Passed on by a friend, the AFAP 'Update for Qantas Group Pilots' makes for painful reading and provides insight into the IR tactics for
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Update for Qantas Group Pilots
Qantas Pilot Council
Last year Qantas took the unprecedented step of demanding the Qantas Short-Haul pilots agree to a variation to their enterprise agreement otherwise Qantas would explore giving the new A320 family aircraft (the replacement for the existing B737 fleet) to another pilot group. Under the variation Qantas demanded various concessions, such as removing the geographical box which historically defined short-haul flying within Qantas and the removal of a range of work rules or rostering provisions, thereby primarily relying on the FRMS instead. Qantas offered no salary increases or improvements in exchange for these concessions. It did however state it would provide the first 20 x A321-XLR aircraft. These aircraft are larger, more efficient and with a longer range than the existing B737 aircraft. The aircraft also do not arrive until after the current agreement and its variation expire. The varied agreement nominally expires on 31 August 2023 and formal negotiations are expected to commence shortly.
The Qantas Long-Haul Agreement was voted on and approved at the start of the Covid-19 pandemic. In this negotiation Qantas explicitly stated that the new ultra-long range A350 aircraft (also yet to arrive) would be provided to a separate employing entity and not existing Qantas Long-Haul pilots if the proposed agreement was not approved. This agreement was approved on 28 April 2020 and expires 4 years from approval on 28 April 2024.
The new aircraft orders and fleet transitions across Qantas Short-Haul and Long-Haul are driving an enormous amount of recruitment and training events planned over the next 5 years. Figures which the AFAP have seen show recruitment of 1039 pilots and 3440 training events at Qantas in the period FY23 to FY27. These recruitment and training requirements are largely of Qantas’ own making. Aircraft orders and replacement programs have large lead times and need careful planning. The volume of training events and constraints in training resources does not excuse it but it does help to explain why Qantas is currently in litigation over attempting to employ direct entry second officers onto the A380 over the top of existing pilots in lesser paid or less desirable classifications in order to reduce subsequent training events.
In summary Qantas has two agreements which are due to expire relatively shortly. Both these agreements provided limited benefits (no benefits in the case of the variation) and were made under specific threats of giving new and/or replacement aircraft to other pilot groups if they were not voted up. The aviation environment has changed dramatically since the agreements were made. Pilot recruitment is extremely tight across the world and inflation has risen significantly in recent years. Despite this, Qantas IR has advised that it intends to maintain its current wages policy. This means that Qantas pilots will still be expected to take a two-year wage freeze followed by 3% increases.
National Jet Systems Council
National Jet Systems (NJS) was bought by Qantas at the start of the pandemic. Similar to the approach taken in the Qantas Short-Haul variation negotiation, Qantas was explicit that if the NJS pilots did not agree to the changes they proposed in the agreement that they would not receive the A220 aircraft (the replacement aircraft for the aging B717 fleet). The concessions which Qantas sought again included a removal of various rostering protections or work rules in favour of a reliance on the FRMS. Again, the A220 is a more sophisticated and efficient aircraft which Qantas determined warranted no additional remuneration to fly.
Since the agreement came into operation a large number of NJS pilots have left the business to pursue other opportunities. The pilot group has now dropped to approximately 150 pilots. This is manageable in the current environment because the number of B717 aircraft in operation has dropped from around 20 to 15 aircraft. With a sub-standard agreement NJS is and will continue to experience difficulties in recruiting suitable pilots. This is not impacting the operation right now as the first A220 are yet to be delivered but will create enormous pressures as the 29 x A220 aircraft announced for NJS start to arrive (initially it was 20 aircraft but a further 9 aircraft have been announced as going to NJS). This means that NJS will need to rapidly grow from approximately 150 x B717 pilots to 350 x A220 pilots in the next few years, again necessitating a large recruitment and training program. Initially the training will be for existing B717 pilots transitioning to the A220 as the B717 phase out and the A220 phase in. From September 2024 the recruitment and training of approximately 200 external pilots to crew the additional A220 aircraft will commence.
As a sign of the impending recruitment needs and Qantas’ disregard for Australian pilots, Qantas has recently sought approval of a visa program known as a Labour Agreement to attract any already type rated A220 pilots to Australia from overseas. This is a desperate measure and unlikely to yield much success given the small pool of A220 pilots globally, other attractive overseas opportunities and the below market conditions provided under the current NJS agreement. The agreement is not due to expire until 30 June 2026.
Sunstate and Eastern Pilot Councils
Both the Eastern and Sunstate pilot groups approved “roll-over agreements” during the pandemic. These agreements expired on 31 December 2022.
The approach taken by these groups was to get the Qantas wage freeze out of the way and secure the applicable Qantas bonus payment and 3% payments before returning to the bargaining table in better negotiating conditions. Negotiations have been taking place however Qantas IR is proving very resistant of any significant improvements. This is despite serious problems with pilot attraction and retention. Sunstate and Eastern are currently running at full training capacity with 8 x new FOs being trained every 8 weeks for the foreseeable future.
To ameliorate the significant attraction and retention issues Eastern and Sunstate have also applied for a Labour Agreement to provide 12 experienced pilots and 3 sim instructors per year for the next five years from overseas. Again, similar to NJS, we do not believe that they will attract anywhere near the numbers they are seeking while other attractive overseas options remain on offer and Eastern and Sunstate are paying such low wages.
Embarrassingly, as a result of higher than usual Award increases related to inflation and the Qantas wages policy including a two-year wage freeze, we have now encountered the scenario of junior FOs receiving less remuneration than they would receive under the safety-net Award. Despite this Qantas IR’s current approach is to simply “band-aid” the lowest classifications and not provide significant improvements across all classifications.
Network Aviation
Network Aviation has a fleet of 18 x F100 and 15 x A320 servicing the West Australian market.
The Network Aviation Pilots Enterprise Agreement 2016 expired in October 2020. Over the past seven years of operating under this agreement, Network Aviation has experienced substantial growth. The number of pilots and aircraft has more than doubled, alongside the addition of a new A320 fleet. This growth has not however been reflected in the pilot industrial space.
Without a suitable agreement in place and with salaries frozen under the 2016 Agreement, Network pilots' pay has decreased compared to the minimum Award equivalent. In 2022, approximately 62 pilots were paid below the minimum Award equivalent, with the majority experiencing a shortfall of around $7,200. This number increases every year a new enterprise agreement is delayed.
In late 2022, negotiations for a replacement agreement at Network Aviation commenced. Coming out of the pandemic the relevant pilot unions and Network Aviation came close to reaching agreement, however significant spikes in inflation, associated increases to the Award and company announcements of record profits meant that the proposal was unable to be supported by the pilot body and support was withdrawn by the pilot reps before even going to vote.
The Network pilot group and its pilot reps are currently revising their claims and engaging directly with the pilot group to ensure the revised claims reflect accurately the pilot views. The revised claims are expected to be provided to the company very shortly.
Qantas IR has already indicated that they will be taking a hard line and not agree to anything that costs more than their previous proposal. Given the historically uncompromising approach of Qantas IR it is likely that other legal options may need to be explored.
AFAP pilot membership numbers have doubled in the last year at Network Aviation. It is in light of this growth that they are seeking to form their own Pilot Council and join our expanding Executive Committee and Council structure.
Express Freighters Australia
The story of the last negotiation at Express Freighters Australia (EFA) is a sadly familiar one and again highlights the opportunistic approach to industrial relations within the Qantas Group.
EFA previously operated under a 2014 agreement which expired on 31 December 2018.
Negotiations commenced prior to the pandemic but were slow to progress. One of the key sticking points included that EFA announced plans to transition from a fleet of older B737 to larger A321 aircraft and to replace the 1 x B767 with 2 x A330 aircraft. As witnessed in other negotiations Qantas was not prepared to recognise these newer, larger and more efficient aircraft with salary increases. Like other negotiations, Qantas also essentially refused to negotiate over the pandemic and changed its 3% wages policy to a two-year wage freeze followed by 2% increases (later changed back to 3% wage increases). As time went on more and more EFA pilots started to receive less remuneration than they would be entitled to under the Award. This appalling situation developed because under the previous Fair Work legislation the Better Off Overall Test or BOOT is only conducted on approval of an agreement and not reviewed over its operation.
Nearing the end of the pandemic and sensing a possible opportunity, the company put a proposed agreement out to vote without the support of the AFAP or our pilot representatives. This proposal was voted down.
By this time the company proposal, which was still only barely above the Award, created the situation that many EFA pilots would be entitled to significant amounts of backpay. The company then put out a second agreement proposal for vote with only very minor improvements to the first offer. This time the company was more explicit that it would not improve the offer and any backpay would not be guaranteed in any future offers. Having also witnessed what had transpired with the Short Haul variation and the NJS agreement, the EFA pilot group voted up the second proposal and it was approved on 30 August 2022. This sub-standard agreement which was pushed through under the threat of removing backpay does not expire until 31 December 2024.
Jetstar Pilot Council
The story of the Jetstar Agreement 2019 which was finally approved on 23 December 2022 (just over 6 months ago) and expires on 21 November 2025 is a long and ultimately more successful one.
Negotiations for the current Jetstar agreement commenced before the expiry of the previous Jetstar agreement, the 2015 Jetstar Agreement, on 21 April 2019.
Having previously been frustrated by the Qantas Group approach to bargaining, the Jetstar pilot representatives were keen to progress bargaining as quickly as possible. The Qantas approach to bargaining commonly involves bargaining at a very slow pace in order to increase the amount of backpay at risk. The company can then use the threat of removing this backpay as leverage to get an agreement voted up.
In order to speed up bargaining the Jetstar pilots moved to taking protected industrial action (PIA) around the Christmas period of 2019/2020, approximately six months after the previous agreement’s expiry. This PIA included a range of bans and stop works which attracted significant media attention. The subsequent reduction in flying and drop in forward bookings over the traditionally busy Christmas period had a significant impact on Jetstar although we believe their claims of costing Jetstar approximately $30 million as reported in the annual report are inflated. At this time Jetstar also advised the pilot group that they were now ineligible for the $2000 record profit bonus which was contingent on accepting an enterprise agreement and “not causing harm”.
Over the course of 2022 the AFAP negotiators and Jetstar management began to make significant progress on a new agreement. The final agreement delivered considerable increases to the base salary (22.9%), DTA (22%) and the highline allowance (15.9%) over the life of the agreement. It also introduced a new and additional layover highline allowance and a range of other improvements. The details of the improvements and concessions made are contained in other AFAP briefings and on page 16 of the No.2 of the 2022 AIR PILOT magazine.
No agreement is perfect and every agreement needs to be judged in its industrial context. The AFAP and the Jetstar negotiators involved are very proud of the agreement which was achieved at Jetstar towards the end of last year. The improvements are significant and the real benefits have shown up in the pay packets and end of year tax summaries of the Jetstar pilots.
In terms of pilot recruitment, Jetstar is continuing grow significantly. As reported in Australian Aviation on 25 July 2023:
“Jetstar is set to hire more than 140 new pilots this year in a major recruitment drive.
The low-cost carrier is undergoing what it says is one of its biggest-ever pilot intakes, which will support new routes including Sydney to Rarotonga, Brisbane to Seoul and Melbourne to Fiji, as well as its push to improve reliability.”
Conclusion and Summary
The inescapable conclusion when assessing the Qantas Group approach to industrial relations is that they will do whatever they need to achieve the lowest possible cost agreement. Concepts of interest based bargaining and valuing employee engagement are misplaced when it comes to Qantas. Qantas understands power and will drive a very hard bargain when the opportunity presents. The AFAP understands this and realises that pilots need to take a similar approach and push for the best possible agreement when the opportunity presents.
We have entered a period when many of the factors that dictate which party is in a stronger bargaining position have begun to change. It is well publicised that pilots at United, Delta and American Airlines have recently achieved salary increases in the vicinity of 30-40%. A220 Captains at Delta are now reported to be receiving base salaries in the vicinity of US$310k. Our IFALPA colleagues at USALPA have shared US Department of Labour information confirming that over 1000 experienced Australian pilots have been attracted to US Carriers under their E3 Visa Scheme.
How long the high global demand for pilots will last is anyone’s guess. Qantas will hold off as long as possible waiting for the next inevitable downturn. They will drag their feet and try to appease demands with short-term bonus payments rather than permanent increases.
The real value of pilot wages has generally gone backwards in recent years and this needs to be addressed. Qantas continuing to play pilot groups off against each other, making threats and spreading fear needs to be called out.