Paul Barry's guide to the Qantas dispute

The Qantas drama involves many of the key people we're following on The Power Index. But what's this dispute actually about, and what are the stakes for those involved?

What's it about?

There are three different unions in dispute with Qantas, representing pilots, engineers and ground staff. Essentially, all are fighting the same battle, which is to hang on to their Qantas conditions of service and well-paid Qantas jobs as management tries to cut costs.

What does Qantas management want?

Qantas management wants to slash labour costs, particularly on international routes, where the airline is supposedly losing $200 million a year. It wants to do this in a number of ways. First is to set up a new offshore hub—possibly with a new premium airline—where pay rates would be lower, shifts longer and conditions more "flexible". Qantas has done this already to a degree by employing pilots for its trans-Tasman route in New Zealand and paying them one third less than in Australia. It has also done this with Jetstar flight attendants based in Thailand who face 20-hour shifts, and whose conditions have been criticised as "slave labour".

Qantas also cuts costs by running code-share flights with Jetstar, and paying pilots at Jetstar rates. By increasing the use of code-share arrangements, domestically and internationally, it can extend lower pay rates to an increasing share of its business. But it doesn't necessarily cut fares.

In Australia, Qantas wants the right to employ contract labour ground staff to meet demand peaks. The TWU appears to have accepted this, but is demanding that the contract hire companies are unionised.

It's about the right to manage

The Qantas board (and the Institute of Public Affairs) say the dispute is about management's right to manage. And our friends at Business Spectator agree. But Qantas managers want to cut pay rates, change work practices, take jobs offshore and increase profits by lowering labour costs. In those circumstances, it's surely legitimate for the unions want a say, because it's about the conditions under which they work.

It's all about union power

Some say it's all about union power. And for Tony Sheldon and the TWU it may well be. But unlike the famous fights in the mining industry, where employees had plenty to gain from higher pay rates, employees in Qantas will lose from the changes that management want to make.

It's the only way Qantas can stay in business

Qantas claims its international operations are losing $200 million a year. Clearly, that can't continue. But not all the changes it's after—particularly those involving the TWU—are confined to international operations. Introducing contract labour to handling of domestic planes has nothing to do with the viability of the airline.

Which side will Fair Work Australia support?

If the disputes remain unsolved after 21 days, Fair Work Australia has the power to impose a settlement. But don't assume it will split the difference between the sides. While the Australian Industry Group is complaining that FWA is entenching union power, Qantas would take heart from a decision in September where FWA refused to apply Qantas conditions to pilots employed at lower rates by the airline's New Zealand subsidiary. It may well take that view again.

How about sharing the pain?

The Qantas dispute is part of an age-old battle between labour and capital. And there's no doubt who is winning. Take a look at these charts from Business Insider, which show CEO pay in the USA is now 350 times average earnings, while corporate profits and unemployment are at record highs and the share of wages in the economy is at record lows. It's not just Alan Joyce that's getting a 71% pay rise for making his workforce take less.

How about sharing the gain?

We all know Qantas passengers have been victims of this dispute. But that's not the only way they're losing out. Qantas made an underlying profit of $500 million last year, which translates to $700 million on its domestic operations. So why aren't passengers getting some of that in lower fares? And will Qantas pass on any future cost savings—at employees' expense—to the public? Or will it just hand it to its shareholders and management?

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