The Qantas Dispute
The Flying Kangaroo, aka Australian national carrier Qantas, celebrated its 91st birthday last week in mid-November with visits from two high-profile travelers – their ambassador, the actor John Travolta, as well as the new Boeing 787 Dreamliner, in the country for promotional duties.
The events were labeled in one Australian newspaper as a “one-two PR salvo” for the troubled airline, now hard at work in the lead-up to the busy Christmas and New Year holiday period at repairing the damage done to its brand during the recent industrial dispute that led to its entire fleet being grounded.
The move by CEO Alan Joyce on October 29 to cancel all flights with immediate effect left more than 70,000 passengers (108 planes at 22 airports) stranded, or up the creek without a paddle, as some Australians might say.
Speaking on November 14 at the unveiling of theDreamliner, the “plane of the future” which Qantas has ordered 50 of, Joyce had been hopeful that the airline would reach agreements over new collective contracts with unions representing long-haul pilots, aircraft engineers and ground crew by the deadline of Monday November 21.
But on the day, negotiations between the airline and two unions representing ground crew and long-haul pilots collapsed. This leaves the sides to face binding arbitration before Australia’s industrial relations umpire, Fair Work Australia, who called a halt to the grounding on October 29. The Transport Workers Union, who represents baggage handlers, ended talks with Qantas just after discussions with the long-haul pilots’ union broke down.
The two parties could not reach agreement on job-security demands, including the number of contractors Qantas wanted to use, said the TWU’s legal representative Michael Burns. A three-week negotiation extension had been a possibility, but both Qantas and the union had to be in agreement. The matters in dispute will now go to binding arbitration, however the pilots’ union and the TWU will discuss with Qantas negotiators those areas on which agreement is more likely.
Joyce reiterated that although the arbitration process could last months, there could be no industrial action during this time. Any union that attempts this faces big fines.
The TWU however is deciding this Thursday whether to take legal action to win back the right to strike.
These events aren’t a surprise.
Even at a rally held outside the Australian high commission in London tensions were running high, with a union official in a Joyce costume threatening two people dressed in kangaroo outfits with a fake knife.
The TWU insisted then that Qantas had no interest in cutting a deal with unions and was looking for arbitration ending.
“Qantas are just not interested in reaching any sort of agreement at all,” said national president Jim McGiveron.
The airline is also in dispute with the Australian Licenced Aircraft Engineers Association (ALAEA), and the Australian and International Pilots Association, since it announced in August a plan to restructure its operations and outsource some of the services. They’re concerned about Qantas’ moves to cut costs and set up new Asia-based airlines.
Richard Woodward, the vice-president of the Australian and International Pilots Association, said negotiations between Qantas and the pilots’ union had finished after the two sides failed to agree over the terms for efficiency gains of up to 20% sought by the company, for example pilot rostering.
He said that the union was “very disappointed”, adding that Qantas had taken a “very hard-headed attitude to negotiations and have not compromised”.
The binding arbitration would drag on for months because of the “complex nature of the contract”, Woodward warned.
Qantas, who claims the long-running dispute was costing them $15 million per week due to flight delays and cancellations, was due to begin talks with the Australian Licensed Aircraft Engineers Association.
The country’s newspaper The Age warned during the industrial action that Aussies would be “understanding” if the affair turned out to be a “nasty dispute that didn’t last too long”.
“They will be unforgiving if their treasured national carrier suffers a long-running and debilitating loss of income and reputation,” an editorial said.
The strike, which came amid the Commonwealth Heads of Government (CHOGM) meeting in Perth and made international headlines, lasted 48 hours.
Some analysts are warning now it could take years for Qantas to win back customers who have shunned the carrier.
The move to ground flights was described as a “watershed decision in Australia’s industrial history” by The Sydney Morning Herald.
“I think Qantas will have to tread very carefully – not just in the coming months but in the coming years – to regain lost ground in terms of its reputation,” said Tim Heberden from consultancy firm Brand Finance.
“Qantas has faced a number of negative headlines in the last few years and should evaluate the cumulative effect of reputational risk when considering future actions and statements.”
A poll has showed an alarming 60% of Australian voters are unimpressed with the airline over the bitter industrial dispute. Nearly half (42%) have blamed Qantas management for the grounding. The already unpopular Prime Minister Julia Gillard, who ordered the workplace mediator, doesn’t fare well either. Nearly half of voters (46%) disapprove of the way she handled the affair.
Qantas, famously mentioned in the film Rain Man by Dustin Hoffman as never having crashed (not completely true, they’ve never had a major crash) was working overtime to assure customers their Christmas flights would be safe, on Twitter.
“We’re just informing customers there’s no more industrial uncertainty & we are back on schedule,”@QantasAirways told@gusworldau.
Some customers were still doubtful.
“The little asterisks on these Qantas flights should say *unless otherwise grounded by Qantas board of directors,” wrote @LeevanNetten. @kanani81 had pleaded with them, “Dear Qantas – just booked my Christmas flights with you. Please don’t strike again. Also – double frequent flyer points would be awesome”.
They appear to have listened on the frequent flyer front. On November 16 Qantas, which has 65% of the domestic Australian market,announced new moves targeting its frequent flyer programme members as a way of saying sorry for the grounding of its fleet.
They will increase the frequent flyer points earned for passengers travelling, but only for a few weeks, and only platinum and platinum one members will receive double points. Silver and selected bronze frequent flyer members will receive only 25% more points, with gold members getting 50% more. The offer, already effective, applies to all eligible Qantas flights until December 23, including flights already booked.
The carrier will also cut fares across their entire network. Qantas are offering passengers affected by the industrial dispute special promotional deals through one of the biggest national advertising campaigns in their 90-year history, as the busy festive season approaches.
One “goodwill gesture” to win back those directly affected by the industrial dispute though is offering them free flights to any domestic or New Zealand destination.
The airline says the free return economy flight being offered to more than 70,000 passengers affected by the grounding is completely separate to its compensation packages or any other payments. The International Pilots Association has branded the free flight sweetener a waste of money.
Some passengers are happy with the attempts by Qantas to woo them back. “thanks @QantasAirways for the double points and the free epicure membership!” said @owenbrandt. Even the smallest things seemed to please some. “I flew QF 41 last nite and enjoyed your new menu! Love the Mango bar )” Tweeted @witakwintika.
According to the Australian Financial Review, much of the country’s “high-yielding corporate market” has already defected to Qantas’ rival Virgin Australia since industrial action against the Flying Kangaroo increased in August.
On the day of the grounding Virgin announced it was offering special “Stranded Passenger” recovery fares for Qantas passengers who were at a port away from home and held a Qantas ticket to return home initially within the following five days.
Virgin said it was also in discussions with “alliance partners to add extra capacity into the market as soon as possible”.
“Expect to see some creative strategies by Virgin Australia to take advantage of the situation and assist them to increase their market share,” said Deborah Edwards, senior research fellow from University of Technology Sydney.
“I wouldn’t be surprised to see emerging tactics such as a points-for-points deal offered by other airlines to take advantage of the dissatisfaction that customers will have with Qantas.”
It’s not just Aussies who feel frustrated about Qantas’ future. Trade unionists in Argentina, Chile, Germany, Indonesia, Japan, New Zealand and the USA showed their support for Qantas workers.
“In Britain the Unite Union is watching very carefully because Willie Walsh [the head of British Airlines’ parent company] is looking . . . for ways to downgrade and outsource services,” said David Cockroft, the International Transport Workers Federation (ITF) general secretary.
“If Qantas gets away with setting up low-cost, low-quality, offshore airlines of inconvenience then lots of other airlines would quickly do the same thing.”
The TWU has warned overseas unions may target Qantas and Jetstar.
Internationally, Qantas’ airline ranking has slipped. In 2005 they were second. Last year they were seventh. This year they’re eighth. Although it’s worth $1.1 billion, the Qantas brand was in 13th position on Brand Finance’s table of Australia’s most valuable brands at the start of this year, the biggest loser of brand value since 2008. Rankings aren’t the only thing going downhill. This year Qantas shares have lost nearly a third of their value.
In mid-November they were up 7.6% to their highest in more than three months.
Days after Qantas flights were back in the skies, The Sydney Morning Herald ran a flight asking its readers “Do we really need Qantas?”
The paper finished by alluding to US singer-songwriter Frank Zappa, who once said that to be a real country, you need “a beer and an airline”.
“One out of two wouldn’t be so bad,” the Herald concluded.
Aussies are very fond of a drink. Indeed at the height of the “national crisis” one stuck passenger, Adam Cottrell from Western Australia (WA), remarked that although Qantas had put him up in a hotel and the hospitality wasn’t too bad, he was looking forward to arriving home to some “cold beers”.
The world’s second oldest airline will have to fight very hard to ensure its surviva.
By AMY FALLON