Them And Us

Mistakes and missteps of management are well documented and the hard line of some unions well known.

The overriding fault however is that management, unions and staff have simply ignored the changes in aviation across the globe.

The airline industry is one of the world’s fastest growing and fastest changing and this necessitates that airlines have the maximum of flexibility in dealing with those changes and make the changes to be ahead of the game – not years behind.

Over the past 20 years it can be argued that Qantas as a whole has largely ignored those changes and is totally ill-equipped for today’s world, just as Ansett could not win against Virgin Blue.

For instance Virgin Australia’s ownership/shareholder structure that Qantas is blaming for its current problems is decades old and was used by Ansett in the late 1990s.

What Qantas is really complaining about is that its monopoly on full service economy and business class has disappeared forcing it to tackle inefficiencies that should have been fixed when it was floated.

In today’s world a monopoly is a rarity and not something that should be counted on.

This writer warned three years ago that the gravy train for Qantas was over with the rebirth of Virgin Blue and Virgin Australia.

Certainly the Australian government has been more liberal than most when it comes to access to Australia but that is a reaction to Ansett and Qantas not changing with the times and stifling tourism growth.

A portent of the challenge ahead for CEO Alan Joyce and his team was the declaration by unions that they would not accept a wage freeze despite Joyce taking a 35 per cent pay cut.

This contrasts with the situation across the Tasman, when Air New Zealand staff readily accepted a pay freeze after it was recapitalized by the government following its near death experience with Ansett.

After the Ansett debacle Air New Zealand staff were shattered with only 29 per cent bothering to complete a staff survey in late 2001. And of those, 90 per cent of respondents said that management was disconnected and out-of-touch.

Fortunately, the airline received a new leader whose mantra is “people and technology”.

That new CEO, Ralph Norris, declared to the author in 2002 that “this is a people business and it’s not about flying planes. ” In a statement probably viewed as heresy at leading business schools, on Wall Street and the ASX, he said; “I am not primarily interested in shareholder returns. If we look after and inspire the staff, they will look after the customers and that will take care of shareholder returns. ”He added that “management must show the way by setting an example, but if staff won’t play the game they must not be allowed to affect the organisation and consequently must be shown the departure lounge. ” Within two years Air New Zealand staff were flying high and the airline turning heads and today it is the most admired company in New Zealand with 56,000 applying for jobs at the airline last year.

These are fascinating insights that are so relevant to Qantas.

An example of showing the way for Qantas is a pilot gripe about staff travel and the “ongoing downgrade” of pilots’ on-load category. The AIPA claims that “level 5 executives” who joined the Group in 2013 are on-loaded before Senior Check captains of 40-plus years’ service. ” According to the AIPA “this says it all”. And one would have to agree. But balancing this ridiculous situation is that long-haul pilots in particular have perks that are outdated.

The Australian newspaper highlighted this on its front page in February with a photograph contrasting the Jetstar and Qantas pilot EBAs. The former is 44 pages, the latter around 250.

When Norris took over at Air New Zealand, he asked staff for a wage pause and slashed executive salaries by up to 30 per cent. He also took away executive perks like chauffeur-driven cars. “Only then did the staff start listening,” he explained at the time.

But Qantas staff are rightly cynical after the Airline Partners Australia aborted buyout in 2006/7 and the $100 million success fee.

Nawal Taneja, chairman of the Dept of Aerospace Engineering and Aviation at Ohio State University and author of a number of books about the industry including Simpli-Flying and the Airline Survival Kit says if workers today are cynical about management mantras, they have a reason to be.

“The failure of companies such as Enron has had a chilling effect on labour-management relations. While executive management enjoy top-up pension plans, huge bonuses and are seemingly isolated from the effects of bad decisions, the rank-and-file have felt pain with pressure for improved productivity and in some cases unfunded pension plans. ” This helps to explain, for example, the seemingly self-destructive attitude reflected in the badges worn by some United Airlines flight attendants during the height of wage concession talks early last decade which stated: “Full pay to the very last day. ” One of the major problems in changing staff culture is how to strip out complexity and this applies particularly to Qantas.

But Qantas staff are rightly cynical after the Airline Partners Australia aborted buyout in 2006/7.

According to Taneja, airlines have added enormous complexity to their operations and processes over time and staff are ingrained with these systems.

He states that: “Enormous fleet and network complexity and labour contracts have been built around these complex systems and processes which often relate to charging higher and complex fares. ” Of course in the case of Qantas the enormous emphasis on safety over the decades is built around strict management systems and attention to detail, which is the opposite of flexibility and flair. While that complexity and rigid management was required 30 years ago the strides in aircraft safety through technology possibly make some aspects and oversight redundant.

The aviation industry has evolved out of a military base and much of the management style and marketplace orientation still reflects an authoritarian, hierarchical and command-and-control worldview.

Authors Kaye and Joseph Shackford in their book Charting a Wiser Course: How Aviation Can Address the Human Side of Change insist that the solution and pain must be shared.

“The Sausage Casing School of Economics where you squeeze various parts to obtain a gain in your part is the most destructive form of combating change. I can think of nothing that breaks down the relationship between all members of the system faster than this, with more discord and resultant wasted energy. ” Another obstacle in the race to convince management and staff of the need for culture change is the marketing by airlines of the luxury side of travel.

Network and legacy airlines have created the image of luxury and excess to attract high-yield passengers but this contradicts the message of restraint and cutbacks being preached to staff.

This was the case at Ansett where Sir Peter Abeles sought to build the world’s best domestic airline during a time when de-regulation was sweeping the world.

Another perspective to the problems of change was highlighted by Sir Rod Eddington, the former CEO of British Airways and Ansett.

As we have previously discussed in Australian Aviation, when Eddington arrived at British Airways in 2000 he made the decision to sell Go Fly to resolve the issue of whether further change was needed at the mainline carrier. “My staff told me that Go was the solution,” he told this writer at the time.

“I said I could possibly accept that if Go was making £300 million a year, which is what our European division was losing. ” He said that it was difficult to change this mindset until Go was gone. “Once we sold Go, the staff at BA really focused on making the changes necessary to make

Only a grand vision and a grand compact will solve the Qantas dive.

BA itself competitive. ” Does Qantas have the same problem with Jetstar? What is certain is that the blame game has erupted on public forums and that blame game is ugly.

Joyce is in the cross-hairs of most and it raises the question of whether he can pull the airline out of its tailspin.

The unions and some politicians have thrown so much mud at him that some is now inevitably sticking.

As unfair as that may be the reality is that possibly Joyce has become a lame duck CEO and needs to be replaced.

But it is doubtful that any replacement would do a better job with the message that has to be delivered.

One of the troubling aspects is that staff morale has crashed and the public pleading to the government for financial help has had a significant negative impact on the brand.

Passengers and frequent flyers are now talking of booking on other airlines and cashing in their points.

The memory of Ansett’s collapse – and the points lost – is to the fore in people’s minds.

The negative rhetoric risks Qantas entering a viscous downward cycle with incalculable cost.

The malaise at Qantas raises the question for Australians of do we need a national icon carrier? Is it relevant in today’s global economy and can we support an international airline? On first glance the answer may be no but look across the Tasman at Air New Zealand which commands 43 per cent of that country’s inbound-outbound traffic.

It hasn’t anything like the scale of Qantas, is truly at the end of the line, only has essentially a rural and tourist economy to support it and yet has more premium class seats (business premier, premium economy and Skycouch) in its aircraft than any other airline in the world. And it makes big profits! Question is, can Qantas pull out of this dive? History says it cannot and the barrage of vitriolic comments from staff about management and each other suggests history may well be right.

The antagonism of staff toward middle management is disturbing at best and toxic at worst and it is impossible to know where it started or who started it, but it is clear to see where it will finish.

Only a grand vision and a grand compact as suggested by Paul Howes, the National Secretary of the Australian Workers Union, will solve the Qantas dive.