Heavy Weather

As recently as 2006, Qantas operated heavy maintenance facilities at Syndey, Avalon, Melbourne and Brisbane airports. Its fleet of 747s was maintained at Syndey with overflow capacity at Avalon, while 737s were maintained at Melbourne and 767s at Brisbane, which also took on heavy maintenance of A330 aircraft in 2010.

The Sydney facility’s closure in mid-2006 saw 747 work shifted to Avalon, but cutbacks and closures in recent years, dovetailing with the airline’s wider struggles, have had a far more dramatic impact. Qantas shuttered its Melbourne base in 2012, cutting more than 400 jobs and shifting 737 work to Brisbane. A series of cutbacks at Avalon was followed by the widely anticipated announcement that Qantas would also shut down that facility, a move it completed in March. That has left only Brisbane and its 560 heavy maintenance staff to work on Qantas’s 737 and A330 fleets as well as its remaining 767s, which are due to be phased out next year.

For well over a decade, Qantas has used overseas contractors to complete overflow heavy maintenance on aircraft that could not be accommodated at its own facilities, but its reliance on offshore work has increased as its in-house capabilities have dwindled. Its flagship A380 superjumbo jets are maintained by Lufthansa Technik in the Philippines, while the closure of the Avalon base will see 747 work moved overseas as well, initially to HAECO in Hong Kong. Qantas has also used three maintenance facilities in Singapore – oneowned by the Singapore Airlines Engineering Company and two by Singapore Technologies Aerospace.

Qantas insists it will only offshore maintenance on aircraft it operates in numbers too small to achieve in-house economies of scale. Suffice it to say, however, the airline’s unions are not inclined to take CEO Alan Joyce at his word. The offshoring of maintenance work has emerged as a central flashpoint in ongoing industrial disputes – one that exploded after Qantas announced 5,000 more job cuts as part of another round of retrenchment in late February. Making use of a Senate inquiry into the airline’s future, the Australian Licensed Aircraft Engineers Association (ALAEA) released a set of damaging allegations highlighting claims of shoddy work on Qantas aircraft at overseas maintenance sites.

Among several examples the union submitted to the committee was evidence that several mounting bolts for a 747-400’s engines were installed incorrectly during work at the HAECO facility in Hong Kong in 2008. The result, according to the union’s submission to the Senate panel, was that three of the aircraft’s four engines were not held on properly. “If any one of these engines had fallen off during flight a most likely outcome would have been the loss of the aircraft,” the submission stated. Further, ALAEA federal secretary Stephen Purvinas told the committee that the defect had not been properly documented by either Qantas or CASA.

That and other examples were intended to illustrate the union’s case that overseas maintenance suffers from poor workmanship and, in particular, from inadequate supervision and oversight. Noting that the traditional ratio of licensed aircraft maintenance engineers (LAMEs) to unlicensed engineers(AMEs) in Australia was one-to-two, the submission says the ratio at Asian facilities where Qantas has sent maintenance work ranges from one-to-eight to one-to-22. The union also released confidential internal Qantas discussion points that it said revealed plans to no longer send any of the two to six licensed engineers who currently accompany the airline’s A380s to the Philippines. Instead, the airline would send only a project manager, a move the union described as intended to “cut costs and prevent Qantas LAMEs highlighting poor maintenance. ” In the Senate hearing, ALAEA also hit out at CASA, saying the air safety regulator was too cozy with Qantas and did too little to ensure overseas work was up to standard. “I have a very dim view on CASA’s oversight of maintenance in this country and outside of Australia. We do not have confidence in CASA to provide effective oversight,” Purvinas told the hearing.

Not surprisingly, both CASA and Qantas responded to the claims forcefully. Qantas posted a lengthy rebuttal on its website, challenging union claims over issues ranging from executive pay to the particulars of the engine bolt episode, which Qantas described as a case where three of eight engine bolt washers were installed upside down and two engines had one washer installed instead of two – neither of which problem could have resulted in an engine falling off. Instead of highlighting legitimate safety concerns, the airline said the union was seeking to make headlines by dredging up a handful of problems over a long span of time at facilities approved and overseen by Australian regulators.

“The union is again playing the safety card by compiling a list of maintenance issues dating back 16 years in an attempt to claim that maintenance done outside of Australia is unsafe,” the airline said. Qantas CEO Alan Joyce expanded on that argument during a separate senate hearing, accusing the union of “fear-mongering”.

“As always in aviation, there are multiple fail-safes to account forthe very small likelihood of human error,” Joyce said. “Suggesting that any mistake is a potential catastrophe is alarmist and deeply irresponsible. ” For its part, CASA rejected the claim that it was too close to Qantas. “We certainly do not favour any particular airline. We certainly do not turn a blind eye to any practices,” CASA spokesman Peter Gibson told ABC Radio’s AM program. “Where we have evidence of safety standards slipping, we step in and take action. ”

Ansett dies again

Meanwhile, as contention and uncertainty swirled around Qantas and its heavy maintenance operation, John Holland Aviation Services, which took over the former Ansett maintenance facility in Melbourne in 2007, announced it would close shop by mid-year. In a terse statement, the construction giant blamed the closure on weakening market conditions, but the move came as little surprise. In 2013 JHAS lost major maintenance contracts with Jetstar, which moved

In a terse statement, the construction giant blamed the closure on weakening market conditions.

more of its maintenance in-house; Tigerair, which launched BAE Systems’ Australian civil aircraft maintenance business; and Virgin.

Estimates placed the number of job losses at around 230 maintenance positions, including 150 at Tullamarine and the remainder at JHAS’ operations in Adelaide, Perth, Sydney and Brisbane. A John Holland spokesperson declined to comment further for this article.

The haemorrhaging of maintenance jobs, not only at Qantas but across the sector, has raised concerns of a long-term skill shortage as trainees choose more promising career fields and experienced engineers transition into other kinds of work. An ongoing study by researchers at the University of New South Wales highlighted these concerns, arguing that a “rapid loss of aircraft maintenance, repair and overhaul capability” was “approaching the point from which it will be very difficult to recover. ” As an example, the study said one of the two remaining CASA-approved maintenance training facilities in Sydney had seen student numbers in Aeroskills fall from an average of 100 a year over the previous decade to 30 in 2013 and 10-15 this year.

According to a summary of the study submitted to the senate inquiry on Qantas’s future, the concentration of Australia’s aviation maintenance skill base within Qantas, combined with Qantas’s “growing determination over the last eight years to shed as much of that activity as it can,” raised serious doubts about Australia’s ability to compete in an estimated $70 billion global market for aviation maintenance. As the study notes, projections by both the International Civil Aviation Organization (ICAO) and International Air TransportAssociation (IATA) predict a growing shortfall in qualified aviation maintenance workers, especially in the Asia Pacific region, meaning that a loss of Australia’s skill base could not only constitute a missed economic opportunity, but might leave the region’s airlines facing a lack of maintenance options.

“The truly worrying risk is that many nations (Australia not excepted) will react to their chronic inability to meet the full demands for properly skilled labour by familiar methods such as resorting to the use of unqualified personnel, intensifying the work of those skilled engineers who are available, and skimping on internal quality control,” the summary of the study states.

Interestingly, the study goes on to recommend that, as part of negotiations to lift the Qantas Sale Act, the government require the airline to sell its maintenance facilities “before they are run down any more. ” “We envisage that [Qantas] management would find such a requirement very congenial,” the summary says. “At the same time, the prospect of developing them into a viable and competitive [business] would almost certainly be greater for a company which depended for its survival on being able to offer a competitive service in that specific product category. ”

A future without the red roo?

That may be a debatable proposition, but it raises a question: could heavy maintenance survive in Australia if untethered from the albatross that Qantas increasingly seems to resemble. The collapse of JHAS, of course, provides one answer, though many inside the industry felt JHAS never adequately escaped its Ansett legacy.

One of the few remaining places to look is Hawker Pacific, whichoperates a substantial heavy maintenance facility in Cairns servicing Bombardier Dash 8, ATR and other regional aircraft for a range of customers in Australia, Papua New Guinea and elsewhere in Asia. Employing about 130 people, half of them heavy maintenance workers, the eight-year old facility can handle simultaneous checks on three aircraft.

Hawker’s chief operating officer for the Pacific region, Doug Park, credits the facility’s relative success in part to its location, allowing it to tap into the PNG and wider Pacific markets while keeping its foot in Australia. A stable, high-quality workforce has also helped. “Because we’ve had a stable workforce, we’ve been able to build up the skill levels and standard of service we can offer. ” Increasingly, Park says, operators are coming around to the view that doing their own maintenance in-house may not be the most efficient approach in an industry with persistently tight margins. “There’s an enormous amount of pressure. Qantas and Virgin are both doing some very public soul searchingabout how they maintain their fleets, and it’s not just them. The FIFO sector is under tremendous pressure as well,” Park says. “Generally speaking, doing their own work internally is less efficient, and I think more and more operators are starting to realise that. I don’t think there’s any doubt that our operation is more efficient than some can do internally,” he said.

Even so, Park acknowledges, Hawker’s heavy maintenance operation has struggled to make a profit, facing the familiar trifecta of high labour costs, high cost of compliance with regulation, and the high Australian dollar.

“When the AUD was above parity, we couldn’t compete,” he says. “The dollar falling of late has given us some breathing space, but we’ve really felt the pressure. ” Park says Asia-based competitors are generally seen as less efficient but that the discrepancy in labour cost can more than make up the difference. “When you’ve got a [competitor] selling labour at one-third the cost, a customer can afford to buy a lot of inefficient man hours. ”And despite the sort of safety fears raised by the Qantas unions, Park says most in the industry recognise that major Asia-based facilities must meet similar standards to those in Australia.

Nor is the only competition to the north. With a dollar that has hovered as much as 10 to 15 per cent below Australia’s, New Zealand has emerged as potent competition boasting a skilled workforce, flexible labour laws and a simpler regulatory regime.

Regulatory reform, a long-running project in Australia, could still provide some relief, Park says. “What I’d love to see is for CASA to be fair dinkum instead of giving us this half-harmonisation” with international regulations. “If they were to properly harmonise with EASA [the European air regulator], that would save the industry an enormous amount of money. ” Labour costs, of course, are another issue altogether.

Asked if there remained a competitive advantage to boasting an Australian workforce, Park was quick to say yes. But increasingly, he added, it’s not enough.