my opinions & thoughts have already been covered in one way or another.

    Assumptions & opinions are exactly that, & if a person is educated & experienced in the field, their opinions can be “assumed” to carry some weight, but that also, obviously, is an assumption! I guess the point is that only time can tell how this is going to pan out, & each person, whether in Australia or overseas, will choose for themselves whether they fly Qantas again or not. Personally, I like the VA brand. It inspires me.

    I’ve never been a fan of unions, but Alan Joyce’s smarting at this “win” offends me. The unions also “won” the right for their workers to be allowed back in the gate on Monday! This “certainty” is about as certain as the “truce” between North & South Korea. It also resembles breaking up a fight between my teenage kids. You can send them to their rooms, but the seething continues.

    I’m sure a lot of workers value their jobs & want to keep them, want to perform, & want to see their employer succeed. A lot also hate management’s guts & feel like they’ve had to drop their cause at gunpoint. The problem is, you don’t know which one is going to be checking the nuts & bolts of your plane prior to your next flight, or throwing your baggage around in the luggague hold, or focusing on their pre-flight procedures in the cockpit.

    I have no patriotic sentiment for Qantas. I value good business practice, but any CEO who cant inspire his staff & inspire his customers, in my amateur opinion, doesn’t deserve his job.

    I think I’ve rambled on long enough…..

  • John Harrison


    As your Magazine has said, Qantas might have won the war, but lost the battle maybe. They will loose alot of passengers, I know of two companies switching to Virgin. While these two companies are not big (2-3 people) travelling each week, if alot of others follow, then the numbers will add up. Words fail me about Mr Alan Joyce, I think he should go, but it would seem he has the full surport of the rest of the board. A total clean sweep of the whole top range of Qantas members would be nice, but again can’t see it happening. I only hope Qantas can recover and still be “our flying kangaroo” Heres hoping.

  • James


    Geoff Dixon appointing Alan Joyce as CEO of Qantas was by no mistake. This man was nominated to fulfill a mission. A mission that was conceived many years ago, perhaps by Geoff and his board. It takes a certain character, hard as nails to fulfill this mission as wild and crazy as it may seem on a voyage for which there is no return. It is clear the persona of John Borgetti was not fit for this radical venture, which was certain to bring conflict between management and workers.

    Captain Alan is now travelling the oceans on his journey, and even though his crew has spelled concern and warnings for his actions have not acted early enough, and their voices have been drowned by the sounds of the waves. They are now passing the point of no return. The crew realising their fate, start to protest loudly, there is discontent on the ship and division of opinion. Alan knows exactly where he is and what his options are. After the stormy conflict on the ship there is calm. Not a breath of wind, the drape of the flag resembles the gutted and exhausted captain and crew. The crew of the ship finally acknowledge their fate, the fate that they will be in new lands, relocated far away from their home, their family and friends.

    It is unfortunate, for the crew, many whom have served the company for so long, are left powerless and have no say in the future and direction of Qantas. It was never their will to go on this journey, just the fate that the board imposed on them. Qantas is powerful; it has the power to control the nation, as has been demonstrated in the past week. The Australian government has been intimidated, as public comments fired upon by ministers and the Prime Minister of Australia has had no ill effect, bouncing off Captain Alan dressed in his steel plated suit.

    Australia is destined to lose thousands of its crew, the crew of highly skilled workers, amongst the best in the world to be dispersed far beyond the land girt by sea.

    Can the Australian government try to save these Australian souls and Qantas of old? Perhaps by the time the situation is understood and a means to perform a rescue is conceived, it would be all but too late.

  • Patrick Kilby


    At the moment there is lot of industrial action around with legacy Airlines. Air France, BA and American Airlines are all having disruptions. I am sure AA is sympathetic and wishes it had enough cash in the bank to do the same as QF. So I suspect the Qantas brand is not trashed that much and now it has a EA with all 15 unions (three to be negotaited but no more strikes) then QF can work out how to grow. I suspect its market share won’t drop a lot on domestic but maybe down to 60-65% rather than 70% and that would be a good thing. Cutting costs inernationally with its new planes (hopefully arrived within five years!!) and partners over the next five years will be the main game now.

  • PB


    Good on Qantas! The unions need to look at the market place and competitive pressures. Tiger, Singapore, Virgin etc all have lower cost. What gets me is the nationalistic sentiment over Qantas our airline and yet only 18% of us fly them overseas..why? Others are cheaper – Unions wake up the world has changed.

    Joyce – good to see someone standing up to them!

  • Mark


    I work for Qantas as a front line Customer Service Representative. Alan Joyce states that the industrial action has damaged the Qantas brand. I can tell you that our customers (and mostly the premium ones, Platinum and Chairmans Lounge) are telling me that it is Alan Joyce himself who has damaged the Qantas brand since his time as CEO with the company. Our customers are smart Mr joyce and you can’t pull the wool over their eyes forever. Cost cutting is seen at the final product which directly impacts their experience. Our customers have been telling me for quite some time now that Qantas is no longer going to be their first choice when they travel. Staff engagement is plunging lower and lower to dangerous levels. When will Mr stand up and take some responsibility for his atrocious leadership style?

  • random


    I think one point that’s missing from the whole debate is whether there are ways for Qantas management to achieve their desired change the direction whilst preserving or guaranteeing higher levels of Australian labour involvement (and most likely public sentiment) in the process?

    Currently it would seem that Joyce only wants to pursue the options he has tabled in the manner he has tabled – in other words, whilst he expects everyone else to compromise, he would like his pan-Asian business plan and brand franchise arrangements to remain unmolested and uncompromised.

    Surely there is scope for an airline like Qantas to morph whilst taking the staff and unions with it? The unions however have to be smart enough to be part of the solution and not part of the problem.

    It is a great shame now that there is often a significant disconnect between the sentiment of the general market versus the finance market. The share value and financial viability of Qantas are now seen as being quite disconnected in many respects from any sentimental / historical value of the company – although this has been temporarily tested by the 48 hour grounding.

    So how do you get a financier to be equally sympathetic to money and sentimental factors?

    The financial markets are pegging their concept of future worth and viability to the Joyce pan-Asian plan, and it is the financial advisers (who, lets face it are worried about raw money, and not necessarily the brand / reputation) that are to an extent calling the shots. Without their approval the market value of Qantas continues to dive. Having said that, over-reliance on financiers and market mentality is exactly what would have led to an equity buyout proposal at the hands of Geoff Dixon, with a subsequent catastrophic failure (financial and brand). This was averted only because some people fought to see that brand and reputation held equal standing with the raw money.

    Surely someone out there is smart enough to make both sides of this problem co-exist and flourish.

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