Part 4: The year that changed Australian aviation

written by Adam Thorn | December 23, 2020

On 31 December 2019, Chinese authorities treated a small number of citizens for a mysterious illness in Wuhan. Fast forward to 23 March 2020, and Australian Prime Minister Scott Morrison announced an outright ban on all international flights leaving the country. This is the story of how coronavirus took our industry by surprise in 2020, as told through snippets of our news stories.

In part four, we report more cuts at Qantas and a twist in the takeover of Virgin Australia. Click the following links to read parts five or part one, two and three.

25 August

Advertisement
Advertisement

Qantas drops a bombshell and announces nearly 2,500 more jobs are at risk because the business plans to outsource its remaining ground handling operations. The proposed cuts, in addition to the 6,000 already announced, could include 370 job losses at Jetstar and more than 2,000 at Qantas. This plan, not yet confirmed, will take place after a review that will compare the efficiencies of using external ground handlers versus doing the work in-house.

The TWU responds and says Qantas chief executive Alan Joyce should resign. National secretary Michael Kaine says, “This is not shrewd management, it is economic violence. Qantas has taken millions in JobKeeper wage subsidies, more than any other company, with the express intent of keeping people employed. But now Alan Joyce wants to destroy thousands more livelihoods. This is callous abuse of public money.”

Qantas’ plans could see the airline brand remove operations at the 10 Australian airports where the work is done in-house, which includes Adelaide, Alice Springs, Brisbane, Cairns, Canberra, Darwin, Melbourne, Perth, Sydney and Townsville.

28 August

PROMOTED CONTENT

The industry body representing international airlines in Australia predicts it will take its members six months to return all citizens stranded abroad if the current cap system isn’t relaxed. The Board of Airline Representatives of Australia (BARA) argues on Friday that it thinks the actual number wanting to come back is as high as 100,000, and not just the 19,000 who have registered with the government. BARA’s airlines provide 90 per cent of all international passenger flights to and from Australia, and notable members include Qantas, Virgin, Qatar, Singapore, Etihad and Emirates.

1 September

Rex reveals a full-year underlying profit before tax of $250,000 and an increase in revenue. Executive chairman Lim Kim Hai says, “On behalf of all regional aviation, I would like to place on record our gratitude to the Morrison government and to the Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development the Hon Michael McCormack MP, for their swift and decisive actions that have saved Australia’s regional aviation industry.” However, overall, for the previous financial year, the airline recorded a statutory loss after tax of $19.5 million caused by passenger numbers plummeting 90 per cent in the latter half of March and a $62 million impairment charge against its assets.

2 September

The Board of Airline Representatives of Australia now says arrival caps have made flying so unprofitable that they are now halting trips altogether – meaning even fewer stranded Aussies are coming home than the restrictions allow. The association suggests the solution is to both increase capacity in hotels and allow flexibility on quarantine for those who arrive from areas with less COVID-19 cases.

3 September

Qantas chief executive Alan Joyce attacks Rex for accepting $60 million in government handouts and then unveiling plans to expand its network to fly between Sydney, Melbourne and Brisbane.

“That doesn’t feel right,” Joyce says. “That doesn’t seem right. They should not be using government subsidies to fund growth. When we set up Jetstar in 2003, it was $120 million to set up an airline. To set up an airline is quite an expensive thing, so I hope they’ve done their numbers correctly.”

4 September

Rex strongly rejects claims by Qantas chief executive Alan Joyce that it used government handouts to expand its network. The business says Joyce was “misinformed by his advisers” and argues it was impossible to use the COVID-19 payments for improper means because they are “strictly audited” by Ernst & Young.

Meanwhile, The TWU finally urges its members to rubber stamp Bain’s deal to take control of Virgin Australia – but leaves its public announcement until hours before Friday’s vote. National secretary Michael Kaine says he looks forward to working with the group but pointedly warns the investors to seek “co-operation not confrontation” with employees. The deal is later passed, with administrator Vaughan Strawbridge calling the step a “significant milestone”.

Finally, a plan to open all borders in Australia by Christmas is agreed by all states and territories – except Western Australia. Speaking after a meeting of the country’s national cabinet, Prime Minister Morrison pointedly refuses to criticise the decision of WA Premier Mark McGowan.

“Western Australia has a very different border and a very different economy than most of the other states and territories where these decisions have been made,” he says. “Not everyone has to get on the bus for the bus to leave the station. But it is important the bus leaves the station.”

7 September

Acting Immigration Minister Alan Tudge hints Australia may only open its borders to the world when a vaccine becomes “globally available”. “It’s very difficult to predict when we can reopen the borders probably again. Obviously, if there is a vaccine that is developed which becomes globally available that will be the game-changer,” says Tudge. “You can see that we have all these state border closures now and in part because everyone is nervous about Victoria and probably means it has slowed down our path to being able to open our international borders.”

11 September

The TWU gathers outside Qantas chief executive Alan Joyce’s private home to protest against the airline’s proposal to outsource 2,500 ground handling jobs. After union members addressed the press, they march to Joyce’s apartment block to hand-deliver a letter asking him to immediately halt the potential job cuts. The union’s campaign chief, Emily McMillan, says the dramatic action is necessary because “there’s no way else to communicate with him”.

15 September

Qantas says it’s mulling shifting all its bases to one city, as part of a review into its office space caused by downsizing its workforce. The business says that “anything that can move” is “on the table”, including its facilities in Mascot, Collingwood and Brisbane. Chief financial officer Vanessa Hudson reveals the new Western Sydney Airport is “part of our thinking” and even suggested Qantas is looking for “potential incentives” from states to relocate. “As well as simply rightsizing the amount of space we have, there are opportunities to consolidate some facilities and unlock economies of scale,” Hudson says. “For instance, we could co-locate the Qantas and Jetstar head offices in a single place rather than splitting them across Sydney and Melbourne.

16 September

Deputy Prime Minister Michael McCormack writes to state premiers urging them to help lift the cap on how many Australians can return home by 50 per cent. Deputy PM McCormack, who is also the Transport Minister, says he is asking NSW, Queensland and WA to accommodate an additional 500 people per week into hotel quarantine and SA an extra 360.

21 September

Dnata announces it is to make around 1,000 workers redundant. Dnata has been unable to claim JobKeeper – which provides struggling Australian businesses with $1,500 per employee, per fortnight – because it’s owned by a “sovereign entity”. Dnata is controlled by the Emirates Group, which is in turn run by the state government of Dubai.

28 September

The last of Qantas’ A380 fleet flies into a Californian desert boneyard. The airline announced months ago that all 12 of its A380s would enter hibernation, with six of those being upgraded beforehand. The Qantas A380, VH-OQI msn 055, departed Dresden maintenance facility in Germany as flight QF6006 at 10:36am on 25 September. It landed at the Victorville, California, facility 11 hours later.

29 September

The Alice Springs boneyard appears to be almost reaching its new expanded capacity of 100 aircraft after the Northern Territory government invested $3.5 million into the site in July. Tom Vincent, managing director of Asia Pacific Aircraft Storage tells the ABC that parking spaces were “definitely in demand”.“As soon as extra spots for storage come online, there are aircraft filling those spots,” Vincent says. In July, the facility was storing 44 aircraft and had already received a $1 million infrastructure grant. This new investment package doubled its workforce and is predicted to inject more than $10 million dollars, directly and indirectly, into the state’s economy. Before the pandemic, APAS was home to just 18 aircraft at any one time.

30 September

Rex announces it’s close to a deal to lease six 737-800 NG aircraft to fly its new network between Sydney, Melbourne and Brisbane. It’s not known whether these are the same aircraft previously used by Virgin Australia before it took the decision to trim its 737 fleet. The news comes after Rex revealed it was in advanced negotiations with an APAC investment firm to secure $150 million of investment to launch the new domestic network in March 2021.

1 October

Prime Minister Scott Morrison reveals he will likely not allow Queensland to receive flights from New Zealand because of the state’s insistence on hotel quarantine for domestic travel. The PM argues he can’t justify allowing trans-Tasman flights into Brisbane if it would mean precious hotel quarantine rooms were taken up by Kiwi arrivals. The intervention comes on the day Queensland’s Deputy Premier Steven Miles confirmed he won’t open his domestic borders to NSW until after the state’s election on 31 October.

Meanwhile, Virgin Australia chief executive Paul Scurrah reveals that the reborn business’ new strategy will see it become a “high-quality, value airline”. In an exclusive interview on the Australian Aviation podcast, Scurrah says Virgin’s problems stemmed from spreading itself too thin and “trying to be too many things to too many people”. However, he insists the new-look airline will emerge from the pandemic with “75 plus” aircraft and offer a network “not too dissimilar” to what it had last year. He also hails Bain as “a really good owner” and says the relationship between the investors and the existing management team is like “a good marriage”.

2 October

New Zealanders will be able to fly into NSW and the NT without quarantine from 16 October as part of the first stage of the long-planned trans-Tasman bubble. Deputy Prime Minister Michael McCormack says the arrangement will only operate one-way at first but that the ball is “very much in [NZ Prime Minister Jacinda] Ardern’s court” to make it a two-way arrangement. “Having spoken to [Qantas CEO] Alan Joyce and [Virgin CEO] Paul Scurrah this morning, they are very, very pleased with these arrangements and want to see planes back in the air across the Tasman,” says the Deputy PM.

6 October

Sir Richard Branson closes in on finalising a deal to retake control of 5 per cent of the reborn Virgin Australia, according to reports. Reports even suggest that Sir Richard is pushing for a bigger stake of 10 per cent, which will seemingly include access to the Virgin branding, too. The news came alongside a confirmation by the state of Queensland that it will sign a 10-year deal to acquire around 2 per cent of the company, which will ensure it retains its base in Brisbane.

12 October

A Qantas ‘flight to nowhere’ tours Australia with Captain Alex Passerini dipping as low as 4,000 feet as he flew past landmarks such as the Great Barrier Reef, over the Whitsundays and Uluru. The Boeing 787-9 Dreamliner, VH-ZND msn 63390, departed Sydney at 10:43am on 12 October for the sold-out, eight-and-a-half-hour journey. The ‘Great Southern Land’ scenic flight initially flew up the NSW coast before crossing the Queensland border for a flyby of the Gold Coast and then up the Queensland coast to the Great Barrier Reef. The 787-9, which features the biggest windows on Qantas’ fleet, then tracked across Australia to conduct low-level fly-bys of Uluru and Kata Tjuta before turning back to Sydney for a flyover of Sydney Harbour and Bondi Beach. Flight QF787 finally landed at 7:09pm.

13 October

Queensland’s decision to reshut its border to NSW has bizarrely caused Brisbane to surge past Sydney and handle more than twice as many passengers per month as its larger rival.l. The knock-on effect of Premier Annastacia Palaszczuk’s restrictions meant Brisbane clocked up 324,188 total passengers in August versus Sydney’s 129,000. Significantly, the Queensland capital’s numbers were down only slightly from July (358,537) whereas the NSW capital’s collapsed 60 per cent (from 317,000).

14 October

The TWU sensationally suspends negotiations with Virgin Australia over new working terms for its members until it receives clarification that chief executive Paul Scurrah will not be fired. The union scraps a scheduled meeting at midday on Wednesday and writes a letter to new owners Bain Capital seeking “clarification” on the situation. However, Scurrah himself dismisses the rumours and adds that they’ve been ongoing for quite a while.

15 October

Virgin Australia confirms union nemesis Jayne Hrdlicka will become the business’ new chief executive after Paul Scurrah resigned. However, administrators Deloitte are quick to argue Scurrah’s exit will not see the airline become a low-cost carrier, and will continue with plans to operate as a ‘hybrid’ instead. The handover will take place in early November, when the formalities of Virgin’s sale to Bain are completed. The news comes despite Scurrah telling the Australian Aviation Podcast just weeks ago that Bain was “a really good owner” and that the relationship between the investors and the existing management team was like “a good marriage”.

Meanwhile, New Virgin owner Bain says it appointed Hrdlicka because she will provide a “different form of leadership to survive”. “We need a hands-on CEO with deep aviation, commercial, operational and transformation experience,” says Bain Capital managing director Mike Murphy in a statement. “She has extensive airline experience and I know she, alongside Bain Capital, wants nothing more than to see Virgin Australia prosper and thrive well into the future.”

Finally, the TWU says it has “serious concerns about the future of Virgin” and lashes out at its “background shenanigans”.

To continue on to read part five, click here.

Did you know that Australian Aviation Magazine comes digitally? Subscribe to Australian Aviation’s digital magazine for just $59.95 a year! Our app is available on mobile, tablet and PC devices! Subscribe now at australianaviation.com.au.

Leave a Comment

Your email address will not be published. Required fields are marked *

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year