David French | 8/11/2011 2:54:33 PM

This article was first publihed in The Morning Bulletin dated 05th November 2011. Titled 'QANTAS'

The Qantas we know today is actually an amalgam of several airlines – in particular the “old Qantas”, which was Australia’s international airline and domestic variant Australian Airlines (formerly TAA). Both airlines were owned by the Australian government.

The old Qantas was a national icon but it has never been a great business - inflexible work practices, long, thin routes and increasing competition meant it was a consistent loss maker. Australian Airlines (which as TAA, did not have a fatality free record) was up until 1990 protected by the two-airline agreement and was as a consequence, very profitable. Qantas and Australian merged in 1992, but the domestic division faced little real completion until Virgin took Ansett’s place in 2001.

Regardless of variants, Qantas’ domestic operations have always been the driver of Qantas’ profit and that history provides a sound basis against which to test the views of Alan Joyce. Consider now the very strong $A, high fuel prices and vastly increased international competition. Then add a rebranded Virgin, which is showing signs of having all of the quality of the old Ansett, without the inflexible work practices and cost base. Sound like an environment for unrestrained pay increases?

The Fair Work Act enables employees to undertake protected industrial action. The rolling stoppages and work bans at Qantas fell under that category. As a result Qantas was forced to ground about eight planes, probably directly eliminating 64 flights daily, and causing significant disruption across the entire network. Qantas claims the stoppages had cost about $68 million before the lockout.

Stalled negotiations, during which certain union officials suggested Qantas management might be found ‘floating down the river’, and the airline “baked slowly”, left Joyce (again under legislation) with only one option – a lockout. But the Fair Work legislation is drafted in favour of the unions - employees can cause significant disruption through limited and low cost industrial action. For a company to exercise its rights, it has to lock out workers and therefore actually or effectively shut down, thereby incurring massive costs and disruption.

The unions were gaming the law. In such a situation there is only one solution – move the play so that the law clearly and demonstrably applies. That’s what Alan Joyce did, and the result is the strikes are terminated. Like the Emperor, Fair Work has no clothes.

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