Blame aplenty for all in Qantas’ downward spiral JANET ALBRECHTSEN THE AUSTRALIAN MARCH 05, 2014 12:00AM ON this day 12 years ago at 6.42am, Ansett’s last commercial flight landed, at Sydney Airport from Perth. That touchdown marked the end of Ansett as staff gathered in Golden Wing lounges across the country to hold wakes for the national icon that started business with a monoplane in 1936. While administrators had revived Ansett with new ownership, they scoffed at an offer from Virgin, using smart-arse language that they “didn’t need a Virgin to come in and show them how to do the job”. Unionists cheered the snub to the low-cost, disciplined airline that would surely have introduced greater efficiencies and produced some job losses. In the end, Ansett collapsed. All 16,000 jobs were lost, making it at the time the biggest loss in Australian corporate history. Perhaps that reminder will provide the wake-up now needed as Qantas stares down the barrel of its own existential crisis. After Qantas posted a $252 million half-year loss, announced 5000 job losses and a wage freeze, once again unions chose to play the same destructive games they played when Ansett collapsed. But blame for the problems facing Qantas must be shared around, between unions, management and federal governments over the past decade. Start with the federal government. For years, it has been obvious that the Qantas Sale Act has hindered the ability of Qantas to operate in a highly competitive, globalised world of aviation. The act - which restricts foreign ownership of the flying kangaroo to 49 per cent, limits foreign airline ownership to 34 per cent and prevents a single foreign investor from owning more than 25 per cent - means Qantas does not operate on a level playing field with airlines that compete with it in Australia and overseas. If similar limits applied to Virgin Australia, it would be in breach of the law. Yet while the Qantas Sale Act ties the hands of Qantas to access more foreign capital, Australia is one of few countries that allows foreign-owned airlines to operate in Australia’s domestic airline market. That means that Virgin Australia - backed by governments of three countries - can compete against Qantas. These commercial inconsistencies have been obvious for years. Yet no federal government - not Labor, not Liberal - has been brave enough to fix the problems. Finally, the Abbott government is trying to address this ridiculous legislative regime. Tony Abbott has said the government cannot offer a guarantee of Qantas debt without offering the same to other airlines. And, facing a bunch of economic illiterates in the Senate who will oppose changes to the Qantas Sale Act both before and after July 1, the Abbott government’s attempt to pass amendments will likely fail. The Labor Party also sits in that camp of economic luddites, having made it clear it won’t allow foreign ownership to rise above 49 per cent. Last week, Labor signalled once again it is led by politicians with little understanding of business, of the market and the challenges of having to make a buck rather than collect a nice secure MP’s pay cheque each week. Opposition Leader Bill Shorten described the Qantas Sale Act as a “red herring” and Labor Treasury spokesman Chris Bowen could only manage to say that Qantas having access to more capital was “not a bad thing”. In fact, the ability of Qantas to access capital is critical given that Virgin announced in November an equity issue of $350m underwritten by major shareholders Air New Zealand, Singapore Airlines and Etihad - all state-backed airlines. Looking even more clueless about commercial realities, Bowen said the Prime Minister and Warren Truss “should have dealt with this weeks ago”. In fact, this should have been dealt with years ago but neither Labor prime ministers Julia Gillard nor Kevin Rudd had the policy nous or political courage to do so. Once again, Labor has tied itself to the union movement, forgetting the national interest in providing a level playing field for Qantas. Looking like the union movement’s political parrot in Canberra, Labor has demanded the government provide a debt guarantee to Qantas. ACTU boss Dave Oliver said “this is the role of government” and “in return the government will get a viable business”. What about the role of unions? When Ansett faced commercial death, the best then AWU boss Shorten could do was demand government money and organise protest walks through the streets of Melbourne. In a case of bad history repeating itself, just as unions did nothing to make the highly unionised Ansett a more viable, more competitive airline to stop it going bust 12 years ago, unions have offered nothing to save Qantas today. When, in 2011, Qantas announced restructuring plans to make the airline more efficient, unions promised “guerilla warfare”. A few years later, there is still no honest talk from unions about the high cost base of EBAs at Qantas, of ridiculously generous entitlements to Qantas staff, of pilots earning more at Qantas than at most other airlines - only unhelpful union threats of strikes and lazy demands for taxpayer dollars to save Qantas. Then, like now, the campaign to save an airline is laced with too much economic illiteracy and emotion about saving a national icon and fighting for every job. Mired in the past when industrial relations was a blood sport, there is no sign of a modern union movement able to work with management to create an efficient, sustainable and competitive airline. Qantas management must also share the blame for the dire straits facing the airline. For years it has shown a supine inability to confront unsustainable EBAs and work practices. And arrogant claims by Qantas to do whatever it takes to protect its 65 per cent share of the domestic market have led to reckless and destructive capacity wars between Qantas and Virgin where both airlines run services that outstrip passenger demand. Lowering ticket prices to fill seats at any cost has seen Qantas and Virgin bleed money - both airlines announcing losses last week. Customers have been voting with their feet. Seventy-five per cent of Australians who fly overseas choose airlines that offer cheaper prices and better service than Qantas. Pump-primed with money from state-owned airlines, Virgin Australia has been eating into the domestic market, attracting customers who favour the low-cost airline. If Qantas goes the same way as Ansett, the blame will lie squarely with decisions taken and not taken by Liberal and Labor federal governments, the intransigence of the current Labor opposition, mistakes made by Qantas management and the entrenched irresponsibility of Australia’s luddite unions. Only a wake-up call on all fronts can save Qantas. [email protected]
Posted on: Tue, 04 Mar 2014 22:46:06 +0000