As Qantas drops to become the worst performing airline in the country, staff and unions say years of outsourcing have turned it into a budget carrier. By Rick Morton.

Inside the Qantas saga: ‘It is a wonder they can get a plane off the ground’

Qantas chief executive Alan Joyce.
Qantas chief executive Alan Joyce.
Credit: Reuters / Loren Elliott

As the Easter holiday season approached and airlines across Australia prepared for frontline aviation workers to face hordes of disgruntled travellers, Qantas was holding a wellness week for its head office employees.

Despite the looming crisis, about which Australia’s national carrier had been warned repeatedly, management at the airline had arranged a week of yoga, meditation, Zumba dance classes and a “therapeutic puppy” that staff on the Qantas campus at Mascot could “pat … to take the stress away”.

It was a typical corporate program to “treat” staff. Some within the airline noted it was particularly tone deaf in the lead-up to the busiest travel period in two years, when Qantas had done so much to jettison workers and, in the case of baggage handling, an entire business within the company.

For starters, the relaxation activities were not available to employees who would soon be exposed to angry travellers booked on an airline that apparently had forgotten how to fly. Crucially, however, many of the campus staff at Qantas work in operational roles and they were already severely overworked.

That month, in April, the Spirit of Australia would stand out for posting the worst airline industry performance statistics since recording began in 2003. Just 58.7 per cent of Qantas flights arrived on time, beaten even by its budget subsidiary Jetstar on 59.2 per cent. Virgin Australia recorded 65.6 per cent of flights reaching their destination on time. Regionally, QantasLink performed the worst, behind Virgin and Rex Airlines. The situation was scarcely better when measuring planes that departed on time. Here, the national carrier pipped Jetstar but was still five points behind Virgin, an airline that collapsed during Covid-19 shutdowns and has been somewhat rebuilt by private equity ownership.

After divesting the entirety of its “below the wing” ground handling business – with some 2000 workers at 10 airports – and using the pandemic to offshore hundreds more call centre staff, and to stand down 20,000 workers while claiming $855 million in JobKeeper, Qantas chief executive Alan Joyce blamed passengers for mayhem at airports in April.

“I went through the airports on Wednesday and people forget they need to take out their laptops, they have to take out their aerosols … So that is taking longer to get through the [security] queue,” he said at the time. “Our customers are not match fit.”

Later, Joyce – who has earned almost $100 million as the man in charge of Qantas since 2008 – would suggest workplace absenteeism rates of up to 18 per cent might also have something to do with historic logjams at airports, cancelled or delayed flights, and an overwhelmed baggage handling system.

Yet this would explain only part of the considerable problem facing the airline. Joyce was not willing to get into the rest of it.

“I say these days that it is a wonder they can get a plane off the ground,” one source familiar with the 15-year-long restructuring effort at Qantas tells The Saturday Paper.

“It’s a complete mess and my honest belief is that they just do not care about providing a good-quality service anymore. They are impervious to public scrutiny and criticism. A new crisis is just another day’s work to them.”

Since 2008, when he took the reins as Qantas chief executive, Joyce has overseen a radical and at times crazy-brave strategy to refashion the airline, spending much of his tenure at war with the various unions that claim membership across different parts of the aviation industry. Since 2010, the size of the Qantas workforce has been cut by 13,700 workers, almost two-thirds of whom were terminated or forced out in the past two years of the pandemic.

“It is really regrettable and it’s really disappointing for the Australian flying public that just when they want aviation to literally take off again, we’ve got airlines, and particularly Qantas, that just don’t seem to be match fit,” Transport Workers’ Union national secretary Michael Kaine tells The Saturday Paper.

“And it’s not match fit because it’s taken a long-term view about its workforce – that it should splinter it, that it should push it away from direct engagement, that it should pit aviation companies against one another. And that has resulted in standards in the aviation sector for workers being so low that just when we need to attract workers to the industry, they don’t want to come back because it’s not a desirable job any more.

“And, you know, that is on Qantas, and it’s on the Joyce administration.”

These are not minor historical squabbles. According to industry watchers and unions, the current failure of airlines to meet even basic flight standards must be understood in the context of Qantas’s domination of the sector and Joyce’s hardline approach to union-busting.

What the Irish Australian managed to do to 2000 Qantas ground-handlers at the end of 2020, under the cover of Covid-19, was the final stage of a plan he first set in motion in 2007. The airline had just negotiated a new enterprise agreement with the TWU regarding this “below the wing” workforce employed by the main business, Qantas Airways Limited (QAL). But rather than continue to hire baggage handlers under these more generous conditions, the company created a labour-hire subsidiary, titled Qantas Ground Services (QGS), with substantially lower wages and conditions, and then vowed to never hire another handler through QAL. It didn’t.

The November 2020 decision to outsource ground crews entirely finalised a Joyce dream: the new contracts with third-party operators such as Swissport and dnata provided ground services at the remaining 10 airports where Qantas still had its own employees, allowing the airline a “full exit”. Not even QGS was required anymore.

“Of course, that [2007 decision] kept the directly engaged workforce much more compliant and much, much less likely to ask for better terms and conditions lest they end up on the labour-hire terms,” Kaine says.

“And then when that wasn’t enough, they started a program of outsourcing – that is, completely severing the relationship between their workforce and the company, pushing the work to a plethora of other companies, some of which have very low standards both in terms of industrial relations and safety.

“But these [third-party] companies are entities over which Qantas has incredible commercial sway, commercial power and the capacity to essentially dictate to them what they will be willing to pay for labour.”

In early May, the Federal Court found that the airline’s decision to rid itself of 2000 baggage handlers was taken illegally because a high-level team of executives deliberately timed the move to avoid industrial action from the TWU. Airline executives in the group management committee had discussed a “vanishing window of opportunity” to pursue a complete exit from ground handling. It was the only option truly considered by the company because it would save $103 million annually and, if pursued properly, was high risk but high reward.

Then chief operating officer Paul Jones made voice memos to this effect, noting that the enterprise agreements governing the workers subject to outsourcing would be “open” from December 2020. On the stand, the primary judge noted he was clearly uncomfortable giving evidence.

“That [voice] document was not referred to in Mr Jones’s affidavit, but made the subject of cross-examination in which he was observed by his Honour to be uncomfortable, and his manner unpersuasive,” Federal Court judges Bromberg, Rangiah and Bromwich noted in dismissing appeals.

“The conclusion his Honour reached was that Mr Jones was feigning a lack of recollection as to what was in his mind when he made the annotations which went directly to the issue of the reasons for the outsourcing decision, casting doubt on his evidence on that topic more generally.

“Mr Jones was found to be willing to fashion his evidence to suit what he perceived to be the forensic advantage to Qantas Airways, and therefore his Honour did not consider it safe to place any significant reliance upon that evidence.”

Qantas continues to deny that it acted inappropriately in pursuing the measures, and has announced it will seek to appeal against the Federal Court decision in the High Court.

On the record, Qantas says the Easter chaos at airports had nothing to do with the outsourcing of ground handlers. People were sick, it says, and besides: there is a global shortage of labour in the aviation sector and similar issues have occurred around the world. Certainly, all major airlines suffered at Easter.

Earlier this month, Virgin Australia passengers endured yet more queues over the Queen’s Birthday long weekend. Qantas passengers continued to be parted from their luggage, for days at a time in some cases.

The difference between the two, perhaps, is that Virgin Australia chief executive Jayne Hrdlicka was at least aware of the consequences of cutting too far and too deep.

“The aviation industry risks being materially delayed in its recovery and forced to downsize while demand is significantly depressed and then rehire and retrain when it ramps up, and the implications of that for the economy are going to be significant,” she told a senate inquiry into the future of the aviation industry post-Covid in January last year. “The consequences that will have with respect to fares and accessibility will also be felt by people in the regions, and they will be significant.”

One Qantas traveller, emblematic of many, spent more than $500 to replace items needed for a business trip, after an inbound flight was delayed by more than six hours. On Thursday, philosophy PhD candidate Eleanor Gordon-Smith tweeted that QF8 was cancelled without warning at 2am at Dallas Fort Worth International Airport. There were no hotels or transport available. Indeed, there were no Qantas staff at all.

“A planeload of people is at checkin with nowhere to go and no guidance,” she said. “The Qantas desk isn’t just unmanned it has become a Lufthansa desk …

“No texts, phone calls, no updates on Google. The flight has disappeared from the internet.

“I’ve flown Qantas exclusively for 20 years and loved them but you leave 300 people in an airport at 2am where there’s no food on site, no hotel vouchers and not one staff member turns up at the time you said to board? Fuck Qantas.”

The executive director of the Australasian Centre for Corporate Responsibility, Brynn O’Brien, was also meant to be on QF8.

“My flight of 200+ people … has been stuck at dallas, delayed overnight, with no update for 15+ hours. almost as if sacking loads of engineers and ground staff is … bad,” she tweeted on Thursday. “Qantas isn’t what it used to be and i reckon the way the company treated (/continues to treat) staff during the pandemic is a pretty good clue as to why.”

Qantas later apologised “for the inconvenience”.

While all airlines are suffering during the extraordinary conditions of the pandemic, former TWU boss and now federal Labor senator Tony Sheldon says Qantas has led the sector into decline.

“In less than 15 years, Alan Joyce has trashed a century-old Australian institution,” he tells The Saturday Paper. “Joyce’s dismantling of Qantas has compromised the capacity and performance of the entire Australian aviation industry. Now the travelling public are paying the price.”

Sheldon says Qantas has treated those who made it great, such as check-in staff, baggage handlers, engineers, pilots, cabin crew and other frontline staff “with utter contempt”.

“Joyce is a textbook example of everything wrong with modern-day corporate governance. He has taken vital national infrastructure, illegally outsourced jobs and cut the pay and conditions of those who remain, all to improve Qantas’s margins and boost his own pay at the expense of his workers and the travelling public,” he says. “Joyce’s complete abrogation of responsibility is matched only by the Qantas board, which inexplicably continues to back him.”

Privately, Qantas argues that getting rid of its baggage handlers couldn’t have had an impact on services because there were no issues at Easter last year, a month after the final workers had left the company.

Of course, last year the world’s borders were not fully open and Qantas handled just 22,684 international passengers. The most recently available data, from March, showed the carrier flew 126,332 passengers overseas in addition to the ballooning domestic market.

Australian Services Union assistant national secretary Emeline Gaske tells The Saturday Paper the airline, which received about $2 billion in taxpayer support during Covid-19, “used the pandemic as cover to outsource, offshore and disinvest in the local workforce, meaning it is a shell of its former self, with insufficient staffing to deliver a quality service”.

“Cuts to service and staff mean that Qantas customers, like its workforce, feel taken for granted and are losing faith in the airline,” she said.

“They have an opportunity to rebuild that trust, but it will require a U-turn in corporate policy, with a reinvestment in the local workforce, bringing jobs back onshore, and renewing the service model that was so successful for so long. The alternative is to continue down the path of a budget carrier.”

During the chaos of the past three months, Qantas has been forced to ask administrative staff and senior executives to “volunteer” to head into the airport to personally help short-staffed customer service teams deal with irate passengers.

As lost baggage rooms at major airports overflowed, these managers – some on $200,000 a year – were given the job of arranging overflowing bags in alphabetical order in the arrival halls. Qantas has had to cancel entire flights because they could not get enough pilots to fly them. At one point, the airline had to fly a jet filled with lost baggage and no paying passengers interstate, just so the bags could be reunited with customers. Call centre wait times have swelled to eight hours in some cases, after Qantas sent about 900 of its 1000 call centre jobs overseas to South Africa and Fiji. Those offshore workers do not have access to the reservation system used by the 100 or so call centre workers in Hobart. Frantic calls for help are often re-routed, leading to those extreme wait times. Unless, of course, a caller is a gold frequent flyer or higher; they get sent straight to the Hobart team.

“It’s an implicit recognition that Qantas knows the service it provides is better in Hobart than in the vast majority of its offshore centres,” a source says.

While the airline points to a global labour shortage, it struggles to articulate the nexus between declining conditions and a workforce that simply cannot support itself. As one Qantas employee told this newspaper, a ground handler at an outsourced company earns about $22 an hour compared with a family member who earns $27 at a cafe.

If there were any expectations Qantas heard these concerns and was willing to act on them, or that it understood the concerns of a travelling public paying more for less, those hopes were extinguished in October last year during a hearing of the senate select committee on job security.

There, Labor’s Tony Sheldon asked Qantas general counsel Andrew Finch if the corporation requires that contractors engaged by the airline pay their employees a living wage.

Finch was deadpan in his response: “What’s a living wage?”

Qantas did not respond to a series of detailed questions sent by The Saturday Paper.

This article was first published in the print edition of The Saturday Paper on June 18, 2022 as "Inside the Qantas saga: ‘It is a wonder they can get a plane off the ground’".

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