The loss of 11 flight dispatcher jobs from Jetstar to a flight services contractor in Manila might not seem like many, but the shift of Qantas group resources overseas is a slow but determined work in progress.
Where might it end? On the positive side of the ledger Qantas has kept the major maintenance of its Airbus A330 fleet in Australia.
On the negative side it has decided to base two longer range version of the A330-200 in Jetstar colours in Singapore, and use them to operate daily flights between Singapore and Sydney from mid December and between there and Auckland from March next year.
The notion of keeping Qantas group airliners in Singapore to serve Australia has not gone down well with Qantas employees, in particular older members of the Australian and International Pilots Association, who are acutely aware that if the Jetstar move generates substantial savings, the board and shareholders will demand to know why any longer haul Qantas or Jetstar jets need to be based in this country when putting them in Singapore, Fiji, Malaysia, New Zealand or the Philippines will make them richer.
(We can scratch Vietnam from the running at this stage.)
In that context, the outsourcing of flight dispatch is another irritation, and another sign of what is coming.
It needs to be kept in mind that when the Qantas Sale Act was devised in 1992 in the run up to privatisation subsequent to the purchase of Australian Airlines by Qantas, no-one had heard of low cost carriers.
Jetstar is substantially unaffected by the act, which doesn’t prohibit the off-shoring of some Qantas functions anyhow, and specifically doesn’t prevent the transfer of fleet and other resources to the subsidiary, or from the subsidiary to Jetstar franchises in Asia.
And Jetstar is the fastest growing, and at least in recent times, the most profitable flying that Qantas does in terms of its full service and low cost brands. In March Jetstar had 8.4% of the Australian international market putting it in third place after parent Qantas on 19.4% and Singapore Airlines on 9.4% and just ahead of Emirates on 8.1%.
Even combining the Qantas and Jetstar shares, the Qantas stake in international flights from Australia is finding new lows, but shareholders are not looking for market share but profits.
The declared strategy for Jetstar has for some time been to use Boeing 787s to reclaim or inaugurate services to markets where the Qantas full service brand would not work.
The strategy has only reached the point of allocating two A330s so far because there are no 787s, and it should be obvious that since they are now to be 787-9s, they won’t be available until some time in 2014, at the earliest.
But the Jetstar strategy is on track in other respects, as is made clear in the official statement (below) that Jetstar gave Crikey too late for publication in its report earlier today. The concentration of flight services in Manila is for all the Jetstars.
The relocation of flight dispatch roles is part of this overall strategy of reducing costs through off-shoring.
Flight dispatch means much less than it does in Europe or the US, although it is still important, and there will be some controversy as to whether or not safety is affected by Jetstar’s Manila move.
The YouTube below, which is rather sugar coated in the typical US corporate way, does eventually get around to revealing a much deeper involvement by Southwest Airlines dispatchers in daily operations than is the case in Australian operations.
Yet weather awareness, and an intimate knowledge of the network, airports and and traffic corridors is common to flight dispatching in the US and Australia. Can we be sure this a smart move by Jetstar? How effectively will the new arrangement work with AirServices Australia? The experiment is about to begin.
Jetstar statement on flight dispatch outsourcing:
Jetstar will continue to control and coordinate flight dispatch from our Melbourne head office, but some of the support functions will be performed by one of our existing suppliers Aviation Concepts. Aviation Concepts provides our load planning services and we have extended our arrangements with them to also cover flight planning.
The new arrangements will deliver greater flexibility to quickly respond to market opportunities and provide efficiencies through scale to support our Pan Asian Growth strategy.
We’re satisfied the facility meets our business resilience requirements.
There could be a net reduction of up to 11 positions at our Melbourne head office and it may be less as we seek to fill roles created in the new structure, and also pursue other opportunities in the business. Jetstar cares for our impacted employees and will work with them over the coming weeks to help them explore their options.
There are no changes to our crewing function as a result of these changes.
As part of the success in growing the business and brand in Asia we are growing our people in Asia, but importantly we are also still growing jobs in Australia. Today one third of our business is domestic Australian and over two thirds of our people are employed in Australia.