Australia's Biggest Airline Grounds Its Entire Fleet

An anonymous reader writes "Australia's national airline QANTAS, famous for never having had a fatal crash, has been grounded effective immediately by its management. The grounding is in response to industrial action by union employees and has stranded passengers all over the world, with 108 planes grounded indefinitely. The Australian Government is seeking an urgent industrial relations hearing in a likely bid to suspend the industrial action and halt further damage to the Australian economy."

There's no good guys here

[drsmithy]

On the one hand, current (and immediately previous) QANTAS management has been woeful, and are now merely reaping what they have sown.

One the other, the employees in question are already on a pretty sweet deal, and asking for more is just raw greed.

Re:There's no good guys here

[Cimexus]

Qantas employees generally already have higher pay and better conditions than equivalent positions at other domestic carriers (Virgin, Jetstar, Tiger) - and FAR more than carriers in almost any foreign country that you could name. Also, Alan Joyce, though just given a $1.5M raise, voluntarily took a $7M/year pay cut previously. So he's just regaining some of what he previously lost (not that that justifies anything, just pointing it out).

AJ is a bit of a dick, but Qantas really is between a rock and a hard place. Or more accurately, Qantas International (the domestic arm is doing fine). QF international is losing money hand over fist through no real fault of their own. The problems are:

1. Geography: Australia is a terminus when it comes to air travel. You don't travel 'through' Australia to get to anywhere else. So you don't have the advantages of being based in a hub, like places in the Middle East or Asia, which can attract substantial traffic from within their catchment area and ALSO a lot of transit traffic (people just passing through in transit to other locations). Australia is the 'end of the road' so to speak, which makes their potential market much smaller.

2. Australia has an open skies policy these days, which has allowed the likes of Singapore Airlines, Qatar, Emirates, Malaysian Airlines, Cathay Pacific, Etihad to operate Australian services. These are airlines that already have the inherent advantages of being based in hub locations (thus are not as reliant on origin-and-departure traffic as Qantas is). They are also airlines that, due to being based in locations with much lower wages than Australia, have costs in the order of HALF what Qantas has, to operate the same flights. Qantas tickets are therefore more expensive. And as a result, noone buys them - Qantas now has only 20% market share for international flights to/from Australia (and falling).

So, QF international is losing money. Their successful domestic arm has been subsidising it, but that can only continue for so long. So what's the solution? They can either start basing at least some of their core maintenance and piloting operations from a hub somewhere in Asia (Singapore, HK etc.) ... or go out of business. This is what Alan Joyce announced earlier this year as a plan to save QF International - moving some operations offshore and creating a new premium airline in Asia. The unions oppose it - they obviously don't want jobs to be lost within Australia, nor do they want their members to miss out on pay or entitlements. Fair enough, from their perspective.

But what would you have Qantas do? They have no choice - if QF International is to survive at all, they MUST significantly reduce their cost base. That would be impossible to do while keeping all existing jobs in Australia. And even more impossible to do if the unions force them to pay even more. They are competing against foreign carriers whose costs are half as much, remember. What a sad thing it would be if Qantas - the second oldest continuously operating international airline in the world - was forced to close its doors.

There really are two sides to this story - the vilification in the media of Qantas as being greedy, un-Australian etc etc. is to some extent unjustified, as they are really running out of options, and noone can force them to keep operating their international arm at a loss.

At $5M QANTAS CEO Joyce is vastly overpaid

[CuteSteveJobs]

The CEOs of Singapore and Cathay, better airlines, earn much less than Joyce. Joyce and his executive mates just awarded themselves big fat payrises, but are crying poor to the employees. QANTAS is much owned my institutional investors. It is the executives that have all the power and the big fat paychecks. You might want to check this out: http://www.smh.com.au/business/tough-times-in-the-executive-suites-20110907-1jxpo.html [smh.com.au] 'The former chief executive of Singapore Airlines, C S Chew, for example, managed to get only between $S1.25 million ($982,000) and $S1.5 million ($1.18 million) in his last nine months at the airline. Cathay Pacific's former chief executive (now International Air Transport Association director general) Tony Tyler was paid $HK11.48 ($1.4 million) in his final full year at the airline. Joyce's $5 million pay packet dwarfed that of the head of Asia's largest airline in terms of fleet size and passenger movements, China Southern. The president of the Guangzhou-based airline, Tan Wangeng , was paid a relatively paltry 1.03 million yuan ($153,000) last year. The entire board of China Southern's supervisors, executive directors and non-executive directors (including Tan) was paid about $855,000 during the same period.'