Pilots at Qantas’ Perth-based subsidiary Network Aviation went on strike for 24 hours Thursday, causing disruptions for thousands of passengers, with more union action planned for next week. Just one of the many issues for new CEO Vanessa Hudson to sort out. Michael Sainsbury reports.
Despite all the promises by CEO Vanessa Hudson of change, the evidence so far is rather more of the same. That includes predecessor Alan Joyce’s predilection for outsourcing all the hard bits, including the hard decisions.
Hudson has so far farmed out the company’s image management to Boston Consulting Group (BCG), operations planning to McKinsey & Co, and now its industrial relations to the Fair Work Commission.
An increasingly bitter relationship between the pilots of the company’s Perth-based Network Aviation and the Australian Federation of Air Pilots (AFAP), which covers about 90% of the 250 pilots in the group, saw them strike yesterday. Qantas cancelled 35 regional flights stranding paying passengers and fly-in-fly-out workers.
Pilots at Network Aviation (NA) have voted down three attempts at a new Enterprise Bargaining Agreement. NA pilots are the worst paid in the Qantas group; at present, 70% of NA pilots are paid below award levels, according to the union. Qantas’ says they want a 50% pay rise, but that would only take them up to award levels.
After the last rejection, Qantas went to the Fair Work Commission (FWC) seeking a finding of ‘Intractable Bargaining‘, a last resort Industrial Relations tool to break the impasse of stalled negotiations. If successful, this would see the FWC settle the dispute. NA pilots voted Thursday to continue rolling strikes, and another two-day action planned for next week was announced by AFAP on Friday..
“In terms of conditions, all we want is what every other pilot in the group has,“ a union rep told MWM. However,
the even bigger problem is that we cannot attract pilots with any experience to the group, and many of our experienced pilots are leaving for much better paid work overseas.
Enter the consultants
And so to McKinsey’s mission which is – and this is not a typo – to ‘make the planes run on time’. An airline’s central task is to supply excellently maintained aircraft to fly their passengers to their destination on time. So, why was Hudson hired if she could not perform this core business task?
Qantas insiders have told MWM the answer is really simple, a simple combination of having enough pilots, engineers and a fleet of aircraft that is big enough, young enough and available.
Hudson’s problem is that she has none of these, so ‘fixing’ the problem will take many years.
McKinsey is the second set of consultants Hudson has called in, with BCG being brought in as soon as she took the top job to help ‘repair the company’s image with passengers’. So far, this appears to have amounted to more Grange wine in the Sydney First Class lounge, as per Qantas Facebook groups, and a slight improvement in on-time performance for the mainline flights (not Jetstar), yet this still sits below pre-COVID levels.
Source: Bureau of Transport and Infrastructure Economics.
The problem is that the airline has changed its core business from providing logistics to financial engineering. It doesn’t help that she has created an executive team of which barely 10% has long-term operational experience.
Pilots on the run
It’s not just Network Aviation that is screaming for pilots, it’s the entire group. To add insult to injury, Emirates, Cathay Pacific and Japan’s ANA are all running targeted recruitment of Australian pilots at present; multiple pilot sources toll MWM.
The larger problem is a global shortage of pilots. The total number of active commercial airline pilots was 351,000 in 2023, according to CAE, a leading supplier of flight training services. In June 2023, the group projected a need for 252,000 new commercial pilots by 2032 – a number that sits in the middle of forecasts for aircraft demand by major aircraft makers Boeing and Airbus.
Insiders also said that Qantas disguised its lack of pilots with its pre-Christmas announcement it was “taking some flights out of our schedules” during December and January.
A thin and ageing fleet
Qantas is also running out of planes due to the under-investment during Alan Joyce’s tenure, and it is now cutting back on a range of international services. This week, an internal note from Nick Bull, head of the international cabin crew, said that the regularity of flights from Sydney to New York, Johannesburg, Dallas, Los Angeles and Santiago would be cut. The spin from Qantas was, as usual, ‘supply chain issues’, ‘supplier delays’, and a lack of maintenance workforce. The last, at least, is true, but self-inflicted.
As for the planes, one A380 is in Abu Dhabi, having its heavy check. “They have found cracks in the wings which is no surprise,’ one engineer told MWM. “This means it has been delayed two months, which in turn has delayed another A380’s heavy check and yet another A380’s landing gear change.”
The landing gear is going to run out of cycles very soon, so it will need to be parked until its maintenance slot becomes available later in the year.
The company’s 25 A330s have an average age of 16.6 years, with Qantas ranked 126 of 149 airlines running these planes in terms of age. “They are very delicate and seem to have a high rate of delays and reschedules to do maintenance problems,” the engineer said. Qantas sources say its A330s have an on-time record of only 35% compared to 100% for its leased Finnair plane that flies from Singapore to Sydney, with another Finnair on the Sydney-Bangkok route next month.
Maintenance woes – and price gouging
“There is higher aircraft utilisation, no spare aircraft as well as more and more aircraft having work that must be done that’s been put off,” the engineer said. “You can only defer things for so long, so ground time delays are inevitable. Overtime is offered every day, but it seems people are getting over doing the extra time. There is a continual line of job ads with no decent candidates left to employ. We have taken back some engineers who took redundancy packages, which is good.”
We still have a spare parts shortage, as we only seem to buy large and expensive items when needed. This leads to long delays whilst the part is sourced from overseas.
And by the bye, just this week, former Australian Consumer and Competition chief Alan Fels accused Qantas of “price gouging” in his landmark report on Australian corporate market power for the Australian Council of Trade Unions.
The duopoly in the aviation sector in Australia is dominated by Qantas, and there is price gouging by Qantas,
Fels said, also finding that Qantas prices have contributed to inflation during 2022.
But none of that is likely to stop Hudson and her team from snaring their bonuses this year. The ghost of Alan still looms large…
New Qantas chief Vanessa Hudson confronts a turbulent ride from shareholders at AGM
Michael Sainsbury is a former China correspondent who has lived and worked across North, Southeast and South Asia for 11 years. Now based in regional Australia, he has more than 25 years’ experience writing about business, politics and human rights in Australia and the Indo-Pacific. He has worked for News Corp, Fairfax, Nikkei and a range of independent media outlets and has won multiple awards in Australia and Asia for his reporting. He is a fierce believer in the importance of independent media.