The huge Swiss-owned labour hire company Adecco is winning more and more business from the national carrier. Pemberton Strong asks questions about Qantas’s cost containment:
Oh there’s lot of hot air being spoken about Qantas’ moves to look at a crew base in London, especially from the unions, some investment analysts and commentators. And there was a bit more ‘heat’ added to the greenhouse content of Sydney’s air by the briefing Qantas CEO Geoff Dixon gave the airline’s top 250 executives in Sydney on Tuesday.

No doubt about the gospel according to St Geoff. It’s cost containment, cost cutting and lower costs. It will be remembered as the hallmark of his time in the captain’s seat at Qantas.

Perhaps it’s because he’s said it for so long that his good young friend, PBL Media CEO John Alexander, is using costs as one of his mantras in his revamp of the Nine Network. And it’s probably why James Packer was attracted to the Qantas board. (It couldn’t have been the freebie airfares, could it?)

So what about costs and Qantas? Well, the first point to be made is that at the next briefing/media opportunity someone should sit St Geoff down and grill him about the role of Adecco, the Swiss-owned labour hire firm that makes Skilled Engineering in Melbourne look saintly and a shrimp.

Adecco is the worldwide king of the labour hire business, but even that hasn’t been enough to make it immune to some labour problems of its own, with the company’s latest series of financial results being undermined by a lack of disclosure, transparency and a delay in the latest annual report and first quarter results, which finally tumbled out this week showing that the huge company is still solvent.

The Chief Financial Officer was marched earlier in the year over the problems, as were other executives in head office and the US. It was a major loss of prestige by the group with the world ‘Enron’ being muttered at one stage in the market. The whew of relief from Qantas management were audible.

But I digress. It’s the nature of the relationship with Adecco. How long has it been going on? Just what exactly does Adecco do, how much does it charge and where does it operate in the employment chain for Qantas?

A few hints. Adecco, through its Adecco Staffing division, is involved in the hiring for the low cost Qantas airline, Jetstar. Adecco has hired a lot of staff offshore for Qantas’ international business in Bangkok and Auckland, and will be involved in the proposed London base for Qantas. Adecco is also involved in the staffing and HR side of Australian Airlines, the low cost international airline run out of Cairns.

And Crikey hears Adecco will be involved in the staffing and HR operations of the new low cost airline to be owned by Qantas, the Singapore Government’s investment arm, Temasek, and two local businessmen.

When someone is hired by Adecco for Qantas in Jetstar they work for the airline and get paid by Qantas. But Adecco handles much of the back office HR functions and charges Qantas through a long-term contract linked to cost outcomes, the types of functions outsourced, staff numbers and salary levels.

Qantas/Jetstar look after the operations of the airline itself, scheduling, fuel, watching load factors and yield management. The staffing operations are overseen by Adecco.

Outsourcing more and more of the HR functions of companies is one of the growth areas of business, especially in the US, parts of Europe, Asia and the UK. In that respect Jetstar can be said to be a ‘virtual’ airline of sorts. It’s another reason why Qantas was re-organised last year into discrete businesses, with little overlap.

The whole idea is to use the new businesses to ‘lean’ on the cost structures of the existing operations, while making sure existing benefits do not flow to the newer parts. At the same time costs are continually hacked away in the older parts by the pressure from the new businesses, restructuring and the growing use of contractors.

People working at Jetstar receive the statutory entitlements of the award for sick leave, holidays, long service and retrenchment, but no benefits available to full time Qantas staff. They can be full time or permanent part time. And, they are paid less than staff working in the Qantas domestic business.

The airline is flying the Boeing 717, then switching to small Airbus A-320s. That makes it hard for employees to move out of Jetstar across to Qantas without retraining. In fact word has it that this sort of cross-airline move is not really an option available to staff.

Moving the other way is, but not one actively sought by employees given the big drop in salary involved and the loss of benefits.

In any interview, Mr Dixon should be asked the benefits to Qantas of this arrangement. How much is saved and whether the staff hired and run through Adecco are considered to be full-time or part-time Qantas employees, or effectively contractors working at Qantas?

When you go to the Adecco Australia website at Qantas seems to be a secret as does Australian Airlines. Type both ‘Qantas’ and ‘Australian Airlines’ into the search engine on the news page of the website and you get a prompt asking you for your name and password. Nothing happens with Jetstar.

But go to the Jetstar website and look at employment prospects and you find a webpage that says its ‘powered by staffcv’ . Click on the jobs for pilots, cabin crew, operational, engineering and backroom people and you find, for example that a prompt comes up with the words pilots.staffcv.com. Cabin crew applicants would find cabincrew.staffcv.com.

A search of the web locates StaffCV in New Zealand. This is what the Staff CV website says about itself:

“StaffCV is a privately held company specialising in next generation recruitment products, on-line psychometric profiling, and Vertical Portal Talent Pools. StaffCV has its main software development office in Auckland, New Zealand, with key sales offices in Chicago, IL, Denver, CO, and Sydney, Australia”.

Crikey then returned to the Adecco Australia website, went to the search the site prompt and typed in pilots.staffcv.com and up comes the same prompt as for Qantas and Australian Airlines asking for a user name and password. In all three cases the top of the prompt carries the web address www.yarra.adecco.com.au. And that’s as far as you get.

In all of Qantas’ new initiatives in the airline business: the overseas bases, Australian Airlines and Jetstar, Adecco is involved, as it is to an unknown degree with Qantas itself.

Wouldn’t it be informative if media commentators and analysts asked Qantas a few tough questions about Adecco’s role. Instead of prattling on about ‘the spirit of Australia’, the horribleness of management and big bright shiny new planes. Or do they depend too much on information drips from the unions or the company?

Jetstar is perhaps the most important attack on the airline’s ‘old’ business, the domestic airline that will slowly be reduced to catering for business and full economy passengers.

The whole aim is bringing down costs in the main part of the airline. Jetstar’s lower costs will put pressure on the domestic operations to lower its costs, especially among air and cabin crew.

Already pilots have told Crikey the fear they have in the existing domestic airline is that their flying hours are being cut (and their pay) as Jetstar ramps up to more and more services. When the Airbuses arrive later in the year, the pressure on flying time for pilots and cabin crew in the existing domestic business will be tougher and tougher.

And the same pressure is being applied by the growing operations of Australian Airlines on the existing international business of Qantas. It’s the same principle, hours have been cut as more foreign holiday routes are taken over by Australian from Qantas.

Qantas crews and planes still fly the money-making routes of the Trans-Pacific, to London and into other Asian and European cities, especially where there is significant business and political travel. But the holiday destinations and New Zealand are being targeted for Australian, putting international crew hours under pressure, and their pay and other costs.

As Crikey reported last week, the London base is aimed at lowering cabin crew costs ahead of a one third expansion in the number of flights from Australia to London over the next two and a half years. They will be through Singapore, Bangkok and Hong Kong.

The Bangkok and New Zealand foreign-based crew operations are run by Adecco. London, if it happens, will be next for Adecco to run on Qantas’ behalf. In New Zealand the Qantas base is in Auckland and Adecco’s Auckland office is on the 9th floor of the Qantas building in that city.

This is not to attack Qantas for using Adecco, just to say that the links should be explained so shareholders and employees, plus the travelling public have a right to know who’s working for whom in Qantas these days.

It would also be handy for people to know the costs to Qantas of this and to the employees and whether the relevant aviation regulatory agencies are fully aware of what is going on. By using Adecco, Dixon and the Qantas board have made it clear they are very serious about attacking costs. And so they should, their bonuses and other remuneration depend upon the success of this campaign.

Finally, with Jetstar looking to sell the paint jobs on its planes to advertisers for $1 million apiece, what about one or two to Adecco, seeing they are all very close and cuddly? Or perhaps they can do a contra to keep real money out of the transaction. With its contacts, Adecco would know where to supply the ‘temporary’ painters, cheaply.

Jetstar employee launches strong rebuttal

I’ve just read the above. What complete trash! Reading it left me offended. I wonder how such incorrect information can be published.

I am a Jetstar employee. Having been with the company since 2000 – the days of Impulse. My pay packet states Jetstar Airways. I am not aware of any employee group at Jetstar that is employed through Adecco.

As far as I know Adecco has nothing to do with the staff of Jetstar employees. I am employed by Jetstar – a wholly owned Qantas subsidiary. I also get all the flight benefits and employee profit share entitlements as Mainline employees. To say we don’t share the same benefits shows a total lack of knowledge on the part of Pemberton.

Pemberton also mentions there is no opportunity to transfer to other Qantas divisions. He may wish to know about the Career Progression transfer entitlements for cabin crew. Yes. We cabin crew have transfer rights to Qantas Short Haul and we keep our leave accrual, long service and seniority. AND benefits.

Your writer obviously has no clue. Airbus 320s are in fact MUCH LARGER than the 717s they are replacing. All staffing operations are in house. Recruitment is done by the Jetstar HR team and a team of cabin crew.

Jetstar is NOT a virtual airline! It has an AOC (Air Operator Certificate) and controls it’s own accounting and staffing. Flight Operations are also controlled by Jetstar. Security comes under the Qantas Group umbrella. I am appalled at the total lack of knowledge and research Pemberton Strong’s part.

What complete and utter trash. I am just so amazed this was allowed to be published when there is so much factually incorrect about this article. I also think it is unfair to paint us as the poor cousins with “no Qantas benefits” when it is just not true.

Sorry if I am a bit emotive but I found the article really offensive. I welcome your response. Or may I please have the writer’s email address to give him an earful directly.

Peter Fray

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