Winnipeg Free Press - PRINT EDITION

Airline faces economic crash landing

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BRISBANE -- As Raymond said in the 1988 film Rain Man, "Qantas never crashed.'' Raymond, a gentle, autistic man with total recall of all airline crash statistics, was right -- Qantas airliners have never crashed. But this week the Aussie airline was enduring enough turbulence to at least light up the nation's fasten-seat-belts signs.

The longest continually operating airline in the world with the kangaroo on its tail is in serious trouble as a result of a series of strikes that began in September.

Many are wondering if a company can survive in the cutthroat world of aviation, where customers now see cheap airfares as a birthright.

The dispute involving baggage handlers, ground staff, engineers and pilots is over pay and job security. At the core of this increasingly angry industrial confrontation, however, is the airline's plans to cut domestic jobs as it looks to expand in Asia.

Qantas as a corporate entity is in great health, earning about $250 million last year alone. But its international division lost around $200 million and, according to Qantas chairman Alan Joyce, needs major financial surgery if the airline is to survive.

Joyce is an Irishman who may well have the corporate talent to match the literary genius of his namesake, James Joyce. But there are also fears this brawl may end in a much-loved Australian success story becoming an antipodian version of Pan Am.

Joyce has a master plan for re-energizing the international division. It involves a partnership with Japan Airlines and another Qantas-related premium airline to be located in an as-yet-unnamed Asian city.

The unions claim maintenance is about to be outsourced offshore and the implication is that with it will go Qantas's unsullied safety record.

Joyce counters that little will change, with 90 per cent of heavy maintenance remaining in Australia, where the vast majority of the airline's 30,000 employees are based.

"We want to bring our employees with us as we meet the challenges and opportunities of a changing global economy,'' he wrote recently in the The Courier-Mail. "It doesn't have to be this way.''

Steve Purinas, from the Australian Licensed Aircraft Engineers Association, says Joyce is not telling the full story.

"Instead of using their talented staff in Australia for heavy maintenance work, all their new aircraft will be maintained by cheap labour in Asia,'' he wrote in the same paper.

Most Australians, many waiting wearily in airport lounges as the strike impacts domestic schedules, are simply hoping and praying the matter is resolved quickly.

Qantas was created in outback Queensland in the tiny town of Winton. The carrier is Australian from its kangaroo-encrusted tail to the wing tips of its 747s. With its headquarters located in Sydney's Botany Bay, where the first fleet landed in the late 18th century, its marketing strategy is highly reliant on its patriotic appeal.

Perhaps its most famous advertising campaign was accompanied by the I Still Call Australia Home soundtrack.

Many Australians are only dimly aware Qantas is not government-owned, having been sold off decades ago along with such other national assets as the Commonwealth Bank.

When national disasters strike and evacuations are needed, Australians expect the red kangaroo to fly to the rescue. And they are rarely disappointed; Qantas, despite commercial pressures, takes such corporate responsibilities seriously.

Yet in the last few days, the strikes are taking a toll, with 60,000 passengers having been impacted by the rolling stoppages. "There are provisions in the Fair Work Australia Act for the government to intervene if this dispute gets to the point whereby it's a threat to the national economic interest," Transport Minister Anthony Albanese warned.

The unpalatable reality is that there are no guarantees in the free market.

As Frank Zappa once said: "You can't be a real country unless you have a beer and an airline.''

Michael Madigan is the Free Press correspondent in Australia. He writes mostly about politics for the Brisbane-based Courier-Mail.

Republished from the Winnipeg Free Press print edition October 21, 2011 A15

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