Terms of engagement

Seven years later, the only challenges that present less of a threat (at least for now) are government policy and succession, though they are never far from a CEO’s mind.

Dixon’s focus, like today, had been on securing the future of the ailing international business of Qantas, for the domestic operations had routinely returned a sound operating profit.

Alan Joyce, now nearly four years in the seat, is still wrestling with the international operations, now the source of the greatest industrial unrest. It is also the area of greatest impact on the airline’s status as a credible international carrier.

In terms of its international presence, Qantas in its own right is a diminishing brand. Ongoing contraction is yielding to competitor airlines in Europe, Asia, the US, Canada and India. Add to that the relentless expansion of Middle East carriers and aggressive Asian airlines and there can be no doubt Qantas is being pushed into corners from which it is increasingly finding it difficult to strike a meaningful defensive blow.

Its new partnership with Emirates is a means of maintaining an indirect presence in Europe beyond London by riding on the successes of the Middle East model, but as explained in the October issue of Australian Aviation, it also provides a much-needed segue to concentrate on a renewed push into Asia in the immediate term and support a medium-term goal of once again flying directly to European cities when the 787-9s arrive in 2016.

While these new plans are being considered by competition authorities, Qantas’s status with its traditionally loyal customers is being be tested. The unreliability caused by persistent industrial unrest has caused malaise among wary consumers and with highly competitive alternatives in the market, Qantas is seeing further erosion of its marketshare simply by this very fact.

Finally, of course, is the close correlation between status and pride – something far more intangible than a balance sheet, but which has historically helped the airline to ride out difficult situations. Within Qantas today, the pride that once the vast majority of employees felt when asked where they worked has given way to cynicism at best, and downright hostility at worst.

Where, then, is there left for Qantas to go?.

In unanimity staff say the grounding of the airline has simply further alienated staff and customers.

When canvassing the staff representatives for views, it would be easy to immediately draw on the pessimism that clouds the airline and its workforce in an all-toopublic way. But in every public or private comment, there is an underlying tone that suggests failure is not an option, even for those with deepest concerns. There is still, thus, a glimmer of support that could yet be wrung out of a tired and disaffected workforce.

The Staff Voice

Views are exchanged freely on various websites that are consumed with the irate and incensed.

“Nothing will change until the chairman and CEO go, because whilst they are still there the status quo or cost-cutting are the only options they will see or consider. There is not one example of expansion beyond Jetstar and they refuse to recognise that cancer is cancer. What is needed is vision and discipline, and nothing I have heard or seen in the last 2 CEOs shows anything that comes even close to resembling that,” one person says.

“Management alone have positioned the brand & the airline to the predicament it currently sees itself, they are the ones to blame. They have managed the airline into the current state of play & are now attempting to manage their way out of it”, says yet another amid a chorus of discontent.

Indeed, staff cite a multitude of reasons why Qantas is in its predicament: overly distracted by the establishment of low-cost enterprises and replacing the ‘mainline’ product with lower value, low-cost products while expecting customers to remain loyal, and taking customers and staff for granted.

In unanimity staff say the grounding of the airline has simply further alienated staff and customers.

There are also more alarming aspects of the changes that are increasingly concerning staff, including a perceived devaluation of the safety principles that have historically held Qantas in high esteem. One blogger says: “People value safety, safety incidents have allowed the reputation to be tarnished”.

However, there is possibly one quote that sums up most eloquently the desperation current and former staff feel. It was tendered more as a personal note, but aptly summarises the situation: “The years you have been away have seen your oncerespected airline undermined and now approaching abandonment, or so it would appear from the way it is being treated by the very people who should have been nurturing it – the CEO and his Board.

Staff disengagement is sadly what the customers see reflected in frontline positions.

As I have been told many times, even the Japanese couldn’t stop Qantas flying while a World War raged on its doorstep, but its own Chief Executive managed to do just that. What a thing to be remembered for.

He created his own Day of Infamy. ” So the question begs, then, what can the unions, the staff and management do to harness the affections for the airline that have so far kept it flying? Away from the rhetorical platforms surrounding the airline’s financial results in August, Australian Aviation asked some of the major unions and associations what their members’ real issues are, and how they see the industrial environment evolving in the future.

Twu-represented Workers

One expects robust words from the TWU, representing the ground-based workforce. TWU National President Tony Sheldon went on the offensive after Qantas posted its first loss since privatisation, saying the airline’s performance was “devastating”.

“It’s devastating… because it’s at the hands of very poor management decisions that we have seen over the last two years. ” Sheldon went further, describing Alan Joyce as “derelict” in his duties.

The TWU has been successful in its efforts to secure improved terms and conditions for its members – a back-dated pay claim, three per cent annual pay increases for 2011-13, a redundancy agreement, twoyear EBA and improvements to superannuation and consultation provisions. In most circumstances, that would be seen to be a significant victory in a climate of financial compromise and volatility.

In reply to the TWU’s actions, Qantas said the union had had an impact on the airline’s financial results, stemming from months of industrial actions that had wrought havoc on operational reliability and consumer perception. The airline blamed the 48-hour stoppage squarely on the TWU and that it, not management, was responsible for contributing materially to the current financial woes.

Australian Aviation spoke to the TWU about is current concerns, in particular its relationship with the airline leadership.

“Senior Qantas management need to end the ideological pursuit of their own workforce and to begin to treat them with the respect and dignity that their hard work and loyalty to the company deserves,” a spokesman for the TWU said. “This requires a fundamental overhaul of how management currently operates. ” The TWU cites the example of the announcement by Qantas in February that it was closing the Q-Catering facility in Adelaide with the loss of 150 jobs. “The workforce was only informed at the same time as Alan Joyce was addressing the stock market. This is despite the fact that Qantas is required to consult with their workforce under the terms of both the Fair Work Act and the existing Agreements. TWU delegates had even met with senior Qantas management, including the head of Q Catering, the previous day in Melbourne and the issue was not raised by Qantas. ” “The solution is for management to stop taking the low road of targeting their own workforce and undercutting their jobs, which has resulted in the company failing to turn a profit for the first time in 17 years,” the spokesman said, adding: “Employers like Leigh Clifford and Alan Joyceshouldn’t be allowed to get away with it – the Fair Work Act needs to be amended to better look after workers, and the Qantas Sale Act tightened so that senior management cannot continue to run the airline into the ground. ” The two critical issues for the TWU over the coming period are job security and the ideological agenda of outsourcing.

“TWU Qantas members want to know what the plan is for the future of Qantas International – does management have a plan that extends beyond cutting routes and allowing Jetstar to cannibalise International?” “There’s no doubt that Leigh Clifford, Alan Joyce, and senior management’s approach has put ideology – that is, union busting – ahead of good industrial outcomes and the best interests of the business, its shareholders and the travelling public. How else can you explain Alan Joyce wasting more than $190 million of Qantas cash to lock out his own workforce and strand 90,000 passengers worldwide? It would appear the current concerns go beyond the normal cycle of EBA and related negotiations, but focus more on the principles of engagement, suggesting a more systemic or longer-term issue. For the TWU, future success in negotiations would be aided by a change of leadership.

“Alan Joyce and Leigh Clifford have to go. And with them Qantas needs to end its ideological pursuit of its own workers, the reason for which they locked out their own workforce and shut down the airline last October, resulting in 1. 2 million hours of employer industrial action. What is needed in their place is an executive team that recognizes the workforce is – and always will be – Qantas’ greatest asset. ”

Aircraft Engineers

The central theme of discontent with the engineering sector of Qantas is the impact of accelerated outsourcing on both the reliability of the airline’s aircraft and engines, and its resultant effect on the workforce.

Federal Secretary for the Australian Licensed Aircraft Engineers Association (ALAEA) Steve Purvinas laments the progressive reduction in in-house capabilities that have eroded the foundation of what was once considered a benchmark organisation.

“Qantas had always prided itself in being a world leader in aviation maintenance and was recognised as such not only by the public but also by aircraft manufacturers,” he explained.

“Now all engine overhauls, all A380 heavy checks and many other engineering functions are undertaken offshore. In doing so Qantas has lost control over the quality of their product,” Purvinas added.

“Internal Qantas reports show that their own internal auditors recommend they no longer use some of (those suppliers) due to multiple technical oversights. ” According to the ALAEA, the price of outsourced maintenance is not significantly lower, with a recent tender process between Avalon in Victoria and Hong Kong showing only a 2. 5 per cent price difference.

Purvinas says the attractiveness of outsourced work is the ever-present threat that an increase in contract price could lead to instant termination of further contracts.

“When work is done in-house and there is no threat of job loss, an engineer can carry out his inspections without fear of recrimination, this is what made Qantas the best,” he added.

It is this trend that arguably worries the ALAEA members most. In 2010-11 Qantas had what Purvinas calls “an extremely bad run of inflight engine failures on the RB211 aboard the 747-400 fleet”. Statistics contained in reports obtained by the ALAEA show the comparative number of RB211 failures for 747-400 operators worldwide, in which other major operators of the type had experienced no failures while Qantas suffered seven.

“We all knew what the problem was (insufficient blade tip clearance and blades cracking on takeoff), and we all knew the modification required to fix it. The problem was, Qantas had closed its internal workshops and none of the overseas facilities they had engaged had capacity to perform the work. ” During this period it is claimed some three-quarters of the Qantas 747-400 fleet awaited slots at overseas engineering facilities to receive modified high pressure compressor blades.

Turning to the planned deal with Emirates, Purvinas says the alliance could “work out very well for Qantas if managed correctly”, while adding: “Whether the current Board are capable of doing that is another question. ” However, he has concerns about some aspects of the airline’s application to the ACCC for the partnership, specifically in the area of marketshare loss.

“It has always been their decision to drop routes or hand them to Jetstar – many of them have been high yield sectors with excellent load factors. Qantas use creative accounting to make it look like the International part of their business is making a loss. This is not the case and Qantas refuse to answer detailed questions regarding the allocation of internal bills. ” Equally, Purvinas doesn’t hold back when asked about the industrial relationship with Qantas and its appointed external advisors.

“The problem for us as an industry union is the frustration we have dealing with (the) IR buffoons. They are making key decisions using ever-present loopholes in industrial laws that affect aircraft maintenance and safety. It is like an ongoing psychological war with the airline tryingto drag us away from what we know best – aircraft – and into courtrooms week after week arguing about trivial matters. At the same time the entire airline is collapsing around them, they seem to find it more important to rip an employee off by $20 a week.

“Qantas is being mismanaged. We recently conducted an industry survey and less than five per cent of all Qantas employees think senior management is taking the company in the right direction.

Even 75 per cent of Qantas managers who responded have no trust in the people running the company,” Purvinas concluded.

Pilots

Although at times outspoken, Qantas pilots, represented by the Australian and International Pilots Association (AIPA), have more often than not been reasoned in their approach to industrial pressures.

While pilots have continued to fly the line without recourse to disruptive industrial action so far, their Association has not been shy to comment.

When asked how relations currently stand between Qantas and the Association, AIPA President Capt Barry Jackson explained pilots have been concerned for some time that Qantas management has not been open or transparent with them about the long-term plans for the airline.

“Pilots are extremely worried about the direction Qantas is being taken – the aggressive shrinking of international flying seems to be setting the airline up for failure in the long term,” Jackson added.

“We were really disappointed in the reaction of management to our first protected industrial action in 40 years. We were committed to making sure the industrial action was responsible and did not disrupt passengers. The most extreme thing pilots did was wear red AIPA-issued ties instead of the standard Qantas ones. Yet despite this moderate approach, management attempted to paint pilots as militant and somehow responsible for the catastrophic grounding that damaged the airline’s brand horribly. So relations have been strained. ” Capt Jackson said forced arbitration before Fair Work Australia is continuing, something that has been costly to both parties.

“We have made the point on numerous occasions that we wish to work constructively with management on solutions to the problems Qantas faces, but the Association has been effectively shut out of any role whatsoever in the decision-making process. ” The Association is clear in its view that productive relations can only be achieved if pilots are viewed as a resource instead of an adversary. “We don’t wish to deny management’s right to manage – but we feel that pilots are a terrific resource that should be drawn upon,” he said, adding: “The average pilot has been with Qantas for much longer than the average executive and, frankly, the average pilot generally knows more about aviation than the average executive. ” Besides flouting Qantas dress regulations, the affects of concern by pilots are being manifested in a more profound – and worrying – way.

“I think that over 200 pilots being either on leave without pay or having resigned is sign enough that Qantas is being destroyed from within,” Jackson says. He noted that the traditionally long apprenticeships that resulted in qualified and experienced Captains is now at risk, with “cadetships putting pilots in the right hand seat of a jet with as little as 200 hours. ” But Barry Jackson’s final comment to Australian Aviation on the subject is as apt for all unions as for AIPA: “The irony is that pilot interests and management interests should be aligned, in that the primary motive of both should be for Qantas to succeed. Indeed, the primary job security worry for my members is the prospect of Qantas failing as an airline. ”

Cabin Crew

By contrast with the more militant elements of the industrial relations scene, the Flight Attendants’ Association of Australia (FAAA) has adopted a cooperative rather than combative approach. While some of its 3,000 Qantas members were urging their Association to take a more robust stand in the face of the airline’s recent financial results, Secretary of the FAAA Michael Mijatov urged pragmatism and caution as it engages in negotiations for a new five-year EBA due in December this year.

Pragmatism is a word that features strongly in the FAAA’s repertoire of industrial engagement. “We adopt a very pragmatic approach and do not go down paths that are completely unachievable. I believe this represents a clear difference in approach to other unions,” Mijatov says.

That does not suggest the FAAA is a light touch. While it has conceded changes to its members’ terms and conditions, such as the acceptance of longer working hours and lower salaries for new flight attendants, its stance of taking discussions to the Qantas executive and having the airline leaders actively participate in negotiations has paid dividends to its members, and sustainably so thus far.

In 2007 when the last EBA was agreed, a new subsidiary company was formed for new flight attendants: QF Cabin Crew Australia. As part of the arrangement, the FAAA was successful in getting Qantas to agree a 25 per cent cap on the number of international cabin crew who can be based offshore. While Mijatov expects this will be one of the crucial elements of the coming negotiations, he says: “This is a very good example of what can be achieved when parties respect each other and deal with each other properly.

“We have a philosophy of engaging actively in negotiations,” Mijatov added.

“It can make a difficult situation somewhat more palatable. ” The FAAA’s Secretary feels strongly that the strength of the relationship with Qantas will help it – and its members – ride out the next round of negotiations with a stronger starting posi-

“The primary job security worry for my members is the prospect of Qantas failing as an airline. ”

tion than the majority of its counterpart unions.

“There is the highest level of consultation between the FAAA and Qantas – they actively listen to any problems we have to any proposed changes,” Mijatov explained.

The FAAA’s leadership concedes the environment in which it will be negotiating is “really difficult and with no immediate relief in sight. ” But, Mijatov cautions: “There is nothing worse than raising the expectations of members beyond reality.

We do not see that in some other industrial sectors. We are proud that the industrial strategy we have adopted has delivered results for our members despite the difficulties of the environment we are operating in. ” The outcome of the negotiations in December will be a practical test of cooperative strategy in the new industrial relations environment. The FAAA’s stance may well become a model for developing sustainable industrial relationships more broadly if its success thus far is anything to go by.

The Management Perspective

Having considered the views of the workforce, Australian Aviation sought comment from Qantas on the views expressed in this article. At the time of going to press no reply had been received.

However, one response from the Qantas executive resounds loudly on the subject, and it was that given to ABC News about the Fair Work Australia ruling in August: “Qantas is free to run our business as we see fit and not be dictated to by union officials who do not have the airline’s best interests at heart. ” It was not an entirely conciliatory comment and hopefully merely reflected frustration. If those combative words, however, are the opening lines to negotiations around the table it does lend credibility to the staffs’ concerns. It is also no surprise that hostility is met with hostility.

It is absolutely true there’s a limit to what the Qantas business can tolerate financially and also in terms of distraction from other high priority strategic issues – like growth, product and fleet decisions.

No-one can accuse Alan Joyce of being indecisive, nor can anyone criticise him for trying to break an untenable situation.

The decision to ground the airline a year ago was bold by anyone’s standard even if it was an act of desperation. To stem the week-by-week losses resulting from rolling industrial action something had to be done, otherwise “the aviation equivalent of mutually assured destruction”, as it was recently described, may well have occurred. In his role as CEO Alan Joyce simply had to act.

History will judge whether this was the correct action.

There is nothing new in a CEO being acidly lambasted by a workforce in change.

But there is a common theme that has emerged through most of the rhetoric: the deliberate disengagement of staff by management and an inclination towards industrial militancy waged by the CEO and executive. Is that wholly justified and objective criticism, or the heat of an industrial showdown? One pointer to it being more than just industrial heat generated by the operational departments is the reported sentiments of non-executive management. It is one thing for highly unionised operational sectors to give management a wire-brushing, but completely another for management to be equal in its concern for future direction. It becomes no longer simply the views of a single union or workforce sector in dispute and on this occasion does attest to concerns far beyond routine EBA negotiations. The dimensions of this industrial quandary, then, are arguably wider and deeper than at nearly any time in the airline’s recent history.

What is patently clear, though, is that there remains a tremendous latent passion within Qantas for the airline to succeed.

That has always been the case, even if on occasion it is taken for granted or ignored.

Staff clearly want to be able to say with pride “You’re the reason we fly”. But to say it without passion is a hollow proposition for staff and consumers alike.

To unlock that passion once more will be a painful process, something that can only be achieved by there being a collective willingness.

Sadly, that appears to be lacking on nearly every side of the equation.

As one astute observer noted: “The pride for the company shares some of the DNA all of us have for pride in this country, so closely associated are the two. It’s inherent.

How hard is it to harness that power, which neither money nor industrial whips will ever produce?” n The author worked as a member of Qantas Public Affairs between 1996 and 1998.