Qantas’ aggressive Alan Joyce-era industrial relations strategy, which has so far been continued by his successor CEO Vanessa Hudson, is beginning to fall apart.
Attempting to stem the flow of resignations from its subsidiary companies, Qantas is offering tens of thousands of dollars in one-off payments to pilots, who are being lured by better salary conditions at competitors, including cashed-up international airlines, a new airline started by a major mining company, and Virgin Australia.
The pilot retention scheme has been launched while the Fair Work Commission continues to adjudicate the enterprise bargaining agreement at Network Aviation, where Qantas rejected union demands for a new agreement earlier this year.
As Qantas management said in an internal note to pilots, obtained by Crikey:
The Network Aviation pilot retention incentive scheme is a retention scheme where eligible employees will receive discretionary quarterly retention payments of $4,500 (the equivalent of $18,000 pa [gross]) for line pilots until a workplace determination is made by the Fair Work Commission (FWC). The payment will be backdated to March 16, 2024, and will be made every three months thereafter (quarterly).
But National Aviation pilots say it’s “too little, too late”.
“The reality is that this would only get a first officer barely above the award,” one pilot told Crikey. “There are better offers elsewhere in the market, especially for people prepared to relocate overseas.”
This follows a similar move at another Qantas regional subsidiary, National Jet Systems (NJS), where pilots have been offered a “side letter” to the EBA, again paying to attract pilots to the new A220 single-aisle jets that are scheduled to replace the ageing B717s.
“NJS pilots are similarly disenchanted with how they were treated during negotiations and they’re all refusing to bid to [go to] the A220. They’re going to have 29 brand-new jets with zero pilots. And the ones who did go across and got a free endorsement are already leaving,” a pilot said in the online forum PPRuNe (Professional Pilots Rumour Network).
Paltry pilots
A generational global pilot shortage and COVID-era redundancies have resulted in a perfect storm, with aviators leaving the sector permanently amid surging aircraft orders and forecasts of a significant increase in passenger demand over the coming decades.
Qantas’ IR strategy has been critiqued in detail by the airline’s two main unions, the Australian International and Pilots Association (AIPA) and the Australian Federation of Airline Pilots (AFAP). Qantas’ subsidiaries were originally charter-only operations providing fly-in-fly-out services for mining companies.
Still, there are signs of change in Qantas’ atomised regional operations, with the airline reportedly considering realigning the broader group under the QantasLink banner. Company sources said talks were underway for certain subsidiaries to begin sharing information technology systems and management moves, which could help trim costs as staff costs rise, and that these could lead to more permanent consolidation.
These moves underscore the fundamental failure — at least for pilots — of Qantas’ divide-and-conquer industrial relations strategy under former CEO Alan Joyce, and the attempt to create low-cost regional airlines from low-cost charter subsidiaries NA and NJS without the set-up resources previously given to Jetstar.
In doing so, Qantas has diminished the charter businesses, which now suffer endemic delays and cancellations, so much so that one mining company, MinRes, is starting its own airline and poaching Qantas staff, as reported recently in Crikey.
Other competition is emerging as well, with Rex this week unveiling flights on its 104-seat Embraer E190 aircraft from its FIFO subsidiary National Jet Express for an Adelaide-Perth route, a flightpath Qantas had earmarked as part of a planned expansion of National Aviation into further interstate routes (beyond its existing Perth-Darwin route).
Disunion
Qantas is now deep in the process of negotiating a new EBA for its short-haul (domestic) pilots, and unions are unsatisfied so far with the company’s indicative offers. Main Qantas union AIPA rejected an offer the airline made last December, which aimed to finalise a deal before Christmas. Almost six months later, a deal — with the current EBA due to expire June 30 — remains distant.
AFAP’s preliminary response was that the proposed offer “falls well short of pilots’ expectations”. In a memo to its members last week, the union said it “reinforced the challenge Qantas faces in trying to meet its arbitrary ‘wages policy’ in the context of the sacrifices made by short-haul pilots during the pandemic and also the current economic reality [inflation]”.
Meanwhile, the latest report by the Australian Competition and Consumer Commission on the domestic airline sector showed traffic back to 99% of pre-pandemic levels. However, as reported by the Bureau of Infrastructure and Transport Research Economics last week, on-time/cancellations still remain above the long-term average. Qantas, both the mainline/regional arms and Jetstar, which are listed separately, has now fallen behind Virgin on all metrics.
Pilots and engineers who spoke to Crikey blame ageing planes, chronic under-investment in spare parts and a shortage of engineers in a division still smarting from deep staff cuts during COVID, with few new qualified aircraft maintenance engineers coming through the system due to the dismantling of the cadet/trainee system more than a decade ago.
The competition regulator is also, understandably, concerned about competition in the sector with the demise of start-up aircraft Bonza. The beleaguered airline’s administrators are in talks with two parties, but with the airline’s leased aircraft now returned to their lessors offshore, its chief asset remains its Australian aircraft operating licences.
