Is Qantas ditching unaffordable excellence?
February 10, 2011 – 8:09 pm, by Ben Sandilands
Here is something risky to think about in the context of the dispute between Qantas and the Australian and International Pilots Association over job security.
If Qantas were to remove the burden of excellence from its balance sheet, those pilot training, maintenance and standards costs that do more than just tick the boxes that make the carrier legal, what are the chances of disaster striking?
The answer is obvious. They would be the same chances that apply to other carriers who do the absolute minimum but claim to be conforming with ‘world’s best practice’, because in the weasel words of air safety standards, ‘best practice’ and ‘minimum required practice’ are identical.
The probability of a ‘hull loss’ which is a euphemism risk assessors use for a heap of dead people on world wide newscasts is probably one disaster every 25-30 years for a large airline.
This means that any such airline might not have a very bad accident for 50 years, or not until tomorrow. But if the company is saving $200 million a year by dispensing with excess excellence, meaning anything which is in excess of the minimum required to be able to claim conformity with ‘world’s best practice’, it will be more than several billion dollars ahead within a decade, and an accident could happen anyhow. Because ‘**** happens’ as Tony Abbott so lucidly put it the other day.
This is what is troubling about the apparently urgent need for Qantas to put an end to the unsustainable losses on its long haul operations, as flagged by Qantas CEO Alan Joyce a week ago in an address to the Melbourne Press Club.
The company has persisted with a failed network concept and a failed re-equipment program and uncompetitive products and seems determined to try and solve these issues by off shoring some of its assets and costs through the device of basing Australian registered aircraft in Singapore. The small beginnings of a major shift in strategy. It closed an engine shop that was critical to keeping its aged fleet of Rolls-Royce powered 747s safe over the far southern ocean routes or across the Pacific to North America. It deals itself out of knowledge and oversight over the engines Rolls-Royce put on its flagship A380s, only to put better versions on those supplied to other A380 operators without telling Qantas a thing until one of them rips itself apart, and tears 27 holes through the wing in the process, on the November 4 flight of one its A380s from Singapore to Sydney.
At the tense meeting between itself, its strike breaker contractor and the union yesterday Qantas refuses to consider anything that might give job security to the pilots that are the best trained in the world.
Why? There are several possible reasons for this. The widely discussed possible reason is that Qantas is determined to end the employment of pilots under ‘legacy’ terms and conditions and churn them back, through Jetstar, under different agreements. The less widely discussed reason refers to nebulous statements from Jetstar about the setting up of a pilot resource from which non Australian pilots flying elsewhere on the Jetstar franchises could perform flying in Australia for Jetstar at favorable rates. No doubt like those of guest workers in the building industry employed on temporary visas.
If such an arrangement is set up for Jetstar there is no reason why it then couldn’t be applied to Qantas, what’s left of it.
The bizarre situation arises now that Qantas has a cadre of pilots who appear to have a longer term loyalty to the carrier than its management. The former are prepared to put standards ahead of remuneration if it keeps the carrier truly Australian. The latter don’t want to know about it.
It isn’t clear if Qantas has thought through the consequences of undercutting and severing those legacy costs that are its brand ‘premium’. It is clear however that Alan Joyce has calculated the immediate consequences of not lifting productivity at Qantas, and this is where there is considerable pain and bafflement and anger in pilot ranks. They are prepared to lift productivity and keep pay in check.
Surely there must yet be room in this stand off for Joyce to make different, more constructive choices, that will engage and retain that part of the Qantas legacy which is priceless.