View Full Version : Offshoring and Cabotage

Prong Wallop
30th Oct 2010, 09:56
It certainly appears that the opponents of the latest Jester oops sorry Jetstar machinations to use overseas pilots are entirely missing the point regarding the validity of the strategy undertaken by Buchanan and his cronies. This is notwithstanding the fact that obviousely management have a vested interest in minimising costs so that they are eligible for their performance bonuses, however that is another thread.
1. The basis for the strategy seems to be founded on the ability of Jetstar to enter into commercial arrangements with overseas operators to fly international routes. What an overseas entity does, whether Jetstar is a shareholder or not, is really of no consequence to Australian pilots, providing the routes are not included in any of the Australian bilateral arrangements.
2. Once the flying comes under the auspices of an Australian determination it changes the game entirely. Jetstar essentially cannot just give away seat capacity to a subsidiary entity, or anyone else for that matter unless they are intending to give away the revenue stream and any profits that may result. This would obviousely be pure fiction and nothing less than subterfuge on Jetstar's part should they claim this outcome while being a shareholder.
3. These joint service agreements are still strictly controlled and note that pooling of revenue is disallowed as is independance of service provision. Jetstar will be drawing a very long string if and when it moves to the next step, as I believe they intend to do, and that is have their foreign entities operating their bilateral capacity with Australian Pilots who are contracted to their subsidiaries. This is an abuse of their entitlement to bilateral seating capacity and a blatant use of cabotage, illegal everywhere in the world except, would you believe, Chile and Australia.
We are indeed on a rapid descent to the third world level.

31st Oct 2010, 00:53
A very astute post Prong Wallop.

· Jetstar cannot just give away seat capacity to a subsidiary entity, and
· Foreign entities operating their bilateral capacity with Australian Pilots ...is an abuse of their entitlement to bilateral seating capacity and a blatant abuse of cabotage.

However, part of Albanese’s white paper review of Australia’s aviation policy proposes replacing ‘Bilateral Provisions’ with ‘Principal Place of Residence Provisions’.

Public detail is scare, but suspect changes will be designed to facilitate cunning circumvention of the issues you have raised.

The pilot unions need to take a close look at legislative changes flowing from the white paper. While they continue to expend effort on small change industrial issues whilst ignoring game changing commercial issues, Australia's pilots will remain on a hiding to nothing.

31st Oct 2010, 01:50
Spot on! Sorry to say it, but reckon QF is all but done. Myopic preoccupation with growing Jetstar and neglecting Qantas will soon be seen for the folly it is.

On September 29, 2010 – ‘BA, American Airlines and Iberia signed off on a strategic alliance that will see them cooperate on flights between Europe and North America.’ Timeline available from: Timeline: BA/Iberia in profit as merger nears | Reuters (http://www.reuters.com/article/idUSTRE69S1HY20101029?pageNumber=2)

When Australian principal place of business regulations are enacted, expect BA & AA will ‘find reason’ to walk away from JSA agreements with QF.

Consequence - QF no longer be ‘competitive’ to the UK & US.

Jetstar will come to the rescue. Memorial Service will be held for Qantas.

Root Cause! Failure to include Qantas in BA's ITA initiatives.

31st Oct 2010, 05:16
A few facts of life:

(1) Qantas group aircraft can be quite legally maintained anywhere suitably licensed by the local NAA, without CASA approval.

(2) Qantas group aircraft, VH registered, do not have to be based in Australia, and this is all quite a separate issue to the provisions of the Qantas privatisation restrictions, International Airservice Commission allocation of route rights/ capacity etc.

(3) There is provision in the Civil Aviation Act 1988 for Australia to enter into ICAO 83bis agreements.

(4) An 83bis agreement essentially allows a local NAA (say CAAS) to substitute for CASA in the provision of ICAO compliant administration of "the rules".

I am sure you can work out the rest of the calculation, and pilot salaries are almost a nil contributor to the whole cost/risk ( as in financial risk) equation.

Tootle pip!!

31st Oct 2010, 14:44
All very interesting Guys, but haven’t you overlooked just one teeny weenie point.

Agree that any move to dilute national ownership requirements would help Jetstar Asia’s global expansion and may even help BA’s ITA ambitions, but wouldn’t it also open the door to Virgin Atlantic and SIA? Talk about letting the wolf in the door.

Then again, Robert Gottliebsen’s is saying QF’s got it wrong, if Virgin’s got it right.

Surely not!

1st Nov 2010, 00:38

Once again, get your facts straight.

Qantas Group basing aircraft anyhwere outside Australia does not dilute national ownership in any way. It has no effect on the nationality of the company, of the AOC, or the right to be seen as an Australian company.

Jetstar VH- aircraft based in Singapore in no way means they become Jetstar Asia aircraft (even if they are "cross hired" to Jetstar Asia- for want of a better description), likewise if Qantas chooses to base mainline VH- aircraft in Singapore, as opposed to Australia, has precisely NIL effect, as far as any traffic rights, bi-laterals or the Qantas Sale Act is concerned.

I am reminded of 1989, when the AFAP said Hawke can't do a,b,c,d and we will win, Hawke did a,b,c,d and the AFAP lost.

This is what I see here: Qantas group can't do x, y and z, because of what some of your see as "consequence", when, just as in '89, the basic pilot premise is wrong.

Qantas can do x,y and z without effecting their legal position one iota.

Tootle pip!!

1st Nov 2010, 03:37
Suspect Lead Sled is talking about aircraft ownership and Prong Wallop about corporate ownership. If so, isn’t the discussion thus far about apples and oranges.

If what both have to say is correct and offshore basing of Australian registered aircraft is, as Lead Sled says, permissible; it would seem that Prong Wallop’s issue is rightly with any such operator relying on Australian international route rights if they are not 51% Australian owned.

In which case, believe the point raised by Struggling is correct. Sorting it for one, will fix it for all and open Australian aviation to unfetted global competition.

Yep! Australian pilots need a new strategy. Arguing the toss about industrial/operational matters won't cut it.