Australia: Spare Us the Excuses – Re-nationalize Qantas!

4-22-09, 9:23 am

Original source: The Guardian (Australia)

Qantas announced last week that it is axing another 1,750 jobs from its workforce. Workers are being urged to take unpaid leave, annual leave and to consider job sharing. The latest cuts follow on from the axing of 1,500 positions last year and the continued outsourcing of services, like aircraft maintenance, to cut-price overseas contractors. Once more flights will be cut. In boom times or bust, the Flying Kangaroo now follows a consistent path to maximizing profits by making the workers and the traveling public pay.

The announcement by the new Qantas CEO, former Jetstar chief Alan Joyce, was said to flow from revised profit estimates for the current financial year. The forecast is for a plunge of nearly 80 percent with last year’s $1.4 billion profit being whittled to something between $100 million and $200 million.

The airline will defer the purchase of new aircraft like the four super-jumbo Airbus A380s and 12 Boeing 737-800s currently on order. The order for fifteen 787-800 “Dreamliner” planes could be cut back. Ten previously operating aircraft will be mothballed or sold. Management will also be trimmed. Ninety senior jobs were cut last year and this time 500 management positions will go. Sensitivity about fat executive pay-outs and salaries no doubt influenced the decision to prune senior ranks. However, the real pain will be felt in the operational workforce.

“Clearly this is very unwelcome news and it’s going to be very distressing for those Qantas workers who are shortly to be told that they have been made redundant,” Deputy PM Julia Gillard said. A spokesman for Tourism Minister Martin Ferguson agreed that the announced cuts were regrettable but that, in his opinion, the airline had to take tough decisions in order to stay competitive in these lean economic times.

There’s no argument that times are tough. There has been a 4 percent drop in inbound tourism to Australia. A survey of major travel and tourism businesses found that 63 percent of them expect to lay off workers. In a sector employing 483,000 people that means big job losses – 3,000 jobs were lost in hotels, motels and serviced apartments in the December quarter last year, for example. Qantas accounts for 30 percent of capacity at Sydney Airport and cuts will be bad news for private operator Macquarie Airports.

Most of Qantas’ woes are said to be associated with international routes. Discounting and sharp reductions in passenger numbers, including business customers, are reported to be the main culprits. Domestic travel is also down and Qantas maintains that even further fare discounting by its budget carrier Jetstar will not halt the decline.

Angry and suspicious

Unions are angry about the staff cuts and very suspicious of Qantas’ motives. ACTU secretary Jeff Lawrence complained that there were no talks with workers before the job losses and restructuring were announced. Several of the unions have written demanding to know exactly where the cuts will be made.

Linda White, assistant national secretary of the Australian Services Union, has called on the federal government to put an assistance package together for the travel industry. “I haven’t heard of any industry assistance like they have done for the auto industry and the banks,” she told The Australian last week.

Gary Norris of the Australian Licensed Aircraft Engineers Association has called on Qantas to take the opportunity to bring outsourced aircraft maintenance work back from Hong Kong, Singapore and Malaysia. “There’s absolutely no need for any redundancies in engineering while they are outsourcing aircraft maintenance,” he said. Qantas fought a bitter dispute with its aircraft maintenance staff last year and was planning to use a Patrick-style scab workforce to break the will of the union. Engineers suspect Qantas will use the economic downturn as an excuse to advance its outsourcing agenda.

The Transport Workers Union believes Qantas is trying to offload its ground services to low-paying contractors by pricing itself out of the market. Qantas has lost Philippine Airlines, Etihad and its own Jetstar clients in the last six months by jacking prices up by 30 percent. “Whoever heard of putting up prices, especially this much, in the middle of a recession?” TWU national secretary Tony Sheldon asked. Employees at Aero Care, who now run ground operations for Jetstar, are paid almost $300 a week less than their counterparts at Qantas.

“Unfair competition”

Qantas and some media commentators have claimed union actions in recent times have in part precipitated the latest round of job cuts. Joyce claimed industrial action last year cost the company $150 million. That is the equivalent of a small number of golden handshakes for outgoing executives but that observation would not shift the blame in the desired direction for Qantas management. Neither does it consider the justice of the unions’ demands and actions.

The most interesting claim being made by big business’ cheer squad is that Qantas is facing “unfair” competition from state-owned carriers like Singapore Airlines, Malaysian Airlines and Thai Airways. They can ride out the bad times because planners in the government-owned airlines can take a longer view. How unfair! State-run airlines can ensure their skilled workforce is kept on, their aircraft maintained and updated and their services kept at full capacity despite a dip in the economy.

Instead of whining that government ownership of huge operations like an airline represents “unfair competition,” why don’t the commentators in the financial pages admit it is the logical way to run things? It is a rhetorical question. If governments run viable airlines and reinvest profits in the airline or elsewhere in the community there are no nice juicy private profits. It’s way past time that Qantas was bought back into government ownership.