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Jetstar: What game are you playing?

Jetstar: What game are you playing?

Industrial disputes are rarely simple and straightforward. First of all, there are at least two sides, with the truth lies somewhere in the middle. Jetstar was the subject of protected industrial action last weekend.

Jetstar cancels 10% of flights

Jetstar has been in negotiations, or dispute with a few of its unions pending new industrial agreements. These include the Australian Federation of Air Pilots (AFAP), and the Australian Workers Union which covers baggage handlers and ground crew. They have approval for protected action – which means strikes and work-to-rule campaigns at notified times.

Jetstar management has just announced that it will cancel 10% of its domestic flights in January, and is thinking about selling three of its long haul aircraft.

Jetstar B787

Business decision, or industrial action?

Jetstar is portraying these actions as the direct result of the protected industrial action, but are they really just inevitable business decisions as a result of Australia’s economic downturn under the cover of industrial action?

Jetstar’s corporate owner, Qantas has a history of playing industrial hardball with unions and professional organisations, and of being out ahead in the PR stakes, so that naturally makes me suspicious.

Pilot unions have quarantined the Christmas period from strike action, promising no industrial action between December 20, 2019, and 3 January 2020.

Cancelling 10% of Jetstar flights in January would see close to 1,000 flights grounded.

Whose at fault?

A difficult question to answer. While admitting that I tend to have a bias towards workers organisations and against large corporates, I will dot point the evidence as neutrally as possible for you to decide:

  • Jetstar has cancelled negotiation meetings
  • Unions hope that negotiations will resume avoiding further strike action
  • Jetstar claims pilots’ demands equate to a 15% increase in costs
  • Unions are asking for a 3% pay increase, arguing other conditions are offset by improvements in productivity
  • Jetstar is reviewing its fleet needs and contemplating selling three Dreamliner to ‘protect . . . ongoing profitability’
  • Jetstar admits that three international routes are loss-making or marginal
  • The union claims no connection between fleet makeup and strike action

One of the routes in jeopardy is likely to be Hawaii. The route is affected adversely by the weak Australian dollar which is discouraging travellers to the USA holiday island.

Jetstar B787 Business Class

2PAXfly Takeout

Jetstar is conveniently conflating the industrial action with a need to downsize and rationalise its fleet and routes given the trajectory of the Australian economy. They appended the note about fleet renewal to their release about contingency plans for the ongoing industrial disruption.

If it gets rid of a couple of Boeing 787 Dreamliners, what are the odds they will go to Qantas?

The Australian Workers Union and the AFAP are fairly adept at industrial negotiations, however, they are not in the same league as the Qantas/Jetstar public relations machine.

Both sides are good at overstatement. A 3% pay rise doesn’t seem overly optimistic, especially if there are accompanying efficiency concessions. On the other hand a 15% increase in costs – sounds like an ambit claim from Jetstar!

In this case, I’m inclined towards the union case – once again.

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