Airlines
Qantas locks horns with unions
Australia’s Qantas will no doubt be pleased to see the back of 2011, hoping the New Year will bring with it a resolution to its labour union woes, writes Emma Kelly.
Labour relations for Australia’s largest airline, Qantas Airways, were at an all-time low as Asian Aviation went to press, with disputes with three unions now handed over to be resolved by national tribunal Fair Work Australia (FWA). Months of negotiations are likely, with any decisions made by the independent tribunal binding on all sides, for a maximum of four years.
In addition, Qantas is facing possible court action from one union as it embarks on the long process of rebuilding its image, which has been severely damaged by months of industrial action and the grounding of its fleet in late October.
Over a 15-month period, Qantas had reached accord with four unions, representing more than 10,000 employees – or a third of the workforce – on five enterprise agreements. But the airline was unable to reach agreement with three more: the Australian and International Pilots Association (AIPA), the Australian Licensed Aircraft Engineers Association (ALAEA) and the Transport Workers Union (TWU), which respectively represent long-haul pilots, licensed engineers, and ramp, baggage and catering staff.
Months of failed negotiations resulted in industrial action by the unions, which saw flights cancelled and aircraft grounded. By 28 October, Qantas said the industrial action had cost it A$68 million (US$69 million) – or A$15 million per week in lost revenue.
Cancellations, delays
Between August and late October, almost 71,000 passengers had been affected by 129 cancelled flights and 387 delayed services. The airline had been forced to ground seven aircraft – four Boeing 767s and three Boeing 737s – due to a backlog of maintenance, resulting in 500 flights being cancelled and 88,000 seats removed from sale.
Qantas’s response was dramatic – locking out all employees covered by the industrial agreements being negotiated with the AIPA, ALAEA and TWU, a move that necessitated the entire fleet to be grounded late on 29 October. That move cost Qantas A$20 million a day, but Chief Executive Officer Alan Joyce claimed the airline had no alternative.
“This is a crisis for Qantas. If this action continues as the unions have promised, we will have no choice but to close down Qantas part by part,” he said when announcing the grounding. Qantas estimates the grounding and industrial action will have an unfavourable financial impact of US$194 million in the first half of financial year 2012.
Qantas returned to flying operations on 31 October when the Federal Government applied for a termination of the industrial dispute, with the matter handed over to Fair Work Australia (FWA), the national workplace relations tribunal, to facilitate ongoing negotiations between Qantas and the unions. All parties were given 21 days to reach a settlement.
That deadline passed without agreement on 21 November, and Qantas decided not to take up a further 21-day negotiation option. The dispute is now left to FWA’s independent arbitrators to resolve. While Qantas expressed disappointment at the failure, some unions accused the carrier of deliberately sabotaging the negotiations in order to force them into arbitration.
“Qantas is extremely disappointed that, despite over six months of negotiations and a further three weeks of conciliation talks before FWA, the TWU has refused to remove its unreasonable demands,” the airline said.
According to Joyce: “We made a generous offer, which included reasonable increases in pay and conditions, protections on the jobs of existing Qantas employees and Qantas maintaining the flexibility we need to run the airline. The union rejected this offer. We did make some progress, but we simply cannot agree to all of the union’s demands. We cannot give in to demands that we hand over control of parts of the airline to the union. The union was asking us to break the law and agree to only use companies that have enterprise agreements in place with the TWU and to write this into a legal document. We simply could not agree to that.”
Angry response
The TWU reacted angrily, with national secretary Tony Sheldon saying: “Qantas has not displayed good faith in these negotiations, The TWU wanted a sprint to the finish, but Qantas just hopped on the treadmill. It looked as if they were moving, but they weren’t going anywhere.”
According to the union, the dispute centres on Qantas’s refusal to agree to the same job security provisions that hundreds of other companies have agreed to.
AIPA also expressed disappointment that Qantas management decided against the 21-day extension of negotiations. Association Vice-President Captain Richard Woodward said that pilots believed a negotiated outcome was possible, but management had instead chosen the drawn-out process of arbitration.
“Today’s decision by Qantas management is unfortunate because pilots have always been of the view that a negotiated outcome was eminently achievable. That’s why we requested an extension of the negotiation period. However, management refused – they obviously believe that a decision achieved through arbitration is preferable,” Woodward said.
AIPA remains confident that it has a strong case. “Qantas pilots simply want to operate Qantas flights. That’s why we’re here in this dispute and that’s what we will continue to fight for. This isn’t about pay and it isn’t about conditions – it’s about retaining the skills and experience of Qantas pilots in Australia,” Woodward added.
Qantas has conceded it made some progress in negotiations with AIPA, but said that both parties concluded that an agreement could not be reached. The airline said it negotiated in good faith with the pilots for 15 months, with over 50 meetings.
AIPA, meanwhile, is challenging the FWA’s ban on industrial action, saying that its low-key campaign of wearing red ties and making announcements on flights before take-off caused no economic damage to Qantas. A Federal Court hearing on AIPA’s claim has been set for February. The TWU previously considered legal action against the FWA’s ruling, but decided against it.
FWA has ruled that the three unions cannot take industrial action for the period of arbitration and for the term of FWA’s determination – which could be for up to four years.
False hope
Qantas and the ALAEA appeared to have made the most progress in their negotiations, but still failed to reach a new agreement and both parties decided that FWA should resolve the dispute.
Joyce said the ALAEA wants to “bind Qantas maintenance to the past; to thumb their nose at world’s best-practice regulations…and continue with outdated work practices on new-generation aircraft”.
At the end of the 21-day negotiation period, ALAEA federal secretary Steve Purvinas had said that four or five issues remain to be resolved and hoped that these could be resolved before Christmas, although that seemed unlikely as Asian Aviation went to press.
Arbitration can be a lengthy process in any matter, but the Qantas situation is complicated by the fact it involves three different unions with three different sets of issues. Under the FWA system, three benches comprising three commissioners each will hear the unions’ and airline’s cases. This process alone could take a month to complete.
As if resolving its labour issues isn’t hard enough, Qantas has the equally hard – if not harder – job of rescuing its brand, which has been severely damaged by the ongoing industrial action.
In late October, Joyce said customers were “fleeing”. High-value bookings on east coast routes were down 25 percent from the same period a year ago. “That’s the most lucrative part of our flying business and it is bleeding badly,” Joyce said.
International bookings had also fallen, with November bookings 10 percent lower than management forecasts made at a time when the international business was already accounting for significant losses. “Our customer research shows an alarming increase in people who intend not to fly with Qantas,” said Joyce, pointing to an increase in that figure in the domestic business from 5 percent to 20 percent, with the figure for international travellers surging to nearly 30 percent.
By early December, the FWA’s termination of industrial action had resulted in some relief. The airline’s domestic forward bookings were back to normal levels while international bookings were recovering at a slower rate.
In early November, Qantas launched a special offer for passengers who had been affected by the grounding. Passengers who purchased tickets for travel between 5pm on Saturday 29 October and midnight on Monday 31 October and whose flights were disrupted are eligible for a free return economy flight on any domestic or trans-Tasman route, for travel between 14 December 2011 and 14 December 2013.
Renewed focus
“Throughout the long period of industrial activity we have been acutely aware of the impact on our customers,” Joyce said. “Now that no more industrial action can take place, and the cloud of further strike action has lifted, we are 100 percent focused on what matters to customers – getting them, to their destinations, safely, on time and in comfort, and rewarding their loyalty to Qantas.”
The airline’s charm offensive isn’t working, however, if the responses to a recent social media competition are anything to go by. In late November, Qantas launched its Qantas Luxury competition on Twitter, asking people to describe their “dream luxury in-flight experience” in order to win a pair of Qantas first class pyjamas and a toiletries kit. Before the day was out more than 22,000 tweets had been sent under the hashtag, with the majority expressing passengers’ anger over the industrial dispute, grounding and the airline in general.
While the arbitration process is likely to take months, rescuing the airline’s image may take far longer.
