It is normal for companies to try and pay employees as little as possible, and eradicate the higher paid for the lower paid.
That’s one of the facts of life in business.
But reading the new permanent part time pilot agreements on offer by Jetstar raises three obvious questions.
- Does the company understand that without ‘engaged’ pilots it risks its future?
- Why work for anyone that despises you, and
- Why would anyone put up with this in an airline industry in which more successful carriers like Singapore Airlines and Emirates, despite their claimed labor relations issues, place a richer, longer term value on pilots, and continue to eat Qantas and Jetstar?
These are some of the acts of self harm new pilots commit if they accept the Jetstar arrangement.
- They are liable to dismissal for any reason in the first year, involving the double penalty of losing their job and having to repay around $40,000 in the costs of being trained to fly A320s.
- They can be moved anywhere in the Jetstar franchises, including Singapore and New Zealand and not just between Jetstar’s Australian bases
- Overseas resettlement at Jetstar’s discretion may involve being paid less than in Australia taking into account different industrial conditions
The contracts are permanent part-time deals, guaranteeing a minimum 600 hours flying duty a year which is around 300 hours less than pilots employed under the current Jetstar Australian EBA which expires in 2013.
In its defence, Jetstar says the pilots can expect to fly around 800 hours a year minimum and insists that the new part time agreements disadvantage no-one.
Jetstar also says it is seeking more flexible pilot arrangements to better match the seasonality of travel demand across its franchises and within Australia.
One of the Jetstar pilots who analysed the new contracts calculated that a flight attendant performing 1320 duty hours a year on the current cabin manager EBA would earn $63,204, while on 600 hours flight duty time a Jetstar cadet pilot would make $65,040 and a first officer $68,400.
Cabin attendants work hard for their money and also play a critical role in the safety of an aircraft in an emergency, however very few if any airlines in the world have such a low differential in the value they place on pilots and flight attendants.
It can be argued that these figures are further evidence that Jetstar management is so disengaged from the technical realities of airline operations that it sees pilots as just another labor unit of no exceptional worth.
In the big picture these part time contracts tell us more about the pitiful self loathing that the board and management of the Qantas Group has for the Australian business it keeps denigrating as unprofitable, unsustainable, and one gathers, all too difficult to run as a competitive enterprise under Australian rules.
With these sort of attitudes is it surprising that Qantas as a group is imploding, a process hastened by cross subsidising Jetstar to make its figures look acceptable without regard to a reality that much depends on taking jets and costs off the full service brand the company says it can’t afford to run.
24 Comments
Remind me; why do we expect people to do Commercial Pilot’s Licences in this country??
The rotation up to Asia would be insurance in case the Senators poo poo the 200 hour Muti Crew Licence. Applications would dry up otherwise.
Ben, just for your information, National Jet (or now Cobham) introduced B Scale packages for their new joiner pilots on the Qantas Link contract around 2005/06. This meant that any new joiners were earning less than any cabin crew member at the time.
Cheers.
Quite correct boocs, however, it is still a full time agreement, and after 4 years, employees are on A scale(not to excuse the cynicism of B scale however)
The Jetstar part time contract is just offensive. Their HR people keep selling it as “you will definitely do 900 hours a year, so you will earn about the same as a full time pilot”
Bollocks. Try getting a car or house loan upon presentation of a part-time contract of employment where actual income will be less that 45K
Here’s the rub – the average punter in the street won’t give a damn about the part time pay deal, as it gives the appearance that a pilot could earn up to 91k.
Joe public will still see them as overpaid prima donnas – and all most of the public care about is getting a $49.00 airfare.
I hope the shareholders are happy with where this is all heading……
As a retired airline pilot from the US, let me tell you that history now repeats itself. In the 1980′s american airline companies introduced the B-scale, the airlines became de-regulated, and the dog fighting began. Cheap fares! yahoo! And service went down the toilet and so did career expectations for pilots. It generated hate and discontent between management and labor as well as the different seniority levels within a company, and here comes an age old adage: you reap what you sow. Flying in the US is a miserable experience. It is also a miserable career. And guess what Australia: it will only get worse. You think Jetstar and Virgin Blue (now reinvented) are terrible? In a few years it will be Jetpink and Dotflight and whatever. Any business school graduate that can scanm a bank inot loaning it money will launch an airline. And every time you press that button for the cheapest fare available (as you inevitably will) you are voting for a decay in quality. But the bottom line is the bottom line: the traveling public does not care what a pilot earns or what their life is like. They want cheap. The stockholders want big returns. And until a engine explodes over the Pacific and almost brings an aircraft down, then and only then (for about 2 hours) does anyone give a damn about who is sitting up front at the controls. It’s all a shame, but that’s the way it is, mates.
Many airlines have been destroyed and ceased operations as a result of a single bad crash that was deemed the fault of that airline.
The bean counters can keep cutting costs, but if they pay peanuts they’ll get a lower class of pilot, and increase the risk of something going wrong that could be the ruin of the airline.
I would like to pose a question to Jetstar Management; How much would a 10% saving on Pilot’s wages add to the bottom line? I suspect a maximum of 0.5% AND How much could an engaged Pilot group add to the bottom line, savings in fuel, sick leave, OTP (on time performance), maintenance etc etc.? I suspect, significantly more than 0.5%. So what is the real motivation for such short sighted, narrow minded, draconian HR (what an oxymoron) tactics? Is it any wonder that the QANTAS group is imploding. When will they learn that, if you employ accountants to run a “people” business, the numbers never add up? As Bluebyyou says, just look at history repeating itself.
It seems that the present management at QF & JQ have picked up where Dixon left off. Dixon was very very successful; at demoralising, belittling, attacking staff and being genuinely anti-employee. Today that baton is being championed by Joyce and his crew. Read UP IN THE AIR: How Airlines Can Improve Performance by Engaging Their Employees
by Greg J. Bamber; Jody Hoffer Gittell; Thomas A. Kochan; Andrew von Nordenflycht (Cornell press)
This study shows that it is your employees that make the difference in any organisation and by engaging with them and bringing them along for the ride, you can do more with less. I cannot understand the management of QF and JQ continually attacking their staff, when it is their staff that make the day-to-day operational decisions that determine a) if the plane stays aloft b) if the airline stays out of the media for a stupid customer service policy.
QF goes on about being the safest airline in the world. Yes it maybe, but not as a result of the culture in grained in QF, rather, it is the professionalism of their employees who make the right choices based on pride not loyalty.
Many have commented on the demise of Ansett, and many say that it was the employees that kept the airline alive. I see much of the family culture in Ansett being repeated at Virgin Australia. The Australian aviaition industry is probably in a unique situation right now to test this theory. Borghetti has just left the “All employees are out to rip us off” camp and has now joined the “lets be friends, hold hands together and skip off into the sunset” camp. Already he is factoring his emloyees into the success of the airlines ‘game change program’. Only time will tell if he get ripped off or skips into the sunset
crystals76,
Keep in mind that any pilot who gets a job at Virgin has enough experience to get a job elsewhere if he/she decides to leave. Attacking the workforce isn’t really an option at Virgin.
At Jetstar it’s a different story altogether…
I would highly recommend the book “HARD LANDING” by Thomas Petzinger and you will get a view of things to come. This is a brilliant reporting of US airlines in the aftermath of deregulation. A real eye-opener.
The book opens with a lovely and flowery description of flying by Charles Lindbergh – a pilot’s perspective. And then is followed up by a comment by Bob Crandall, former CEO of American Airlines: “It’s a dirty, rotten business.” There’s a pilot’s perspective and a business school master’s perspective, and it pretty much says it all.
I’d like to comment on Virgin valuing their pilots more than Jetstar and the perhaps implied comment that Virgin pilots are somehow more valued and valuable than Jetstar ones. I spent a career at American Airlines and then flew my last few years with Virgin. Virgin is much better at making you think you are valued, but look at salaries and see just how valued you are. At some point beyond the flash and cutesy slogans and hot cabin crew you’ll have to ask yourself where the financial reward will come for spending 50% of your life away from your family.
Pilots are their own worst enemies. For every one that is willing to fight the ugly fight for the proper pay and work rules that your profession rightly deserves, there are three more willing to crawl over your back to take the job just because they are going to fly a jet or be a Captain. I don’t know what the solution is in that regard, except to start asking these folks how they envision retiring someday from this profession before the age of 80; and if they think it reasonable that a bookkeeper or a cop should be making better wages than they will.
We have benefited from the struggles of our parents’ generation who fought hard to make the airline pilot profession a good one. We owe it to them and to the next generation to fight hard now to keep it a good profession. Don’t let Australia go down the path of the US airline industry.
At least for the time being there is a national minimum wage. Pilots also tend to fancy themselves as white collar workers, maybe even of the same class as management. But we are really blue collar workers – laborers working under a contract that is negotiated with management. When we kid ourselves into believing anything other than that, we let ourselves get sucked into managements downward spiral.
Leadership. That’s what I think Blogs is referring to in his/her post. Leadership vs Management. Managers count paperclips and see nothing beyond the bottom line. They are driven by quarterly results at the expense of long term viability. They are rewarded for short term goals with massive bonus payments.
Leaders motivate people and move everyone in the same direction toward a long term objective. Leaders win the trust and respect of their people.
If your airline management told you today that times are rough and they need a 25% temporary reduction in salary, would you say okay? Why not? Can’t trust a word they say?
How about if you had some history of your management patting you on the back and even rewarding you for the fine job you’ve done to contribute to the success of the company, even when they weren’t contractually obligated to do so? What if they later asked you for the same concessions? Would your reaction be different?
Continental Airlines (soon to become United Airlines sadly) is a great example of this klind of turn around. The total scourge of the US airline industry in the 1970s and 1980s under Frank Lorenzo, this ratbag airline became the number one airline 25 years later because Gordon Bethune (a pilot) took the reins of the company and gave them their pride and trust back.
Southwest Airlines – the only airline in the US that has NEVER had a quarterly loss and has NEVER furloughed a pilot -has had this right from day one. They should serve as the example to all others on how to run an airline from the management-labor perspective. This is what Blogs refers to : the exponential force multiplier when you have a highly-motivate workforce. Unfortunately, the average business school graduate can’t measure this so they can’t grasp the concept.
Bluebyyuou….well said sir.
Our industry is stuffed.
Australia has so few business Leaders. Yes the newspapers and magazines may promote bright and shiny wonder kids in the business pages, but so few are true leaders. Most are just managing their KPIs – a truly filthy concept applied by lazy management to justify their existence.
The ANSETT end was brought about by the unions failing to see that it was costing the airline more to fly their planes than leaving them sitting on the ground. Bob Hawke made the end seem like a good idear at the time by getting the RAAF to fly for a few weeks and slugging the public $10 for every flight sector to pay the staff their unpaid wages. If this is the way the SMART COUNTRY runs its airline industry then we may as well sell all the planes to the federal government.
Yes Gapot, it’s the unions fault. or Osama Bin Laden or some other bogey man. I’d agree with you but for the facts that unions don’t sit in boardrooms and in the current industrial relations system have very little actual power to do anything beyond bluster.
I also note that the Jetstar contracts are a flat or all in rate. I’m not really familiar with airline industry rates of pay and allowances but the contracts shift the cost burden to the employee for many things that most Australian employers pay for as part of the cost of employing people. this results in a very significant reduction in disposable income as more of your take home pay is used to fund costs associated with employment.
Jetstar is an awful place to work, both for operational staff and management. It’s BCG B-School gone mad and it will come a cropper. The problem lies with the general public as well: they demand ‘low fares – everyday’, and while there are plenty of young people desperate to fly a plane, I don’t see it changing. The only thing the government can do is actively enforce safety standards, something they seem a bit timid about doing.
The comparisons with Emirates and Singapore Airlines are unfair though: these are heavily state-sponsored companies – the main reason Qantas finds it so hard to compete.
@gapot- Not sure how you managed to combine an incident in 1989 with the collapse of Ansett in 2001, but l see your point.
Looking at the local industry from abroad amazes me.
Having worked at AN up to the end, the feeling of insecurity and hopelessness was felt everywhere up to the point the doors were closed. But that was with a well paid and respected job.
It seems now that insecurity and hopelessness are instilled in a poor paying and disrespected job.
Not smug, but am pleased for my family l moved away from all that.
Just a question Ben, on the “general public as driver of cheap fares” issue, what percentage of trips are paid by business
I suspect that many of these Jetstar cost-saving initiatives are merely short-term (and short sighted) attempts to grab market share (through cheap fares), and increase returns to the Qantas bottom line. In the short term then, the execs all meet their KPIs and get their bonuses, and Qantas shareholders are happy with an increased dividend and/or share price. The long-term impact however may be profoundly negative and the damage to the brand(s) and the operational effectiveness irreversable.
SBH,
Both major domestic carriers argue that about 20 per cent of trips are paid for by managed travel accounts as used by the ‘big end’ of town and government and are loosely covered by account management contracts. They are comparatively easy to measure but the majors here and abroad fudge the details as commercial in confidence. These are very frequent travellers, so they may in terms of head count, only be five percent or less than the flying population, but they get counted much more often than leisure driven, price driven and self employed or SME travellers, who generally can’t afford the fees charged by travel management companies, are often invisible because they book on line, and fickle, in that both price and schedule come together in choice.
The carriers try to measure these ‘other’ categories of travel by analysing FFP memberships, thus removing those who are captured by a managed travel account, and revealing those who frequent fly but are capable of making independent choices. They do not share this data with the public.
In 2000 around 15 percent of domestic flights were on the premium cabins of QF and AN. That figure is widely believed to have fallen in percentage terms, and many, many seats in the premium cabins used by corporate accounts are actually sold at or even below full economy so real business class flyers at business class fares are only a proportion of those sitting in those cabins.
The so-called great unwashed have been quoted to me as representing between 0.8 return trips and 1.3 return trips a year, domestically, with something even smaller per person in terms of cheap trips top Bali etc.
There is a huge ‘middle ground’ the follows the deals of the moment, who don’t buy $29 specials but are into $129 specials, which as I’ve discovered being part of it, often buys Qantas ‘red-e’ special for less than JQ fares at shorter notice, and often flies DJ for the same reason, because the ultra cheapies on JQ and TT are hard to use.
Which is a long winded way of saying you’re asking a hard question.
My feeling, talking to airline people, is that around 35 per cent of the domestic market flies for business or employment related reasons, mostly in economy, and mostly at fares that are ‘middle range’ because they need availability at specific times not necessarily available on special.
The figure quoted for international is generally lower at around 20 per cent for business or employment reasons, again, some of that 20 per cent may fly international long haul once a month, or medium haul more frequently.
This is the catch for pilots. The 65 per cent or so of the market that has grown that big because of cheap fares has also grown pilot jobs.
The issue therefore is industrial equity, and the expectation that those who work for airlines should be properly paid for their efforts, rather than treated like serfs.
SBH:
“Yes Gapot, it’s the unions fault. or Osama Bin Laden or some other bogey man. I’d agree with you but for the facts that unions don’t sit in boardrooms and in the current industrial relations system have very little actual power to do anything beyond bluster.”
Closing down an airline via a strike constitutes a great deal of power and was used to great effect by Qantas engineers in 2008. As for unions on boards: I’d love it if we had a system like Germany’s where there is meaningful labour representation, but I think given the general immaturity of both ‘staff’ and ‘management’ in Australia it would be a disaster. Which is probably why it hasn’t taken off.
Ben I think you’re figures are roughly correct, if anything airlines make disproportionately more from their ultra-frequent flyers than you quoted.
Virgin’s new business model is predicated on capturing some of this market. If they do: happy days, if they don’t – they certainly won’t recoup their huge investment in going upmarket. My tip is the first place they’ll start is addressing their woeful cancellation rates. At 4% some months (from the govt data), they can’t be serious about attracting business business.