Author, Greg Bamber, Professor, Department of Management at Monash University

Qantas chief Alan Joyce could learn much from US-based Southwest Airlines. AAP

The looming confrontation between Qantas and its pilots, engineers and baggage handlers could easily become Australia’s most dramatic industrial conflict since the waterfront dispute of 1998.

But it seems that some of the parties involved are not considering solutions available to ensure these disputes don’t develop into a full-blown crisis.

Rather than holding constructive talks, they appear to be making public inflammatory comments in a series of heated exchanges. In the latest salvo, Qantas chief Alan Joyce publicly condemned unions' “kamikaze campaign” on wages, describing their talk of industrial action as “throwing oil on the fire”.

Union leaders have previously criticised senior managers as “hard-line”, accusing them of trashing the Qantas brand while awarding themselves huge pay increases while denying modest pay increases and job security to workers.

Qantas and the unions need to adopt long-term, cultural changes to their industrial relations regime if the parties are to avoid costly disputes that destroy shareholder value, put jobs at risk and endanger Qantas' corporate reputation.

Qantas could learn from the experience of US-based Southwest Airlines, which has worked hard to foster good relations between managers, employees and unions and has become one of the most successful airlines in the world.
Navigating forward

At 90 years old, Qantas is one of the most successful “legacy” airlines in the world.

Legacy airlines generally reflect militaristic traditions of command-and-control. But partly because of this highly adversarial approach, legacy airlines like Qantas seem not to find it easy to achieve trust and high productivity from their workers.

Adding to this tension is a tendency to outsource, restructure and cut employment costs – highlighted in Qantas’s recent move to base staff overseas and outsource some maintenance work.

This reflects Qantas’s aim to cut costs in the face of rising fuel prices and tougher competition, but has left groups of Qantas staff concerned about their pay and job security.

The Southwest solution

In contrast, Southwest – a much younger airline – has developed a constructive management culture that strongly values the views and interests of its employees.

Southwest was founded in 1971 in Texas. Like Qantas, Southwest it is heavily unionised, with 88% of employees paying union dues.

Nevertheless, Southwest adopts management strategies based on fostering partnerships, mutuality and staff engagement.

By 2007, Southwest had become the largest airline in the world by total number of passengers carried per year and it has been continually profitable since it was founded.

This is unusual in the airline industry, which often faces much turbulence, currently from rising fuel costs.

Southwest attributes much of this success to its constructive relationship with its staff and the unions.

The airline holds quarterly briefings with unions when its profits are reported and according to management, aims to treat its staff like “family”.

Employees are treated more as a source of value, rather than as a cost. Consequently, it has never retrenched any of its workers.

The airline allows employees to choose their own representatives at company meetings and respects the legitimacy of the union.
Business logic

In Up in the Air, our book on the airline industry, a Southwest executive explained the business logic behind the company’s management style.

“Our people know what the airline industry environment is like,“ the executive said. "I am confident they will do what it takes to keep Southwest on top. I would consider it a failure if we have to go to our employees and tell them to take a pay cut.”

Southwest generally works through difficult issues in a form of joint problem-solving, in partnership with the workforce rather than via public slanging matches and threatening industrial disputes.

While many airlines have tried to copy aspects of productivity-enhancing innovations pioneered by Southwest – such as the fast turn-around of planes – its industrial-relations strategies have not become commonplace.

But this does not mean that Qantas cannot transform its management and industrial-relations strategy.

After a period of much turbulence in the US, another large old legacy airline, Continental, succeeded in transforming its previously troubled management and industrial relations in the 1990s.

The adversaries at the Flying Kangaroo could learn much from the constructive dialogue, cooperative approaches and mutual-gains-style negotiations that Southwest managers and unions adopt – and from Continental’s transformation.

As they confront big issues, such learning would be in the interests of all the Qantas stakeholders – including investors, workers and the customers.