Jetstar viability at risk, warns Joyce
Matt O'Sullivan
February 7, 2012
QANTAS'S chief executive, Alan Joyce, has argued that proposed law changes aimed at limiting the ability to hire foreign-based flight crews will force its budget offshoot, Jetstar, to pull out of Darwin and Cairns.
Fronting a Senate committee in Canberra yesterday, Mr Joyce also said proposed changes to the Qantas Sale Act, compelling it to perform more work such as aircraft maintenance in Australia, would force it to decide between letting Jetstar ''wither'' or selling the low-cost subsidiary.
Qantas's push to set up Asian subsidiaries, employing staff such as pilots and flight attendants on lower salaries than their Australian counterparts, was at the centre of the standoff with unions last year.
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Although the airline has settled with its 1600 aircraft engineers, its dispute with long-haul pilots and ground crews is set to be determined in a binding ruling by the workplace regulator.
In his fourth appearance before the committee in a year, Mr Joyce described the proposed cabin crew bill and amendments to the Qantas Sale Act as a ''major threat to our business [and] to Australian jobs''.
He said restrictions on Jetstar's ability to employ foreign-based cabin crew would increase its labour bill for flights to the ''already unprofitable'' cities of Darwin and Cairns by more than $3 million
''That is not a threat - that is a fact,'' Mr Joyce said when Alex Gallacher, a Labor senator, questioned the validity of his threats to pull out of Cairns and Darwin. Jetstar has four aircraft based in Darwin.
''The impact on regional tourism and development would be immediate and negative. Strangling our international business and forcing us to pay uncompetitive wages compared to our foreign airline competition is no way to make us stronger, better or more Australian.''
But the independent senator Nick Xenophon, who has championed the two proposed bills, later described as ''ridiculous'' the claims Jetstar would have to pull out of the two cities if it had to offer foreign-based crew local wages and conditions when they worked on domestic flights.
Jetstar pays its foreign-based cabin crew about a third of what Australian flights attendants earn. Thai-based cabin crew earn about 60,000 Thai baht ($1800) a month, which Jetstar emphasised yesterday was about 10 times the average salary in Thailand.
Mr Joyce said the proposed changes to the Qantas Sale Act ''go way beyond'' the original aims of the legislation. It includes a requirement that Jetstar conduct the majority of its heavy maintenance in Australia.
''These amendments in total - from the make-up of the Qantas board to the location of our flight training - would apply intrusions and restrictions on Qantas … that do not apply to our competitors,'' he said.
The proposed tightening of the Qantas Sale Act is aimed at reining in the airline's aggressive overseas expansion plans, which include a proposal to set up an ultra-premium airline in south-east Asia.
But the proposals are understood to have little support among Labor and Coalition ranks. Virgin Australia has also argued against the changes at previous Senate hearings.
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Jetstar viability at risk, warns Joyce