Aviation workers caught up in air war

[Thylacine]

SMH
Elizabeth Knight
November 21, 2007
We received a taste yesterday of why Geoff Dixon at Qantas feels he needs to further cut costs from his airline. Emirates announced it was nearly doubling capacity to Australia over the next couple of years and in doing so stepping up the competition with the national carrier.
This tells us two things. The first is that Qantas is under the gun to further cut its cost base. The second is that the international aviation industry is in good shape and comfortable about adding a lot of capacity.
One reason Qantas and Virgin Blue have experienced such wonderful improvements in returns in recent years is that costs have continued to fall and demand for domestic and international travel has been especially strong.
But Dixon is only too aware that he has to continue to work on his cost base. He has limited control over the cost of fuel (other than hedging) and has recognised that the low hanging fruit continues to be labour costs.
When the Qantas chairman, Margaret Jackson, announced her resignation a few months ago the most obvious replacement was Chris Corrigan, the former investment banker who had played hard ball using strike breakers to snuff the waterfront unions in the 1990s.
He is a bloke who understands how to appropriately value companies, and he has chaired Virgin Blue.
The revelation this week that Qantas appeared to have a contingency plan in the event it could not reach an appropriate enterprise bargaining agreement with its flight attendants suggests that having Corrigan on side may not be a bad tactic.
Qantas may well be negotiating with or training a workforce to replace its incumbent workers in the event that things get nasty. And Corrigan has much first-hand experience in this regard.
This is the rude end of industrial relations. Dixon has been waging a more subtle game against labour costs for years, and it will continue.
The modus operandi has been more about the shift from Qantas mainline business domestically and internationally to new lower cost services from Jetstar.
The latest additions to the fleet Qantas announced last week will be primarily directed towards increasing Jetstar services.
This will not happen overnight, but in five years or so the Jetstar brand will dominate in a way it does not today.
Similarly Emirates, with its top-of-the-line service, yesterday would not rule out getting into the no-frills space with, presumably, another brand.
The mass leisure market in travel is the new reality. There remains a top end that will pay for service but this is not where the growth is.
The strong international and domestic economies are taking care of the top line growth, but Dixon is clearly looking to resort to more desperate measures to get his cost line under control.
If the unions come to the party the fight will not escalate - at least not in the short term.
If the workers surrender gently and accept the fact that the world has changed, then it may not get ugly.
But clearly Qantas is working on contingencies. And the increased colonisation by Emirates announced yesterday gives Dixon just the fodder needed to mount a case that Qantas is working with one hand behind its back.
It is hard to escape the conclusion that one of the prime motives for the attempts to privatise Qantas earlier this year was the desire to keep these potentially hostile negotiations away from the public glare.
Against this backdrop Qantas and many others in the industry are staring down the barrel of increases in capacity.
Qantas announced this last week ,and Emirates followed the lead yesterday.
One of the factors contributing to the success of the better airlines over the past 18 months has been capacity constraints.
This is all about to come to an end.
The game of moving the pieces around is well and truly afoot. Who if anyone is going to be able withstand the assault?

[IAW]

Lets see them build up a contingency force of L/AME scabs. Bring it on!

[silvafox]

Corrigan is back eh. Bastard Boys round 2. We are all in for a hell of a fight with the bastards! Bring it on..

[Ultralights]

i got out of the airline industry for good reason, its the new Shipping! crewed with very low paid immigrant workers. there will never be another decent paying job in air travel.

[Wod]

Yeah but!

It's moving towards crunchtime ladies and gents, and Dixon isn't necessarily the baddest guy.

Emirates is a heads up for everyone on this forum.

What do you want australian airline companies to do?

The gummint is no help - I mean how come Emirates have all these traded rights.

What GD has been preaching for a long time is that the price of doing nothing is that Australian airlines (not just QF) contract and all future growth in capacity is foreign. So if "we" want a successful QF group, costs must come down.

It's not just QF. Virgin are about to stick their toe into the trans Pacific market. Remember when Ansett did Japan and Hong Kong, and were looking at USA and Europe??

The headline article's fundamental point is not industrial; it is economic.
No change QF: no grow QF : no grow QF : contract QF.

Tough but true. :(

[Dark Knight]

Kev & Julia will fixit and look after you!

But, then Hawke in a Labor government with the complicity of the ACTU under the presidency of Simon (Simple) Crean introduced Individual Contracts some 18 plus years ago. But you would not listen to the predictions of where this would take us)

Keating in another Labor government turned them into EWA's/EBA's.

Kevin, Swan and other Labor members berated the Coalition Government led by Prime Minister John Howrd to continue the reforms of Hawke/keating labor governments and when this occurred, now say they will Rip these reforms up despite:

Record unemployment
A booming economy
600,000 Australians becoming eligible for the pension
Majority of Australians over 60 Do Not have to pay income tax on retirment incomes
No Government Debt
The Future Fund
The University fund
and so it goes on.

Australia has crossed the threshhold of perhaps the greatest period of prosperity & wealth creation this country has ever seen, a period properly managed will last for some 20 to 30 years.

Today one can easily identify some 700 Billion, that is correct 700 billion, dollars of projects in the pipeline (occurring within the next ten years) and the benefits of this will flow through to every Australian through jobs, wages and into our pensions and superfunds.

And we are going to give management of this to a bunch of ex-union hacks and party officials who, it should be remembered, could not run a department store in Melbourne Central?

Nor can they effectively run their own unions as membership has fallen to an all timr low with the union officials all bailing out hoping to get safe jobs in our parliament as Parlaimentarians?

And you reckon Kev, Julia, Swan, Combie, et al are going to rip up the current indsutrial laws and look after us?

Here's another gem particularly relevant to your Kids future:

Apart from China and the Middle East (take a look at developement there, their economies and where they are spending their money ie what they are buying) in India, by the year 2015 (just under 8 years) there will be 550 million teenagers, each and everyone of them is going to want an IPod, Plasma TV, mobile phone, car, better standard of living, etc.

It is right and proper they should do so however, they are also going to need the energy (ie Global Warming) to produce and power this.

10 years later they will be 20 year olds at work and the challenge for us is to be part of this economic shift for if we do not we, and our children, instead of working as partners with them, will be working for them!

Whether we like it or not, the world changes rapidly around us and the challenge is to identify the changes creating opprtunities within these changes to benefit us maintaining and improving our lifestyles. Returning to the systems of the past is no longer a viable option and will see opportunities and jobs disappearing overseas at an increasing rate.

Kev, Julia (maybe) and Combie reckonise this but say anything to get your vote but it ain't going to happen and should it happen then, the jobs and opportuities will disappear overseas quicker than you can fill in an application form.

We need to be one hellava lot smarter than thinking `Bring it on' and whinging about low paid immigrant workers who just happen to be the ones working for highly professional & successful airlines who are our direct competitors.

For example the benefits from an economy working with record low employment and the afore mentioned projects will create a need for more jobs & workers than we can supply from within under any government and sending serm work offshore will ease the pressure however, jobs will still be created here.

Have a look at Emirates projected growth within and to Australia announced yeasterday.

Time for a serious rethink prior to putting a number on Saturday's green paper.

It is your future.

DK

(who just happens to still be a card carrying union member and ex union rep. and, being retired, increased interest rates suit me just fine)

[silvafox]

spare us the political drivel 'Dark Knight'. "Interest rate increase suits me fine" What kind of statement is that? Says it all really. Quote from yesterdays SMH, "we live in a community, not an economy". Think about it DK, really hard...

[AEROMEDIC]

There IS another world out there, Dark Knight....... Anyone would think that if Kevin Rudd and co. get in, that the country suddenly falls apart and any form of civilisation vanishes.
Open the door of your closet, come out into the daylight and smell the flowers.
Have your say on Saturday, and to live a litle, enjoy a post election BBQ on Sunday .:)

[Roost]

Isn't the point of his email saying they need to cut costs so they can take on Emarites?

Emarites have a great package so why can't Qantas ?

[Shlonghaul]

there will never be another decent paying job in air travel.
Unless you're Geoff "Darth" Dixon & Co.!!! :E

[Whiskey Oscar Golf]

Nice monologue Mr. Knight. I agree we've had one of those once in a generation booms too. What have we got to show for it? Increased infrastructure? Don't think so looking at those bulks lined up at Newcastle or any of the other industry bottlenecks around the way. A telcommunications system that's the envy of the developed world, don't think so either. A health system that looks after those pensioners you're talking about, nah think not. How about an education system that's equitable and world class? MMM maybe not. An employment system that treats everyone fairly and keeps those old time family values, nah costs too much and we'll fail.

There will be some harsh judgements thrown down on our generation for taking those $50.00 tax cuts rather than making Australia a better place and keeping us at the top. Mr. Howard and co will not be looked at by historians as being insightful or forward thinking and we'll just be seen as greedy. Yeh me too.

Sorry for getting into a political monologue myself people, but this whole thing is getting to me and I just want it done.

As to GD and co I hope he takes his 20 peices of silver and lets some smart people run the show in a way that shows you can be competitive and productive without looking like a third world dictator.

[alidad]

dark knight,
try for an education before you spew your right wing ideologies into cyberspace.
It is proven that a company trying to improve margins will NOT achieve that by cutting labour costs as the market place will demand that those savings be passed on; in our case by lower fares and freight charges The only way ahead is to achieve competitive advantage by CAPITAL INVESTMENT to improve productivity. The average wage in China is currently in the order of $120 US per month. Do you rejoice in our wages and conditions being driven toward that for no net gain for anyone in this country?

You must live with passafrozo (or what ever that little boy's name is...) who has NEVER had to survive outside of a government sponsored nursery.

[Sunfish]

Throw Qantas to the wolves. I'm sick of capacity constraints to protect an "Australian" airline that doesn't seem to want to employ Australians, just bleed them of cash.

Memo to Qantas Management: No one wants to fly on your scummy airline anymore. We will do everything we can to avoid having to fly with you, but since you have a stranglehold on capacity, sometimes we can't avoid you, in which case the simplest method is to board blind drunk and try to sleep through the flight.

As for Qantas staff, I'm sorry for you.

[lowerlobe]

The article by Ms Knight sounds as though it was scripted by Darths spin Doctors.....

How many times during his tenure has Darth come up with some doom and gloom scenario.

Perhaps if he had improved his product and worked with his employees then the travelling public would not want to fly with anyone else.

[QFinsider]

Dixon is a one trick pony.

His political grandstanding carries little weight in Canberra. He is from a bygone era, he will not win, he backed off until he survived the AGM, now it's the same old rhetoric. Wonder where the share price will be in six months? Probably ripe for another takeover offer! Sad thing is, they can't fly the planes :E

[Thylacine]

Not sure what your point is Dark Knight? Your economic treatise is all very interesting but the original post was about Qantas' need to cut costs to compete initially with Emirates but more broadly in an 'open skies' environment with increasing competition from international LCCs that is on the horizon.
The most likely scenario, discussed at length on this forum, appears to be the growth of Jetstar at the expense of QF until every possible cost savings has been extracted and one can assume that will include pilot's salaries.

[apache]

Quote from yesterdays SMH, "we live in a community, not an economy".

I believe that the two are synonomous. ie you cannot have an economy without a community, and you cannot have a community witrhout an economy (in the developed world).

Why is it that we now quote journo's to SUPPORT our arguments when we constantly bag them for aviation reporting.... which I agree is woeful. If they are too lazy and inept to report accurately and FAIRLY on aviation matters, what makes you think that their incompetence is limited to aviation? maybe this little gem was overheard in a 3rd grade public speaking contest, and old mate who was probably half drunk atthe time thought "gee... that sounded good. I'll use that"

[Moniker]

Roost It's Emirates, not Emarites. Having flown on both carriers I much prefer the EK brand for o/s travel.

[Brutus]

Well Moniker, I reckon this whole Emirates = Great Product thing is a myth. I have been lucky enough to travel in first class on Emirates, Qantas and other airlines and fair dinkum, Emirates comes up short. The only area in which Emirates can claim a win is in the sheer number of cabin crew; there were so many of them they couldn't all fit in the galley so were constantly in the cabin.
In my opinion that wasn't a blessing either, I felt like someone was looking over my shoulder the whole time. I reckon Qantas has a good balance between the product offered and level of service delivered - in P class anyway. Y class is probably a different matter.

[Launchpad McQuack]

Y class is probably a different matter


Having flown Emirates for the first time yesterday (Y class), all I can say is that the service was outstanding and I was very impressed...they were extremely helpful, the food was fantastic etc etc.

I'll be flying with them again on much longer trips in the very near future and am looking forward to it.

LP