Industrial Action? The Case For....
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Industrial Action? The Case For....
Recently I had the pleasure of a long lunch with an old friend from University. Interestingly, this individual now occupies a position as a senior IR adviser with what could only be regarded as an EMPLOYER friendly organisation. The substance of the discussion was, I believe, worthy of posting.
He was aware of much of the recent history of pilot industrial relations, having read many relevant journal articles. He was specifically aware of the major issues that exist - seniority, limited number of large employers, pilot numbers/shortage, opportunities overseas, IR history (ie '89), etc, and in processing the information he arrived at certain very interesting conlusions:
- Seniority will always stifle the natural operation of the market. The requirement for new joiners or returnees to start at the bottom effectively impinges on horizontal movement between major airlines. As such, even in times of pilot shortage, salaries are prevented from rising in the enormous amounts that sometimes occur in other industries (ie mining, IT in the 90's, etc) because employers do not have to increase salaries to retain skilled labour.
- The industry is living in fear of '89. He is staggered that given the duplicity and deceit showed by management in a range of different airlines, no major pilot group has taken significant industrial action.
- Today is very different from 89. The major companies are publicly listed, so it would not be likely they could get into bed with the government and have their way. The precedent would be too dangerous. Their is no massive surplus overseas ready to come to Australia at the conditions on offer. And management, despite the tough talk, are absolutely petrified of lost productivity. If you don't believe me read the Dixon letter.
- Any action taken by irreplaceable skilled employees would lead to an immediate collapse in share prices. The pressure placed on management by institutional investors, and also associated damaged industries, would ensure a rapid resolution on terms favourable to the employee.
- Action must be taken during the window of opportunity. If you don't make the most of it now, then under the new IR laws, when the pendulum swings back to management you will get screwed and there is nothing you can do about it.
I believe it will only take one bout of successful industrial action by one group of pilots, and the rest of the industry will be emboldened, and the flow on effects enormous.
NJS pilots are actually in an industry defining postion. It is not their job to do our dirty work, but if they do take action and damage the mining industry in the process, the cost of giving them their due will pale into insignificance to the losses those companies face. Enough pressure will be applied to ensure a swift resolution in their favour.
OI
He was aware of much of the recent history of pilot industrial relations, having read many relevant journal articles. He was specifically aware of the major issues that exist - seniority, limited number of large employers, pilot numbers/shortage, opportunities overseas, IR history (ie '89), etc, and in processing the information he arrived at certain very interesting conlusions:
- Seniority will always stifle the natural operation of the market. The requirement for new joiners or returnees to start at the bottom effectively impinges on horizontal movement between major airlines. As such, even in times of pilot shortage, salaries are prevented from rising in the enormous amounts that sometimes occur in other industries (ie mining, IT in the 90's, etc) because employers do not have to increase salaries to retain skilled labour.
- The industry is living in fear of '89. He is staggered that given the duplicity and deceit showed by management in a range of different airlines, no major pilot group has taken significant industrial action.
- Today is very different from 89. The major companies are publicly listed, so it would not be likely they could get into bed with the government and have their way. The precedent would be too dangerous. Their is no massive surplus overseas ready to come to Australia at the conditions on offer. And management, despite the tough talk, are absolutely petrified of lost productivity. If you don't believe me read the Dixon letter.
- Any action taken by irreplaceable skilled employees would lead to an immediate collapse in share prices. The pressure placed on management by institutional investors, and also associated damaged industries, would ensure a rapid resolution on terms favourable to the employee.
- Action must be taken during the window of opportunity. If you don't make the most of it now, then under the new IR laws, when the pendulum swings back to management you will get screwed and there is nothing you can do about it.
I believe it will only take one bout of successful industrial action by one group of pilots, and the rest of the industry will be emboldened, and the flow on effects enormous.
NJS pilots are actually in an industry defining postion. It is not their job to do our dirty work, but if they do take action and damage the mining industry in the process, the cost of giving them their due will pale into insignificance to the losses those companies face. Enough pressure will be applied to ensure a swift resolution in their favour.
OI
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A succinct and relevant piece.
1989 was an entirely different ballgame. Talk to the old hands on the 400 and they will tell ya the introduction of the A3dugong is the same as the 747. Conveniently they forget the airline is not owned by the government, nor are the airports. Boeing generates a commercial ROR, as does EADS(if it can)
Times have changed. Dixon is yesterday's man. At 67 he is part of history not making it. His generation benefitted from baby boomer economies of scale, mass production, equity market growth etc etc.
Faced with a chronic skills shortage, he still persists with the oldmeadow doctrine of yesterday as it makes sense to him...
The reality is otherwise. It is all contained in the ABS Occassional paper 2 on Demographics and Aging....
Nonetheless the short haul EBA will be "ready fire aim" as we snatch defeat from the jaws of victory........
1989 was an entirely different ballgame. Talk to the old hands on the 400 and they will tell ya the introduction of the A3dugong is the same as the 747. Conveniently they forget the airline is not owned by the government, nor are the airports. Boeing generates a commercial ROR, as does EADS(if it can)
Times have changed. Dixon is yesterday's man. At 67 he is part of history not making it. His generation benefitted from baby boomer economies of scale, mass production, equity market growth etc etc.
Faced with a chronic skills shortage, he still persists with the oldmeadow doctrine of yesterday as it makes sense to him...
The reality is otherwise. It is all contained in the ABS Occassional paper 2 on Demographics and Aging....
Nonetheless the short haul EBA will be "ready fire aim" as we snatch defeat from the jaws of victory........
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- Seniority will always stifle the natural operation of the market.
- The industry is living in fear of '89. He is staggered that given the duplicity and deceit showed by management in a range of different airlines, no major pilot group has taken significant industrial action.
Your friend is smart. Thank you for the post.
Last edited by ITCZ; 31st Aug 2007 at 10:15.
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To 'revitalise' the discussion of seniority, I have clipped the relevant bit and opened a thread on that topic. Don't want to hijack the many other relevant points of OI's post by simply focussing on seniority.
http://www.pprune.org/forums/showthr...86#post3513886
http://www.pprune.org/forums/showthr...86#post3513886
Last edited by ITCZ; 31st Aug 2007 at 10:54.
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Ochre, nice post. Your friend makes some very shrewd observation. It reinforces my view that airline management has comprehensively 'won' over the last twenty years or so. The mechanisms to achieve this end are well documented on PPRuNe, no need to focus on it here.
However, to some degree management face the same challenges that the Americans did after the collapse of the Berlin Wall - the end of history so to speak. Without a powerful adversary in a multi-polar world, management have no roadmap. They, & they alone are now solely responsible for T&C, effectively promulgated by decree.
The white flags of surrender by pilots are being raised everywhere - Entry of new pilots into the industry falling, vb/j*/qf pilots leaving in droves to the sandpit or contract land. Yet demand is increasing strongly.
It is almost as if a silent revolution is occurring, middle managers see it as they wonder (aloud) how they will crew those new deliveries over the next 5 years. Yet the CEO's are still hung up on giving more money to people who won't demand it by industrial action.
But yet the strike-by-stealth continues as people leave or choose other career paths.
The smart way forward for pilots is to build a supra-crewing company owned by pilots for pilots with its own in-house seniority system, in a similar way to the medical/legal/accounting industries are organised. This puts things on a business to business basis, not employer - employee relationship.
This is not a case against industrial action. It's just this may be a better way to organise. If we are ever going to get this thing up, now is the time.
However, to some degree management face the same challenges that the Americans did after the collapse of the Berlin Wall - the end of history so to speak. Without a powerful adversary in a multi-polar world, management have no roadmap. They, & they alone are now solely responsible for T&C, effectively promulgated by decree.
The white flags of surrender by pilots are being raised everywhere - Entry of new pilots into the industry falling, vb/j*/qf pilots leaving in droves to the sandpit or contract land. Yet demand is increasing strongly.
It is almost as if a silent revolution is occurring, middle managers see it as they wonder (aloud) how they will crew those new deliveries over the next 5 years. Yet the CEO's are still hung up on giving more money to people who won't demand it by industrial action.
But yet the strike-by-stealth continues as people leave or choose other career paths.
The smart way forward for pilots is to build a supra-crewing company owned by pilots for pilots with its own in-house seniority system, in a similar way to the medical/legal/accounting industries are organised. This puts things on a business to business basis, not employer - employee relationship.
This is not a case against industrial action. It's just this may be a better way to organise. If we are ever going to get this thing up, now is the time.
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Strike threat to remote areas
Geoffrey Thomas | August 31, 2007
THE threat of a strike by National Jet Systems pilots who operate charter aircraft for mining operations and QantasLink's 717s has underscored the vital role aviation plays in Western Australia's booming resource industry.
Adelaide-based NJS holds the dominate position in Western Australia, estimated to be approximately 45 per cent of the major resource contracts by passenger uplift using 11 Avro RJ70 and BAe146s and one Dash 8, as well as providing crews and support for QantasLink's 11 717s, most of which are based in Perth.
The potential disruption also highlights the various arguments for and against the controversial fly in/ fly out (FIFO) operations that underpin many resource operations.
At 6am on a weekday, there are only a handful of "suits" in the Qantas Club. Instead, there are jeans, mining boots and khaki shirts as literally thousands of mine workers commute to sites across Western Australia.
In 1969, when the state's mineral boom was just getting a head of steam, the main intrastate airline was MacRoberston Miller Airlines (MMA), which had a tiny fleet of just six Fokker F-27s and eight 21-seat DC-3s.
Thirty eight years on, the state has the most vibrant airline/charter air service in the world -- for its population size -- with 28jets such as 180-seat 737s and65-seat BAe146s and 58 smaller turbo-prop and commuter aircraft.
In the 90 minutes from 5.30am, about 70 flights take off from Perth airport, with more than 50 destined for the state's northwest.
Perth-based Skywest Airlines, which has firstly risen from the ashes of Ansett and then survived bitter ownership battles, is now flying high.
Skywest managing director and former NJS MD Hugh Davin told The Australian that the airline would more than double its jet fleet capacity by November, with five 96-seat Fokker 100s fully utilised.
A sixth arrives in March and the first 189-seat A320 will be introduced in November 2008. The airline also has seven Fokker 50 turbo-props. "The level of opportunity (for resource contacts) is increasing significantly with both renewal and new developments," Mr Davin said. "With a global shortage of qualified resource workers, the relationship between a mining company and its employees is critical and integrity of the air service is a vital part of that delivery."
But while the airline industry is vibrant, it is under enormous cost pressures as the resource industry plays off up to nine players: Qantas, QantasLink, Skywest, NJS, Alliance Airlines, OZ-jet, Virgin Blue, Network Aviation and Skippers Aviation.
In the past year, Alliance Airlines has started operations in Western Australia with two Fokker F-100s, while OZ-jet started earlier this year with one 737-200.
Virgin Blue is also eyeing more flights within the state, possibly using its new EMB170 and 190s, while Darwin based Air North has launched an EMB170 service from Darwin to Broome via Kununurra and from September 1 starts a weekly Kununurra-Perth service.
Complicating the resource contracts bidding process is a state government push to integrate resource charters with regular passenger transport services to otherwise isolated destinations.
Criticism of the resource industry's critical FIFO operations from state government and regional authorities tends to gloss over the impact that this operation has on lowering the airline industry's costs. FIFO is a more recent development in the industry, which has come about for economic and social reasons.
Well-established centres such as Karratha, Port Hedland, Kalgoorlie, Paraburdoo and Newman, which evolved in the 1960s and 1970s under then federal government policies, are served by RPT flights, while FIFO operations evolved to address isolation issues, speed travel times and offset fringe benefits tax.
While much is made of FIFO operations, according to a 2000 study, "Mining and Regional Australia: Some Implications of Long Distance Commuting", only 47 per cent of the mining industry is employed on a FIFO basis. Understandably, 77.7 per cent of subcontractors are FIFO.
FIFO opponents raise concerns about the impact on regional communities, with a loss of economic and social elements to regional areas.
But this ignores the fact that right across Australia there has been a move from regional areas to the coast, regardless of the resource industry.
Some blame FIFO for breaking up marriages, but that outcome may be even more likely in cases where resource employees are forced to uproot their families to remote outposts such as Leonora, resource industry officials says.
Another significant factor is the high number of joint-income families, where moving to a remote town would cause loss of one income.
A 1991 survey by the Department of Mines of 26 FIFO mines indicated the main reasons for adoption of FIFO was isolation (44 per cent) and the short mine life (31 per cent).
According to another report, "Fly In/Fly Out: A Sustainability Perspective", produced for the Chamber of Minerals and Energy, by Professor Keith Storey, an internationally recognised expert in long-distance commuting, there is lower turnover of staff and lower rates of absenteeism at FIFO sites, compared with live-in mining towns.
With serious problems relating to skills shortages, the continuation of FIFO is critical, resource industry analysts say.
The Chamber of Minerals and Energy argues that "FIFO is a key attraction to recruit and retain personnel for many remote and regional assignments".
In many cases, FIFO operations are for the exploration and construction phase, where large numbers of workers are required for a short time and no long-term continuity can be guaranteed.
But airline and charter operators are working closely with communities to make the FIFO flights available to passengers.
NJS's BAe146 Perth-Ravensthorpe operation is a classic example. NJS sells seats to the public while the operation is underpinned by BHP.
Skywest Airlines and Argyle recently reworked the FIFO contract for Argyle Diamonds to extend the contract and include Kununurra. This supports tourism in the Kimberley region and provides a valuable link for the area's community.
The massive disruption of a potential pilots strike has sent shudders through mine sites. With the FIFO aircraft as important as Christmas at home and with a raft of contracts up for renewal in the next 12 months, industrial harmony will take precedence over price.
Geoffrey Thomas | August 31, 2007
THE threat of a strike by National Jet Systems pilots who operate charter aircraft for mining operations and QantasLink's 717s has underscored the vital role aviation plays in Western Australia's booming resource industry.
Adelaide-based NJS holds the dominate position in Western Australia, estimated to be approximately 45 per cent of the major resource contracts by passenger uplift using 11 Avro RJ70 and BAe146s and one Dash 8, as well as providing crews and support for QantasLink's 11 717s, most of which are based in Perth.
The potential disruption also highlights the various arguments for and against the controversial fly in/ fly out (FIFO) operations that underpin many resource operations.
At 6am on a weekday, there are only a handful of "suits" in the Qantas Club. Instead, there are jeans, mining boots and khaki shirts as literally thousands of mine workers commute to sites across Western Australia.
In 1969, when the state's mineral boom was just getting a head of steam, the main intrastate airline was MacRoberston Miller Airlines (MMA), which had a tiny fleet of just six Fokker F-27s and eight 21-seat DC-3s.
Thirty eight years on, the state has the most vibrant airline/charter air service in the world -- for its population size -- with 28jets such as 180-seat 737s and65-seat BAe146s and 58 smaller turbo-prop and commuter aircraft.
In the 90 minutes from 5.30am, about 70 flights take off from Perth airport, with more than 50 destined for the state's northwest.
Perth-based Skywest Airlines, which has firstly risen from the ashes of Ansett and then survived bitter ownership battles, is now flying high.
Skywest managing director and former NJS MD Hugh Davin told The Australian that the airline would more than double its jet fleet capacity by November, with five 96-seat Fokker 100s fully utilised.
A sixth arrives in March and the first 189-seat A320 will be introduced in November 2008. The airline also has seven Fokker 50 turbo-props. "The level of opportunity (for resource contacts) is increasing significantly with both renewal and new developments," Mr Davin said. "With a global shortage of qualified resource workers, the relationship between a mining company and its employees is critical and integrity of the air service is a vital part of that delivery."
But while the airline industry is vibrant, it is under enormous cost pressures as the resource industry plays off up to nine players: Qantas, QantasLink, Skywest, NJS, Alliance Airlines, OZ-jet, Virgin Blue, Network Aviation and Skippers Aviation.
In the past year, Alliance Airlines has started operations in Western Australia with two Fokker F-100s, while OZ-jet started earlier this year with one 737-200.
Virgin Blue is also eyeing more flights within the state, possibly using its new EMB170 and 190s, while Darwin based Air North has launched an EMB170 service from Darwin to Broome via Kununurra and from September 1 starts a weekly Kununurra-Perth service.
Complicating the resource contracts bidding process is a state government push to integrate resource charters with regular passenger transport services to otherwise isolated destinations.
Criticism of the resource industry's critical FIFO operations from state government and regional authorities tends to gloss over the impact that this operation has on lowering the airline industry's costs. FIFO is a more recent development in the industry, which has come about for economic and social reasons.
Well-established centres such as Karratha, Port Hedland, Kalgoorlie, Paraburdoo and Newman, which evolved in the 1960s and 1970s under then federal government policies, are served by RPT flights, while FIFO operations evolved to address isolation issues, speed travel times and offset fringe benefits tax.
While much is made of FIFO operations, according to a 2000 study, "Mining and Regional Australia: Some Implications of Long Distance Commuting", only 47 per cent of the mining industry is employed on a FIFO basis. Understandably, 77.7 per cent of subcontractors are FIFO.
FIFO opponents raise concerns about the impact on regional communities, with a loss of economic and social elements to regional areas.
But this ignores the fact that right across Australia there has been a move from regional areas to the coast, regardless of the resource industry.
Some blame FIFO for breaking up marriages, but that outcome may be even more likely in cases where resource employees are forced to uproot their families to remote outposts such as Leonora, resource industry officials says.
Another significant factor is the high number of joint-income families, where moving to a remote town would cause loss of one income.
A 1991 survey by the Department of Mines of 26 FIFO mines indicated the main reasons for adoption of FIFO was isolation (44 per cent) and the short mine life (31 per cent).
According to another report, "Fly In/Fly Out: A Sustainability Perspective", produced for the Chamber of Minerals and Energy, by Professor Keith Storey, an internationally recognised expert in long-distance commuting, there is lower turnover of staff and lower rates of absenteeism at FIFO sites, compared with live-in mining towns.
With serious problems relating to skills shortages, the continuation of FIFO is critical, resource industry analysts say.
The Chamber of Minerals and Energy argues that "FIFO is a key attraction to recruit and retain personnel for many remote and regional assignments".
In many cases, FIFO operations are for the exploration and construction phase, where large numbers of workers are required for a short time and no long-term continuity can be guaranteed.
But airline and charter operators are working closely with communities to make the FIFO flights available to passengers.
NJS's BAe146 Perth-Ravensthorpe operation is a classic example. NJS sells seats to the public while the operation is underpinned by BHP.
Skywest Airlines and Argyle recently reworked the FIFO contract for Argyle Diamonds to extend the contract and include Kununurra. This supports tourism in the Kimberley region and provides a valuable link for the area's community.
The massive disruption of a potential pilots strike has sent shudders through mine sites. With the FIFO aircraft as important as Christmas at home and with a raft of contracts up for renewal in the next 12 months, industrial harmony will take precedence over price.
My bold in last paragraph.
Aviation is a significant CREATOR of wealth within the economy. Airlines have traditionally had trouble capturing a significant component of this value.
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Back to the topic... timeliness of industrial action.
Just to give you an idea of how well timed the NJS action is, their story is being heard at very high levels. Senators are asking questions and offering support.
Whether you're a Frozo or a leftie, the time is ripe. Watch this space.
Just to give you an idea of how well timed the NJS action is, their story is being heard at very high levels. Senators are asking questions and offering support.
Whether you're a Frozo or a leftie, the time is ripe. Watch this space.
Last edited by ITCZ; 2nd Sep 2007 at 05:11.
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I had an interesting thought just yesterday - having received a company memo on the contract for a specific route which is now up for a new contract which is being strongly contested by another group, it occurred to me that it gives the pilot body a particular target to focus upon.
If limited IR action in terms of "go slows" were used to threaten a specific company contract, would this not be the type of leaverage needed to produce a result from the company in the current EBA negotiations with only very limited action by the employees?
A whiff of revolution on the wind?
If limited IR action in terms of "go slows" were used to threaten a specific company contract, would this not be the type of leaverage needed to produce a result from the company in the current EBA negotiations with only very limited action by the employees?
A whiff of revolution on the wind?
