Qantas is now working on a low-cost yet high-quality Asia-based, single-aisle airline for those travellers who can’t tolerate low-quality, low-fare Jetstar.

It is aimed at its own workforce and its “unsustainable” wages and conditions as much as it may have Virgin Australia’s outrageous attempt to use its lower cost base to undercut Qantas business class on domestic routes in its sights, as well as take on the likes of the Singapore girl’s shorter intra-Asia routes.

The project has been under way for some months and is related to the industrial unrest at Qantas, starting with disruptive engineer stopwork meetings tomorrow (Friday),  in that it is part of a grand plan to cut jobs and costs in Australia, which the Qantas unions are resisting.

This is what a Qantas spokesperson said this morning:

“Qantas has previously indicated that our international business has not been performing to expectations, our market share has fallen in recent years and we need to relook at this area of the business. A project team has been established to look at Qantas’ international product and service, possible new routes and ways to reinvigorate our offering.  A  range of options are being considered but no decisions have been made about the direction Qantas will be taking at this stage. Recent media stories are purely speculation.”

The speculation has substance, and the statement is hardly a comprehensive denial.

It’s clear how strong the Qantas agenda to kill off Australian jobs is from its readiness to suffer industrial turmoil, with its engineers taking protected industrial action from tomorrow and with the pilots waiting out an ultimatum to management to discuss job security by next Thursday or have them follow a similar path.

Connecting the dots,  Qantas has decided that international full service isn’t worth the investment—all that fussy stuff about maintenance and standards is way too costly to be sustainable — and it will continue to transfer assets into its Jetstar franchise, which is unencumbered by the restrictions in the Qantas Sale Act of 1993.

An extreme summary? Not if you rely on what Qantas group CEO Alan Joyce has said on the public record several times this year about the unsustainability of Qantas long haul.  Not if you follow the clues from within Qantas that it is seeking a Qantas air operator certificate in Malaysia, and working on a project to launch a premium travel, single-aisle airline based in Asia to replicate at the high fare end what Jetstar Asia (Singapore) Jetstar Pacific (Vietnam) and Jetstar New Zealand are doing at the cheap end.

Qantas already has a full-service 737 operation in Auckland, which even carries Wallaby tour logos or the line “Spirit of Australia” and the word “Qantas” on its side, which the airline has insisted before Fair Work Australia isn’t Qantas, or a Qantas airline, but a 100%-owned but 100%-independent NZ subsidiary Jetconnect, against which, unaccountably, it doesn’t compete.

The greedy pilots and rapacious engineers associations have now publicly said they will forgo pay rises, and do anything to lift productivity, if Qantas behaves like the “Spirit of Australia” and provides job security in Australia.

It is the disinterest in Qantas in such concessions that suggests a major shift out of “exposure” to Australian costs, tax requirements and employment is part of a grand plan.

The last grand plan by Qantas management to escape from the misery of being an Australian enterprise was the private equity deal that would, with exquisite timing, have sold the world’s oldest airline into a highly leveraged fund immediately before the GFC sent it broke.

There is a far wider issue for the Australian economy involved in the pursuit of the initiatives Qantas has already demonstrated with the basing in Singapore, for example, of  Australian-registered Jetstar liveried A330s in order to employ people under Singaporean rather than Australian workplace agreements.

Qantas is doing what major enterprises throughout the West have done, and gone offshore in search of savings and better returns for shareholders.

Such strategies have left many areas, starting with the US and UK, producing less and less but going into debt more and more for lifestyles that are no longer earned.

The service industries that were supposed to replace the coal miners, ship builders and car makers have themselves began a wholesale migration to, and for the enrichment of, less developed economies.

If one were to plot the Qantas scenario on a map, Australia becomes surrounded by Qantas offshore entities all flying into and out of Australia with lower cost labor while the home-based, full-service brand, and even sections of the Jetstar activities within Australia, are run down and shut down.

Meanwhile, Qantas travellers can expect some widespread disruptions from the engineer union’s program of taking protected industrial action. Qantas has already cancelled  or rescheduled many flights involving perhaps tens of thousands of passengers tomorrow It will also have a significant impact on management staff taking oversight over airworthiness and repair issues, as Qantas is nothing if not conscious of the need to keep those flights that operate completely safe.

When pilot actions begin to affect the airline depends on how long it takes Fair Work Australia to approve them, and whether or not Qantas appeals any decision to grant protected status.

It could take nine days, a few days after the pilot ultimatum to negotiate over job security expires next Thursday, or it could be delayed for months, or never occur.

Peter Fray

Save up to 50% on a year of Crikey.

This extraordinary year is almost at an end. But we know that time waits for no one, and we won’t either. This is the time to get on board with Crikey.

For a limited time only, choose what you pay for a year of Crikey.

Save up to 50% or dig deeper so we can dig deeper.

See you in 2021.

Peter Fray
Editor-in-chief of Crikey

SAVE 50%