In stark contrast to the situation at Qantas, former Qantas executive GM John Borghetti, and VIPA, which covers the largest number of Virgin Australia pilots, have reached an enterprise agreement which provides for pay rises of up to 28%.
In a statement VIPA says:
VIPA the union representing Virgin Australia and V Australia pilots, has secured pay rises of up to 28% for its members at Virgin, with its first enterprise agreement.
The agreement took almost two years to negotiate and offers significant improvement over the current common law contracts members were under.
VIPA is the largest pilot union in the Virgin Australia group and the agreement is to be voted on by pilots over the next two weeks.
VIPA Executive Director Simon O’Hara said today that the union hoped the agreement was the beginning of a professional and collaborative approach with Virgin regarding industrial relations issues with pilots.
“VIPA acknowledges that this good result would not have occurred if not for the imprimatur of the CEO, Mr. John Borghetti. There is no doubt that Mr Borghetti’s arrival ushered in a new era of industrial relations within the Virgin Australia Group.”
“VIPA supports the new CEO and also his mature approach to organizational and cultural change.”
In addition to the pay rise, the agreement provides for a comprehensive system for consultation between management and pilots, the introduction of a credit system, the cornerstone of this agreement, that measures overtime and work performed, a new insurance system for pilots and back-pay pay rises from 1 July if the agreement is voted up.
“This document represents the framework for the future and as such it is critically important that we achieved good structure and robust processes to underpin the Industrial relationship moving forward,” Mr O’Hara said.
The deal doesn’t put Virgin Australia at a cost disadvantage to Qantas, where the pilots are seeking annual rises of 2.5% over the three year period of their as yet unresolved enterprise agreement, as it fills in some of the existing pay differentials between both carriers.
The ‘stark’ differences are in the relationship between the Virgin Australia management and its pilots and engineers, where CEO John Borghetti is committed to increasing the use of Australian based employees to the maximum possible level, while Qantas is determined to shift jobs and assets off-shore and rotate through Australia flight and cabin crew paid under the terms and conditions of the labor laws of which ever country its foreign entities are based.
The Crikey home page take on the Virgin Australia deal
Qantas has previously said it will announce cuts to its Qantas international operations and more details concerning a proposed Asia based full service carrier and new transfers of business to international alliances on August 24.
It has refused to negotiate a guarantee sought by its pilot union AIPA, under which Qantas aircraft would always be flown by Australian based and trained flight crew, on the grounds that this would be a veto against change and innovation.
Earlier this week AIPA President, Captain Barry Jackson, told its annual dinner that Qantas regarded its experienced pilots as ‘inconvenient heroes’ in relation to recent in-flight crises involving the engine disintegration on an A380 near Singapore last November, and earlier incidents involving a temporarily out of control A330 that made an emergency landing at Learmonth, and the damaging decompression of a Boeing 747-400 prior to an emergency landing in Manila.
Jackson said the management of Qantas had destroyed in a few short years the brand value of the airline through mediocre decisions and a policy of denigrating and marginalising its pilots and maintenance engineers as being too expensively excellent for the cost cutting short term mentality that was evident at the board and executive level.
There was, he said, a lack of respect for the standards that had made Qantas a leader in aviation, and a determination to eliminate those advantages for the lesser requirements involved in meeting so-called world’s best practice when the Australian practices of Qantas had been superior.
He told the annual dinner of AIPA that the tradition of 90 years of excellence at Qantas deserved better than to be destroyed by a management that had failed to engage with its employees, or to grasp the importance of continuing the highest standards of pilot training and engineering excellence.
Jackson said AIPA was firmly committed to avoiding inconveniencing Qantas passengers through industrial action but would take important initiatives after the August 24 announcements to protect and save the meaning of Qantas to Australian travellers.
The developments at Virgin Australia are expected to strengthen AIPA in the further pursuit of a guarantee that Qantas remain genuinely Australian, instead of a sham branding exercise like the Qantas painted Jetconnect trans Tasman 737 services, or the various efforts Jetstar has made to pay pilots New Zealand wages for flying in Australia or hang Thai cabin crew off the end of 20 hour shifts to work domestic sectors in this country.
15 Comments
Ben,
On the topic of keeping Qantas Australianised in its various facets, and your comments in the paragraph starting with ‘The ‘stark’ difference…….:
I wonder if Brett G initially used Aussie-based call-centre staff at Virgin, before this service changed to being based in the Philipines. I’ll bet they’re being paid only under local income terms and conditions which would most likely be less and lower than Australia’s.
My family and I have flown to Dunedin, NZ, a few times over the last twelve months (connections with Otago Uni) and, working the three main airlines (Jet* remains impractical because of odd hours of arr./dep. times), I feel the greatest satisfaction when my telephone inquiries are responded to by someone working for that airline, ie a Kiwilander for ANZ (based in Auckland), or an Australian, based, eg in Hobart, for Qantas.
Qantas’ IT support centre has been based in India for some years. The public doesn’t get to talk with the staff, but Qantas employees do, when they need passwords reset, etc. (very frustrating- ‘….and thankyou for calling the Qantas Support Centre…have a nice day.” UGH!)
In order to cut costs further, maybe a day will come when that (still) friendly, if sometimes more formal and quicker-paced QANTAS Australian-based voice, will also be no more.
@Ben
Virgin have always had an Australian based call center (in Brisbane) and from what I hear, their local call center is growing rapidly to meet the demands of their expanding business. They outsource some of their calls to their Philippines based call center (for the obvious reasons).
Borghetti yet again, showing that he is the man that should have been given the top job at Qantas.
Unlike the man commanding the larger salary package who is unable to come to any agreements with almost the entire workforce.
JB is turning Virgin into an airline that Australians are proud of, while in a very few short years Joyce has taken one of the strongest brands in the world and is rapidly destroying its public value.
QANTAS pilots aren’t interested in a 28% pay rise. All we want is our jobs in Australia. Clearly though, we’re asking for too much.
Borgehetti is smartening up Virgin from the inside out. What a class act.
Meanwhile over at QF there is a Board of Directors and CEO that jump at shadows, with a business plan that seems hellbent on dismembering the Flying Kangaroo, and not much else.
When will the politicians wake up to the apparent outsmarting of the Qantas Sales Act taking place under their very noses? Is Minister Albanese alert to the big picture issues? Do these comments reach the converted, but otherwise fall on deaf ears?
Arrrggghhhh.
Well I rang the fund managers at my very large super fund last week and asked them to ask some real questions at the Qantas AGM. Now whether they do or not is another thing but their ears sure pricked up when I said something along the lines of the Qantas board reminding me in its behaviour of an earlier Telstra Board that seems determined to bite the hand(s) that feed it.
Folks,
Have a close look at the present QF balance sheet —- an asset strippers dream, far more attractive than even the ALCO days —- just because you’r paranoid, doesn’t mean they are not out to get ya!!
Bill Hamilton
PS to my last comment:
In terms of the duties of Directors under the Corporations Act 2001(see the recent precedent setting Centro HCA judgement) how can the contrasting actions of the QF and Virgin Boards and management be, in each case, in the best interests of the shareholders.
Bill Hamilton
More evidence Virgin is staking the house on becoming a full-service carrier. They better hope there’s room for two. I think it would have been more prudent to wait to see how their international arm goes before giving out the payrises. They’ve changed strategy three times since their inception, and their cost base keeps on rising – very very risky in this industry.
Room for two??
They are going to be the last ones left as full service once Joyce makes his changes on Aug 24th.
Have we heard of any other employee group in any industry obtaining even near such a pay rise, in some time? (Other than the knuckleheads in the executive suite?)
If Virgin is able to/must provide a 28% pay rise in this dreadful environment, does that mean that the pilots were so woefully underpaid, as compared with the pilots of competitors, or that somebody has given away enough to now be at a disadvantage, just when Qantas and Tiger, at least, seem vulnerable?
In a nutshell, yes. Virgin Australia are in the midst of significant restructuring, and any disharmony / disenchantment could hinder this progress. In particular, pilots are in demand globally, with Cathay Pacific, Emirates, Qatar, Etihad airlines all recruiting pilots presently, and offering better remuneration than the previous employment contract at Virgin Blue. (Luckily for Australian airlines, most Australian pilots want to live here, a fact that is apparently lost on Qantas.)
While 28% does sound ‘generous’ in terms of operating costs, pilots represent less than 5% of the operating cost of a flight, whereas fuel, for instance, represents over 50%.
IMHO this offer ensures Virgin Australia have a motivated, engaged, stable workforce that will implement the long term restructuring at Virgin being pursued by Borghetti and his management team, and is simply another long term investment in the company.
After all, it wasn’t too long ago that Rex airlines were cancelling routes because they were unable to retain enough pilots to fly all their aircraft.
11 days to go…….maybe there’s a change AJ can pull off a deal with the QF pilots ?
or will it be a case of …..Blue horseshoe loves Anacott Steel……. I tipping the latter…
On the subject of pilot demand:
http://www.telegraph.co.uk/finance/newsbysector/transport/8693999/British-Airways-to-recruit-800-pilots.html
I think it important to recognise that the 28%, while making great headlines, represented redressing the worst underpayment (that of V Australia Second Officers) and the deals for FOs and Captains were substantially less in percentage terms. My understanding is that the agreement is part of the salary rebalancing necessary to proceed with merging V Australia and Virgin Blue pilot remuneration as part of the Virgin Australia re-engineering.