REx Management – “OUTthere” or “OUT of there”
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REx Management – “OUTthere” or “OUT of there”
Guys/Gals,
I managed to spend some time back in AUS during this past week and I did some travelling on the air transport network around the East coast. Basically, Australian aviation is in a mess showing severe signs of critical problems with service. The regional airlines such as REX and Eastern Australia appear to be coping poorly with schedules and service, and I’d dare say that these two airlines are not alone, given the root cause of a lot of the problems.
One of my trips was into rural NSW flying on Regional Express and this journey proved to be a real eye-opener, not because of journey with REx, but because of the reaction in rural Australia to the causes of the present dilemma at REx and the very real consequences to the customers it serves.
Interestingly, there was considerable knowledge and understanding of the root cause of pilot retention problems at airlines such as REx. Entry level salaries, remuneration to retain senior crew, recent profits, the proposed cadet scheme, schedule cancellations and a myriad of other relevant factors were all openly discussed with me by the friends and business colleagues that I went to visit.
The message was clear; rural Australia requires air transport services and infrastructure, and it won’t tolerate infrastructure or airline managements that won’t respond to the market to ensure reasonable and reliable service. It’s also not just the regional’s that came under fire; Virgin, QANTAS and JetStar also took hits from the rural community.
My return journey to Sydney left me to ponder the state of Australian aviation while watching the landscape from my window of the Saab-340. I then picked up the latest edition of REx’s in-flight Magazine, “OUTthere” (Edition No. 40, 2007, Paul Kelly on the cover).
The opening rexNEWS article, “Staying the Course”, expounded the virtues of the airline’s recent business performance and results; net profit AUD $23.6 M up 50.4%, revenue up 29%, passengers increased by 18%, capacity up 14%, taxed paid dividends, etc.
It was clear that this business has the financial capacity to deal with its issues, but is yet to do anything about it.
The final blow however, came from Page 75 & 76 of the magazine. Within the CountryBIZ section was a Special Feature containing two articles on Human Resources management. The first was “Attracting and Retaining Staff”, followed by another entitled “Mission Impossible”, dealing with the issue of recruitment challenges in times of low unemployment and skills shortages.
Frankly, I was stunned. These articles made an absolute mockery of the incumbent management at REx and the present personnel situation that they’ve not only allowed to develop, but fostered by an ill-conceived denial that all personnel require a fair days pay for a fair days work. Lowering salaries, stagnating remuneration and lowering crew numbers in the pursuit of the “investor’s nirvana” is unfair, un-Australian, and eventually leads to being unprofitable. No Business is entitled to a business at the expense of its employees.
The alarm bells are ringing and it’s time to take action.
Is it any wonder that the CEO resigned for retirement this week; I’m sure he knows what’s coming.
Dragonfly
I managed to spend some time back in AUS during this past week and I did some travelling on the air transport network around the East coast. Basically, Australian aviation is in a mess showing severe signs of critical problems with service. The regional airlines such as REX and Eastern Australia appear to be coping poorly with schedules and service, and I’d dare say that these two airlines are not alone, given the root cause of a lot of the problems.
One of my trips was into rural NSW flying on Regional Express and this journey proved to be a real eye-opener, not because of journey with REx, but because of the reaction in rural Australia to the causes of the present dilemma at REx and the very real consequences to the customers it serves.
Interestingly, there was considerable knowledge and understanding of the root cause of pilot retention problems at airlines such as REx. Entry level salaries, remuneration to retain senior crew, recent profits, the proposed cadet scheme, schedule cancellations and a myriad of other relevant factors were all openly discussed with me by the friends and business colleagues that I went to visit.
The message was clear; rural Australia requires air transport services and infrastructure, and it won’t tolerate infrastructure or airline managements that won’t respond to the market to ensure reasonable and reliable service. It’s also not just the regional’s that came under fire; Virgin, QANTAS and JetStar also took hits from the rural community.
My return journey to Sydney left me to ponder the state of Australian aviation while watching the landscape from my window of the Saab-340. I then picked up the latest edition of REx’s in-flight Magazine, “OUTthere” (Edition No. 40, 2007, Paul Kelly on the cover).
The opening rexNEWS article, “Staying the Course”, expounded the virtues of the airline’s recent business performance and results; net profit AUD $23.6 M up 50.4%, revenue up 29%, passengers increased by 18%, capacity up 14%, taxed paid dividends, etc.
It was clear that this business has the financial capacity to deal with its issues, but is yet to do anything about it.
The final blow however, came from Page 75 & 76 of the magazine. Within the CountryBIZ section was a Special Feature containing two articles on Human Resources management. The first was “Attracting and Retaining Staff”, followed by another entitled “Mission Impossible”, dealing with the issue of recruitment challenges in times of low unemployment and skills shortages.
Frankly, I was stunned. These articles made an absolute mockery of the incumbent management at REx and the present personnel situation that they’ve not only allowed to develop, but fostered by an ill-conceived denial that all personnel require a fair days pay for a fair days work. Lowering salaries, stagnating remuneration and lowering crew numbers in the pursuit of the “investor’s nirvana” is unfair, un-Australian, and eventually leads to being unprofitable. No Business is entitled to a business at the expense of its employees.
The alarm bells are ringing and it’s time to take action.
Is it any wonder that the CEO resigned for retirement this week; I’m sure he knows what’s coming.
Dragonfly
Last edited by dragonflyhkg; 14th Nov 2007 at 05:23.
Nicely said dragonflyhkg.
The alarm bells started ringing loudly at the beginning of this year. Blind freddy, the postman, and even the neighbour's cat could see it comming! Everyone of course except the management of REX, and I suspect most other regional and domestic operators. The reality is that it's genesis originated in the oversupply and slashing of wages and conditions of more than a decade ago. Airline operators have become addicted to paying substandard wages. The solution to the problem has become something that they will not, can not, bring themselves to contemplate.
So where are we today? The REX Pilot Committee met with the board today. The meeting was a result of serious petitioning by the AFAP and REX pilots. At no time has the management asked for, or invited the pilot group to offer solutions to this crisis. The details of the meeting will more than likely be made public in a few days. No-one expects any real initiatives from the company, but at least they can say they tried as the last one out turns off the lights.
The real victims will be the communities that REX service, and the staff that will be made redundant as the business shrinks. And shrink it will. As I have said in a previous post, you 'aint seen nothin' yet!
Your point about the stunning sucesses of the airline over the last few years is paticularily poignent. The REXPC hypothesised back in April that it would take nothing less than a 40% increase in salary to retain a majority of experienced pilots in the current circumstances. A substantial amount to be sure. But when placed in the context of what is at stake, a suprisingly small price to pay. If funded by a ticket levy, not taking into account the future growth of the business (now destroyed), the cost would have been in the order of $6.25 per ticket!
Rex are in the process of contracting the business. Just how far they go will depend directly on the number of pilots available to fly the aircraft. The consensus around the industry is that we have only seen a foretaste of what is yet to come. 50% of REX pilots have resigned in the last 18 months. Even my eight year old nephew can do the math on that one.
Over the next year when the wholesale slaughter of regional routes takes hold, we can tell these communities that the loss of these essential services had come at a high price......$6.25 a ticket!
The alarm bells started ringing loudly at the beginning of this year. Blind freddy, the postman, and even the neighbour's cat could see it comming! Everyone of course except the management of REX, and I suspect most other regional and domestic operators. The reality is that it's genesis originated in the oversupply and slashing of wages and conditions of more than a decade ago. Airline operators have become addicted to paying substandard wages. The solution to the problem has become something that they will not, can not, bring themselves to contemplate.
So where are we today? The REX Pilot Committee met with the board today. The meeting was a result of serious petitioning by the AFAP and REX pilots. At no time has the management asked for, or invited the pilot group to offer solutions to this crisis. The details of the meeting will more than likely be made public in a few days. No-one expects any real initiatives from the company, but at least they can say they tried as the last one out turns off the lights.
The real victims will be the communities that REX service, and the staff that will be made redundant as the business shrinks. And shrink it will. As I have said in a previous post, you 'aint seen nothin' yet!
Your point about the stunning sucesses of the airline over the last few years is paticularily poignent. The REXPC hypothesised back in April that it would take nothing less than a 40% increase in salary to retain a majority of experienced pilots in the current circumstances. A substantial amount to be sure. But when placed in the context of what is at stake, a suprisingly small price to pay. If funded by a ticket levy, not taking into account the future growth of the business (now destroyed), the cost would have been in the order of $6.25 per ticket!
Rex are in the process of contracting the business. Just how far they go will depend directly on the number of pilots available to fly the aircraft. The consensus around the industry is that we have only seen a foretaste of what is yet to come. 50% of REX pilots have resigned in the last 18 months. Even my eight year old nephew can do the math on that one.
Over the next year when the wholesale slaughter of regional routes takes hold, we can tell these communities that the loss of these essential services had come at a high price......$6.25 a ticket!
Last edited by KRUSTY 34; 14th Nov 2007 at 11:29.
KRUSTY 34 said:
If you had the intelligence, you would realise that, if it did truly only cost $6.25 per ticket, then this increase would have been made long ago and everybody would be living happily ever after.
I will just labour that point a little more, for the benefit of the numerous PPRUNE readers that seem to lack the comprehension ability to understand my simple posts.
If all it took was the little increase of $6.25 per ticket, REX would have made that increase.
So, obviously, 40% salary increases must cost more than $6.25 per ticket.
The calculation that yields these little numbers (e.g $6.25) is so incredibly simplistic that only a fool would use it. The calculation manages to exclude almost all the factors that would affect ticket pricing.
It assumes 100% load factors before and after the ticket price increase - can't have load factors in there now, complicating things, can we?
It ignores GST and other taxes and charges that are a percentage of the total airfare.
My personal feeling on the question of how much of a ticket price increase would be required to facilitate a 40% salary increase is that such a result is utterly impossible. Probably anything over a 3-4% increase is impossible.
This is because, as you increase prices, load factors drop. Increase them even more to compensate for the reduced load factors and the load factors drop even more. This should all be bleedingly obvious.
... we can tell these communities that the loss of these essential services had come at a high price......$6.25 a ticket!
I will just labour that point a little more, for the benefit of the numerous PPRUNE readers that seem to lack the comprehension ability to understand my simple posts.
If all it took was the little increase of $6.25 per ticket, REX would have made that increase.
So, obviously, 40% salary increases must cost more than $6.25 per ticket.
The calculation that yields these little numbers (e.g $6.25) is so incredibly simplistic that only a fool would use it. The calculation manages to exclude almost all the factors that would affect ticket pricing.
It assumes 100% load factors before and after the ticket price increase - can't have load factors in there now, complicating things, can we?
It ignores GST and other taxes and charges that are a percentage of the total airfare.
My personal feeling on the question of how much of a ticket price increase would be required to facilitate a 40% salary increase is that such a result is utterly impossible. Probably anything over a 3-4% increase is impossible.
This is because, as you increase prices, load factors drop. Increase them even more to compensate for the reduced load factors and the load factors drop even more. This should all be bleedingly obvious.
OK so what's your solution then aircraft? Close the doors?
You know aircraft, you continually show your ignorance, especially when making assumptions from afar. Your blind faith in REX management is even more amazing considering your lack of first hand knowledge.
The amount of $6.25 per ticket to achieve a 40% pay rise was in fact checked by REX management. They conceded that those figures were accurate! So who's the fool now?
The reasons given for not implementing such a move was the belief that It would not prevent the majority of pilots from moving on. Now before you think that you have been given a free kick, here is another fact. The majority of those senior pilots that have moved on, would have stayed for such a recognition of their worth. I have spoken personally to many of them, and the answers are nearly always the same. Have you spoken to them aircraft?
The fact that the management of REX think otherwise is merely a testiment to their complete disengagement with their workforce. They aren't even on the same planet as the rest of us. When you go next door to borrow a cup of sugar, suggest to them that they turn their telescopes towards Earth sometime. Feel free to have a look yourself. You may learn something. Although I doubt it!
P.S. For someone with a glass jaw, you certainly like sticking it out!
The amount of $6.25 per ticket to achieve a 40% pay rise was in fact checked by REX management. They conceded that those figures were accurate! So who's the fool now?
The reasons given for not implementing such a move was the belief that It would not prevent the majority of pilots from moving on. Now before you think that you have been given a free kick, here is another fact. The majority of those senior pilots that have moved on, would have stayed for such a recognition of their worth. I have spoken personally to many of them, and the answers are nearly always the same. Have you spoken to them aircraft?
The fact that the management of REX think otherwise is merely a testiment to their complete disengagement with their workforce. They aren't even on the same planet as the rest of us. When you go next door to borrow a cup of sugar, suggest to them that they turn their telescopes towards Earth sometime. Feel free to have a look yourself. You may learn something. Although I doubt it!
P.S. For someone with a glass jaw, you certainly like sticking it out!
The amount of $6.25 per ticket to achieve a 40% pay rise was in fact checked by REX management. They conceded that those figures were accurate!
Yeah, I can believe that. I suggest you are the victim of hearsay and/or chinese whispers.
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Guys/Gals, Aircraft, et al;
It's time for us to all get real.
Forget AUD $6.25 per ticket if necessary. Even if it the required action is to double the salary bill of REx, if that's what it takes within the current market, that's what it takes.
No employer, airline or otherwise, is entitled to a business at the expense of its employees; bottom line.
We work as a team, albeit with some different boundaries; employer, employee, customer.
The simple fact is that staff are required to be recruited and retained within all areas of the company, otherwise it's "game over".
It's time we all thought about coming to the table with prospective solutions, not just complaints, and that goes for both sides of the table.
Dragonfly.
It's time for us to all get real.
Forget AUD $6.25 per ticket if necessary. Even if it the required action is to double the salary bill of REx, if that's what it takes within the current market, that's what it takes.
No employer, airline or otherwise, is entitled to a business at the expense of its employees; bottom line.
We work as a team, albeit with some different boundaries; employer, employee, customer.
The simple fact is that staff are required to be recruited and retained within all areas of the company, otherwise it's "game over".
It's time we all thought about coming to the table with prospective solutions, not just complaints, and that goes for both sides of the table.
Dragonfly.
Isn't it about time people stopped paying bus fares to ride on aeroplanes? Passenger numbers would obviously drop if fares were substancially increased but the required load factor to be profitable would also decrease. The number of services between cities would decrease and with that, the number of pilots. Somewhere along the line a new equilibrium would be found. Airlines would continue to make the same profits whilst paying their employees more and running less services with less aircraft. Less pilots required helps with the pilot shortage. The profession of pilot would once again be worthwile financially, thus ensuring a continued supply of would be pilots. Even the environment would benefit.
Kelly Slater,
Excellent, intelligent and sensible post. Just one little problem - the commercial airline industry.
The commercial airline industry has a mind of its own and it has been doggedly following that mindset for over 50 years now.
That mindset has been for ever more cheaper fares. If you look at the statistics you will see that, in real terms, the decline in airfares over the last 50 years has been nothing less than spectacular.
So how would your idea of more expensive airfares sit with that mindset (or should I say "obsession")?
Excellent, intelligent and sensible post. Just one little problem - the commercial airline industry.
The commercial airline industry has a mind of its own and it has been doggedly following that mindset for over 50 years now.
That mindset has been for ever more cheaper fares. If you look at the statistics you will see that, in real terms, the decline in airfares over the last 50 years has been nothing less than spectacular.
So how would your idea of more expensive airfares sit with that mindset (or should I say "obsession")?
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The not-so-subliminal message brought to by aircraft* is:
"pilot wages are in terminal decline, wannabes & n00bs, get out while you can."
The pilot managers must cringe at your every post as you publicly expose their secret plans to slash pilot wages. Keep going aircraft, help bury the industry deeper in the sh!t.
* assisting the shortage since 2005
"pilot wages are in terminal decline, wannabes & n00bs, get out while you can."
The pilot managers must cringe at your every post as you publicly expose their secret plans to slash pilot wages. Keep going aircraft, help bury the industry deeper in the sh!t.
* assisting the shortage since 2005
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A Task for Aircraft
Aircraft,
I've watched your numerous debates from the sidelines for some time. A lot of the suggestions made on this forum are from front-line staff, and although at times emotive still hold some merit.
Whilst I accept some of your reasoning, I note that all your responses are of a "can't do" nature and why the suggestions won't work. Modern management should have a "how can we make this work with what we've got" attitude. Are you a modern manager? Are you a "can do" man?
Let me ask you:
You have offered no solutions to the current crisis at this stage. HOW would you address the situation? Using REX as en example, (you claim they are in a financially "good" situation, I don't dispute that). If you were in a position of influence within REX management, what plans would you put in place to retain an increasingly shrinking commodity whilst keeping the shareholders satisfied?
How would you address:
Remuneration;
Lifestyle;
Career expectations;
Morale?
These factors (for your consideration) are not in any specific order. The priority of these is an individual choice.
I look forward to your response.
I've watched your numerous debates from the sidelines for some time. A lot of the suggestions made on this forum are from front-line staff, and although at times emotive still hold some merit.
Whilst I accept some of your reasoning, I note that all your responses are of a "can't do" nature and why the suggestions won't work. Modern management should have a "how can we make this work with what we've got" attitude. Are you a modern manager? Are you a "can do" man?
Let me ask you:
You have offered no solutions to the current crisis at this stage. HOW would you address the situation? Using REX as en example, (you claim they are in a financially "good" situation, I don't dispute that). If you were in a position of influence within REX management, what plans would you put in place to retain an increasingly shrinking commodity whilst keeping the shareholders satisfied?
How would you address:
Remuneration;
Lifestyle;
Career expectations;
Morale?
These factors (for your consideration) are not in any specific order. The priority of these is an individual choice.
I look forward to your response.
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enthusiastically awaiting
I have been clicking onto this thread and all threads that contain aircraft’s input, in the exploration of aircrafts solution to REX preservation. He seems a willing and educated adversary of the populace, somewhat a subvert, but maybe not. Now Hugh Jarse has asked for a, somewhat ‘formal, but, certainly comprehensible solution and has been supported by a man of the community with status, I, also enthusiastically await the answer from, Aircraft
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Salary alone will never fix the problem. Pilots by nature are ambitious animals. Most aspire to fly a large jet and will do almost anything - like pay for their own type ratings - to get a window seat in a big jet. The bigger the better. Young ambitious pilots will sacrifice lifestyle and work their rings off in sh!thole foreign places if it means eventually sitting in the Captain seat of something like a 777. So Rex etc will not retain their younger pilots with money or promises of a laid-back life in downtown Albury etc (whoop-de-doo). Well, maybe a few young blokes are happy remaining on something like a Saab all their life, but I haven't met too many in my long career.
Older guys - like really old enough to have missed the boat - will stay if the workload does not kill them first. And other older guys who have been there done that could possibly be attracted back for a direct entry command, but obviously won't cop co-pilot salaries in a light turboprop like a Saab. Some of these will work out fine and others, especially if they have the skygod syndrome that often comes with flying in large flag-carrier airlines, will be a disaster. What would I do ? Get a deal going to train cadets on behalf of larger airlines in return for their service as F/O's for a set term. Open it up for DEC's and recruit experienced older Captains - being very picky about their atttitude and flying aptitude. Heavy-duty simulator assessments first. No psych testing, but, because old guys will usually fail these.
Budget maybe for a 10% failure rate, but get realistic with the check standards too. The Saab is not the space shuttle, though from what I have heard of Rex their checkies treat it a bit that way. Which also puts off older guys, not because they can't fly but because most of them are over the BS.
And of course, pay enough money to make it worth living in wherever it suits the Company, but with rosters flexible enough to allow a commute to civiilisation with reasonable time off.
Yes, I am smoking some good gear as I write this.
.
Older guys - like really old enough to have missed the boat - will stay if the workload does not kill them first. And other older guys who have been there done that could possibly be attracted back for a direct entry command, but obviously won't cop co-pilot salaries in a light turboprop like a Saab. Some of these will work out fine and others, especially if they have the skygod syndrome that often comes with flying in large flag-carrier airlines, will be a disaster. What would I do ? Get a deal going to train cadets on behalf of larger airlines in return for their service as F/O's for a set term. Open it up for DEC's and recruit experienced older Captains - being very picky about their atttitude and flying aptitude. Heavy-duty simulator assessments first. No psych testing, but, because old guys will usually fail these.
Budget maybe for a 10% failure rate, but get realistic with the check standards too. The Saab is not the space shuttle, though from what I have heard of Rex their checkies treat it a bit that way. Which also puts off older guys, not because they can't fly but because most of them are over the BS.
And of course, pay enough money to make it worth living in wherever it suits the Company, but with rosters flexible enough to allow a commute to civiilisation with reasonable time off.
Yes, I am smoking some good gear as I write this.
.
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aircraft
you said
This has been your stance on RX's financial position for some time now. WE GET IT! ( despite the share price down $2.80 to $2.10 )
Why then, do you not think the workers would consider a forseeable future with RX if they were on the receiving end of some of this "cream".
gas-chamber - I know plenty of people willing to settle for a career in the regionals, provided they are renumerated accordingly ie more than a building site labourer who's only outlay was a pair of steel caps.
No need to close the doors. The company is in a strong financial position, is profitable and expects to remain so for the forseeable future.
Why then, do you not think the workers would consider a forseeable future with RX if they were on the receiving end of some of this "cream".
gas-chamber - I know plenty of people willing to settle for a career in the regionals, provided they are renumerated accordingly ie more than a building site labourer who's only outlay was a pair of steel caps.