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Qantas Employee Costs - It's all about the AUD

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Qantas Employee Costs - It's all about the AUD

Old 9th Feb 2012, 11:23
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I think it was capt Kremin who posted some figures awhile ago reference Effective Full-time Employee per Airframe ratio's for different airlines.
If my memory is correct I believe the figures Capt Kremin gave for most airlines was a staff/aircraft ratio of close to 110 staff per aircraft.
However if I'm not mistaken the figure for Qantas was up around 200 staff per aircraft.
Almost double most other major airlines!
If these figures I've trawled up from my dim dark memory are correct, why haven't Qantas' executives, some of the highest paid airline execs in the world, tackled this obvious overstaffing issue?
Secondly if this really is the case ,where is all the "fat" at ?
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Old 9th Feb 2012, 11:36
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Hey Shark Patrol

I don't think people go to China because they like the cost of living in China. They go there to make MONEY to take home. China is a great place to visit but lets face it, it's a polluted, corrupt mess.

No matter how cheap the cost of living, $2500 per month is not giving you much of a kitty at the end.
China is not that cheap anymore anyway.
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Old 9th Feb 2012, 11:57
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Clear. That doesnt make any sense.
Either way, how can you make enough money to 'go home', or 'send home' ?
You are subject to the economy in which you are employed.
In Oz, we need the full dollar wage to survive.
Jezuz, 10 bucks a pint at the local!
In Arizona 5 years ago, I bought a 5 bedroom, 2 story house for 180 US....now, I ask you, what would that buy you in a city of 2 million people in Oz?
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Old 9th Feb 2012, 12:25
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The cost comparison is meaningless unless you compare productivity per employee as it translates to the firms net profit.
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Old 9th Feb 2012, 12:26
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2 competing forces at work here.

Local employment on local rates

Or

Local employment on 3rd world rates

It's not difficult to see what an uninspired management want.

They want their cake and to eat it too, we're all too expensive in their eyes it withstanding the fact that the aud was $0.60 a few years ago and their staff costs were effectively half in the global arena of today. But of a contradiction when they want to charge Australian rates of fares to the traveling public and pay the management and board well well well above 1st world rates of pay with very low performance management bars set by the remuneration committee members of 'the board'.

I would really love to see what business plan gets the 'man' the job
1. Create a permanent state of fear for livelihoods for the staff
2. Insist in 'change' but don't state what that is
3. Retire qantas aircraft but don't replace
4. Gift routes to subsidiaries and foreign airlines
5. Guarantee 14 a380s total to the qantas intl brand only to service USA and singapore.
6. Send all the profits of the ludicrously profitable domestic side to new jetstar aircraft by the dozen and fund 3/4 new upstarts at the expense of the carrier generating the money.
7. Go to war with the staff because they see all of this unfolding as predicted and play their industrial tactics against it.

--- the next is yet to unfold but it's obvious

8. Continue the downsizing qantas
9. Move capital and assets offshore to new venture
10. Insist the local operation is unsustainable, sack them all.
11. Offer employment to sacked staff on new jq style contracts on less money
12. Live in a perfect world where everyone is a minimum wage airline slave, bonded employment for pilots, engineer and cabin crew, ala jetstar Asia cc and jetstar cadets/paying for type ratings.
13. Outsource all ground handling to the cheapest bidder rotating 12 monthly as they go out of business chasing the $150 per transit
14. Maintenance by cheapest offshore bidder in sin/mnl/china/hkg
15. Repeat step 1. on the now too expensive jetstar staff

But I can only guess that's how it goes.
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Old 10th Feb 2012, 23:06
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Astute observations 600ft.

Create a permanent state of fear for livelihoods for the staff
Dixon kicked this off with his constant Chicken Little stories at staff briefings....AND if any one had the gall to ask a "probing question"-your arse would be booted by your Line Manager within hours of returning.


Go to war with the staff because they see all of this unfolding as predicted and play their industrial tactics against it
Some goose(s) ( in IR ??) must have been inspired by the writings of the Napoleonic wars. Smash through, Divide and massacre all resistance.



10. Insist the local operation is unsustainable, sack them all.
11. Offer employment to sacked staff on new jq style contracts on less money
Bingo ! Economic rationalism at its best.

I am one of the "lucky ones" who managed to squeeze under the barb wire fence and get out of the joint. Let me tell you..... its great to be out.

My new employer recognises their people, pays for performance, communicates to us -in a manner that is human AND wants all of the staff to be part of their success.

Whats so Fng hard about that ????

Yes its a Global Company, Yes there 34,000 staff world wide, Yes they have(dare I say it-a legacy from the past).
No its not an airline ,bank or mining company-its Communication based.

They say that a fish rots from the head..........well I reckon the rot @ QF is approaching the back dorsal fin.

I'm sure many of you may be saying ...."Well....Good Riddance Stubby Jumbo -F---K Off then"

Fair Enough. But after 25 years at one place- and leaving -I reckon I've found the bit that has been missing in my working life for the last 10 years at QF.

That is:

NOW......I HONESTLY ENJOY COMING TO WORK
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Old 10th Feb 2012, 23:57
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Touche Stubby!

I have stated it many,many times on here before.

The best thing I ever did was get out of that toxic outfit. I was only there 12 years, not 25 like you!

However, I have NEVER been so well respected, valued, and TRUSTED as I am now. My ONLY regret is that I never exited stage left from QF a lot earlier.
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Old 11th Feb 2012, 02:07
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How does this table allow for different levels of outsourcing?

e.g. One airline might outsource a lot of low skilled, low paid type work thereby artificially raising it's cost per employee. Another airline might outsource more of the higher value employees (with say, contract pilots) and thereby artificially lowering its cost per employee by comparison.

Curious that BA shows cheaper than AirNZ. Does BA outsource more cleaning than AirNZ?
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Old 12th Feb 2012, 22:42
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Its all the Guvmints fault

No doubt our wage costs place us at a disadvantage.

So do a few poor decisions by management. Probably the major one is the failure to acquire B777s. AJ said in the Senate hearings that it was the wrong aircraft for Qantas, yet it was fine for Air NZ - an airline in a similar geographical and operational situation as QF - not to mention all of our competitors. If fuel costs comprise 25% of total operating costs, how much of that 25% is burned by the B744, the mainstay of the QF Int fleet? If B777s burn 30% less fuel than a B744 for a similar payload & range then even after costs of B744 disposal and B777 acquisition (lease/buy plus accounting & financial jiggery-pokery) QF profit margin would be a couple of percentage points higher. That's a considerable increase when we're operating on about 5% or less margin. It means a 40% increase in profit.

The crux of the issue however is Federal and State government policy failure over DECADES. A failure to support one of the most important transport sectors to a First-World country that is vast, sparsely populated and with a highly urbanised population. This is where AJ should be putting the public punches on. Shame the bastards. Expose the short-sighted mealy-mouthed weasels for their myopia and cowardice.
1. No second airport in the Sydney Basin
2. Privatise the only international airport in the Sydney Basin, sit back and watch as airport costs triple.
3. Failure to match our competitors home governments accelerated depreciation schedules for the aviation industry, which would allow the industry - from GA to RPT - to upgrade to more fuel efficient aircraft more cheaply and faster.
4. Failure to implement the resource rent tax as recommended by the Henry Review, ie tax the resource super profits and use the proceeds to propel the non-mining economy by cutting company tax.
5. Introduce a carbon tax 7 years before the rest of the world.
6. Open skies policy instead of reciprocal rights policy.
7. Changes to OHS and industrial laws that unwind 25 years of reform and cripple productivity.

Imagine a CEO that said "We value the input of our highly professional and loyal staff. They are world class, so we're happy to pay world class wages. But the Governments of this country must come to the party if they truly value the Aviation sector!"

Imagine a government that listened, thought strategically, made long term decisions and implemented the decisions competently.

Dream on.
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Old 12th Feb 2012, 23:40
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Geoff's got it in one, the capt's club membership that is.


Geoffrey Thomas, chief editor of Air Transport World, said Qantas had to tackle the industrial action head-on. Failure would have threatened the airline with collapse. "Corporate bookings were down 40 per cent, which is a totally intolerable situation. They were being slow-baked." He said the industrial action by engineers and baggage handlers and threats by pilots meant the airline had to go with the "nuclear" option of a lockout. "The airline was facing losses of $85 million and it was only a matter of time before it was torn apart." He said the union strategy was to make the dispute so expensive the airline would buckle.
Thomas said relative costs made it difficult to compete. While a captain of a US airliner with 21 years' experience was paid on average $155,000, Qantas was paying its top long-haul pilots closer to $380,000 with co-pilots on $280,000 and first-officers $180,000. Wages for US airline captains had fallen by an average 40 per cent over the past 10 years, largely because so many airlines went into Chapter 11 bankruptcy and renegotiated their pay deals. Thomas said Qantas pilots were also better paid than Jetstar pilots: 40 per cent more for 26 per cent less flying.
Thomas said with so many international airlines flying to Australia, Qantas was struggling to compete with a cost base of 20 per cent higher. One of the latest airlines flying to Australia, China Southern, was offering a return business-class Sydney to Paris ticket for $4500 (Qantas charges twice that).
"The dynamics of air travel and marketing have changed dramatically over the past 20 years but the unions have not caught up. There was a time when Qantas could demand a premium based on its safety record but all airlines are relatively safe and it has fallen away as a concern among passengers who are now far more price conscious. Engineers and pilots have to stop living in the 1960s and 1970s," he said.
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Old 13th Feb 2012, 04:19
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Interesting that he mentions China Southern considering the package for DEC there is more than at Qantas for A330 Captains.
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Old 13th Feb 2012, 07:04
  #32 (permalink)  
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with co-pilots on $280,000 and first-officers $180,000.
Gives the F/O's something to aspire to, I mean if they work hard, one day they could all be 'co-pilots'!
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Old 13th Feb 2012, 11:05
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And China Southern are going to offer a heap more Aussie bases mainly on A330 over the next few years, 200k after tax for Captains and rumour is F/O basings will be offered later this year.(around 110k net), Forget GT he is a knob, this is the QF market being carved up by foreign airlines paying more than QF does so forget the crying poor Irish fool get in there and take the money while QF flounders!
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Old 14th Feb 2012, 16:25
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Would this chart make some sense?

Qantas Personnel Costs - Bloomberg

Employee expenses as a percentage of sales:

QF: 28.5%
CX: 15.4%
SQ: 14%
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Old 14th Feb 2012, 20:32
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Thanx Dr Pepz,
Just goes to show, I believe , the cost impost unskilled labour in Australia
causes to Australian Business' bottom line.
One more point worth mentioning in all this is, is that EBA's have been going on for some time now at Qantas.
Before an EBA can be voted on by emploees, Qantas Management have to approve said contract.
Does this mean that all of Qantas' present uncompetitive woes can be sheeted home fairly and squarely at piss poor Qantas management negotiating skills regarding EBA's???
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Old 16th Feb 2012, 04:49
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Going back to your first post Pepz its a nice graph but a bit
misleading by comparing it to USD. A US dollar for example
goes a lot further in Malaysia (MAS) say as compared to the
UK and Oz, and as you say above the personal tax on gross
income is far less than both.
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Old 16th Feb 2012, 06:24
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Yes Slasher you right. 1 USD goes much further in KL than in Sydney, there's absolutely no doubt about that.

But from a company perspective, they will only care how much it costs to pay an employee. A Malaysian employee would be willing to be paid less than a QF employee because it is cheaper to live there. Or a HK employee would be willing to be paid less than a Sydney employee for the same job, because the tax rate is lower. (An income of SGD150,000 leaves me with much more post tax than an income of A$150,000 even though the SGD is 25% cheaper)

But ultimately, companies look at the overall cost for hiring a worker, and they don't care that it costs 1 Ringgit for a can of Coke in KL as opposed to A$1 in Australia.
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