In an extraordinary display of brinkmanship, Qantas CEO Alan Joyce has announced that all Qantas international and domestic services will cease immediately with the airline locking out all employees of the Australian Licenced Engineers Union (ALAEA), the Transport Workers Union (TWU) and the Australian and International Pilots Union (AIPA).
Joyce says the drastic move has been taken under the Fair Work Act in response to industrial action taken by the unions, and will likely cost the airline as much as $20 million per day until the disputes are resolved. The airline has so far lost $68 million due to disruptions caused by industrial action in recent months, and was losing an estimated $15 million per week. The airline says more than 600 flights had been cancelled and about 70,000 passengers had been affected.
In a hastily called media conference on October 29, Joyce said the airline would be grounded from 5.00pm on October 29, but that all employees are required at work as normal and will be paid until the lockout begins at 8.00pm eastern time on October 31. Once the lockout starts, those employees who are locked out will not be required at work and will not be paid. He said he had made the decision that morning, and had consulted the Qantas board before implementing the lockout.
“I have to activate the one form of protected industrial action that is available to me to bring home to the unions the seriousness of their actions, and to get them to forge sensible deals with us,” Joyce said. “I am using the only effective avenue at my disposal to bring about peace and certainty.”
The action does not affect employees based oversees, or the operations of Qantas Group subsidiaries Jetstar, Jetconnect, QantasLink and Express Freighters Australia.
“They are trashing our strategy and our brand,” Joyce said of the unions. “They are deliberately destabilising the company. And there is no end in sight. They talk about job security, but the unions are on a path that would diminish the job security of their own members. Because the pilots, ramp, baggage and catering staff and licensed engineers are essential to the running of the airline, the lock-out makes it necessary for us to ground the fleet.”
“Key high value domestic bookings on east coast routes are down by 25 per cent on the same period last year,” he added. “That’s the most lucrative part of our flying business and it is bleeding badly. International bookings have also fallen, with November bookings nearly 10 per cent down on where we expected them to be – when Qantas International is already making significant losses. ”
The airline says those aircraft in the air will continue to their planned destination, but that no passengers should go to any airports until further notice. Passengers have been advised to monitor the Qantas.com website, or the airline’s Facebook or Twitter accounts.
UPDATE: 6.50PM AEDST 29 OCTOBER
A brief statement from Jetstar said the airline has “limited capacity” on its flights, and that opportunities to increase capacity to accommodate more passengers are currently being investigated.
Federal Transport Minister Anthony Albanese says he was informed of Qantas’s intentions just three hours before the airline announced the grounding, and says the government will make an urgent application to Fair Work Australia that it was in the national interest to order an immediate cessation of industrial action by the unions and by the airline.
The Minister questioned the decision and said he was “extremely disappointed” with the airline’s actions, and that he was disturbed by the fact that he and Joyce had had a number of discussions in recent days and that at no stage had Joyce indicated that the grounding was under consideration. “I certainly indicated my concern to Mr Joyce about the inconvenience to the travelling public,” he said.
Albanese added that he had spoken to Virgin Australia CEO John Borghetti and had been assured that Virgin would do all possible to assist. Virgin Australia quickly announced that it will step in where possible and was in discussions with alliance partners to add extra capacity to the market and will offer special ‘stranded passenger’ recovery fares for those holding a Qantas ticket.
But with Qantas grounding 108 aircraft at 22 ports around the world, Virgin isn’t expected to be able to make a huge dent in the anticipated passenger backlog in the short term.
UPDATE: 9.40PM AEDST, 29 OCTOBER
During a doorstop interview on the sidelines of the CHOGM conference in Perth, Prime Minister Julia Gillard said she had been “kept continuously informed” during the day as the dispute “escalated in a dramatic way.”
“This dispute has implications for our national economy,” she said. “I want to see this dispute sorted out.” While she refused to be drawn on who was to blame for the escalation, Ms Gillard said Qantas is an “iconic Australian brand” and that she was “looking at this dispute as Prime Minister and its implications to the national economy.”
Ms Gillard said an urgent first meeting of Fair Work Australia would take place at 10.00pm AEDST tonight, but was reluctant to speculate on its possible outcome. She said CHOGM delegates who had been booked to fly out of Perth on Qantas has been briefed, and that they are working on alternate arrangements.