Pilots and cabin crew are leaving Qantas’ troubled Perth-based Network Aviation (NA) subsidiary for offshore airlines and a new airline started by major miner Mineral Resources (MinRes), which has the potential to shake up the vast fly-in-fly-out networks in Western Australia and other mining regions.
MinRes runs iron ore and lithium mines and raked in $4.78 billion in revenue in the 2022-23 financial year. MinRes Air, due to launch next month, will cut out the middleman by running its flights directly, putting at risk the high-margin business for Qantas, as well as other charter companies. It comes less than a year after Qantas failed to bulk up its Perth-based charter business when the competition regulator knocked back its planned $611 million purchase of Alliance Aviation.
Commentary on the online pilots’ forum PPRuNe said aircraft delays for large mining companies cost millions and that many had grown sick of these. For MinRes, its motive is not so much profit than protecting its mining investments by flying its 5,000-plus miners in and out of its mines on time and lowering the need for accommodation at mining sites.
“Right now we operate three airports of our own. By the time we get towards the back end of this year, we’re going to have airports in pretty much every site, so we can get our own people to site,” MinRes chief executive Chris Ellison said at the company’s half-year results. The mine has already begun flights from Brisbane — using charter group Skytrans in the interim — to its WA mines to better tap into labour supply on the east coast.
“By the end of this year, as I said, all of our FIFO will be run by MinRes Air. And we’re doing that because we’re going to save tens if not hundreds of millions of dollars,” Ellison said. MinRes plans to build a terminal at Perth Airport, and Crikey understands it will use the operating licence of an existing charter company while waiting for its own to be ratified by the Civil Aviation Safety Authority.
Pilots said that MinRes was offering higher salaries for captains and first officers ($285,000 and $190,000 respectively) as well as cabin crew, on a five-day weekly roster, a lifestyle option that was removed by Qantas when it turned NA from a charter to a commercial operator with scheduled flights.
The move is being carefully watched by the likes of Andrew Forrest and Gina Rinehart, people in the west say. The recently collapsed Bonza’s valuable operating licence is also for sale, an opportunity for another smart new player.
Qantas is fiddling while NA burns
Meanwhile, NA pilots are waiting for a new Fair Work Commission-created enterprise bargaining agreement — a crucial test case for the watchdog’s new powers to write an EBA after the failure of mediation. But this could still be six months away, insiders estimate.
As pilots wait for their first pay rise since 2019, the company is recruiting new managers into the subsidiary’s head office — including a “senior culture program manager” — while it leaves in place deeply unpopular senior management.
NA’s Fokker fleet is falling apart, with two planes already pulled out of service and cut up for spares due to corrosion. On top of that, their twin-jet (A319) replacements are arriving more slowly than expected and can’t access some smaller mining landing strips. Pilots say there will be aircraft shortages if any more planes are found with corrosion.
NA is still bleeding pilots domestically to Virgin as well as offshore, where airlines are handing out much larger pay packages and bonuses.
Emirates recently announced that after recruiting 420 pilots last year, it was on a major recruitment drive. Sources at the Dubai-based airline said there were 17 pilots from NA — as well as seven from fellow regional subsidiary National Jet Systems, and 11 from Qantas mainline who were waiting for medical and flight simulation checks.
Offshore airlines are also paying out significant bonuses. These can be up to 50% of salaries at Emirates, while last year Qatar Airways gave pilots five weeks of pay.
Qantas hands out $500 staff travel vouchers at NA and after-tax bonuses of $1,000-$1,400, pilots told Crikey.
The pilot NA at Network is now so severe that it has forced Qantas to put cadets from its training academy straight into co-pilot roles.
Federal Court compensation test
Meanwhile, Qantas and the Transport Workers Union (TWU) will present their final arguments to Federal Court Justice Michael Lee today in the hearing for damages after the airline was found guilty of the 2020 sacking of 1,700 baggage handlers by the Federal and High Courts.
Despite this resounding defeat, Qantas is arguing that it should pay no compensation because it had not outsourced the workers for a prohibited reason (to prevent them from accessing their rights to collective bargaining and protected industrial action), and that it would have outsourced them at a later date anyway, because of the ongoing impact of the pandemic.
The TWU says there is no evidence to show that this would have occurred, and domestic flying resumed early in 2021, with international following once borders reopened. The TWU says previous loyalty to Qantas shows workers would have remained in their jobs for the long term, which the judge should take into account when awarding economic loss. The TWU has also argued for non-economic loss to compensate for the pain and suffering of workers.
