Essential Reading: "Can Qantas Survive" (BRW July 10 -16)

[Pedota]

Further to the "Dixon's Daring Strategy" thread (which seems to have lost its way), the current edition of BRW has an interesting interview with Geoff Dixon under the heading of “Can Qantas Survive” and “Wounded Kangaroo”. It purports that the Qantas board has privately questioned whether the airline can survive . . . and concludes that the answer is still a matter of debate.

The article concludes that “Time is running out for Qantas. It needs to make radical changes. It must cut its complex costs, including removing scheduling constraints, introducing tailored business streams, outsourcing more of its processes, selling assets and opening up subsidiaries overseas without the labour constraints that it faces in Australia".

Specific “next steps to survival” listed are:

1. Take a tough stance with the group’s 14 militant unions . . . to reduce the 20% cost differential between VirginBlue and Qantas to 5%
2. Implement a 2 year $billion cost-cutting program – including hiring lower-cost overseas labour
3. Convince the Federal Government to remove the 49% foreign ownership gap to reduce the cost of capital
4. Persuade the competition regulators to allow the Qantas/ANZ alliance to proceed
5. Ensure staff morale does not fall too far as management slashes the number of staff and introduces new workplace practices
6. Stop VirginBlue from increasing its market share to 50% - which would be ‘catastrophic’ for Qantas. To be done by a price war which will slash profit margins
7. Overhaul the company’s business model to make it more efficient
8. Lift the share price above $4.20 (the price investors paid for an $800m rights issue last August)
9. Ensure that British Airways dumps its 17% in Qantas – they already have another investor line up
10. Sell non-core assets, including terminals at Melbourne and Sydney airports and outsource non-core activities to reduce the complexity of running a full-service airline

The following article “The Secret of Qantas” is also very interesting . . . it refers to the company being very well prepared to crush union dissent to proposed changes. According to BRW, a team of strike breakers known as the “day 21ers” have been in training and the airline is well placed to minimise operations in the case of a disruptive strike.

It all makes a damn interesting read!

(Unfortunately you need to be a subscriber to BRW to access the full article on line at www.brw.com.au, but of course it is available at news stands).

[Torres]

Very interesting Pedota. I said Qantas has a longer term problem a year ago when everyone thought Qantas was "riding high".

The single biggest factor that brought Ansett down was the loss of around 8% (from memory around 45% to somewhere in the 30's%) in market share, resulting in a significant reduction in revenue, for the same cost structure. The market share loss was caused in part by the emergence of Virgin and the 767 "grounding" fiasco.

When Ansett failed Qantas geared up for an 85% market grab - remember the new aircraft orders etc? With Virgin's market share rising significantly above the early estimates of 15%, Qantas must have a longer term problems serviceing it's debts and capital costs.

As much as the unions et al will squeal, for an international company in a globalised economy, the BRW article makes heaps of sence.

[Ushuaia]

I'm a subscriber... here you go.

Wounded kangaroo: Can Qantas survive?
By Adele Ferguson

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When Qantas's chief executive, Geoff Dixon, releases the annual results in August, the market will be praying there are no more ugly surprises. Dixon has already downgraded the airline's profit forecasts twice in the past few months, most recently on May 8. But there have been times since then when Qantas has lost $3-4 million a day. Dixon says there are always periods when a full-service airline loses money, but in the eight years since he joined Qantas, he has never seen tougher times. "SARS [severe acute respiratory syndrome] is something that has never happened before. There was a lot of hysteria attached to it and it came on top of an economic slowdown, the war with Iraq, and industry overcapacity. Low-service airlines also played a part, but I'd have to say SARS played the biggest role."

Qantas makes most of its money from international and domestic travel. International travel was hit hard by the outbreak of the SARS virus, but so was domestic travel because 15% of the group's domestic market comes from inbound traffic. On May 8, Dixon warned the market that full-year profit before tax, for the year to June 30, 2003, would be 20-30% lower than the generally expected figure of $707 million. In other words, pre-tax profit would be between $495 million and $565 million. Given that pre-tax profit in the first half of the year was $513 million, the second half is shaping up as disastrous.

Sources close to the company say the board and senior management expected a poor performance from the international business but were shocked by domestic operations. This prompted questions about the survival of Qantas in its present form, particularly if it fails to win regulatory approval to take a 22.5% stake in Air New Zealand and if Virgin Blue fulfils its pledge to take another 22 points of market share from Qantas, increasing its share to 50%.

This would be terrible for Qantas, and it has prompted the board to look for ways to ensure the survival of the company in the face of structural changes in the worldwide aviation industry. Options include taking a hard line on unions, slashing labor costs, moving some operations to other countries, restructuring the entire domestic business, slashing $1 billion from total costs, cutting capital expenditure next year by $1 billion, and pinpointing assets for sale or outsourcing. All of this is fraught with danger, particularly from the union movement, which could strike at any time and bring the airline and the country to their knees.

Dixon says survival is not guaranteed. "Despite the demise of Ansett Australia and numerous airlines abroad, some people think Qantas will survive no matter what. In fact, they misread the signals and imagine that the Ansett collapse somehow guarantees Qantas's future. This simply is not true - it faces many obstacles in surviving."

These obstacles include a large, militant labor force; a business that is tied to prodigious physical infrastructure; complex fleets of aircraft; old information technology systems; and a low-cost rival, Virgin Blue, which can offer lower prices on Qantas's most profitable routes. This is being compounded by the number of full-service airlines, including United Airlines, that are under bankruptcy protection and are able to lower their costs by billions of dollars a year. Such cost cutting is making it harder for Qantas to compete. Dixon says: "United Airlines is going to take $US4-5 billion out of their cost base; $US1.9 billion of that will be in labor costs. It is a major competitor of ours on the Pacific [route] so we have to look at that and see how will that affect us. We don't have chapter 11 or governments backing us and we don't have government ownership sheltering us."

Dixon started meeting these challenges last year with a two-pronged strategy of improving the operating performance of the airline and diversifying its earnings away from straight airline operations, into subsidiary businesses such as travel, catering and freight. Last year, these businesses contributed 26% to total group earnings and, by 2005, are expected to produce more than 33% of total earnings.

However, the obstacles that the company is facing, internally and externally, are coming with such velocity that the board and Dixon realise that they will have to speed up these changes or face eroding market share, more red ink and a falling share price.

In early June, the board, with Dixon's blessing, appointed Dennis Adams, the head of Qantas's international low-frills subsidiary Aus-tralian Airlines, to lead a taskforce to look for ways to reduce costs in the domestic business and to develop a new business model. The purpose is to overhaul the domestic business model and look at whether the group should outsource some of its processes and assets. Any savings that Adams finds will be in addition to the $1 billion cost-cutting program outlined in the group's "Sustainable Future" program. If Adams does his job well, sources suggest an extra $500 million could be found each year. This would have a big effect on the group's bottom line. It would also go a long way towards closing the 20% cost differential between Virgin and Qantas.

Adams has been given carte blanche to go through each part of the domestic business and recommend ways to simplify processes. Dixon says: "He will work with me and others to make sure we redesign our whole offering: how we fly our aircraft, utilisation, product offering, our offering at the airports - the whole lot. It will include scheduling, the load factors we are aiming for, how many aircraft we will have in two classes, how many we will have in one class."

One of Adams' mandates is to offer a markedly different product by July 1, 2004. This could include offering an alternative single-class low-fare service on all the main Australian domestic routes. Qantas has already introduced a single-class international budget operation - Australian Airlines - that could be extended to domestic flights as well.

Adams was the executive in charge of starting Australian Airlines. There is speculation in the industry that the company intends to start more airlines overseas, using a low-cost model similar to its Jet Connect subsidiary in New Zealand. "They would set up an operation like that in Asia, feed all the traffic into Singapore, using a low-cost model," a source says. Dixon denies the speculation but says it does not mean the company does not think about it from time to time. "We have no plans that I would want to divulge for starting airlines. What we want to do is ensure that the Qantas group of airlines are in good shape. But if opportunities come up we will be interested."

Until now, Qantas has been run as one business, with its domestic and international operations overseen by Dixon, rather than operating as separate business units with separate structures, chief executives and profit centres. This has worked well in the past but with the onslaught of the low-cost business model of Virgin, the model needs modernising.

Dixon says the group is also looking at other ways to save money and make the business more efficient. For instance, it will reduce its capital expenditure in 2003-04 by $1 billion, to $1.8 billion. It will also delay the delivery of some of the new planes it has committed to purchase in the next four years. In addition, it is looking at other ways to save money, including asset sales, outsourcing some of its businesses and its ownership of up to $2 billion in property assets.

Qantas is one of the few airlines in the world that owns its terminals. Dixon says it could sell and lease back some of these assets, or spin them off into a separate property trust. "I think it is neutral owning or leasing. Not many airlines own their own terminals. We make money out of the terminals but it is money tied up. We don't feel the need to sell them at the moment. If someone wanted to buy them, we would listen, but there is no need to go out on a fire sale É We are looking at those sorts of elements. I suspect it is more efficient not to own them. Peter [Gregg, the chief financial officer] is looking at those possibilities as part of our program."

The company could also save money by outsourcing more functions and processes, including its data systems, which are based in a building in George Street, Sydney. Qantas owns its computer systems and employs the staff to operate it. This costs tens of millions of dollars a year and the replacement value of the equipment is more than $100 million. Other airlines, including Singapore Airlines and Cathay Pacific, have outsourced their computer systems.

Qantas is also looking at ways to slash its sales and marketing budget. Dixon says Virgin Blue sells more than 60% of tickets on the internet; Qantas sells 25%. "The internet is a lot cheaper and we intend to do a lot more with it."

Other options include using part-time, casual and low-cost overseas staff to reduce its labor costs. It has already started this with Jet Connect, which is preparing to fly across the Tasman from September. Qantas is hiring New Zealand pilots and staff (at a time when it is sacking Australian staff) to fly 27 two-class return services a week - 14 of them between Sydney and Wellington - to replace existing Qantas services. There will also be services from Brisbane and Melbourne to Wellington and Christchurch. The lower labor costs in New Zealand and more flexible enterprise bargaining agreements are estimated to give Jet Connect an overall 3-4% cost advantage over the Qantas operation.

In early June, Dixon started to talk tough about labor costs. He recently announced big staff cuts. He told the market that 2000 positions would be made redundant, a further 800 would go by attrition and 400-600 full-time jobs would be made part-time.

In a speech to the Australian Council of Trade Unions, he said: "All of the major airlines understand that September 11 merely catalysed the consequences of the underlying structural problems of the industry - that revenue and cost structures are fundamentally out of step - and they are now focusing on labor costs as the make-or- break of their restructuring efforts." He says: "Qantas has 14 unions; Virgin has three. We have lots of enterprise bargaining agreements. Each one is a long process to go through, and although it is difficult, it is becoming easier because we don't have any other options and we can't move because of


the sheer economics of the business."

Dixon says he has no alternative to tough talk. If it leads to strike action, then he is prepared for it. However, he would prefer to deal amicably. "I find it easier to deal with those sorts of things when you have to do them. We are after efficiencies, and there are a lot of practices, like rostering, that have to be tackled."

Sources inside the industry say the technology Qantas uses for its rostering and scheduling systems is fraught with inefficiency and open to abuse. For instance, the company is believed to have various ghost workers on its books, which add to its wage costs. (Ghost workers are employees who are logged on to the system and are paid an eight-hour day even if they are not working.) This sort of behavior could have been stamped out but the unions have threatened to strike. In February, Qantas tried to introduce finger-scanning machines to log the work attendance of baggage handlers at Melbourne Airport, but after strike threats from the Transport Workers Union, the plan was abandoned. The TWU called the proposal an invasion of privacy. Qantas has since introduced swipe cards to improve the system.

A report by Cardiff University and the International Transport Workers Federation noted that: "Labor costs have now become the largest single cost element and a major factor differentiating one airline's unit costs from another." About 29% of Qantas's total costs are labor, fuel is 15% and the rest covers engineering, maintenance, sales and marketing.

Dixon says the cost of labor is related not just to the size of the workforce but also to the flexibility of staff and the productivity gains that flexibility brings. He says that with 14 unions, there are many demarcations. But at Virgin Blue, for example, air stewards clean the planes, including the toilets, at the end of each flight.

David Huttner, Virgin Blue's head of commercial operations, says it is workplace flexibility, rather than lower wages, that adds to the cost differences between Virgin and Qantas. "For example, airports can be very busy between 6am and 8am, so some staff in Brisbane come in at 5am, work the airport at morning peak, then head to the call centre to complete their shift from 9am, which is when the travel agents and corporate customers come into the office. Another example of workplace flexibility is if a cabin crew member goes to the airport and feels sick, we can use check-in staff to step in, because they have done flight training. Besides saving costs it also means the airlines aren't delayed while we call up a reserve crew."

SURVIVAL STRATEGIES

Qantas will continue to push for the $NZ550 million deal with Air New Zealand, which, if it goes ahead, will benefit Qantas by $NZ171 million a year from 2006. If it gets knocked back by the New Zealand and Australian regulators in August, Dixon says he will appeal. The deal is important for Qantas because it will allow it to lower its cost base. Qantas's disclosure document to the NZ Commerce Commission reveals that Qantas's cost of operation is 20% higher than Virgin Blue's, at 10¢ per passenger kilometre, compared with Virgin Blue at 7.9¢. The report also shows that Virgin's market share on the key Melbourne-Sydney-Brisbane route at 35% and growing.

Sources in the Australian Competition & Consumer Commission say the proposal is anti-competitive and the undertakings being offered by Qantas and Air New Zealand are not enough to get the deal through. Dixon's best option - if an appeal fails - is to lobby both governments to override their respective regulators' decisions.

Virgin Blue has gone from virtually zero market share three years ago to 28% today. Dixon says the natural market share for Qantas is 65-70%. He says there is a line in the sand at which the company has to fight back. "We say our critical mass is about 65-70%. They have about 28%, so we aren't there yet." If Virgin goes beyond a 30% market share, there might be a price war. However, Huttner says: "The line in the sand seems to have shifted. We believe we are going to get to 50%."

Besides worrying about Virgin's encroachment on its market share, Dixon is trying to find ways to persuade the Howard Government to change its foreign-ownership policy on Qantas. Under the Qantas Sales Act, foreigners cannot own more than 49% of the airline; any single foreigner cannot own more than 25%, and foreign airlines as a group cannot own more than 35%.

Last year, the company failed to get the act changed. Dixon says: "We are competing in markets distorted by government ownership but we have this rule that only applies to Qantas. We are fighting with one arm tied behind our back. We are revisiting it. We know the concerns of the Government and the Opposition. We won't have a big public campaign this time.

"We will continue to talk to the Government and believe there are ways that will allow Qantas to do this while having enough safeguards to prevent it falling into foreign hands. There may be a kangaroo share. We are looking at how we can put a proposition to the Government that will allay their fears and those of the Australian public."

Dixon says the act's limit on foreign investment restricts the airline's ability to get equity capital. It also imposes an artificial ceiling on the group's share price and increases its cost of capital. "There is no other reason we would want to do it. We have been able to hit on 49% foreign ownership for quite a few weeks now, and they can't go any higher than that, and so they have to go somewhere else."

ABN Amro's aviation analyst, Bruce Low, says: "If Qantas managed to persuade the Government to lift the cap, Qantas would be a world leader," he says. But removing the foreign-ownership cap would be difficult because it would affect the many bilateral agreements that Qantas has with other countries.

Low says that with all the structural changes taking place in the international aviation industry, it is only a matter of time before there is big consolidation. SARS, the fear of terrorism, an economic downturn, and the success of low-cost airlines have combined to bring the worldwide aviation business to its knees.

The International Air Transport Association predicts that by the end of 2003 its member airlines will have lost $US30 billion since September 11, 2001, wiping out all of the profits made by the industry since 1945. Worse still, the industry is not expected to return to profit until 2005, as more airlines face bankruptcy or seek protection from their creditors. These include Air Canada, United Airlines, Sabena, Swissair, US Airways and Hawaiian Airlines. Others are merging or being propped up by governments. The result is that they are focusing on how to change their hub-and-spoke business model, which is no longer competitively sustainable. They need a new model to ensure survival.

Qantas is no exception. Although it is the most profitable airline in the world, this is only due to the collapse of Ansett the day after the September 11 terrorism attack in the United States. Ansett's demise instantly increased Qantas's domestic market share from 56% to more than 80% (it has since levelled out to 70%) and enabled it to move capacity to Australia from its depressed international routes. It is no secret that Qantas is where it is today because of Ansett's collapse. Sources in the company go a step further and say that Ansett gave Qantas two to three years' breathing space.

Time is running out for Qantas. It needs to make radical changes. It must cut its complex costs, including removing scheduling constraints, introducing tailored business streams, outsourcing more of its processes, selling assets and opening up subsidiaries overseas without the labor constraints that it faces in Australia. All of this will bring the company into direct combat with the unions. But if the airline is to survive in the long term, Dixon will have to put his ideology aside and do more than talk tough to the unions. He must act tough. "The day of reckoning is coming," Dixon says. Australians can only hope it is not too bloody.

The next steps to survival

1 Take a tough stance with the group's 14 militant unions to introduce more flexible work practices, which will help close the 20% cost differential between Virgin Blue and Qantas. Geoff Dixon's aim is to bring the differential down to 5%.

2 Make big inroads into a two-year, $1 billion cost-cutting program without causing too many morale problems and acrimony between management and unions. This includes hiring lower-cost labor overseas.

3 Persuade the Howard Government to lift its foreign-ownership cap from 49% to help reduce the airline's cost of capital and make it more internationally competitive.

4 Persuade the New Zealand and Australian competition regulators to allow the Qantas and Air New Zealand alliance to proceed. A decision will be handed down in August. If the proposal is rejected, Qantas will appeal.

5 Ensure that staff morale does not fall too far as management slashes the number of staff - by 2000, to 32,000 - and introduces new workplace practices.

6 Stop Virgin Blue from increasing its market share to 50%. This would be catastrophic for Qantas. Virgin has 28% of the domestic aviation market and Qantas says any more will affect Qantas's "critical mass". The result will be a price war, which will cut profit margins.

7 Accelerate plans to overhaul the company's business model to make it more efficient. If the airline hesitates, it will not keep pace with the structural changes taking place in the international aviation sector.

8 Lift the company's share price above $4.20, which was the price retail investors paid for an $800 million rights issue last August. On July 4, the stock was trading at $3.19 compared with $4.56 a year ago.

9 Ensure that if British Airways dumps its 17% stake in Qantas, another cornerstone investor is lined up to fill the gap, preventing an overhang in the number of shares on the market.

10 Pinpoint non-core assets for sale, including the terminals at Sydney and Melbourne airports, and outsource non-core activities to reduce the complexity of running a full-service airline

[Pedota]

Thanks Ushuaia . . . can you also please post the following article "The Secret of Qantas"?

[Ushuaia]

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And here's the other article in the same BRW:

The secret Qantas
By Stuart Washington

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Secret training for strikebreakers in Sydney. Labor-hire firms that pay some staff about $9000 a year. Staff flown in from New Zealand to work cheaply and break strikes. This is not the waterfront, this is Qantas. Until mid-May this year, Qantas was secretly preparing a strikebreaking team at its jet base emergency procedures training area at Sydney Airport. The team was known as 'Day 21ers' because training was needed every 21 days to maintain their qualifications to work on Qantas Boeing 747s for international flights. The Day 21ers were trained as strikebreakers, known to unionists as scabs, in case union negotiations with the international division of the Flight Attendants Association of Australia (FAAA) broke down. The strikebreaking team was maintained in readiness until the enterprise bargaining agreement was certified with the union - meaning it could take no further strike action - on May 22.

The FAAA had already been shown how far Qantas was prepared to go to defeat industrial action. On February 25, the union staged a 14-hour strike. Qantas management mounted an elaborately prepared campaign that drew strikebreaking labor from four separate sources - including Thailand and New Zealand - to defeat the strike. The use of strikebreakers defeats a union's trump card, the ability to withdraw the labor of its members.

Qantas's executive general manager of human resources, Kevin Brown, says Qantas had specifically trained ground staff to work as flight attendants before the strike. He says training of the Day 21ers was continued after the strike because the FAAA threatened further industrial action. 'We took the steps necessary to protect the interests of our customers,' he says. 'We don't maintain, on an ongoing basis, a strikebreaking workforce.'

The national secretary of the international division of the FAAA, Johanna Brem, says, in relation to the continued training of Day 21ers after the strike: 'It's a very heavy-handed tactic.'

The strikebreaking tactics show Qantas's willingness to take a hard line against unions. The efforts to thwart the strike also highlight Qantas's use of overseas labor to cut costs.

There is more of this to come. Qantas has announced that its 100%-owned subsidiary in New Zealand, Jet Connect, will fly to Australia from Wellington and Christchurch using lower-paid New Zealand pilots and flight attendants. The trans-Tasman flights undercut existing routes offered by higher-cost Qantas services, causing disquiet to the Australian and International Pilots Association and the domestic and international divisions of the FAAA.

As Qantas seeks $1 billion in savings and competes with low-cost carriers such as Virgin Blue, chief executive Geoff Dixon is boosting the rhetoric about looking overseas to cut costs. 'Whenever I refer to the possibility that Qantas may need to relocate work offshore, I am greeted with shock. But that is the reality of the aviation industry today,' he said in a speech on June 12. '[Although] we need to be successful in our efforts to secure greater efficiency and cost reductions, we still have to pursue actions in order to remain competitive.'

Linda White, the assistant national secretary of the Australian Services Union (ASU), says her union, which represents about 10,500 Qantas employees, expects Qantas to consider placing key parts of its workforce overseas. She says this could include call centres (about 1200 ASU members), Qantas Holidays (about 500 staff) and Qantas Business Travel (about 300 staff).

Her fears are not unfounded. In 1998, Qantas moved its passenger-revenue accounting business to Fiji, and then to Mexico, resulting in 130 job losses in Australia. White says the union is not aware of any firm proposals to place Qantas work overseas.

The planning for the FAAA strike illustrates Qantas's aggressive stance on union issues. Unionists attribute the strategy variously to Kevin Brown, the executive general manager of operations, David Forsyth; and a consultant, Ian Oldmeadow, who runs an industrial relations consultancy called Oldmeadow Consulting. Oldmeadow was industrial relations manager for Ansett during the 1989 pilots' dispute, which is credited with breaking the pilot union's negotiating power.

Before February 25, Qantas flew in flight attendants from Thailand and New Zealand. They travelled on other airlines to avoid being recognised by Qantas flight attendants. Qantas has hired its overseas staff - about 200 in Thailand and about 70 in New Zealand - through the international labor-hire firm Adecco since late 1998. Wages are about $9000 a year for staff in Thailand and about $24,000 for staff in New Zealand. An Australian Qantas flight attendant's annual wage is about $45,000. Brown says the pay is relative to local market conditions. 'You can't convert anything into Australian dollars,' he says.

Qantas also called in casual flight attendants from the labor-hire company Maurice Alexander Management (MAM) to help break the strike. Maurice Alexander, a former FAAA union official, has about 120 casual flight attendants on his books. He runs his business from a residential address in Hawthorn East, Melbourne. The business is not listed in the telephone book. Qantas also co-opted its staff to take the emergency procedures training necessary to work as a flight


attendant. These included management, and staff from other unions who were on a waiting list to train as flight attendants. The former vice-president of the FAAA Victorian branch, Neil Horneman, says he spoke to a check-in staff member who had been asked to work as a flight attendant without being told he would be strikebreaking.

Qantas's use of strikebreakers negated the union stoppage and allowed the company to exploit rifts between the domestic and international flight attendant unions. The casual flight attendants supplied by MAM are hired within the domestic division, and their casual employment arrangements were used to break the industrial action of the international flight attendants. The FAAA international division's national vice-president, Troy Warner, says: 'Geoff Dixon is playing us off beautifully and standing at the finishing line, clapping us on.'

Qantas's response to the strike exposes the different wage rates and conditions offered to the overseas flight attendants hired through Adecco. When approached by BRW, Adecco managers in Bangkok and Auckland referred inquiries to Qantas public affairs.

Johanna Brem says: 'They get less of everything except they work longer hours.' For example, Australian staff receive a minimum 36-hour break after flying a 14-hour flight. Overseas staff have a minimum 12-hour break after the same flight.

Last year, the New Zealand Flight Attendants and Related Services Association (Farsa) appointed an executive officer, Billy Boreham, to try to unionise the Adecco flight attendants. He says: 'They are working on planes doing exactly the same work as Australian colleagues, on substantially inferior terms and conditions [that are also] substantially inferior to an Air New Zealand equivalent.'

Boreham also says conditions at Jet Connect are unfavorable compared with Air New Zealand's domestic service, Freedom Air. Brown contests the claim that Jet Connect staff are low paid, but says: 'Their rate is lower than some other airlines in New Zealand, that's true.'

Boreham also highlights the difficulties of negotiating union representation for Adecco employees, including being allowed access to the flight attendants only at Adecco's Auckland head office.

'It's a bloody nightmare,' he says. 'They are a shield for Qantas. I could not get physical access to people to even consider the benefits of joining the union. I would stand in the car park at 5.15am in the pitch black and make contact with Adecco flight attendants because I could see them arriving in their cars in Qantas uniforms.'

Qantas is not ruling out anything in terms of future overseas opportunities. Jet Connect and its low-paid staff will soon be flying across the Tasman. Qantas is also maintaining its hard line on unions. Recently, with the approval of the Qantas pilots' union, Qantas employed casual pilots through a labor-hire company, Forstaff Aviation. As seen in the flight attendants' dispute, this could create a pool of strikebreaking labor for future industrial disputes.

Brem says: 'I think there is a lot of distrust between the employees and Qantas, and a lot of bridges have been burnt.'

Boreham is hoping to sign a new deal with Adecco on behalf of the New Zealand flight attendants employed for Qantas through Adecco. He says: 'My honest opinion is it's crap. But it's slightly better crap than what we were on before.'


Diary of a strikebreaker

A Qantas employee has spoken to BRW about his experience as a strikebreaker. He says he was recruited over the phone by a Qantas human resources (HR) staff member in the middle of last year. He worked in two separate strikes last year. He asked that he not be identified.

'The training is secret, even to your local manager. They ask if you are prepared to take on a role or a function during a strike period. We were all trained on multiple tasks: baggage handling, customer services, front counter. They kept using the word 'disruption' and asking for support. I believe they were targeting a lot of people who were non-union members, people stuck in between middle and senior management. If you say no, you were against them. The reason why I went along, it was showing a bit of loyalty to immediate management and the firm.

'[And it was a way to] experience other fields where you don't normally work. It all sounded pretty good at the time.

'When the strike came along, I had a call from someone at Qantas HR indicating who I should report to. [Interstate flights to Sydney and hotel accommodation had been pre-arranged]. They tried not to get local staff to report in local areas. Then you just go and gather in the conference room for a briefing. [We were told] we might be abused, to walk straight, say absolutely nothing, and if anybody was getting abusive or getting close or physical, just call security.

'Then everybody got allocated their task. On our site, fortunately, there weren't any incidents. They sold us in the manner of 'you help us and we will help you'. At that stage, I thought it was something I could help them with. Things have changed since then; there's a lot of restructuring and a lot of redundancies. None of the loyalty is shown back. Now they have turned around, retrenching right across [the company], which also affects the people who supported Qantas. It was actually during the strike period [we] realised how we had been used.'

[Alpha Charlie Bravo]

I was one of those MAM flight attendants called by HR in SYD to ask whether I'd be interested in two days B747 endorsement followed by a 'possible' weeks flying. No mention was ever made of strikebreaking by the anonymous caller from HR but I'd been given a heads up that morning, fortunately and declined.

At the time I wrote quite extensively about it on the CC forum, encouraging others being called to do likewise. Unfortunately, after being out of work post Ansett and being starved of hours as a MAM casual, union solidarity is a high ideal indeed compared to paying next weeks grocery bill.

However, I felt strongly at the time that the company were conducting a dry run, testing the water temperature. They now feel confident that when, not if, but when push comes to shove, they have the numbers to achieve their 'final solution' in the destruction and elimination of unionism in Australian aviation.

While Ansett and Qantas held each other in industrial balance, the aviation industry in Australia was always guaranteed healthy union representation. What this federal government and industry players have achieved in Australian aviation is no different to what the same players achieved on the Australian waterfront in the early '90's. And, gee whiz, they're the same players in both scenario's. The Howard liberal govt., big business and none other than Patrick's Chris Corrigan who has profited enormously from both situations, at the expense of middle Australia.

Ansett did indeed commit it's own sins commercially, but the Howard govt were quick to realise and then convert the potential of the situation while at the same time leaving a stupid beyond belief Air NZ holding a dead Australian baby. Many of you have denied even the possibility of a behind the scenes 'hidden agenda' believing it to be nothing but the rantings of those who couldn't accept the painful truth. Perhaps it is time for that opinion to be revised. Perhaps it is time for those left standing to open their eyes and see the truth before it is all too late. Everything happens for a reason! Ansett didn't just collapse. It was but a plank in a longer term objective. An objective which, in it's final stages, is only now beginning to reveal itself for all it's sheer ugliness and brutality!

September 13th has gone down as a dark day in Australian Aviation for 16 000 people already. I fear it will come to be known as the day that heralded the beginning of the end for Australian aviation as we have ALL known and loved it.

[GT-R]

Oh well bring it on.

Id be happy to keep flying for QF on half what im getting now anyway.

As im sure many many more would be too.

[ExcessData]

From what I've heard, QF tech crew aren't really a big inefficiency (award-wise) anyway - compared to other similar carriers around the world they're among the more efficient. Some other areas/departments, however, mentioned in the articles above, are apparently well out of whack with the rest of the world.

It's probably too easy to assume that the CEO's cost-cutting aims are directed significantly at tech crew, when in reality I'd say they're not.

Interesting articles, anyway!

ED

[Gnadenburg]

ED

Don't kid yourself. Cheap Kiwi labor is coming!

It would be easy to think your special skills are immune from globalisation. Cheap Kiwi labour will aquire your skills-buy an endorsement-and happily wear the QF uniform for much less.

[The_Cutest_of_Borg]

So GT-R. What happens when someone comes along willing to undercut you?

[Reverend Doctor Doug]

ED

Of course tech crew are part of the problem. Maybe only a small part, but a part nonetheless. You have to believe that every part of your operation will be looked at, and I'm certain the rediculous rostering and fleet transfer policies will be one of the first areas to be assessed, not to mention the exorbitant salaries S/O's get for sitting in the back seat of a -400.

Don't get me wrong, I say good luck to those who are benefitting. It has been a great deal for a long time. It's just that from where I sit (O/S), and talking to dozens of guys who have worked for airlines all over the world that no longer exist, I would have to say that the good times are going to come to an end.

Be careful making the comparison between yourselves and other big operators around the world. Most of those are going through serious pain as well. Just look at the last 10 years in Hong Kong. Read a bit how the US majors are going. Check out the layoffs in Singapore. Get aquainted with the salaries BA pay.

At EK we are booming. This is doesn't have anything to do with government subsidies as GD would suggest (there isn't any), but everything to do with lower labour costs, no unions and almost zero bureacracy at executive levels. (I'm sure cheap fuel helps a bit as well)

To be fair, we get shafted more often than we would like, and it is often not the ideal work environment, but this is what you guys have to compete with. If you can't or won't, then the writing is on the wall.

Change is inevitable. Get on the job and make sure you get the best deal you can, whilst ensuring you still have a job in 10 years.


Cop U Later

The Rev

[QF skywalker]

I read with interest that Qantas would have to try and " Ensure staff morale does not fall too far as management slashes the number of staff" - do they think that this has not happened already ? For the past few months I have felt as though I am part of a sinking ship already, management once again are displaying their ignorance to the mood of their workforce - the people who are working hard to keep the airline flying. After reading all of this what motivation do we have to keep enthusiasm for the company and the job that we all love so much ?

Excess data - I assume you are referring to "other departments" as cabin crew.Although the cabin crew in Australia maybe paid a slightly higher rate than our overseas colleagues, I don't see it as being a huge expense to Qantas when you compare it to Virgin Blue. The BRW magazine suggests that the average wage of an Australian based QF f/a is 45k, yet my close friend at Virgin Blue earnt a whopping 57k for the financial year. The major gap comparatively between the two companies is clearly tech crew wages where the difference is unarguably large.

Regards
QF Skywalker

[ExcessData]

Rev,
Yep for sure, points taken. I didn't mean to suggest in my post that QF tech crew weren't being targeted at all - I guess my point was more that if you had to make an assessment of each department's 'performance' in economic terms, tech crew wouldn't neccessarily be among the worst - at least that's the impression I got?

Skywalker,
Fair enough - I don't work for QF so I'm not right up on the figures etc. But taking a step back, and by your own admission, if Q cabin crew are 'paid a slightly higher rate than our overseas colleagues' (and by overseas colleagues I assume you mean other comparable full-service carriers, as opposed to low cost ventures), and yet Q's tech crew are paid at a rate commensurate, if not slightly lower their many of their overseas colleagues (again, not local low cost ventures), surely when it comes to the cost-cutting crunch, Q management would start with the cabin crew (as an example) - and at least attempt to bring their conditions in line with other similar carriers elsewhere?

I'm not suggesting they do it, by any means. Just trying to work out which areas would be in more need of attention than others if worst came to worst, and more importantly, to keep everyone in a job.

Safe skies,
ED


(edited for typographical errors)

[pullock]

I just typed an essay on the woes of big management having no real idea how to save money by having no grass roots understanding of what they are managing. I deleted it and wrote the above sentence.

The problem is that if you are trying to cut costs, yet have offices in George Street Sydney to deal with an internal computer system, then you have missed something severely in what you are doing. Would not the same office in Newcastle cost half as much? Do the benefits of having it in the hardest part of Australia to commute to every day outweigh moving it somewhere cheaper? For a computer network that is an intranet, not selling it's self to other CBD based customers the answer (this is the only reason for a George St address that I can see) is MY GOD WHY IS IT THERE??

Get rid of the address before anything else, it is only an ego stroke for your IT department, and one that they could well do without, moreso than any single employee could do without their job!

How many more of these obviously rediculous costs are there that take a profit making economy of scale business to an outdated megolyth? Well I can go for another six or seven points that I see every day, each that would be painlessly implimented with little capital expendiature, that would save hundreds of thousands of dollars each year (each), and that's without sacking ANYONE. LOOK FOR THESE THINGS BEFORE YOU SACK ANYONE!!

The problem is it is always easy to sack the people first, and this action makes the all importent middle management look and feel the best.

[Andu]

Foreign, as well as local cheap labour strike-breakers being secretly prepared by management to do ‘their duty’ in Qantas… (Did I say ‘secretly’? I think the fact that this management plan isn’t a secret might actually be carefully structured part of the company’s grand plan – call it an early ranging salvo in the war to come – to start putting the frighteners on the weaker willed among the QF staff.)

Sadly, it would seem that another group of Australian aviation ‘fat cats’ are about to learn for themselves why those dreadful domestic 89ers can’t forget what happened to them and why they keep harping on and on about it all these years later. (For anyone who may have taken offence at the ‘fat cat’ tag, I just thought I’d get you used to it, because that’s what the ever-compliant Australian media will be calling you within ohhh… about five minutes of your taking any industrial action. Get used to hearing how every one of you made a twenty year 747 check and training captain’s wage from the age of 21 and how you do absolutely zero work to earn it.)

The sad fact is, a new group are about to learn that the only way you can understand just how unbelievably nasty and totally all-consuming what you are about to be put through is to experience it yourself. Perhaps some of the younger brethren who have to date been so outspoken in telling the 89ers that the events of that long-forgotten year are ‘in the past’ and ‘should be forgotten’ may have a moan or two of their own in future – and might I suggest you all get ready for the next generation in the industry and those already in it not directly affected by what you’re about to go through to be telling you you’re a bunch of ‘sad cases’ who should ‘get a life’ and ‘put the past behind you’.

To the poster who said that September 13th 2001 was the start of the rot… As important as the day of the final demise of Ansett undoubtedly is to what it would seem is about to go down in QF, I think you’ll find quite a few others who might put 24th August 1989 ahead of that date, or maybe a date I can’t quote in 1979, when the unspeakable Fatty and Skinny duo first took Ansett over and began, quite literally, to sell the farm out from under us.

Good luck to you all. I believe you’re going too need it, and may the men and women who lead you be as wise as they will doubtlessly need to be.




Oh, and finally, remember that particularly in your domestic fleet, you have within your ranks a goodly number of colleagues who fourteen years ago showed their true mettle in circumstances very similar to the ones you’re about to be put through. Give them all the trust you think they deserve.

[Johhny Utah]

QF skywalker - I think you might be missing the point of some of these articles. To state that:
The major gap comparatively between the two companies is clearly tech crew wages where the difference is unarguably large
is looking at things in very simple terms. I think you'll find that there might be greater savings to be had in any number of areas - baggage handlers, contract workers etc in many other departments that contain the majority of Qantas ~30,000 employees. I'd suggest that tech crew although being the most visible, might not be where the greatest savings would be.

Doctor Doug - perhaps Qantas should crew -400's with 2 captains & 2 F/O's, or maybe a Captain & three F/O's? Although I find it hard to work out how they could still do the tours of duty required at a lower cost than operating with 2 S/O's on board. At the end of the day, although the very same people that may considered to be 'overpaid' by some people, are viewed by others as a very cost effective alternative. I guess it all depends on which side of the coin you're looking at. I'd be most interested to hear how Emirates crew long haul flights - just as an idea of how others do it...

Just my thoughts.

[Col. Walter E. Kurtz]

You better spend a good amount of your union dues on getting the best PR/Advertising people on the job as soon as possible.

Propaganda goes a long way in winning battles.

You have been advised.

[dunerider]

The fact is pilots will never be viewed as cost effective unless management is paying at a rate comparable with the cheapest operator around.They could start by reducing some of your allowances,decrease your Singapore overnights to minimum rests.Degrade the quality of your 5 star accommodation.Remove
second officers from your SIN-OZ sectors.Change your bidding system.Bring in more contract labour.Dont forget you have a whole bunch of high moral fibre colleagues in your domestic operation who I'm sure will back you up all the way.I do believe in the end of the day the QF international pilots will still be payed and have one of the best jobs around but you will have to go through some fun and games to keep it.

[fartsock]

QF has twice the number of staff per airframe as DJ.

This my friends and colleagues is the principle difference - QF is a huge bloated out of control buraeucracy that the management and unable or unwilling to trim.

As a stated on a recent other thread - tech crew wages are only 3% of aircraft operating cost, let alone the overall operating cost.

All these articles, both in the BRW and the Fin Review stink to high heaven of being indirectly authored by the QF PR dept.

In return for a free seat somewhere the 'journo' in question cuts and pastes for an e-mail and it becomes 'fact'.....

[Reverend Doctor Doug]

Johnny Utah

I wasn't suggesting that S/O's shouldn't be used, I just think that something has to give when QF has S/O's getting in excess of 100k a year keeping the seat warm, when Virgin have F/O's getting around 70k for doing what F/O's do. It would appear to me that would one area that considerable savings could be made.

Correct me if I'm wrong, but don't some -400 S/O's earn more than F/O's on other fleets. It may have seemed a cost effective alternative when it was introduced. It is certainly cheaper than having extra F/O's, but times have changed and I suspect it is now considered an expense that can't easily be justified when the management know full well that they could halve the current S/O salary and still have a book full of applicants.

As far as EK goes, the rumors to date are that we are going to have two crews (2 Capt and 2 F/O's) on our ultra long haul. This isn't the most cost effective way, but our guys have backed themselves into a corner by insisting our cadets become first officers (would be loss of face for locals to be S/O's). This means that it is now difficult to introduce the S/O concept without ruffling some feathers.

My money would be on EK finding a way around it though. I cant see them paying for double crews when they dont really need them. They certainly don't throw money away for the fun of it in any other area.


Cop U Later


The Rev

[sirjfp]

and wouldn't it hurt if S.Q decide to turn the screws and start an airline here !
Plenty of crew out there who would gladly work for S.Q at a lower wage scale than Q.F.

Just my 2 bob's worth,

stay safe

[Three Bars]

Rev Dr Doug,

You've entered an interesting area here, regarding the relative pay of S/Os and F/Os.

The same argument sometimes holds true for senior F/Os on the 400 versus junior captains on the 767. The S/Os usually cop the heat , however, because they do not occupy a front seat and can be relatively junior.

From memory, the hourly pay rate for a type is initially agreed on for captains, and then the F/O and S/O hourly rates are determined as a percentage of the captain's hourly rate. If a new type enters service at a higher hourly rate for captains (maybe the A380, for example) then it follows on that the A380 F/Os and S/Os would get an equivalently higher hourly rate.

Combined with this is the fact that EBA pay increases are agreed to in straight percentage terms. Therefore, in time, the gap between 767 and 744 wages will widen even further in real dollar terms.

Finally, as JU has already said, having 2 S/Os on a very long sector is a much cheaper option for QF than running 2 Captains and 2 F/Os. So while it appears iniquitous that a S/O should get paid more than a F/O, it must still be cost effective for QF to do so. To rectify this anomaly would require a complete rewrite of the pay system, the contract or the seniority system, and that thread would go for hundreds of pages. Fleet pay at the highest hourly rate would solve all of these problems, but I can't see that happening in a hurry either!!

[hoss]

sirjfp,

"Absolutely" ;) (pardon the pun)

Regards, hoss

[Reverend Doctor Doug]

Three Bars


To rectify this anomaly would require a complete rewrite of the pay system, the contract or the seniority system, and that thread would go for hundreds of pages. Fleet pay at the highest hourly rate would solve all of these problems, but I can't see that happening in a hurry either!!


Exactly. That is what I would think the management will be striving for. After all, isn't that what they have effectively done at Australian. My guess is that nothing will be sacred once the slashing starts.

Fleet pay is one answer, but you know that it isn't going to be at the highest hourly rate, because that won't save any money.

Cop U Later


The Rev

[Ushuaia]

Not the S/O thing AGAIN? Question: What is the difference between a F/O and a S/O? Answer: the latter is not fully trained or AUTHORISED to perform take-offs and landings. So he/she is paid less than the F/O. At QF, on a -400 for example, significantly less, I assure you.

Other than the above, the S/O is, in all other respects, a CO-PILOT, and is expected to have the knowledge of such and be able to perform the duties of such (emphasise again: with the exception of such duties below 5000' - in the QF case). Not all of them do so, unfortunately. A minority give the rank a bad name, and that is where Capts and F/Os have a role to play. A S/O is a CO-PILOT, not a seat warmer. Yes, he/she may have zero experience, or he/she may have millions of hours experience. I hear there is a new management S/O at QF with thousands of hours..........

I cannot understand the continual attack on QF S/Os by so-called professional pilots in this country. Then again I should - it's classic Aussie tall poppy syndrome stuff. You should be aspiring to the position, not trying to tear it down. (well ok, don't aspire to it if you don't want - long haul flying really isn't everyone's idea of a great flying job). But all you are doing is denigrating the profession of airline pilot in this job and playing into the hands of those who would love to pay professional pilots less.

That attitude + the proliferation of low cost operators (both onshore and OFFshore) means the profession of airline pilot has only one way to go in this country: B A C K W A R D S. Wait til the day we see teachers earning the same as new hires at QF. Nothing against teachers, mind you, but the way things are goin'.........

There are many, many other bloated costs and inefficiencies within QF that should be the target of the drive to reduce the cost of a T-km. Let's put our focus there, rather than trying, amongst ourselves, to destroy our profession.

[Taildragger67]

One can only think this trend will continue.

One example is IT - loads of US, European & other country-based firms now have their IT operations in India. Cheap labour which is becoming very skilled... masters-degree-level people doing call centre work.

I can imagine a situation where someone sets up a flying school in India (as an example), trains up from ab-initio to JAR ATPL-standard & type endorsed, ready to go in at s/o level. Get a few ex-mil types in with a few thou' hours, chuck in the odd western ex-senior F/O or Cap'n given the boot from somewhere or from a failed airline & looking for a comeback and you have ready-made crews.

Can't happen? That's been said before...

No, I dunno what the answer is, personally if I fly on an a/c with a country's flag on it I like the voices I hear to be the appropriate accent but shareholders want their returns...

[ITCZ]

Taildragger67, all too true mate.

There is little in the current environment that could be encouraging for any jet driver, especially a QF one.

The new sweatshops are not shoemakers in the Phillipines making Nike runners. The new sweatshops are people like Indian university graduates in law, medicine and computer science taking the jobs that Westerners now do.

Next time you call up a help line for your Bank balance, or software support, or internet service provider calls, you might be talking to Ranesha who calls herself Jane and has done a course on Australian attitudes and behaviour, talking to you from downtown Delhi.

So anything that could be done by phone support does not need to be done in Australia. Why pay $60K for a fully qualified accountant in Oz when you can get the same work done for $10K?

And it is not just over the phone stuff. Only a few years ago, coastal shipping around Oz was the business of Australian National line, australian ships with australian bridge and deck officers, and australian deck hands. Now there is only one or two Australian registered ships doing this work. Just about ALL the DOMESTIC shipping work into and out of aussie ports is now done by Ukrainian and other eastern european CAPTAINS, ships officers and a collection of eastern european and asian crews who do the same job as the Aussies did at a fraction of the pay, in the very ships that used to be on the Australian register. And it was all set up by the Australian government issuing exemption after exemption to 'foreign' registered vessels.

That is where we are headed, friends.

[Sonny Hammond]

Nicely put Ushuaia

[mmmbop]

Well said Ushuaia

[Reverend Doctor Doug]

Ushuaia

The answer lies in your post.

"Yes, he/she may have zero experience"

Think about that statement, and reflect on why I think management could get away with paying S/O's less than they currently do.

Cop U Later

The Rev

[Ushuaia]

Rev, yep,

I hear you, have thought a lot about that myself. There is logic in an argument that cadet S/O's with zero experience should be paid something less than an S/O with thousands of high quality hours (eg, heavy jet, military, or regional command). It DOES seem irrational that a 150 hr total bloke/blokette can enter a pay system whereby after 18 months he/she is earning very good money. But I don't want to go there - where do you draw the line or lines? I will not be drawn any further on S/O pay vs everybody else. And is not the thrust of my previous post anyway.

The thrust of my previous post is that we seem to be about the only mob I know anywhere in Aus that seems hell bent on tearing our own conditions and pay down. We publicly declare members of our own profession overpaid! We have people prepared to do the same job for less, far less. No other profession I have ever encountered in my 40 yrs does this, as far as I have been aware! Ever hear of doctors, lawyers, teachers taking such a line about their own profession? You don't, do you. For us, that HAS to change. People have to start thinking more positively and with confidence about the pilot profession, and what it's worth

That's all I'm trying to say.

[Reverend Doctor Doug]

Ushuaia

I can't comment on Doctors, Lawyers etc, because I don't frequent Proffessional Doctors Rumor Network etc. For all I know there is probably the same inequality amongst those professions the world over also.

I understand your position as well. I don't want to see pay and conditions in Oz erode either. I may need a job back there some day. My point is that having had the benefit of a broader look at the global aviation scene now that I am O/S, I believe that the QF operation is unsustainable given the cost base of some of QF's competitors.

I was told that a QF baggage handler earns around $60000 per year. I don't know if that is accurate, but our baggage handlers earn around $6000 per year. That gives you an idea of what QF (and US majors) are up against. It is implausible that baggage handlers wages can be reduced to the level of ours, therefore the cuts must be made across the board, even to areas that may not seem overpaid, so that the average comes back to a level where QF can sustain competitive seat prices.

When I worked in Oz, I was oblivious to the global implications of the airline business and thought that the Govt would never let QF or Ansett go out of business. That's how naive I was.

After moving over here and being made aware how brutal the aviation business is in Europe, it occured to me that QF and Ansett would be in serious trouble if they didn't reduce their costs and improve productivity. QF picked up a short term windfall due to the unfortunate demise of Ansett. This has given QF some much needed breathing space, but can't be sustainable. SQ clearly think that there is still some fat to be trimmed. It seems clear to me (IMHO) that QF must adapt or be overwhelmed.

You are clearly aware that difficult times may be ahead. Be proactive, get involved and get the best deal out of it you can.

Cop U Later

The Rev

[twobigtesticles]

After watching a few sims with S/o's with nil experience vs S/o's with lots of experience, i would definately say that the S/os with no experience can be better than the S/os with lots of experience. I can also definately say that there are times that the S/o with lots of experience can be better than the S/o with little experience, and i can also definately say that at times they can be equally skilled. Your experience vs Pay for new S/os is broadly speaking without merit.

[huan hung lo]

USHUAIA

At last! Someone with a brain!

I hear you loud and clear. Your observations on our profession are absolutely spot on!

Its time people understood how destructive the various public debates on pilots pay and conditions really are.

The truth is simple,this profession by its very nature demands high calibre people. Whether you are flying a four engined jet or a regional turboprop for airline a or airline b the job remains the same.

Management would be the first to say that executive pay scales simply reflect the quality of the people doing the job.

Well HELLO! The same ought to apply to pilots AUSTRALIA WIDE!

[dingo084]

Now that we've prattled on about Second Officers, can we talk about something substantive, something like the subject of the thread would be good.

Please tell me you seriously don't believe S/O's are the cause of all the problems at QF, do you?

Ding:confused:

[fartsock]

No in point of fact S/O's are not the problem.

The rev hid the nail on the head when he drew the baggage handler comparison.

QF's non-technically qualified staff are massively overpaid by world standards.

In addition to which we have a massive management bureacracy which does not value add to the business model

[OverRun]

Beautifully put Reverend Doctor Doug. It's not about tech crew bashing or trying obscure tricks with crewing. The reality is that difficult times are ahead for ALL airlines. You said Be proactive, get involved and get the best deal out of it you can. and I reckon that's the best advice ever.

The fact is that QF is up for change. Dixon and his team are a godsend to QF because they are determined to drag it into 21st century airline economics and make it survive - no matter how many people resist. Plus the QF team has some mighty canny people. BTW - I don't talk to Dixon and don't get paid by him.

But the airline world has changed, and the global implications of the airline business are now here at Ozland. I was surprised to read RDD say that a QF baggage handler earns around $60000 per year = (a) stupid (b) slightly less than Ansett paid bfore they went belly up, and (c) more dangerous to QF than a box cutter on the flight deck.

And I'm not isolating out baggage handlers as the problem - it's a problem right across the QF empire from the pointy end to the pointy heads. Reducing costs and improving productivity is what is needed to lead to job security. As I re-read this, it sounds like I'm airhead union bashing, and I'm not trying to at all. I would love QF to survive and win. I reckon that they've been handed fantastic opportunities, and gained some valuable breathing space. I've rattled on about their economics and their ability to do the market dominance thing in the parallel PPRUNE D&G topic "WA Airline price War". They'll go well in the future as long as no internal grouping gets bloody minded and f**ks it all up.

Watch PPRUNE as a barometer on the future of QF. When there's eventually a posting on "how we can make QF more productive" rather than "QF attacks pay, staff, boo-hoo", then QF has turned the corner.

[The_Cutest_of_Borg]

Some fairly sweeping statement being made here regarding the efficiency of QF crew. Remember we get paid BY THE HOUR .

A UA 744 flying to OZ with 2 Captains and Two F/O's is costing UA in excess of $750 US per Hour.

A QF crew, flying the same route in the same aeroplane, is costing QF around $470 Oz per hour.

Some of you experts grab a calculator and work out how much cheaper that is over a 15 hour flight and then tell me QF tech crews are inefficient.

I dares't ya!

[Reverend Doctor Doug]

Overun

Thanks for that clarification. I was getting worried. I realise that I am not the most eloquent of contributors, but clearly my message is being lost on most.

I am in no way attacking QF S/O's. Had things turned out different I would have happily been one myself. They are just an example I used because I happen to know a little about what they get paid and what they do, in comparison to some other airlines. Overun seems to have caught my drift. No one area can or will be isolated as the problem. Everyone will be under the microscope.


The_Cutest_of_Borg

You are flying with blinkers on. Yes UAL guys get paid heaps more than QF. That is one of the reasons they are in Chapter 11.
The threat QF faces is not coming from UAL, (although chapter 11 does give them a significant advantage over an Australian company in the same position). It is from the carriers with lower cost bases.

If anyone thinks that UAL salaries are the benchmark then I believe you will be in for a rude shock in the years ahead. As much as anyone, I would like Cathay A scale to be the world standard. The simple fact is that it all translates to ticket prices. Most of the punters no longer give a damn about who is up the front. They just want cheap tickets, TV's in the seats (read new airplanes) and good looking cabin crew serving their G&T's. I don't think QF has any of these on international routes.

Ticket prices are directly linked to company overheads. He with the lowest overheads will win. All this tripe about pride in uniforms and working hard for the privilege is ignoring the fact that the shareholders (owners)are the driving force. If they are not making a buck then things must change.

I think I will bow out of this thread now. I only stuck my nose in to try and highlight some of the difficulties that I can see ahead. And to encourage you to develop a realistic, unified platform from which you can defend your position


Cop U Later


The Rev

[hoodooguru]

Thanks to that ex 89 guy who set up VB after a stint in Europe (taking someone elses job) Oz pilots are now faced with crushing pressure to work for peanuts. NICE ONE! Hold the country to ransome in 89 then come back 10 years later and destroy pilot wages for good. What a fantastic career! Airline flying in Oz and getting paid accordingly is HISTORY thanks to wage pressure from VB and a poor QF pilots union who fold like wet cardboard under any management pressure. The damage has been done and is irrepairable.

[Sherm Boy]

Hoodooguru

That has got to be a wind-up because if you actually meant it you would get the record for the biggest load of nonsense ever perpetrated on these pages.

VB has created a lot of jobs that would not otherwise be there and if in the longer term the jobs don't meet the expectations of the troops then they'll walk. That's how the system works. Crushing pressure? Maybe great opportunity would be a better phrase.

Something was destroyed in 1989 but it wasn't done by the gentleman you refer to. It was done by a bunch of other people who decided that their personal conditions mattered more than anyone elses. To suggest that the VB jobs should never have been created just so that that bunch of other pilots could continue to live in a cosy duopoly is beneath further comment.

[RaTa]

Whilst QF competes internationaly against airlines that have cheap local labour and in some cases government hand outs, then there will always be pressure on labour costs for QF employees. In the end it could come down to, do you want an international Australian airline or not?
That is something that Virgin employees don't have to worry about for the moment.

[DutchRoll]

It's interesting, though entirely understandable on a 'pilots' forum, to see a fair bit of comment centering around pilots conditions. However, I would think that they are, relatively speaking, among the least of Qantas's problems as far as cost base goes.

Qf pilots have been reasonably flexible in the last few years (taking pay freezes, etc etc). I'm not saying that there is no pressure there, but just that there are many other expensive, inefficient, more stubborn fish that I'm sure Dixon wants to fry.

[pullock]

Not many QF porters take home only 60K, most do somewhat better than that.

I for one am keen to help do what I can toward making QF a stronger operation for the good of all Australians and QF staff, but I also see that it has to be done with a view to having the least impact possible on the airlines people, and that is a concept that I am worried that management are missing rather badly.

Cut expense in other areas before you cut wages. Point in case, after midnight not much goes on at an airport, so why not reduce the lighting in the terminals and on the ramp to half intensity, selectable to full intensity if required? The savings across each QF base in AUS would be astronomical.

The problem with big business is that nobody turns the lights off. The next problem is that turning lights off is in no way as exciting for a manager to make happen than is sacking people, because that's what makes them feel good and powerful (ok not all, but certainly some).

Lets say that we only saved $240K per year by reducing power expendiature (amd I bet it would be more), that is four porters that are now working at no cost to the company, and nobody was hurt in the process. It's a win-win, and that's a wankword that everybody loves :O

[elektra]

Well the undoubted QF labour cost inefficiencies are dwarfed by the cost of operating 744 equipment on long routes against operators like Cathay, Emirates and Singapore (to name a few) who are using very large numbers of the vastly more efficient 777-200 and 300 (with the 777-300ER to come).

Between the older 767 fleet and the fuel guzzling 744 fleet QF are already starting well behind the power curve compared to their competition. And that's not the fault of any QF employees except maybe the planners and decision makers.

The world moves on but to a large extent the QF long haul fleet stays rooted in the past.

[Gnadenburg]

Sherm Boy

Where are all the Virgin Blue pilots going to run to if they vote with their feet?

Please draw a line in the sand regarding your conditions. Don't come and undercut us abroad.

[Binoculars]

Interesting to see the different types who can only think of their own agendas, from defensive S/O's to a couple of 89ers who insist that's where it all started to those whose ego is chafed at the suggestion that pilots are not gods, but the horrible truth is that the Reverend Doctor Doug had it spot on from his first post to his last.

He had to repeat the message a couple of times and some still don't want to hear it, but put quite simply, That's Just The Way It Is. There is no implicit criticism of anybody in his message; if you think you're being picked on, read it again.

The crucial words are Supply And Demand. Any one of you who is shocked at the idea of a lowly teacher getting the same as a pilot should get his/her head out of the sand. The cruel fact is, as you are all well aware, that you work in one of the only professions in the world where supply is such that people are prepared to work for nothing. It is a job that requires a certain type of intelligence and abilities along certain special lines, but it's not, as they say, rocket science.

It is a constant source of amazement to me, speaking ONLY of the laws of supply and demand and not casting any aspersions, that pilots are still paid as well as they are. The world which has allowed that to exist is changing, has changed. The influence of unionism is waning, thanks in no small part to union thuggery in all industries over the years, and combined with the rise of economic rationalism (for want of a better term) the path is set in stone. There is no going back.

Company loyalty is an outdated concept despite the jargon issuing forth from management, and the bottom line is now the only line. That appears, sadly, to be irrevocable, and it has set in motion a sequence of events that will decimate conditions built up over 50 years.

Everything I have said above applies as much to my own profession of ATC as it does to pilots. There are thousands of applicants for each position advertised, just as there are pilots for each available position. No, not all of those applicants would turn out to be suitable, but there would certainly be more than enough to fill all positions, and we are facing the same inevitable downgrading of conditions as you are.

As the Rev Doc Doug says (more or less), when rape is inevitable lie back and enjoy it. Accept that it's going to happen. To ALL of us in the industry. Position yourself to make it as comfortable as possible. It's not second officers, or tech crew per se; not baggage handlers or F/A's or reservations clerks. The cuts will be made across the board, simply because they can.

That's Just The Way It Is.

[HotDog]

You're dead right Bino but I couldn't see it until after I retired.

[permFO]

Well done Binoculars, you have set it all out as clearly and concisely as any post I have seen. As I often remind people "May you live in interesting times" is a Chinese curse.

[hoodooguru]

Dear Sherminator I am deadly serious! These are the facts. An Australian guy tried to start an airline a few years back called Compas and was royally shafted by all and sundry including the government. Enter a pommy nit wit a few years ago and the fed and state gov bend over forward and hand him 67mil of tax $$$. How can you fail? Wage destruction follows of course and gooses like you need to have it explained? Wake up and smeel the kerro my friend. Airline flying in Oz is Finished! Watch what Dixo does with Australian and that other 737 joke across the Tasman.

[Lodown]

Geez! Doom and gloom.

The simple fact of the matter is Qantas is losing its competitive edge. Nothing more. The company is not about to go broke tomorrow. But the prospects don't look bright for the future if changes aren't made. Qantas needs to regain an advantage over its competitors. Reading some of the notes here, it sounds as though some people are ready to throw in the towel. Others are ready to hang Virgin Blue from the nearest tree for being nothing more than a good competitor. And then there is the finger pointing at the 89ers on both sides.

Years ago the status quo was maintained through the duopoly. Procedures were put in place throughout the organisation that took advantage of the situation for the betterment of stakeholders, staff and customers. Fair enough.

Dixon and the Qantas management are looking into the future and realising that to stay competitive, many of these procedures, which many people somehow have come to regard as rights, will have to change.

Customer value, particularly in relation to time, flexibility and cost; and shareholder value have become the motivators of change for every business, not just the airlines, and Qantas is no exception. The international services and government restrictions on airline operators have helped shield Qantas and delay the impact of these drivers. It can't be assumed that some form of protection will continue.

Dixon knows he has a struggle to change the organisation. The first step, as the psychologist says, is for people to want to change. Dixon's working on it.