COMMENT – Qantas and the big bang theory

written by Gerard Frawley | October 31, 2011
Grounded Qantas aircraft at the airline's Sydney domestic terminal on October 30. (Damien Aiello)

A text message roused me from a deep sleep at 2.26am. It was AA’s deputy editor, Andrew McLaughlin.

“QF has grounded its whole fleet immediately until unions withdraw claims!!!”

It took a few moments for the importance of that message to penetrate my sleepy fog.

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“I’m dreaming that, right??” I messaged back.

Then it clicked. Wow, I’m meant to be flying home to Australia this evening. I’m going to be stranded.

Usually you cover stories from the outside, but this time, like 70,000 or so fellow Qantas travellers, I was in fact in the story. I was in the USA and was booked to fly home to Canberra on QF8 via Dallas Fort Worth and Brisbane. What happens next?

Qantas’s decision to ground itself, with immediate effect on Saturday Australian time, and then lock out staff from the ALAEA, TWU and AIPA, was stunning. It is without precedent in Australian aviation history. It took me hours to comprehend the magnitude of this action, and I bet it did too for my fellow affected Qantas passengers, not to mention Qantas staff, particularly those to be locked out. What was Alan Joyce playing at?

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But slowly it dawned on me, once news of the Fair Work Australia hearing process filtered through. If Fair Work ordered all industrial action terminated and in effect put the airline back into the air (on the grounds of national economic interest), that was exactly the result Qantas management wanted. Terminated would mean no more industrial action by the three unions – in particular the much more belligerent TWU and ALAEA.

Joyce and the Qantas management team had bet it all on black, that Fair Work would terminate all industrial action and force the airline back to the negotiating table to come to agreements with the three unions, which, if necessary, would be arbitrated. It was the ‘big bang’ theory.

That surely is a win-win for the company. There will now be no more industrial action by these three unions. Full stop.

But secondly, surely employment guarantees and limitations on Qantas uses contract labour and codeshares with other airlines, as the unions want and Qantas has so vehemently resisted, can’t be included in those agreements. That falls outside Fair Work’s remit, which will focus purely on wages and conditions. And all along Qantas has said it is happy with three per cent per annum pay rises for TWU/ALAEA/AIPA staff (as it has given other staff groups in recent times), it is just the restrictions on how it chooses to run the business that was the critical sticking point.

So in one fell, albeit dramatic and risky, swoop, Qantas gets surety that it can resume operations without the threat of industrial action. Remember the uncertainty caused a little while back by ALAEA federal secretary Steve Purvinas’s comments that passengers shouldn’t book on Qantas through to Christmas because of the threat of industrial action?

On Qantas’s part there was clearly a calculated strategy of short term pain for long term gain. Or as Alan Joyce said in his press conference today “we didn’t want to suffer the death of a thousand cuts”.

Still, while this is a tactical victory for airline management, what of the other issues the grounding has thrown up? How will disrupted passengers react once their short term anger has subsided? Will they come back to the airline?

Will the big corporates (many of whom would have been cheering Qantas’s war against the airlines from the sidelines) stay loyal to the airline? What is the long term damage to the Qantas brand? What is the financial cost not just to Qantas, but the broader Australian economy, of all this pain?

Surely the toxic relationship and residual bitterness between Qantas management and its pilot, engineer and baggage/ground handler workforces will linger for years (remember the 1989 pilots’ dispute?), so how will the airline re-engage staff?

How big a boost is this to Virgin Australia’s bid to rebrand and reposition itself as a business friendly airline?

What was ‘Plan B’ if Fair Work didn’t terminate or suspend industrial action by all parties? Will Qantas pilots stop wearing red ties?

And when will I get home?

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10 Comments

  • random

    says:

    The lunacy of all this is that BOTH SIDES ARE RIGHT. Management can’t off-shore everything that costs a little more than they’d like whilst continuing to claim an all-Australian heart and soul, and acting as a National Flag Bearer at all convenient times. Likewise the unions can’t get pay on levels that will break the airline financially in terms of international competitveness – because other countries can and will do it cheaper – even if it involves no Australian loyalty. There must be middle ground, and both sides must give and concede to create goodwill.

    Unfortunately also in the mix is the fact that today’s Qantas management does not have to (nor does it want to) bear responsibility for previous managerial failings on international route and fleet choices – many of which were completely awful and have DIRECTLY led to the failings of Qantas international. Those failings should not be a noose around the neck of ordinary staff.

    Furthemore, the funny thing is that no-one wants to talk about the real bogey in the room – FUEL pricing. It is the relentless increase in this cost over recent years that has eroded the margins that legacy airlines had at their disposal. This is actually the common enemy of both staff and management at Qantas (and most airlines). Everyone – from management to commentators talks about the high costs of FUEL and STAFF and then proceeds to say that really only STAFF has flexibility in price and that nothing can be done about FUEL costs – WHY!? The fuel and oil companies are bearing no pressure for change whilst they profit from larger margins (even by their own admission).

  • PeterL

    says:

    Fuel is another issue altogether. NASA did a study a while ago about how the airlines could save fuel and guess what you can save an enormous amount of fuel without needing new aircraft…..how you ask? Simply slow the aircraft down. It takes longer to get to your destination but a lot of fuel is saved.

    Unfortunately we are our own worst enemies as we want to be everywhere as quickly as possible……

  • annoyed in adelaide

    says:

    My thought over for the last few months has been that “Qantas” will become a holding company only, and cease to fly as an airline. It will own Jetstar (Australia) outright, will have large percentage ownership of “Jetstar Asia” “Jetstar Pacific” “Jetstar Japan” “Jetstar China” “Jetstar Korea” “Jetstar Malaysia” “Jetstar……..fill in whatever country suits”. Qantas will start “Red Q” or whatever the name will be,based in asia, ALL labour to run it will be sourced via asia including staff based in australia. Like it or lump it.
    Qantas Link,Jetconnect etc will remain owned by Qantas and operated by sub contractors as they are now.
    Doesn’t it look a bit suspect that with this grounding over the weekend,Jetstar,Qantas Link and Jetconnect could somehow continue to operate even though the businesses are owned by Qantas. I know I will be be criticised for being dumb that I should know they are separate entities but why else were they started, but to No1 make profit and No2 be able to bypass union action and continue to operate.
    It would also not surprise me if some of the A380’s were sold out right to other airlines and the rest transferred to “Red Q” and Jetstar Australia,I dont imagine this to occur tomorrow but give it 2 to 3 years when the dust has settled on this current turmoil and I believe we will start to hear murmurings from within.
    I’ll stop my rant as I have vented my spleen and I’d be really interested to see if anybody else has had my thoughts.
    I dont consider myself to be a paranoid conspiracy theorist but I am annoyed with what I believe is being done to our airline.
    I also dont believe it is all Alan Joyce’s fault there are quite a few more “power brokers” behind him.
    Do the Qantas union members really earn more than their counterparts at other airlines? Or is this something else that we are being led to believe?

  • John

    says:

    I believe the corporates at least will support Qantas, like you said, they have been ‘cheering from the sidelines’. The people will forget soon enough, they always do, and the fact thats so many have frequent flyer points will bring them back anyhow. The question is whether the politicians and public servants will still fly with Qantas, surely they’d make up for a significant part of their ticket sales?

    Mr Joyce will have no problems long-term, this is probably great for his career. I do wonder whether he will be made the scapegoat, and whether his resignation will form a part of the final agreement with the unions. His leaving will make it palatable to them, I suspect. I wouldn’t be surprised if that’s not part of the plan already.
    We don’t have a very good track record when it comes to holding on foreign CEO’s, do we?

    It’s an emotional story but I can’t see any damage to the country, if you want to travel to Australia would this really change your plans? Qantas is certainly not the only airline available.

  • Hannes

    says:

    The unions lost the initiative with a gutsy move from Qantas’ management. The problem is that an international airline cannot compete overseas with their hands tied behind their backs. Qantas’ staff are well paid compared to international counterparts and even their local competitors and have nothing to complain about.

  • Damian

    says:

    People forget pretty quickly……within a week or two 99% of people will still be doing internet searches for the best fare. The Qantas “brand” is overstated as an economic asset – whilst it has cultural and historic value it’s value as an ecomic asset is limited. Essentially anyone with enough capital can start an airline with no history, a website and a made-up name and still attract the punters…..

  • Martin

    says:

    Gerard, Hope your travel arrangements have been sorted out in the meantime. The up-side for you is that getting stuck in the middle of it makes it a worthwhile perspective for an aviation journalist!

    I have to wonder about the wisdom of Qantas management in deciding to grounding the airline. Up to now, they could say they have tried their best to look after customers during any industrial actions and could attribute blame for delayed or cancelled flights to the various unions. As of Saturday, they can hardly say that anymore. The irony is that the task of looking after affected passengers (and so keep their future business) very much fall back onto QANTAS employees (whether union or non-union) rather than management.

    I also wonder how much the decision to ground the airline was based on a financial analysis of the losses that would be incurred as a result of a short term grounding vs the lost business due to customers shying away from Qantas due to the continued prospects of flight cancellations as a result of industrial action. Qantas would have good visibility of how their passenger numbers may be being affected by risk of industrial action: 1%, 5%, 10% lost business? Depending on the %, over several weeks or months, that could amount to more than a 2 day grounding. But if that was the case, how much did loss of good will from customers get factored into the financial assessment?

  • John A Gates

    says:

    For heavans sake, the T.W.U. are worried about outsourcing their jobs overseas. How can the loading, unloading,vehicle services etc. in all Australian Ports, be outsourced.When the truth is at stake, the two birds Rhyme & Reason become startled. Maybe the words of Mr. Crumlin, M.U.A and International Transport Workers Organisation President, should be noted. The Unions world wide, will wage guerilla war on Qantas. Coming from the M.U.A, whose conduct has brought the Australian Flag Fleet of ships down to 22, and laundry workers on oil rigs being paid $145,000; is that the union’s future for Qantas?’

  • Robert T

    says:

    As a mere man in the street, and occasional occupant of an airline seat, I find myself in awe of the piece by Mr. Frawley and by the respondees above. A privilege to observe these dynamic issues at close quarters.

    The politicians in Canberra bear some responsiblity for what is happening to “The national Icon”, too. Alan Joyce got little enough support from that quarter, when he made his move, but regrettably when the jigsaw has been re-set on the table, he will be forced to resign. A scapegoat must be seen to be found, however unfair, before the ship is back on course.

  • Warren Ladbrook

    says:

    A simple man with a partner who works for Qantas is only too aware of the consequences that the staff, not in any dispute, were effected by Alan Joyce’s decision to ground the fleet to bring set of rolling disruptions to a conclusion. We were all worried about the future but understood it happen otherwise Qantas would end up the same as Ansett.
    The arogance of many politicians in trying to find a reason to blame Alan Joyce for this decision is astounding. Even ot the man in the street, its obvious that the Prime Minister should of stepped in weeks ago becuase of the damage the unions were doing to Qantas. It appears to me that Julia Gilliard will let the unions do what ever they like.

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