Teaser Alert: Two Views of QANTAS; Spot The Difference

WITH QANTAS seemingly in existential trouble, I will be posting in the next couple of days with thoughts and analysis of the situation the Flying Kangaroo finds itself in, and where it might go from here; for now — and at the cost of five minutes — I wanted to share a compare and contrast exercise with readers that pretty much sums it up.

Like a lot of Australians, I love Qantas; I really love Qantas. Nobody can really sum it up, but millions of us feel the same way about the big red and white bird with the kangaroo on the tail that — in its own quirky, quixotic way — says “we’re home” wherever we find it, even if it’s (literally) a half a world away.

I am aghast at the headlines in recent months about the state of Qantas and the hole it no longer attempts to hide the fact it’s fallen into; for now I am still thinking through the events of the past 36 hours — the $300 million first-half loss likely to balloon to $1bn for the year, the job cuts and cost reductions it has announced, and the increasingly desperate pleas of its CEO Alan Joyce for help — but be assured, I will be publishing on this subject and at length within the next couple of days.

We’ve talked about Qantas before, when issues in aviation policy have conspired to make it the frontline issue of political news; it’s unfortunate we will shortly need to do so again.

And in the interests of disclosure, I should admit my company has commercial discussions on foot with Qantas at present — and leave it at that.

But I would also emphasise in the strongest possible terms that I would never do anything to damage that fine institution, and any comment I make should be regarded as being underpinned by that single, simple sentiment.

That said, two pieces from YouTube have presented themselves, and I simply can’t shake the contrasts.

Two views of the same beast, and in its own words, quite literally: it will cost you less than five minutes to do so, but watch both of these items.

Now, wind the clock forward, and watch this little gem:

I think it’s a bit of a no-brainer as to what I might be readying to say on this issue, but seriously, if a picture tells a thousand words — what the hell is wrong here?

I don’t think it’s just me either; the earlier story was far more engaging than the latter.

And those two clips — especially on account of them being advertising collateral commissioned and approved by Qantas — are a metaphor for what has happened to this airline, and which now threatens to destroy it.

I’m not going to do my media industry colleagues the disrespect of tearing that second advertisement to shreds, in this column, deconstructing every last flaw it contains in an execution so wildly off-target as to beggar belief. But, perversely, they could not have summed up what’s wrong with Qantas better if they had tried — however inadvertent that effort might have been in doing so.

Like the headline says, this post is simply a teaser; as soon as I’ve thought this all through properly I will be posting an article on the problems facing Qantas, and I won’t be pulling any punches: I want to see that airline not just survive, but thrive — like it always has, and as I am certain it will do again.

In the meantime, those who wish to comment below should feel free to do so.

Historic Loss At Qantas: Bad Result, Bad News, Bad Bums

QANTAS this morning posted a nett full-year loss of $245 million; its first loss since it was privatised in 1995, and its largest loss ever. This is a bad result that heralds further bad news at the Flying Kangaroo, and reflects on the federal government, Qantas management, and its unions alike.

The thing striking about this result, no pun intended, is that nobody is particularly surprised; Qantas management has been softening the market up for a result like this since well before last year’s industrial machinations. Indeed, the result is actually better than most forecasters and analysts had predicted.

Yet let there be no doubt: this is a bad result, irrespective of what profit the Qantas domestic business and the frequent flyer program contributed.

Not only have losses in the international division blown out from $2oo million a year ago to almost half a billion dollars today, but one-off costs of $194 million attributed to  industrial action and grounding the fleet in October, if removed, still see the airline’s full-year figures some $60 million in the red.

The figures include $400 million of one-off restructuring costs, but it remains to be seen how much of this figure is recouped against the Qantas Group’s bottom line over the next year in the face of a fuel bill sitting at a record high ($4.4 billion), industry rumours of a failure to fully hedge against rising fuel costs, inefficient structural wage costs, the ongoing need to retain ageing and increasingly ancient components of its fleet, and rampant and increasing competition.

There are many parties to blame for what, to use the vernacular, is an absolute shocker; and — in turn — a thickening band of ominous black clouds on the horizon of the Qantas sky.

Union leaders — with Transport Workers Union national secretary Tony Sheldon blaming the loss on “disastrous management” — have been quick to hit out at Qantas management, with Mr Sheldon saying “It’s devastating…at the hands of very poor management decisions that we have seen over the last two years.”

Australian and International Pilots Association president Captain Barry Jackson spoke of an “unnecessarily militant approach” to industrial relations on the part of Qantas management during last year’s industrial turmoil which he says “continued to do damage to the Qantas brand.”

I was quick to support Qantas management over the unions last year, and I stand by that judgement; not least in view of the ridiculous wage claims the TWU and other unions were determined to pursue against the company.

At the very minimum, those unions collectively wear egg on their faces today: the hard figures of the Qantas annual result prove that its management was not bluffing when it said the pay claims of the unions were unaffordable and, if realised, could send the airline broke.

The cost to Qantas of the dispute — $194 million, on its own figures — is far less than the residual increase to its wage bill would have been if the union pay claims were achieved. Nonetheless, even in putting down the industrial action taken by its unions, it’s clear Qantas is in no position to be doling out wage rises to any component of its workforce.

This brings me to the big pay rise the Qantas board approved for CEO Alan Joyce at the height of last year’s industrial action; at the time, I said it was not a good look, not smart timing, and damned silly tactically.

As fate would have it, these were prophetic words, in light of the fact Joyce has just presided over the biggest loss in the airline’s history. Perhaps — and I say this wryly — it’s a good thing he recently declined to accept his annual bonus.

What many of us suspected 12 months ago, as Joyce was announcing the restructure that would “build the new Qantas” and trigger unprecedented industrial strife — that the airline was in poor shape — emerged with crystal clarity from this morning’s figures.

Exactly what happens from here is, to some extent, anyone’s guess.

This column gave its support to the company over the unions at the time of the dispute last year, and that support remains behind Qantas, Joyce and his management. However, in light of the annual result posted today, that support now comes with a couple of hefty qualifications.

The first is that Joyce has been talking of restructures and painful adjustments for the better part of two years now; having booked $400 million in abnormals attributed to restructuring it is, quite literally, time for a return on those monies to be achieved.

Should Qantas report a similar result in another year from now, serious questions will be asked of Joyce, and his tenure — rightly — will be called into question and reviewed.

Joyce has made too much noise for too long now about “fixing” Qantas: he is entitled to the time for the results of his changes to become evident, but there won’t — and shouldn’t — be any extra chances if he fails.

The second qualification I place on my support of airline management speaks to two dreadful decisions it has taken since the end of the industrial dispute; specifically, in terms of fleet management and brand strategy.

Why — why — Qantas has seen fit, in the wake of the events of the past nine months, to completely trash its entire brand strategy is unfathomable; the long-running “I Still Call Australia Home” campaign is more critically important to the airline now than at any other time, with its underlying themes of familiarity, continuity and stability.

Switching to an obscure strategy based on a focus group-driven faux pas (“We Fly For You,” backed by an odd instrumental composition by Daniel Johns that amounts to nothing to most consumers) is a ridiculous and almost suicidal step to take, given the turmoil and upheaval the airline has faced in recent times.

At a time of falling yields, rocketing costs, rampant competition and diminishing consumer confidence, continuity and a “business as usual” approach are precisely what should be emphasised — not a complete change of direction when the airline faces enough uncertainty as it is.

Management decisions, as much as financial outcomes, are going to be scrutinised more rigorously by commentators and industry analysts alike over the coming year.

The decision by Joyce to defer another order for new aircraft — this time, for 85 new Boeing 787s — is of more concern than the changes in brand management and marketing strategy.

Whilst it is true that some of Qantas’ oldest planes have been retired in the past couple of years, the airline nonetheless retains a sizeable number of aircraft at or very close to the point at which they really should be replaced on the grounds of reliability, fuel efficiency and cost effectiveness to operate.

The Qantas mainline fleet — that is, excluding Jetstar — retains 10 Boeing 747-400s that are 20 years or more old; these include four (VH-OJA, VH-OJC, VH-OJD and VH-OJE) that are 23 years old, and one — VH-OJH — which is the 22-year-old jumbo that skidded off a runway in Bangkok whilst landing during a severe storm in 1999 that was repaired and returned to service.

8 of the 12 Boeing 737-400s it retains are 20 years or more old, with four of them 22 years old.

And 14 of its 22 Boeing 767-300ERs at or above the 20 year mark, including seven purchased second-hand from British Airways in the 1990s. Of the 14, eight of them entered service in 1990.

With the delay of further Airbus A380 deliveries until at least 2014, and the deferral of new Boeing 787 aircraft until at least 2016, it is unclear as to when these ancient aircraft — which comprise almost a quarter of the Qantas mainline fleet — will be retired.

And this, in turn, will inevitably raise questions of safety, and compound the heightened cost imposts these old machines make to the bottom line with delays and other scheduling mishaps on account of the increased rate of technical issues these aircraft face.

It doesn’t help that Qantas made the wrong aircraft selections when it addressed the issue of fleet renewal in 2002, and that the 747 fleet could have been replaced by brand new Boeing 777-300ERs and 777-200LRs five years ago.

There is at least the silver lining of sorts that these old aircraft will keep more aircraft engineers in their jobs for longer when they might otherwise have been restructured out of the Qantas business.

I would very quickly like to make further mention of Qantas’ unions; it is clear that they do not accept the outcome imposed on them late last year by Fair Work Australia; today’s outbursts by Sheldon, Jackson and others are evidence that discontent lingers very close to the surface.

But the unions have abided by the FWA decision, having opted not to pursue prohibited industrial actions, and — at the very least — should be commended for that.

Finally, the federal government must accept some portion of the blame for the state Qantas is in.

It (or its QANGOs, which is the same thing) has allowed an ever-increasing number of foreign airlines open access to Australian airports to carry international traffic; it is one thing to encourage and foster competition, but another altogether to allow capacity to be dumped into the Australian market at the direct expense of the Australian national carrier.

I just think that granting exponentially increasing numbers of landing slots to middle-eastern, state-run airlines probably isn’t the best way to preserve a local aviation industry in this country.

And it is probably time to review the foreign ownership provisions of the Qantas Sale Act; possibly allowing higher levels of overseas investment to allow the airline to raise capital, balanced by rigorous and far tighter restrictions on the concentration of foreign ownership as opposed to the total level allowable under law.

Still, it’s clear that it has taken a long time to produce today’s result; many parties have had a hand in it, and the end product — the largest full-year loss in Qantas’ history — is abysmal.

The bottom line, however, is that Qantas is a mess.

What happens now, and what Alan Joyce and his management do to remedy the situation, will attract critical scrutiny of a kind seldom seen in corporate governance circles in Australia.

Qantas Dispute: Now We Wait

Pursuant to my post last night, both the Gillard Government and Qantas have made application to Fair Work Australia for a termination of all industrial action in the matter of Qantas’ dispute with three of its unions.

The unions, in turn, have sought a suspension — “most likely” according to reports close to the proceedings until just after Christmas.

I’ve monitored coverage of this issue in the last 24 hours extremely closely; opinion in the mainstream media seems divided fairly evenly between favouring the union position or the Qantas position, as is reaction from directly affected people at airports around the world.

We’ll come back to that.

Fair Work Australia, having sat late into the night last night, resumed its hearings in this matter at 2pm AEDT today (3am GMT) and we wait with breath that is bated for a decision.

In the meantime, there are a few issues I want to address.

  • The Gillard government didn’t even use the right clause of its own Act in its application to Fair Work Australia; it has come to light today that a Ministerial Declaration terminating the action could have been issued; instead, the Government application was made under a different clause that allowed up to five days for a determination to be made. Given its desired outcome and the economic consequences of the alternative, the incompetence of the government — yet again — is on clear display.
  • Qantas management has stated today that the shutdown in operations is designed to bring the dispute with its unions to a head. I’m inclined to sympathise; the rolling strikes and industrial stoppages — some bordering on wildcat action — have been going on for months, and to continue is clearly in the interests of nobody associated with the issue.
  • TWU head Tony Sheldon appeared on the ABC’s 7.30 programme tonight, with the laughably misleading (but factually correct) claim that the campaign of the unions has thus far resulted in eight days of stoppages. That’s technically true, but many times in recent months, the unions have cancelled other scheduled industrial action at the last minute, after contingency plans (and flight cancellations) were already set in motion. Mr Sheldon, your eight days in effect better resembles two weeks.
  • Much has been made today of the pay rise Qantas CEO Alan Joyce received at Friday’s shareholders’ meeting, and quite rightly so. In my view, as I intimated last night, it was an act of corporate idiocy to announce that one day and to ground the airline the next. But that doesn’t alter every other aspect of this dispute, which boils down to union greed and industrial bastardry.
  • And, last, much has been made of the grounding of the Qantas fleet being a “premeditated act.” Well…Qantas says it had advice that a lockout was an option open to it, and to action it would never have been a decision made in five minutes flat. It would have been canvassed with Qantas’ economists, industry analysts, lobbyists and PR people at the minimum. If Qantas took ten days as some reports suggest to arrive at a decision to ground its fleet, then as far as I’m concerned Qantas has treated the matter with great care and diligence.

Returning to the experiences of directly affected travellers, it’s understandable their feedback is as varied as has been played out in today’s media coverage.

Some say they have been well looked after by Qantas, and some are scathing; some are philosophical whilst others are angry and/or upset.

My view is that Qantas probably took the best of a small number of equally unpalatable options by grounding its fleet.

This has already dragged on for months (and already disrupted tens of thousands of booked-and-paid airline travellers).

There was no guarantee, and no prospect, of any meaningful resolution other than Qantas management caving into union demands.

For reasons we have previously discussed on this site, caving in was no option.

A few days’ disruption now, rather than another year of industrial espionage by the unions (and a question mark growing over the viability of the airline), however unpleasant or inconvenient, would seem the best choice from a bad hand of options.

OK, it wreaks havoc on the Spring Racing Carnival here in Melbourne, but is there ever a good time to do these things?

Last month it was school holidays. Next month it’ll be nearing school holidays again, and Christmas, and New Year…

…and if the unions’ application for a suspension of action rather than a termination were to succeed, there’s no guarantee this crap wouldn’t simply resurface around Easter and Anzac Day.

Interestingly, I saw Dave Oliver — National Secretary of the AMWU, a union not involved in the dispute at Qantas — at the Fair Work Australia hearings, in media coverage of the dispute today across multiple media outlets.

I’ve met Dave and I think he’s a pretty good bloke, but in this case I’d wonder if the presence of such a senior AMWU figure — in a dispute the AMWU has nothing to do with in a direct sense — is indicative of a more co-ordinated union campaign against large employers in Australia, with Qantas being the bunny and the guinea pig.

It would certainly lend weight to my observation in last night’s post that “someone” was bound to try it on, under the Fair Work Australia regime, and that (surprisingly) it was the aviation unions who got in first.

The Qantas dispute involves the TWU, the AIPA, and the ALAEA…if anyone can see the AMWU in this list, please let me know so I can make an appointment at the optometrist.

But for now…we wait. I’d held off posting tonight because there were indications Fair Work Australia might have handed down a decision prior to this, but at 11.50pm (AEDT) I think it’s time to say we’re going to have to wait until tomorrow.

Keep your comments coming (and use the blog site if you can…no emails…let’s keep the discussion in one place).

The Qantas Issue: Something Has To Happen. Now!

I never — never — thought I would see the day that I’d advocate government intervention in an industrial dispute. But it’s here; the Gillard government must sort out the mess at Qantas, and quickly. The government needs to sort out the mess its own dumb laws created.

News this afternoon that Qantas is grounding its entire fleet in the face of the industrial action it is confronted with means that one of three things now happens: the unions back down, the government orders them back to work, or Qantas goes out of business.

Qantas management is unlikely to back down, and nor should it; the demands it faces from its unions are ridiculous.

Clearly, the time for screwing around and causing trouble for the sake of it is over.

But a finger needs to be pointed at the ALP and the current federal government which, ultimately, is responsible for the mess by creating the circumstances in which this could occur in the first place.

The Rudd/Gillard government, as we all know, came to power in 2007 with little real mandate (aside from slogans like “Education Revolution”) other than to undo the WorkChoices legislation enacted by the Howard government.

But rather than simply repeal those amendments to the Workplace Relations Act, it went further, and created the most pro-union legislative environment in nearly thirty years.

And that environment has come back to bite — at least insofar as the dispute at Qantas is concerned.

It was only a matter of time before someone in the union movement tried it on, and — a little surprisingly — it’s been the aviation unions.

Between the raft of protected strike action provisions conveniently afforded by the Fair Work Act, and its general allowance of a return to pattern bargaining, unions are holding Qantas to ransom by simply refusing to budge an inch on their stated — and generally unreasonable — demands.

Those demands include pay rises of 15% over three years; well above inflation, and on top of the already-generous pay conditions they enjoy compared to engineering staff at other airlines.

Compared to engineering staff at Virgin Blue for that matter, too, with which the very same unions made a deal that saw their members earn considerably less than their brethren over at Qantas.

Those demands include conditions for contractors being made the same as those of their members who are employees of the airline, and that includes guarantees of job security — something which, by their very nature, a contractor can’t be given.

And those demands include guarantees of job security generally for union members who are employees of Qantas well beyond what is reasonable to expect any employer to provide; not least in light of the restructuring that is to commence at Qantas and the changes to its labour requirements such a restructure will necessitate.

The unions also say their campaign is designed to ensure Qantas remains a fully Australian-based airline and that they will “fight” moves to relocate operations and/or jobs to bases in Asian countries.

Never mind that management runs Qantas — not the unions some of its staff belong to.

Now that Qantas management is parking its planes on tarmacs around the world, let’s look at what is at stake and what the lie of the land really is.

Qantas International is already running at a heavy loss; the figure (depending on the source) is between $150 million and $220 million each year.

Yes, the other arms of the business are holding the overall entity in profit; last financial year the Qantas Group posted nett profit of some $550 million. But any business with a division haemorrhaging $200 million-odd per year has a serious underlying problem that requires urgent redress before it infects and drags down the remainder of the company.

The aviation industry is one of the most sensitive in the world to shocks on the cost side; terrorism, economic downturn, rises in the price of oil, plane crashes, government policies and taxes, and supply issues generally are all items on a much longer list of factors that can destroy airline businesses and send them into history.

Qantas has thus far made one major, major strategic blunder in its fight with its unions: the rather large pay rise its board endorsed yesterday for Chief Executive Officer Alan Joyce.

Not a good look, not smart timing, and damned silly tactically.

Still, the airline has lost $68 million so far from the present protracted industrial dispute, a figure widely accepted by economists, industry analysts, and aviation industry journalists.

It probably wasn’t smart for the unions, yesterday, to assert that this $68 million had been spent “on advertising.”

Indeed, it was probably the final wave of the red flag at the bull.

The 15% pay rise claim over three years mightn’t be so obscene if it weren’t for the fact that many of the engineering staff in question are already paid several times the average weekly wage of about $60,000 per year; factor in that the claim is for double the inflation rate, pressures in the aviation industry generally and problems in segments of the Qantas business specifically, and it’s outrageous.

One of the things Qantas management has said in the course of this dispute is that its engineers want to hold jobs and to be paid for maintenance work that no longer exists.

A process which has already — and belatedly — started is the retirement of Boeing 747-400s, Boeing 767-300s and older Boeing 737-400s from the Qantas fleet.

These planes represent half of the 200-odd units in the Qantas fleet, and those retiring planes have an average age of 20 years.

They are being replaced with brand new Airbus A380s, Boeing 737-800s, and the soon-to-be-introduced Boeing 787 Dreamliner — all of which will require little heavy maintenance for 6-9 years.

That’s the market law of supply and demand; if Qantas doesn’t need to maintain the workforce it has because fleet renewal makes positions redundant, it has no obligation to keep staff on its books just to be nice.

On the other side of the coin, the skills these engineering people have are not only prized, but sought around the world; indeed, given the exponential growth in the aviation industry expected in the next 20 years — not least in the Asia-Pacific region — those portable skills offer licensed engineers and other engineering professionals the opportunity to work across the world.

Not, perhaps, in Australia, at least not in the immediate future; and not, indeed, in a regime where they can regularly tell their boss — to put it indelicately — to bend over.

They wouldn’t get away with it in Dubai or Singapore, for example.

And any industrial claim to put contractors on the same level of entitlements as permanent, long-term employees is so offensive (and abusive of process) that it doesn’t warrant or merit response.

Any airline business operating today needs to find cost savings; it’s the nature of the industry, the world over.

It’s why half the airlines in the US are in government bankruptcy protection; it’s why, for example, airlines in the UK (one of which Alan Joyce once ran) are looking at things like charging for use of toilets, or silly ideas like flying twice as many people standing up to maximise flight yields.

None of this has even been hinted at in Australia.

But if the price of maintaining Qantas as the Spirit of Australia (or, indeed, the living spirit of anything) involves some operations in Asian countries, then that’s better than the alternative.

Indeed, former CASA head Dick Smith — who ought to know about these things — was broadcast on Melbourne radio today, saying that if the current industrial action against Qantas doesn’t stop, the airline will either go broke or become a purely domestic carrier.

Just think about that…if Qantas goes broke, 40,000 people instantly lose their jobs; and air travel in Australia becomes something you save up for over a period of months or years like it was 15-20 years ago.

I can remember saving for six months for my first airfare from Brisbane to Melbourne as an 18-year-old in 1990…some people couldn’t even afford to do that.

This dispute is already affecting hundreds of thousands of travellers; it is placing tourism-based businesses under great strain; it is diluting what inbound international traffic is still coming here despite the high dollar and economic problems abroad; and it is impacting businesses across the country who require access to reliable air travel at short notice in the daily course of their operations.

And were the end result simply to be that Qantas became a purely domestic operation, every foreign carrier would look at us here, and say to anyone wanting to fly much further than Auckland or Bali — again — to bend over. The price of flights would rocket.

The economic damage to Australia of a partial or full collapse of Qantas would be horrific.

This isn’t Ansett, where a poorly run (and much smaller) parent company presided over a subsidiary in which management standards were abysmal and aircraft maintenance, service bulletins and compulsory fleet inspections were routinely and systematically ignored.

No, this is a business being held to ransom by a militant, unionised minority, endangering the whole business in the process, and potentially inflicting incalculable economic damage on Australia generally if it all goes pear-shaped.

It’s well-known that as a rule I’m generally contemptuous of unions, largely as a result of the type of thuggery and bastardry we’re seeing played out here.

But from a philosophical point of view I think workers are entitled to this type of representation if they want it — provided the organisations offering that representation don’t abuse it.

And they are here.

Completing the circle, Julia Gillard and her government need to intervene in this immediately.

It is ALP-sponsored law that has emboldened the unions down this path, and it is now incumbent on the government to shut this down.

It goes against every fibre of my being to advocate a government intervention, but in this case the government is as much at fault as the unions trying to put Qantas over a barrel are.

Neither side is perfect, but on a “points decision” or balance of probabilities or whatever euphemism you like, Qantas is right and the unions are wrong.

Now it’s grounded.

The longer it stays on the ground, the more it will cost the economy generally; and if this isn’t cleared up quickly — and once and for all — there’s a real danger of vast and permanent damage not just to the Australian economy, but to international confidence in Australia.

And that’s a hell of a price to pay for union thugs trying to hang “the boss” out to dry.

Shut it down, Julia.

This is a chance for the Prime Minister to deliver something other than rhetoric, or policies people despise and never voted for.

It’s time for the Labor Party to put the labour movement in its place. For the national good.

And for God’s sake, be quick about it…

Striking Out: Union Thuggery And Industrial Bastardry At Qantas

If anyone really wonders why unions face dwindling membership in this country, or why trade unions are increasingly held in such low regard by the Australian public, look no further than the disgusting antics of elements associated with the unions involved with Qantas.

For those who’ve been in Antarctica on safari for a while, there’s a pay dispute going on over at Qantas: a big one.

The unions want a 15% pay rise over three years, and various guarantees relating to the job security of their members (many of whom are contractors, not employees), whilst maintaining a weather eye on a coming restructure that could see hundreds of jobs made redundant.

Management says they can’t afford to meet the claim, citing tough conditions internationally for airlines generally, and pressures on Qantas specifically such as the price of oil, competition from airlines operating from countries with far lower labour costs, and so forth.

(And before anyone mentions the $500 million-odd profit it made last financial year, just remember Qantas is embarking on an overdue renewal of most of its ageing fleet at a capital cost of several billion dollars, which is where most of those profits will go for the next five to ten years).

On the one hand, I understand the unionists want a pay rise.

On the other, I understand that Qantas, like most businesses with an eye on costs, is baulking and — like many airlines around the world — is operating in a difficult economic environment.

And so the stoush has played out: in private, in public, behind closed doors in meeting rooms, and on the front page of the country’s newspapers, for months.

And it has affected the travelling public: literally dozens of Qantas flights have been delayed or cancelled, disrupting the travel plans of thousands of people, as a result of industrial action.

And that’s notwithstanding the fact that on some occasions the unions have cancelled their planned stoppages for certain reasons; for example, to minimise disruptions at the end of recent school holiday periods in some states.

The subtext of the dispute essentially boils down to this: the unions are floating the spectre of overseas maintenance as linked to substandard workmanship and a safety risk, combined with what they say are the best interests of their members; Qantas denies the safety accusations and says it is simply prepared to pay what it can afford.

Being fair, the arguments on both sides have some merit, and the actual reality most likely lies somewhere in the middle.

And aside from the fact that most of us will lean toward the position of either the airline or the union, from an overall perspective, so far so good: it’s the typical argy-bargy of a collectivist bargaining campaign by a union against a large industrial employer.

There’s where it gets ugly.

Really, really ugly.

Revelations that senior Qantas executives — including its Chief Executive Officer, Alan Joyce — have received death threats in the context of the current negotiations are appalling.

The threat received by the Irish-born Mr Joyce referred to him as “foreign filth” and “Paddy” (not his name, clearly) is both repugnant and an oxymoron; it ignores the fact many of Australia’s largest and best companies are run by foreign-born executives, and it ignores the fact that many Australian nationals run (or have run) comparable foreign companies.

Would these people have described Sir Rod Eddington as “foreign filth” on account of his time at the helm of Cathay Pacific or British Airways?

What I think is even worse is the fact that Qantas workers who have opted not to take part in strike action have been harassed and bastardised: stories that the houses of workers refusing to strike have been damaged, or their car windows smashed in retaliation for turning up to work, are disgraceful.

And these non-striking workers have — predictably enough — been denounced within the rank-and-file workforce as scabs, traitors, dogs, and so forth.

The type of language that everybody expected from militant unions 30-odd years ago.

As someone philosophically distrustful of unions in any way, and politically opposed to the leftist nature of most unions’ agenda, I am prepared to take at face value the statements of some of the transport unions’ leaders and especially those of the Australian Licensed Aircraft Engineers Association federal secretary, Steve Purvinas.

These are hard men who drive a hard bargain; indeed, so hard the airline is calling their bluff and the travelling public is now beginning to bear the brunt.

Purvinas emphasises that he and his executive have implored their members to “play it legally” on the basis their demands were mostly met last time this situation arose and his members did not break the law.

And Purvinas himself is a reasonable bloke.

This points to elements in his ranks that he can’t control and who may never be conclusively be identified.

Death threats don’t appear out of thin air; car windows don’t spontaneously shatter; houses don’t self-immolate.

I’m reminded a bit of Arthur Scargill’s leadership of the National Union of Mineworkers (NUM) in Britain in the early 1980s; Scargill was a thug and a brute whereas I trust Purvinas is neither, but there the differences end.

Scargill called his miners out on strike without a ballot; Purvinas’ members got one. In both cases, those workers refusing to strike were vilified, bastardised, and terrorised.

Indeed, some of Scargill’s minions were so enraged that “scabs and traitors” should dare to cross picket lines and go to work that they started murdering them — literally.

And does anyone remember the notorious Builders’ Labourers Federation (BLF), run by the late Norm Gallagher, and which was deregistered by the Thompson Liberal government (Vic) and the Fraser Liberal government (federal) in part due to systematic illegal and violent conduct?

The problem someone like Steve Purvinas — a salty, straight-shooting, and generally honest bloke — has is that as much as he has faith in “his men” he can’t control them.

And so from the protracted and increasingly checkmated industrial dispute between Qantas and its unions, the uglier side of the union mentality has reappeared out in the ranks.

It’s not good enough to dismiss these events as the conduct of a rogue element or misguided few; they go to the heart of the culture of the union itself.

If Alan Joyce — publicly or privately — were to let it be known that unions were filth, and that consorting with unionists would result in significant damage to the property or person of those daring to associate with “union filth,” the outcry — and uproar — would rightly be horrendous.

So with the boot on the other foot, let’s call a spade a spade.

The conduct of unionists in the case of the industrial dispute with Qantas is despicable.

It makes no difference whether the union case is sound or not — threats of violence and intimidation supersede any case that may be put.

And it makes no difference whence the threat comes from: Purvinas and other transport union leaders like him may be responsible for their men, but it is a regrettable fact of human nature that they can’t control them all.

The unions in the Qantas case, therefore, do themselves no favours.

They do, however, strike at the core of what damaged credibility their individual unions — and the union movement in this country generally — retain in the eyes of the Australian public.

Little wonder only about 15% of Australians belong to a union these days, as opposed to about 50% 35 years ago, if this is the example the unions set.

What do you think?

I’ve Been To Cities That Never Close Down…

As someone who loves — really loves — Qantas, despite my pathological fear of flying and millions of air miles clocked up over the years, I’m worried about where the Flying Kangaroo is headed. And a bit sad.

It really didn’t have to be like this: Qantas is the safest airline in the world of the last 50 years; it was also the most profitable airline in the world for years after its privatisation in 1993.

Management teams led by James Strong and later Geoff Dixon made it the envy of the aviation world; it was “The Spirit Of Australia;” its fearsome reputation for safety was unrivalled and unchallenged; and QANTAS was a byword for quality, service, reliability and world-best practice.

News in the last few days that Qantas faces a drastic and draconian restructure — including the loss of at least 1,000 jobs (and perhaps as many as 6,000), and further withdrawal from its direct international route network –is a sobering reminder that internationally at least, the Flying Kangaroo is increasingly becoming a shell of its past glory.

As I said in my introduction, I have a pathological fear of flying, but have also logged millions of air miles in the last 20 years.

I have dealt with my fears a) by flying (although it never gets any better), but also b) through a “know your enemy” approach of studying commercial aviation as best I can from the armchair, reading every news item on the subject I can, following online industry forums, and knowing as much as I can about airlines, various aircraft types, and aviation issues in general.

As such I think I know a little bit here; not enough to speak with the authority of an industry insider, but enough to speak as a very well-informed frequent flyer and keen follower of the commercial aviation industry.

It’s clear that the domestic operations of Qantas — and its frequent flyer program — are keeping the Qantas Group as a whole profitable.

It’s also clear that the increasing Jetstar-isation of Qantas Domestic is at the forefront of the strategy to optimise domestic profitability growth.

There are certain routes it is now impossible to book a Qantas mainline flight on: recently, I had need to look at a business trip to Coolangatta (which didn’t eventuate) but could only book a flight from Melbourne on Jetstar.

Out of curiosity, I checked and found it was the same if I wanted to go to Maroochydore.

My wife’s parents, when they were alive, lived in Launceston; if we wanted to visit as recently as five years ago, we could fly on Qantas.

My parents moved to Hobart three years ago and if we want to go to see them, the majority of flight offerings are by Jetstar.

I understand commercial reality: that routes need to be profitable, and in the case of Qantas, Jetstar provides an alternative (to the Qantas Group) of a lower cost alternative — even though customers, at best, might grit their teeth and resentfully accept the product offering.

I understand, too, that the entry of Virgin Blue was the initial harbinger of a colossal shake-up of aviation in Australia; this initially led to cheaper airfares, and the cheap fares survived well after Ansett ceased to grace Australian skies.

Yet today, airfares are as high — if not higher — than they have ever been, certainly on mainline trunk routes. At time of writing, if I booked a three-day trip to Brisbane this time next month on Qantas, ignoring Jetstar, with a refusal to fly at 6am but a need to be in Brisbane by 11am and a fly-out time at 7pm on return, I’d be up for about $470.

The similar fare ten years ago was about $140 cheaper.

And Virgin is, mostly, dearer.

International fares are a shudder: look at flying to London and Qantas is now routinely one of the most expensive, if not the most expensive, option of all of the reputable carriers.

Qantas management blames all of this — high costs, high fares, Jetstar-isation, and now withdrawal from more international routes — on a higher cost base compared to its competitors in Asia and the Middle East.

Just a minute…

Qantas has always competed with Asian carriers, and it was never a problem in the past.

It is true that the various Middle Eastern carriers are flooding world markets with capacity and doing so at a slight overall discount to the traveller in terms of fare structures. Yet this isn’t being cited by comparable carriers in other markets as a key challenge to their viability.

The unions responsible to Qantas maintenance staff think they know where to point the blame: the outsourcing to overseas facilities of Qantas maintenance. However, 90% of the company’s maintenance is still done in Australia, and the bulk of what is done overseas is either incidental to the course of flight operations or performed at specialist maintenance facilities (for example, the A380 facility operated by Lufthansa in Germany).

The pilots think they know where to point the blame: bad pay, bad conditions, inadequate training and insufficient job security. Yet as things stand, Qantas management — quite literally — is offering them what they can afford.

And Qantas management thinks it knows where to point the blame: the high cost of oil, airlines operating from second-world countries on low wage structures, and the great global downturn in aviation that happened at the time of the so-called GFC and from which, by all accounts, airlines across the world have rebounded from with gusto.

I think Qantas’ problems stem from two colossal mistakes its board made 10-12 years ago, and that the chickens are now coming home to roost as a result.

One occurred in the aftermath of the Ansett collapse: Ansett’s planes didn’t ignore the service bulletins and maintenance directives issued by manufacturers and aviation authorities all by themselves; and the airline as a brand name didn’t make the commercial decisions that ultimately — literally — ran it into the ground.

Its management did those things.

There were a lot of good people at Ansett who were thrown onto the scrapheap. There were also people at Ansett who made poor decisions that directly contributed to the end result of the airline failing and whose careers deserved to end right there and then, in 2001.

Qantas hired many of these people. Whether it was due to the immediate need for additional personnel to manage its sudden 90% market share at the time, or through a desire to save some of these people, or a bit of both, nobody knows; but the bottom line is that a lot of Ansett people reappeared at Qantas and continued making Ansett-style decisions at the national carrier.

The second of the two big mistakes Qantas made was in fleet planning and capital expenditure.

To order what was then known as the A3XX (now the A380) in 2001 for delivery in 2006, and then the Boeing 787 in 2004 for delivery in 2008, was sheer folly.

The Airbus A380s turned up nearly three years late, and the world is still waiting for the B787.

To make it worse, an airline with an already-ageing fleet bet its entire fleet renewal strategy on aircraft that were still no more than drawings on a slate.

And to make it worse again from a Qantas perspective, a fundamental rule of fleet management was broken: maintaining a consolidated selection of aircraft types.

Not so long ago, if one got on a Qantas plane and it had jet engines, it would have been a Boeing 737, 747 or 767.

This offered real efficiencies in maintaining and operating a small number of products from a common manufacturer.

Today, it could be a Boeing 717, 737, 747, 767, Airbus A320, A330, or A380.

The Boeing 787 is to come and, according to industry rumours, the Airbus A350 (another drawing-board prototype) is being seriously considered for purchase by Qantas in the next few years as well.

Qantas have flatly ruled out buying the Boeing 747-800, which would integrate with its existing 747 training and maintenance program .

An intangible is the sizeable proportion of the travelling public who, for whatever reason, do not want to fly on Airbus planes — the saying “If it’s not Boeing, I’m not going” did not appear out of thin air for no reason.

The near-disaster with VH-OQA — the A380 Nancy-Bird Walton — late last year served only to reinforce these perceptions.

Indeed, after a series of crashes and near-miss/near-disaster incidents involving Airbus planes a few years ago, its Chief Operating Officer John Leahy appeared on television to refute the “Scarebus” label that had been attached to his company’s products.

Yet Qantas had been a Boeing-only customer for decades, and if the consideration was economics of flight, there was an answer — without the need to buy product from Airbus.

It’s called the Boeing 777, and its variants can seat almost as many people as a 747, fly them as far if not further, and at 10-15% less in terms of fuel burn to boot.

Despite being a development partner to Boeing on the 777, Qantas refused to buy.

Had Qantas ordered 30-40 777-300ERs or 777-200LRs or a combination, ten years ago, its fleet of 20 1989-1991 vintage B747s would be long gone, as would many of its 25 equally-ancient B767s, all replaced with a modern, cheaper aircraft more than capable of filling the breach.

Qantas would have had those planes within two or three years of order: at the time the 777 was newish; established enough to have solid flight service credentials, but new enough for timely production to be possible.

Today there is a nine-year backlog for a new order of a Boeing 777.

And the recurrent cost of flying a 20-year-old 747 is twofold: it’s not fuel efficient, and it costs a hell of a lot more to maintain than an updated model like a 777.

But the most incomprehensible aspect of Qantas’ fleet strategy is the wholesale purchase of A320s. Yes, they’re comfortable to sit in (as far as a seat on a plane goes) but it’s not pleasant to fly in them and it further diversifies the fleet composition at a time when new 737-800s are being added as well to replace old 737-400 models dating back to the early 1990s.

Very simply, Qantas ordered the wrong planes.

But of course, mistakes in management recruitment or fleet procurement can never be admitted.

So instead, we have talk of discount domestic airlines in Japan, a premium international airline called something else based in (presumably) Shanghai or Singapore, and Qantas — aside from domestic operations and minor international routes like New Zealand — flying to London, LA, New York, Dallas, Santiago, and Johannesburg.

With reductions even to those destinations in the number of weekly services.

And that’s about it.

And mass sackings if redundancies can’t be voluntarily effected.

As for codeshares on “alliance partners” — well, whoopee. British Airways and Cathay I’d fly; American perhaps, Alaska Airlines…???…

Something tells me I’m not going to Canada in a hell of a hurry.

I don’t know if codeshares are directly profitable to Qantas or not. But even if they are, it’s someone else’s maintenance regime they rely on, and someone else’s standards of service, and someone else’s fare structure…you get the picture.

What a mess.

I don’t think it’s too late to “save” Qantas, but there has to be a better way to do it than what was announced earlier this week.

I’ve been to cities that never close down…and I have, too.

But I fear that next time, it mightn’t be on Qantas.

And whether it is or not, it won’t be my decision at all.

Come on Qantas, you can do better than this!