Wirraway
25th Feb 2004, 22:43
Thurs "Melbourne Age"
How Qantas pilots acted on impulse
Alan Kohler
February 26, 2004
The breakthrough that got Jetstar flying came three months ago. The former Impulse pilots, now flying Qantas 717s, agreed to fly A320s for the same salary.
The immense significance of this may be lost on those whose contact with aviation is confined to trying to figure out where to stick the headset lead on different planes. But believe me, it is the start of a revolution.
Under the deal with the 143 pilots, the standard rate for a Jetstar A320 captain is $125,000 a year. The standard rate for a Qantas captain flying a Boeing 738 (the equivalent plane) is between $200,000 and $240,000. That is, Jetstar pilots will earn a little more than half that of Qantas pilots.
What is more, the Jetstar pilots volunteered for it. The 143 pilots unanimously agreed three months ago to fly A320s for the same pay as 717s. The pilots knew that the old Impulse fleet they had flown into Qantas was being phased out and the pilots would soon be out of a job.
It means that as the 717s (now to be labelled Jetstar) are replaced by larger more efficient A320s, the cost of running the new discount airline will fall from 8.25¢ per passenger kilometre to 7.8¢ - about 11 per cent below Virgin Blue's disclosed cost base.
Qantas chief Geoff Dixon says he did not have Jetstar in mind when Qantas bought Impulse and kept it as a separate subsidiary employing its pilots on the same rates. He did it "for a rainy day". With Virgin Blue at 31.5 per cent market share and rising - it is raining.
The deal with the Impulse/Jetstar pilots also has enormous implications for Qantas and, without wishing to get too carried away, for industrial relations generally.
Qantas pilots have now asked Dixon that they be able to transfer to Jetstar and are prepared to accept the lower rates when they fly its planes. Negotiations are continuing. But the Qantas pilots want seven out of every 20 commands (captain's positions) at Jetstar to go to Qantas pilots (they want to try to maintain their overall pace of advancement to command).
Dixon says he will agree to that only as long as Jetstar pilots can advance to Qantas commands (on Qantas pay rates, that is). So far the Qantas pilots are baulking at that.
In general, it is a sort of bloodless Pilot's Strike Mark 2, where the lower-paid Impulse pilots have brought a low-wage infection into the Qantas host.
Over time, Jetstar will take market share from Qantas. In fact most, if not all, of its passengers will come from Qantas. After all, even Dixon acknowledges that Virgin Blue's market share is likely to remain the same (between 30 and 35 per cent).
This means Qantas's capacity will be reduced and some routes will be dropped as Jetstar brings in more A320s. Qantas pilots will then have this choice: switch to the discount airline on half the pay or lose their jobs as Alan Joyce at Jetstar hires pilots from somewhere else. The pilot pay cut is the first breakthrough that helped Dixon get Jetstar off the ground. The second is that Joyce will be able to match European discount productivity.
He believes he can get up to 1000 hours a year flying time from the pilots, as opposed to Virgin Blue's 700 hours a year (and Qantas's much less).
That will be achieved largely through faster turnarounds - 25 minutes on average, compared with 30 minutes for Virgin Blue and 35 minutes for Qantas.
European discount carrier Ryanair has been helping Joyce design the turnaround processes, but the main thing is that there will be no fixed seat allocation - everyone will be able to sit where they like, which will save time on the ground. Also, flights will be closed 30 minutes before take-off.
In time, it is possible that Jetstar will grow to a third of the market, with the Qantas full-service airline shrinking to a third. If that happened, Qantas group market share would remain the same (around 65 per cent), revenue would fall because of Jetstar's lower fares, but profit would rise.
That is because Qantas will make more profit margin on every discount passenger who transfers from Qantas to Jetstar, thanks to its lower costs, in turn due to the pilots, plus other things like using Avalon as a hub, charging for food and not having seat allocation.
The advent of Jetstar will be a fascinating episode in aviation, but above all it is a major industrial relations event.
[email protected]
============================================
How Qantas pilots acted on impulse
Alan Kohler
February 26, 2004
The breakthrough that got Jetstar flying came three months ago. The former Impulse pilots, now flying Qantas 717s, agreed to fly A320s for the same salary.
The immense significance of this may be lost on those whose contact with aviation is confined to trying to figure out where to stick the headset lead on different planes. But believe me, it is the start of a revolution.
Under the deal with the 143 pilots, the standard rate for a Jetstar A320 captain is $125,000 a year. The standard rate for a Qantas captain flying a Boeing 738 (the equivalent plane) is between $200,000 and $240,000. That is, Jetstar pilots will earn a little more than half that of Qantas pilots.
What is more, the Jetstar pilots volunteered for it. The 143 pilots unanimously agreed three months ago to fly A320s for the same pay as 717s. The pilots knew that the old Impulse fleet they had flown into Qantas was being phased out and the pilots would soon be out of a job.
It means that as the 717s (now to be labelled Jetstar) are replaced by larger more efficient A320s, the cost of running the new discount airline will fall from 8.25¢ per passenger kilometre to 7.8¢ - about 11 per cent below Virgin Blue's disclosed cost base.
Qantas chief Geoff Dixon says he did not have Jetstar in mind when Qantas bought Impulse and kept it as a separate subsidiary employing its pilots on the same rates. He did it "for a rainy day". With Virgin Blue at 31.5 per cent market share and rising - it is raining.
The deal with the Impulse/Jetstar pilots also has enormous implications for Qantas and, without wishing to get too carried away, for industrial relations generally.
Qantas pilots have now asked Dixon that they be able to transfer to Jetstar and are prepared to accept the lower rates when they fly its planes. Negotiations are continuing. But the Qantas pilots want seven out of every 20 commands (captain's positions) at Jetstar to go to Qantas pilots (they want to try to maintain their overall pace of advancement to command).
Dixon says he will agree to that only as long as Jetstar pilots can advance to Qantas commands (on Qantas pay rates, that is). So far the Qantas pilots are baulking at that.
In general, it is a sort of bloodless Pilot's Strike Mark 2, where the lower-paid Impulse pilots have brought a low-wage infection into the Qantas host.
Over time, Jetstar will take market share from Qantas. In fact most, if not all, of its passengers will come from Qantas. After all, even Dixon acknowledges that Virgin Blue's market share is likely to remain the same (between 30 and 35 per cent).
This means Qantas's capacity will be reduced and some routes will be dropped as Jetstar brings in more A320s. Qantas pilots will then have this choice: switch to the discount airline on half the pay or lose their jobs as Alan Joyce at Jetstar hires pilots from somewhere else. The pilot pay cut is the first breakthrough that helped Dixon get Jetstar off the ground. The second is that Joyce will be able to match European discount productivity.
He believes he can get up to 1000 hours a year flying time from the pilots, as opposed to Virgin Blue's 700 hours a year (and Qantas's much less).
That will be achieved largely through faster turnarounds - 25 minutes on average, compared with 30 minutes for Virgin Blue and 35 minutes for Qantas.
European discount carrier Ryanair has been helping Joyce design the turnaround processes, but the main thing is that there will be no fixed seat allocation - everyone will be able to sit where they like, which will save time on the ground. Also, flights will be closed 30 minutes before take-off.
In time, it is possible that Jetstar will grow to a third of the market, with the Qantas full-service airline shrinking to a third. If that happened, Qantas group market share would remain the same (around 65 per cent), revenue would fall because of Jetstar's lower fares, but profit would rise.
That is because Qantas will make more profit margin on every discount passenger who transfers from Qantas to Jetstar, thanks to its lower costs, in turn due to the pilots, plus other things like using Avalon as a hub, charging for food and not having seat allocation.
The advent of Jetstar will be a fascinating episode in aviation, but above all it is a major industrial relations event.
[email protected]
============================================