Although protected (read legal) industrial action is not going to happen at Qantas this side of Anzac Day, what would happen if the pilots, the engineers, the refuellers and the baggage handlers all withdrew their current pay claims?
Nothing. Based on nothing more than the statements made by Qantas group CEO Alan Joyce about how unprofitable its international business is, and how crippling labor costs are in Australia, it wouldn’t matter if the respective unions lined up outside Joyce’s office tomorrow morning promising a pay freeze for the next three years or five years.
Their jobs are still toast, because no matter what productivity deals they offer, no matter how much they are prepared to curtail pay and conditions, the company refuses to negotiate guarantees over keeping flying and engineering jobs in this country.
In a real sense, the noise the pilots and engineers and other Qantas employees are making about job security, are giving a failed management a cover behind which to hide.
While the timing is coincidental, and simultaneous protected industrial action by pilots, engineers, refuellers and baggage handlers may seem bad news for Qantas and travellers, the labor unrest is no more serious than the apparent failure of the current management and board to run an expanding, profitable and useful company.
For at least the past three months the tired old clichés about Qantas being undermined by ‘dumping’ on international routes have looked absurd beside the likes of Singapore Airlines and Emirates charging more for their premium products than Qantas, and holding their market share steady or rising while Qantas, clinging to aged jets and poor network decisions, keeps sinking toward single figures in market share.
(Qantas had only 17.7 percent of the international market in February, and even with Jetstar international reaching 7.6 percent share, it only had 25.6 per cent of the market as a group compared to a 35 per cent share in 2003 before Jetstar was invented, only to help drive Qantas customers elsewhere.)
The lesson from international traveller defections to foreign carriers may be that premium payers don’t care what a fare costs, and are abandoning Qantas for what they see as superior quality and convenience.
The current Qantas group strategy seems to be one of continued contraction, in international travel, and a line in the sand in domestic which is starting to look as much under threat from Tiger as Virgin Blue. It can’t go on.
In this morning’s installment of the industrial-action-about–to- tsunami-Qantas genre, in The Australian, its spokesperson says:
“The unions are threatening industrial action while the company deals with rapidly increasing fuel prices, an underperforming international business and the operational impact of natural disasters in New Zealand, Japan and in Australia.”
But its competitors are dealing with the same misfortunes, yet benefiting from the rebound from the GFC far more successfully than Qantas. Apart from the A380 groundings, Qantas has the same challenges as its peer airlines, who are all posting record profits and paying their shareholders dividends, while Qantas isn’t.
It is this group under-performance that leaves Qantas CEO Alan Joyce, and Qantas chairman Leigh Clifford and the board, no-where to run.
Their only answer is to pursue a policy of shedding Australian jobs, and Australian taxation and superannuation levy obligations, by sham arrangements in which its pilots, cabin attendants and engineers, some of them still resident in Australia, are paid according to Singaporean or New Zealand work place agreements.
The implication of what Joyce says is that Qantas cannot afford to be Australian to be competitive. It intends to deal with foreign competition to Europe for example, by basing Australian registered jets in Singapore, where they will fly between Singapore and Europe and Singapore and Australia, thus imitating the advantages it says Singapore Airlines enjoys.
This de-Australianisation of Qantas may reflect a wider view in business that Australia cannot maintain internationally competitive enterprises in its own country. It’s a debate quite a number of business leaders have joined one way or the other in recent decades.
But it is a painful position when it involves a strategy to gut the piloting and engineer excellence of Qantas for the cheapest source of labor available abroad. It even involves under cutting Australian jobs within Jetstar with Asia sourced Jetstar employees being paid according to Asia terms and conditions while flying in Australia.
These strategies, which also included Jetstar flying cadet pilots to NZ to open NZD bank accounts for pay which would avoid Australian superannuation and taxation obligations while working and flying exclusively in Australia, are at the core of union unrest and calls for job security clauses, whether pilots or engineers.
Whatever the rights and wrongs of demanding job security, there is a much bigger issue for the government of taxation security. Will it allow a precedent where anyone can be employed under a foreign contract issued by a foreign entity and evade Australian taxation and super levies while performing duties in Australia?
For Qantas, this off-shore migration of assets and labor is unlikely to lift earnings enough to sustain the profits and dividends shareholders might have expected if Qantas and Jetstar continue to drive customers away because of poor management decisions on fleet and network.
Qantas needs to attract customers more than it needs to destroy its traditions of skills and excellence in flying and engineering. If it fails it will not be in a position of strength when, as most analysts expect, the Asia-Pacific airline industry gets serious about trans border consolidations.