The slow bake

AIPA president Captain Barry Jackson told media that Qantas management was seemingly eager to destroy its relationship with loyal workers. “We are witnessing the demise of an icon through mismanagement,” he charged. “This is not the first time some of the Qantas managers have been through this. This dispute is about jobs and whether there will be a recognisable aviation industry based in Australian in the future.”

Capt Jackson also warned at the time about job security at Jetstar: “It [Jetstar] is now being undercut and off-shored at every opportunity, with the imminent formation of more off-shore bases.”

While the initial public spat made few headlines, long time analysts such as CAPA – Centre for Aviation’s executive chairman Peter Harbison warned that Qantas’ international operations would be in serious jeopardy within months if the unions press ahead with claims for guaranteed job security.

Harbison told Australian Aviation at the time that Qantas’ international division is “seriously fragile”, adding, “if they cave into the union demands, [international operations] will be wiped out.” Demonstrating the difficult bind in which Qantas finds itself, he noted that “a prolonged strike will have the same result”.

At the same time, the Transport Workers Union, representing baggage handlers and caterers, was enraged after Qantas admitted that its management staff was being trained slow bake in Los Angeles to work ramp equipment.

Qantas CEO Alan Joyce told Australian Aviation that he would not capitulate to demands that would cripple the airline’s ability to compete. “Some of these demands would put us out of business,” he said. “Many of these demands take out all the flexibility to deal with the constant shocks that airlines go through. There is simply no way we can agree.”

Qantas’ pitch was supported by figures from the Bureau of Infrastructure, Transport and Regional Economics, which showed that the airline’s market-share on international operations to/from the country in 2010 had slipped to 19 per cent, below the combined total for low cost carriers, which has climbed steadily to hit 20 per cent. Jetstar had 8 per cent of the LCC share.

In April, the heat for Qantas and its passengers increased when members of the Australian Licensed Aircraft Engineers Association (ALAEA) voted 80 per cent to 20 per cent to take protected industrial action if their log of claims, which had so far been rejected by the airline, was not met. Fresh in travelers’ minds was that when the engineers last took industrial action in 2008, Qantas’ on-time record sank to just 52 per cent.

“We are witnessing the demise of an icon through mismanagement.”

The engineers’ major focus was outsourcing of maintenance work overseas and this has been a constant theme for years. But Qantas faces significant problems, particularly relating to the A380 where its fleet size means that dedicated facilities are unviable.

International US based management consultant firm Oliver Wyman told Australian Aviation that a fleet type needed to be about 100 before it reach an economical number for nose to tail maintenance.

Qantas claimed in papers presented to the government that ALAEA’s demands on wages and other issues, if met, would cause its costs to rise by $165 million over three years. In particular, it claimed that the average engineer earned $150,000 a year including overtime and superannuation. In the government presentation it claimed that the package for an average LAME would rise to $170,000 by 2013 if the claim was met.

ALAEA’s federal secretary Steve Purvinas dismissed the Qantas wage claims, saying that the numbers were “nothing like that”.

By late April the rhetoric ramped up significantly. Joyce slammed the unions, telling Australian Aviation that they were conducting a “kamikaze” industrial campaign that will “kill jobs”.

In a speech at an Australian Institute of Company Directors luncheon in Sydney on 19 April, Joyce delivered a broadside. He told Australian Aviation afterwards that the unions were demanding a level of job security that was undeliverable: “I find it bizarre that Qantas is being singled out as jobs at Qantas have been historically secure.”

Joyce said that Qantas has one of the lowest staff turnover rates in Australia, adding that more people hit 30, 40 and even 50-year employment milestones at Qantas than any other company in the country.

“I understand that people want job security but it is no more in my power to guarantee that than to promise that Santa will swing by on 24 December,” Joyce commented. He rejected union claims that the airline has moved much of its business offshore. “In fact, 93 per cent of our 35,000 staff is in Australia and in the past four years we have conducted at least 90 per cent of Qantas aircraft maintenance in Australia.”

Joyce also warned that Qantas’s future is “not guaranteed, and in some respects it has never been more challenging”.

In his speech, he said Qantas would continue to look for opportunities to grow in the international environment. “We need to grow, we need to find new sources of income and profit, and we need to be able to take on the incredibly strong competition that is coming at us,” he stated. “Profitable international expansion benefits all Qantas Group employees.”

He cited Jetstar Asia, which was formed in 2004. “It is based in Singapore and has an Asian CEO and has not taken any Australian jobs, and it actually protects them by sending profits straight back into the Qantas Group,” Joyce asserted.

But all that didn’t sway the engineers, who were first out of the blocks with industrial action planned for 13 May, when Purvinas said that Qantas had not allayed concerns over job security. That action, however, didn’t go ahead over technical issues.

Qantas group executive operations Lyell Strambi inflamed the situation, saying that the engineers union was misrepresenting their claims for increased wages and conditions.

“The cost of the union’s claim is 28.6 per cent over three years, with further increased costs being incurred in subsequent years, bringing the real cost to above 36 per cent,” Strambi said.

In mid-May, Joyce lashed out at “ridiculous” union demands and warned that the airline’s international operations was losing money. Speaking at the launch of the airline’s first Sydney-Dallas nonstop service, Joyce labelled the ALAEA’s list of demands – such as Qantas Club membership – as “reckless and unrealistic”.

“What we are faced with are unbelievable claims and the public would be shocked by them,” he said. “We simply can’t agree to them.”

At the time, Joyce warned that the airline’s international operations were in the red and the group was propped up by the frequent flyer program and Jetstar. “We have huge challenges and [are] finding it hard to compete and our international market share is declining,” Joyce said, noting there was “no silver bullet” to fix Qantas but he wanted to grow the airline with a mix of operations, including Asia-based options such as Jetstar Asia.

However, he would not confirm rumors that the airline would set up a new premium airline in Singapore or Kuala Lumpur to reduce costs.

Scoot

Over the past 40 years, Singapore Airlines has dominated aviation with a push for premium service, so its 25 May announcement that it was launching a long haul, low cost carrier was as stunning as it is decisive, sending an emphatic message to the global industry that this is the way of the future.

SIA said that “the new airline is being established following extensive review and analysis”, which in part was focused on the runaway success of AirAsia X with its fleet of A330s and A340s.

It added that the new airline, later named Scoot, to be equipped with 777s, will “enable the SIA Group to serve the growing demand among consumers for low fare travel”.

The decision was not unexpected. Over the past 10 years SIA has increased the number of passengers it has carried by just 1.1 per cent annually, from 15 million to 16.6 million. At the same time, traffic through its Changi Airport hub has grown from 28.6 million to 42 million, or 3.2 per cent a year.

This erosion in marketshare has accelerated in recent years, says CAPA – Centre for Aviation: “SIA’s passenger numbers contracted by 15 per cent from 19.1 million in its fiscal year ended March 31, 2008, to 16.6 million in its just ended 2011 year. At the same time Changi Airport was able to grow its passenger throughput over the same period by 15 per cent.”

“This has set alarm bells ringing,” says CAPA, which surmises that “SIA’s new executive team is apparently not willing to watch the group stagnate and continue to lose marketshare. Establishing a long haul low cost subsidiary is a bold move but necessary for SIA Group to again grow”.

In late May, the ALAEA called a four-week truce on strike action, but AIPA warned it was seeking approval to conduct a secret ballot of members to authorise protected industrial action unless management has signaled a change of heart on job security issues.

On 11 July, that vote came and it was an overwhelming yes for industrial action – expected at the time to take place in early August to drive home demands for regrading and job security. AIPA, which represents 2,500 pilots, said 89 per cent of eligible pilots voted in the ballot, with 94 per cent voting to take protected industrial action for the first time since 1966.

Capt Jackson said after the vote, “Qantas pilots dedicate their careers to looking after Qantas passengers, so naturally we will be doing everything possible to minimise disruption to travelers and focus the pressure on management. We believe and the public believes that when you board a Qantas flight you are entitled to a Qantas pilot in the cockpit. That’s part of the deal when you fly Qantas. You expect the world leading safety culture of Australian Qantas pilots. Yet we now have a CEO who believes you can substitute Australian Qantas pilots with outsourced and offshore alternatives without doing damage to the brand. He’s dead wrong.”

Not singing that tune was former Civil Aviation Safety Authority (CASA) chairman Dick Smith – also one of Australia’s most controversial and outspoken entrepreneurs – who infuriated airline unions by predicting that Qantas International will go bankrupt unless it moves its operations to Asia.

Speaking with The Australian, Smith warned that high wages and government policies that opened up routes to/from Australia to too many carriers had put Qantas’ mainline international operations in danger. He claimed that QF was in a similar position to manufacturers forced to move offshore because of an inability to compete with lower cost competitors. Smith told The Australian that servicing on aircraft in Singapore was 50 per cent cheaper than in Australia, and many airlines were operating at much lower costs than Qantas.

“I feel sorry for Alan Joyce, I feel sorry for the pilots and I totally blame the government,” he said. “The politicians have decided that we should have this open skies [regime] where you have to compete with completely different wage scales and salary scales. If they [Qantas] don’t move virtually everything up into Asia, they will go broke.”

Responding, Purvinas said, “Anyone can get a cheap fix done on a car – unfortunately, in our game, when something is missed, it tends to resurface at 30,000 feet.”

AIPA VP Captain Richard Woodward slammed Smith, saying he had never worked as a professional pilot or at an airline: “Sure, things are tough out there, but there are other international carriers making significant amounts of money right now in these difficult times.”

Joyce ramped up the offshore issue in late July, declaring that Qantas’ future is in China, the world’s second biggest and fastest growing aviation market, but the airline needed its staff to embrace the radical change to succeed. Speaking on 20 July at the Australia Pacific Aviation Outlook Summit in Sydney, Joyce warned that “out of touch union leaders” who are resisting change don’t understand that the carrier’s costs are 25 per cent above its competitors such as Singapore Airlines.

“Globalisation continues to change our world in profound ways and it is still changing the way we work, consume and engage – and it is still driving relentless competition,” said Joyce. “Globalisation is not optional and it is not over.”

Joyce told delegates that China is already home to seven of the world’s top 20 airports by capacity. “By 2020, China will have 15 cities with bigger populations than Sydney and the region will be home to 2.6 billion people. And by 2030 the country expects to have at least three globally recognised international airline hubs, 10 national and regional hubs and at least 244 airports,” he said.

But to capitalise on the booming China and Asia market, Qantas needs significant change, cautioned Joyce. “Change is always tough. But the competitive challenges we face make major change essential, and our commitment to the change process is absolute,” he said.

However, Joyce noted a significant upside: “I believe we have a major opportunity to go beyond the natural limitations of our market size and geography, to become a champion Australian company in a globalised region and world.”

As an example, Joyce claimed that Jetstar operates Asia’s largest and fastest growing low fares network. “That is an amazing achievement for an Australian airline,” he said.

Joyce also claimed that some unions are blocking efficiencies that can be delivered by new maintenance technologies. “Less than a month ago, CASA issued new aviation maintenance regulations that bring Australia into line with European standards and global best practice,” said Joyce.

He added that the new regulations finally recognise the quantum leap in aviation technology, particularly in the sophisticated information, material and design technologies that underpin new aircraft. However, Joyce said the ALAEA is resisting the change.

“Our maintenance and repair costs are among the least efficient and most expensive in the world,” he claimed. “It’s time to catch up. We don’t repair our cars the same way we did 40 years ago. We can’t repair our planes the same way either. We can – and we will – be safer, smarter and more efficient.”

In a farcical aside to the deepening dispute, Qantas was forced to pull its airline safety video featuring ambassador-at-large John Travolta, according to AIPA. Travolta, who was fronting the airline’s safety video, said in the video there is “no one he would rather having flying the plane than a Qantas pilot”. However, AIPA said the message conflicted with management’s stance in the industrial dispute over outsourcing.

AIPA’s Capt Woodward said at the time that the video’s removal indicated that Joyce was “eager to outsource Qantas jobs to overseas pilots.” But Qantas said that pulling of the video had “absolutely nothing to do with” the industrial dispute. “It was always intended to be a temporary feature,” said a spokesman.

On 16 August, Qantas was forced to bring forward its restructure announcement due to leaks in Japan over plans to forge a JV to form Jetstar Japan. That plan, to cut routes, lay off staff, retire aircraft, and defer deliveries of A380s in an effort to return its international division to profitability while expanding into Asia, played right into union hands.

In a public relation disaster, within minutes unions were able to claim to the public that Qantas was killing Australian jobs and moving to Asia. And to equip its new Asian adventures, Qantas ordered 110 180-seat Airbus A320s, including 78 A320neos, valued at $4 billion.

Incredibly, Joyce claimed that virtually all the 1000 layoffs would be voluntary, which begged the question of why the airline just didn’t ask for voluntary redundancies.

Joyce said the changes were just the first phase of a “new strategy to build a truly modern, customer focused and competitive global aviation business”.

“Qantas International is a great airline with a proud history,” said Joyce, “but it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change. Qantas International takes up enormous amounts of capital, and our cost base is around 25 per cent higher than that of our key competitors. To do nothing, or tinker around the edges, is not an option.”

Joyce revealed that the new premium airline would have 11 aircraft but would not be called Qantas or Jetstar, and would be targeted at the growing number of middle class Asian travelers and will employ local staff.

Qantas also provided details on the JV in Japan, announcing that its partners were Japan Airlines and Mitsubishi Corporation, and the LCC would be based on Jetstar and would have 24 aircraft at launch late in 2012.

In an interesting related move, arch rival Singapore Airlines had announced that it was forming a long haul low cost airline to arrest its decline in marketshare (see side bar below).

Fuelled by the anger over the restructure, the ALAEA announced one hour weekday stoppages through mid December, further escalating the long running industrial problem. Further aggravating the dispute was the “acrimonious breakdown” in talks between the union and Qantas management after what the airline called “aggressive and inappropriate behaviour” from a union official.

Purvinas told Australian Aviation that ALAEA did not believe that Qantas’ international division was losing money. “The airline has not responded to a list of 61 questions on the subject sent on August 10,” he said.

The union was querying how costs were being allocated between Qantas and Jetstar, and also the benefit to the domestic airline – and the Frequent Flyer program – of having an international operation.

Qantas offered the union briefings with Joyce and the airline’s auditors, but that did not allay the concerns of the engineers or the pilots.

The pilots continued with their passive campaign of wearing red ties and making passenger announcements, but entering the fray was the TWU with an overwhelming vote for strike action.

Adding more fuel to the fire was Qantas’ full-year results announcement, with the airline more than doubling its result with a net profit of $249 million for the financial year ended 30 June.

The fact that it was off a very low base and that there was an 83 per cent slump in the second half result to $9 million mattered little. The TWU in particular grabbed the initiative and went on the attack.

According to Qantas, its Frequent Flyer program was again the best performer, contributing an EBIT of $342 million with Qantas delivering $228 million, low cost subsidiary Jetstar $169 million and Qantas Freight $62 million. The airline claimed, however, that the Qantas mainline result was affected by a $216 million loss on international routes.

While passenger numbers overall rose 7.3 per cent to 44.4 million, Qantas International recorded a modest 1.3 per cent increase in passengers to 5.97 million, while Jetstar Domestic saw a 16.6 per cent increase in passengers to 9.75 million. Jetstar International saw its passenger numbers up 4.8 per cent to 4.09 million.

Adding to the intrigue were rumors that former CEOs Geoff Dixon and James Strong (the latter also a current board member), were hatching an equity buyout deal. Transport Minister Anthony Albanese said the government, while adamant that Qantas would remain Australian owned, would not rule out an equity buyout with majority Australian control.

In 2007, an international consortium led by the Macquarie Bank and the Allco Finance Group launched an unsuccessful $11.1 billion bid to take over the airline that ended up as a fiasco. But Joyce said the airline had received “no private equity takeover bid”.

While on the ropes in the PR stakes, Qantas won a significant battle over AIPA on 6 September after the industrial arbitrator Fair Work Australia (FWA) dismissed the pilots’ claim over pay related to having the airline’s New Zealand-based subsidiary Jetconnect subject to Australian industrial laws and agreements.

Instead, FWA ruled that Qantas pilots employed by Jetconnect were subject to New Zealand industrial laws and agreements. Jetconnect operates 737-800 services from New Zealand bases, has 600 employees, including 100 pilots, and has linked the two countries since 2003.

Qantas lauded the decision, saying that “New Zealanders living and working in New Zealand for a New Zealand company should be subject to New Zealand’s industrial laws and agreements and not to Australia’s industrial laws”.

AIPA’s Capt Jackson said FWA’s ruling was disappointing and concerning. “The whole Jetconnect operation has been nothing short of a deception. When passengers purchase a Qantas ticket and then board a plane with a flying kangaroo on the tail, they are entitled to expect that their pilots and crew are fully fledged Qantas employees,” he said.

True to its word, the TWU started rolling four-hour baggage strikes late in September, with Qantas forced to cancel 28 flights and delay a further 27 up to 30 minutes, affecting 7,000 passengers.

The TWU blamed Qantas’ efforts to frustrate a new enterprise bargaining agreement. National TWU secretary Tony Sheldon said that “since the beginning of 2011, Qantas management has failed to negotiate in good faith, seemingly to trigger a fight with TWU members.”

AIPA started to fight the dispute through online petitions, and was able to claim on 22 September that 22,000 travellers had signed up. AIPA said that more than 50,000 Australians had visited its website to get details of the Qantas dispute.

The numbers followed a public survey that revealed that a majority of Australians – 86 per cent – did not agree with the airline’s strategy of replacing Qantas pilots with foreign based crews, and 56 per cent rejected the airline’s Asian base plans.

Capt Jackson said at the time that Qantas pilots would continue to apply pressure to management, while simultaneously avoiding inconveniencing passengers: “The only forms of protected industrial action pilots are currently taking remain the brief, positive in-flight announcements and a cheeky noncompliance with the uniform code, with our red pilot ties.”

He added: “We’re still hopeful that this will encourage management to actually sit down and discuss the inclusion on a Qantas flight/Qantas pilot clause in the new agreement. That way we can avoid the escalation of this dispute.”

U Research managing director John Utting said that Qantas might have a real battle on its hands reconciling its international corporate expansion plans with Australian public opinion. “What is surprising is the almost uniform consistency and intensity of the negativity towards the Qantas proposals. Most Australians in the nationwide survey disapprove by a strong margin of the plans by Qantas to reduce its international network and set up offshore airlines based in Asia,” Utting said.

By early October the dispute was becoming ugly, with the ALAEA warning of a series of full-day strikes leading up to Christmas and with calls for passengers not to book with Qantas. Purvinas also warned that it would be a lengthy campaign and may last a year.

Through early October Qantas was hit by both stoppages and cancelled action by the TWU and the ALAEA disrupting tens of thousands of passengers.

On 12 October, Qantas grounded five aircraft – three 737s and two 767s – and scrapped 97 flights a week as pressure mounted for the Australian government to intervene to end the dispute. Qantas said that it was 60,000 hours behind in maintenance, requiring it to ground planes and cancel 400 flights over the next four weeks.

Joyce said the go-slow approach from ALAEA “is now making it difficult to clear maintenance tasks in a timely fashion. It takes about 15,000 hours per week to maintain the fleet. We are seeing a shortfall in maintenance capacity of over 1,200 hours per week or about eight per cent”. He also noted the airline’s on-time performance had fallen from 87 per cent a month earlier to 77 per cent.

At the same time AIPA warned it may look at stop-work meetings, although it said that was a last resort.

On 16 October, Prime Minister Julia Gillard, speaking on ABC Radio, warned the parties to the dispute that the government would exercise its powers to end the dispute. “Qantas and the relevant unions say they want to negotiate this dispute. Well, I think they should get on and do it,” she said.

Minister Albanese also weighed in on radio MTR, and said he was “very concerned” about the impact on the tourism industry and “has spoken to both Qantas and the unions about getting a sensible outcome”. He also criticised the engineers’ union for talking down Qantas, singling out ALAEA federal secretary Steve Purvinas.

“I don’t understand, frankly, how it is in anyone’s interest to talk down this great Australian company,” Minister Albanese said.

Adding to the debate was the revelation that Joyce was to get a 72 per cent pay increase. But Qantas explained that Joyce’s salary, disclosed in Qantas’s 2011 Annual Report as $5,008,000, included items that must be costed to comply with Australian accounting standards even if the full value has not been realised and would not be unless certain share price targets were met.

By late October the situation was at an impasse.

Joyce said the situation is “getting worse and there is no end in sight to the dispute”, while Purvinas told Australian Aviation that there was “zero chance” of a compromise on the key issue of offshoring maintenance work.

Purvinas said: “We have been and always will be prepared to accept change that is both necessary for Qantas to be successful and safe, but we will not accept change that converts Qantas from the safest airline in the world to a leader in world’s cheapest practice.”

Separately, Qantas also suspended talks with pilots because they would not move on what had become known as the Jetstar clause.

On Sunday, QF management held crisis talks to examine the effects of the ongoing work-to-rule actions, overtime bans and go-slows being waged by ALAEA.

On 26 October, the TWU rejected a new pay offer from Qantas, setting the scene for more travel disruption.

Strambi said the airline was disappointed: “We have made the union our best offer but they are refusing to agree to it.” Australian Aviation understands that an agreement was made over staff security and wages, but enforcement was the issue, and Sheldon told ABC radio that Qantas executives had agreed not to outsource any more jobs, but reneged.

“They’ve refused to make an enforceable arrangement that makes those words guaranteed,” Sheldon said. “What Qantas has also said verbatim is that Qantas will not employ another person in this country under Qantas, and they will be outsourcing work wherever they can overseas and to lower rates of pay within this country.”

Strambi countered: “Qantas completely rejects claims that we won’t be employing any more employees in Qantas or our subsidiary Qantas Ground Services, that we have not negotiated in good faith or that we are offshoring TWU jobs. The reality is that TWU members – baggage handlers, ground handlers and catering staff employed – are in Australia. These roles will always be based in Australia.”

Leading up to the AGM on 28 October, Qantas warned the three unions to accept the shareholders’ vote and stop trashing the airline. For their part, the unions were talking up the fact that shareholders would reject the airline’s strategy and executive remuneration packages.

On the eve of the AGM, Joyce issued a blunt ultimatum to unions, that “it’s the shareholders, board and management of the airline who decide the future direction of the airline”.

“The real issue at the heart of the campaign that the [long haul] pilots’ union, licensed engineers’ union and the Transport Workers Union are waging against Qantas is that the unions want to control how the company is run,” Joyce said.

“The annual general meeting is a chance for Qantas shareholders to have their say and indicate their support for the Qantas board and management and endorse the company’s strategy.”

The vote was, as expected, overwhelmingly in favour of the management and board, but that result at the hostile meeting was greeted by calls for more industrial action, with the TWU talking of 48-hour stoppages and ALAEA again warning that the dispute would go on for 12 months.

Qantas bookings had been tanking for weeks, and the airline said the dispute was costing $15 million a week and that figure was accelerating.

The total figure given by the airline to that date was $68 million with disruption to 70,000 passengers.

After the AGM, Prime Minister Gillard said she would not get involved and again called for the parties to sit down and solve the disputes.

With no way out after 10 months of negotiations and 200 meetings, Qantas held a special board meeting on Saturday morning (29 October, the day after the AGM) and decided to lock out the members of the three unions from Monday at 8pm and ground the airline with immediate effect owing to safety and sabotage concerns. The shock announcement was made at 5pm.

It affected Qantas mainline, with 108 aircraft grounded and 447 flights a day cancelled, with an estimated 60,000 passengers affected.

The government went into damage control and a heated slanging match and blame game ensured with politicians becoming overnight experts on how to run an airline.

PM Gillard insisted Qantas had other options, but was set on taking the “extreme” action of grounding the fleet. However, Joyce said that under the Fair Work Act the airline had no other choice but to ground planes to force an end to the dispute.

The embarrassed and highly annoyed Gillard government, with no option, supported the Qantas and state governments’ push to Fair Work Australia to have all industrial action terminated. After marathon meetings that went into the early hours of Monday morning, FWA agreed. All industrial action was terminated and Qantas was ordered back in the air.

However, Qantas could not get back into the air immediately as CASA wanted a sabotage mitigation policy in place after damage was done to a 767 at the Brisbane maintenance base the previous Wednesday (see side bar below).

Flights started to return to normal on Monday afternoon with the backlog of passengers cleared by Wednesday, flagging just how low bookings had become on Qantas due to the threat of industrial dispute.

FWA gave the parties three weeks to reach an agreement before it would arbitrate.

“We had no alternative,” Joyce said. “We made this decision after we saw the union leaders at the AGM talking about more stoppages, 48-hour stoppages.”

Reflecting on the grounding and lockout, CAPA said Joyce had no options.

According to CAPA, it is apparent Qantas hoped for government intervention, which was not forthcoming as the government wanted to avoid the battlefront: “While Qantas could apply for intervention from FWA, the industrial relations body is limited to making decisions in cases that have a profound effect on the country’s economy.”

As the tribunal stated in its 31 October ruling, “It is unlikely that the protected industrial action taken by the three unions, even taken together, is threatening to cause significant damage to the tourism and air transport industries.”

CAPA said that Qantas needed to concoct a scenario that would cause significant damage. As Joyce said on 29 October when announcing the grounding, “I have no option but to force the issue.”

The lockout and consequent grounding, says CAPA, the only legal form of retaliatory industrial action available to Qantas, put the carrier in the position it wanted, even if as a last resort. FWA agreed it could intervene given the severity. “The response industrial action of which Qantas has given notice, if taken, threatens to cause significant damage to the tourism and air transport industries,” FWA said in its ruling.

“With operations resuming in the afternoon of October 31 (65 international and 139 domestic flights operated), and a full resumption on November 1, staff were never locked out, pay was never withheld and the all-important corporate market was largely disrupted only on Monday morning and afternoon. Some relief for Qantas was that November 1 in Victoria, the second-largest state, was a public holiday, reducing corporate travel. The timing of the grounding – uncannily or not – was impeccable.”

Sabotage

Federal Police are investigating the suspected sabotage of one of Qantas’ Boeing 767s in Brisbane on the Wednesday before the airline’s AGM, while the plane was being upgraded to the new Wi-Fi spec.

It is understood that after engineers returned from a lunch break, they noticed several wires had been cut on the Wi-Fi system.

Aviation industry sources have told Australian Aviation that further investigation by the engineers revealed more severed wires that had been covered up.

Qantas confirmed that Federal Police were investigating.

However, the risk of more serious sabotage or malicious damage was the reason for the delay in Qantas getting back into the air on Monday after the shock grounding.

Apparently the Civil Aviation Safety Authority insisted on Qantas developing and implementing a comprehensive sabotage risk mitigation strategy.

Qantas’ confidential submissions to FWA detailed concerns about sabotage.

The submission from the airline’s head of safety, Susan D’Ath-Weston, raised a number of risk scenarios including flight crew distraction, intentional unsafe acts by flight crew and intentional unsafe acts by ground crew and engineers that might not be noticed by flight crew.

Her assessment concluded that the grounding of the fleet immediately after the lockout was announced substantially reduced the risk of sabotage.

The Australian Licensed Aircraft Engineers Association federal secretary Steve Purvinas said it was not known whether the incident was accidental or deliberate and who was responsible, as many people had access to the aircraft.

Brought to you by the Australian Aviation Dec 2011 Archives