In a disturbing turn that appears to be oblivious of the state of the world economy and the reality of increased competition into and out of Australia the Qantas pilots’ union has increased its demands on the airline in arbitration hearings before industrial relations watchdog Fair Work Australia.
On the new menu for pilots is superior first class accommodation – or better – ,travel upgrade priority ahead of the airline’s chief executive and undercover parking at their home airport.
Whereas the Qantas engineers’ union moderated its demands to reach a deal with Qantas, FWA documents leaked by pilots to ATW indicate the Australian and International Pilots’ Association has taken a more demanding stand on behalf of its long-haul members.
Last year, Qantas forced the long-running and bitter industrial dispute with three key unions to binding FWA arbitration by grounding its fleet and locking out staff on October 30.
The grounding resulted in 447 flights being cancelled and disrupted the travel plans of 70,000 passengers.
After a weekend of deliberations, FWA terminated all industrial action, ending the crippling stand-off.
However, after a mandatory 21 days the unions and Qantas could not reach agreement and the dispute is before FWA for binding arbitration.
Industry observers had suggested that the unions would moderate their demands because FWA would be less accommodating than Qantas.
The engineers’ union reached an agreement in December.
The pilots’ demands are outlined in a 275-page, 105,000-word document that has its origin in the late 1950s when the airline negotiated the transition from piston to the jet engine.
The document lays out what the first-class menu should be for pilots away from home and insists on three, three-course meals a day. In an throw back to IATA in the 1950s it even specifies how many vegetables must be served!
The AIPA is seeking a 3% cent pay increase and an upward reclassification of some pilots, allowing them to be paid for fly larger aircraft despite the fact they will stay on their current type for another five to seven years, raising their salaries by about $40,000 each.
All Qantas 767 pilots will be paid A330 rates, while 747 pilots will get the A380 salary scale.
The average Qantas captain is paid as follows: 767-A$270,609 ($283,000), A330- A$341,000, 747-A$371,142 and A380-$415,643.
AIPA is also insisting that Qantas cannot code-share on its LCC Jetstar’s flights or demands that Jetstar pilots are paid the same rate as Qantas pilots.
Both the AIPA and Qantas have declined to comment on specifics.
A Qantas spokesman said: “The most important thing for our customers is that none of the three unions which caused industrial unrest last year can take any industrial action for up to four years.”
Qantas chief executive Alan Joyce has previously warned that the pilots’ demands over code-share flights would spell the end of Jetstar.
In a portent of things to come China Southern Airways which now operates 35 flights a week into Australia is selling business class fares to Europe at half the cost of Qantas and has warned that it will more than triple its flights by 2015.
The demands beg the question when will relaity sink in?
Last year the Qantas hero pilot Richard de Crespigny broke ranks with his Qantas colleagues by calling for an end to “legacy practices.”
The captain, who landed the stricken A380 following an engine explosion after taking off from Singapore in 2010, revealed to The Australian that he had not joined in the pilots’ industrial action against the airline, even though he belongs to the long-haul pilots’ union.
De Crespigny told The Australian that “no pilot” has job security.
“If we have a higher cost base than our competitors, then we need to be more efficient.”
Hopefully the de Crespigny view will prevail.
Qantas pilots flying higher?
Is Congress really close on FAA bill?
Is an FAA reauthorization bill finally nearing the finish line after more than four years of wrangling? Perhaps, but I remain skeptical that a comprehensive, three- or four-year bill can be passed by Congress by the new Feb. 17 deadline (when the latest temporary funding extension passed by the House of Representatives Tuesday would expire).
There is a lot of back patting on Capitol Hill over putting the National Mediation Board airline unionization voting rule issue to rest with a compromise brokered last week between Senate Majority Leader Harry Reid (D-Nevada) and House Speaker John Boehner (R-Ohio). But the NMB issue only emerged as a stumbling block last year.
Lawmakers spent years (under various configurations of party control in the White House, House and Senate) arguing over FAA reauthorization prior to determining how to count votes in airline unionization elections became the BIG ISSUE preventing an FAA bill from being passed.
That’s because every time one BIG ISSUE is put aside, another emerges. (Remember when drug testing at foreign repair stations and FedEx’s labor classification were BIG ISSUES stopping FAA reauthorization?) Or various smaller issues conspire to slow or stall negotiations.
There may be reason for optimism. The US business community has let House Republicans know that they’re increasingly unhappy that funding for NextGen ATC and airport construction projects remains in limbo. Republicans and Democrats are weary after a series of bitter flights over the past year on budget and tax issues and may want to put FAA reauthorization to the side so they can get on with bigger battles leading up to November’s elections. And the FAA partial shutdown card has already been played. It was a public relations disaster for all involved.
Still, while the threat of another partial shutdown looks to have receded, reaching agreement on an FAA bill that takes the agency through, say, 2016 could prove to be too heavy a lift for this Congress. A fallback could be either a long extension (at least through November’s elections and perhaps into 2013) or a short reauthorization (a two-year bill that would be a de facto long extension but may contain a few broad policy provisions that a 9-12 month extension likely would not).
The FAA reauthorization battle has extended through two presidents of different parties and four Congresses of varying partisan configurations. It’s hard to believe it can now be wrapped up over the next three-plus weeks. I’ll believe a long-term FAA bill has been passed only when I see President Obama sign it into law. An announcement of a broad compromise on a single issue (even one as contenious as unionization voting rules) is far different than both chambers of Congress actually passing identical, comprehensive legislation and sending it to the president’s desk.
No growth for Southwest in 2012
Southwest Airlines chairman, president and CEO Gary Kelly gave a mostly upbeat assessment Thursday when discussing his carrier’s $178 million 2011 net profit, its 39th straight year in the black, but insisted growth is off the table in 2012. The Dallas-based LCC’s fleet will actually shrink this year as it takes delivery of its first 33 737-800s but retires 40 older 737s. Full-year 2012 capacity for Southwest and AirTran Airways (the carriers expect FAA to grant them a single operating certificate in March) will be flat year-over-year because the incoming aircraft will be larger than the retiring planes (total trips will be down 3-4%).
Kelly conceded to analysts and reporters that the company is following a “conservative” fleet strategy that eschews growth in favor of boosting unit revenue. But he described the current economy as “a very good environment. The macro-[economic] environment feels better now [compared to mid-year 2011], much more stable, much more consistent.”
Nevertheless, growing capacity continues to be verboten for Southwest and most other US airlines.
If you can’t grow capacity following a year in which PRASM increased 8.2%, overall revenue lifted 12.7% and your cross-town rival (and competitor on numerous routes) is occupied with Chapter 11 reorganization, when can you? Kelly’s response is that high fuel costs (up 35% year-over-year in 2011) have driven up expenses and prevented Southwest from reaching its profit targets. Absent hitting and exceeding profit targets, Southwest doesn’t grow capacity. Period.
For much of its history, of course, the carrier did hit profit targets and grew capacity at a fairly steady pace. Not so in recent years (though, of course, acquiring AirTran does increase the company’s size, but neither Southwest nor AirTran is growing ASMs).
Southwest’s discipline has always been one of its hallmarks; even if profits were down last year, earning positive net income for 39 straight years in the US air transport market is quite an achievement, one that likely wouldn’t have been accomplished without sticking religiously to the credo that revenue must outpace costs, a simple business philosophy that has often been ignored by US airlines.
The rest of the US industry, however, appears to have also finally accepted that basic supply/demand operating strategy over the last couple of years. SWA’s opening salvo in US carriers’ 2011 earnings reporting season likely previews a trend: US airlines are making money, the economic environment is showing noticeable signs of improvement, BUT the industry won’t actually grow again until it is near-certain that the growth will pay off on the balance sheet.
Amazing Scenes
It is something you rarely see these days – every passenger transfixed to the overhead video monitors watching a safety demo.
But of course this is not just any safety video and it’s not just any airline.
ATW was on board an Air New Zealand All Black A320 flying a domestic sector and the safety video was its latest – a compilation of three outstandingly successful safety videos.
A number of airlines have developed cult followings with safety demos.
Delta Airlines has Katherine Lee with her adorable wagging finger warning passengers which has attracted over 2.5 million views on YouTube. Southwest’s rapping flight attendant David Holmes scores multiple entries on YouTube with hundreds of thousands of views for his captivating antics.
And who can pass up on Philippines-based Cebu Pacific’s flight attendants dancing to Lady Gaga’s “Just Dance” delivering a mesmerizing safety demo. Number of views on YouTube?
Over 10.35 million.
Air New Zealand with its “Nothing to Hide” safety video has 6.7 million views and combined with the “Nothing to Hide” TV campaign it’s over 11 million views.
The kiwi airline followed that video with a Richard Simmons’ safety video which has 2.5 million views on YouTube.
The more recent Crazy about Rugby safety video scores just over 1 million views.
The latest video takes the cheekiest and most risqué elements of the three and weaves them into a tight and effective message.
Contrast this with passengers on most airlines who give flight attendants only passing glances as they go through their routine.
Safety is serious business but needs to be delivered in a zany, funny or even crazy message if it’s to be effective.
Bad time to Dream
In what probably earns this month’s “bad timing” award, Boeing has just announced that the first destination in the second leg of its 787 Dreamliner Dream Tour is … Wichita.
Boeing announced just eight days earlier, in a Jan. 4 statement, that it will close the Wichita plant where it converts airliner frames into military tankers by the end of next year, thus abandoning the Kansas city.
Boeing says in a press release that the visit will allow people at Wichita-based Spirit Aerosystems and Boeing employees to see the Dreamliner. Given the new uncertainty about the future of their jobs among those more than 2,100 Boeing Wichita employees, however, the local mood to Dream may be absent.
But even supposing that employees are happy to get a first-hand look at the 787, Kansas lawmakers and local officials may be less willing to celebrate. Many are complaining publicly that they were instrumental in helping win the U.S. Air Force’s new tanker program because they understood from Boeing that it would guarantee continued jobs in the area; some are accusing Boeing of breaking its promise.
What about tall passengers?
Geoffrey Thomas touches below on the latest friction point in the long-running debate over whether to charge obese airline passengers for extra seats. But what about tall passengers?
Yes, in Canada (where, by law, airlines since 2008 have had to give severely overweight passengers two seats for the price of one), a skyscraping architect has spent the last year trying to make Air Canada sell him a “preferred” economy seat (mainly exit row seats with extra leg room) for the price of a regular economy seat with standard leg room.
In petitioning the Canadian Transportation Agency, the Edmonton man said his 6 ft. 7 in. height is a disability when it comes to flying. The agency rejected his claim. That’s unfair and inconsistent with the agency’s past ruling on obesity, the tall passenger explained in this account in The Toronto Star, because “you can, to some degree, control [obesity], whereas height, you don’t have much you can do about it.”
Fat tax but what about the baggage?
The suggestion by former Qantas chief economist Tony Webber that overweight passengers should be paying a surcharge opens up once again the debate about what should be weighed.
Webber, who spent seven years with Qantas before becoming an economic consultant, also suggests that skinny passengers should get a discount on their ticket price, as should those without baggage.
In an interview with Fairfax media Webber postulates a total weight of baggage and passenger of 100kg “above which you’d impose a surcharge.”
While admitting the charging of overweight passengers could be humiliating for some he believes that LCCs will line this avenue up as the next thing to charge for.
In fact a fat tax is not new to those who follow LCC giant Ryanair.
In 2009 the airline ran a poll, in which 100,000 passengers participated, which showed that 29% wanted a fat tax. Other ideas in the poll were to charge €1 for toilet paper (25%) with CRO Michael O’Leary’s face on it, €3 to smoke in a special cubical (24%), an annual subscription to access Ryanair.com (14%) and a €2 fee to bring food and drink on board ($2).
Ryanair’s concept was to either: Charge per kg over 130kg for a male and 100kg for female; Charge per inch for every waist inch over 45 inch for a male and 40 inch for a female; Charge for every point in excess of 40 points on the Body Mass Index (+30 points is obese) or charge for a second seat if a passenger’s waist touches both armrests simultaneously.
However the idea hasn’t taken-off yet.
But it brings into perspective the absurdity of charging people for baggage but not the baggage around their waist.
That situation took a crazy turn in Perth Western Australia a few years back.
It relates to a National Jet System (Now Cobham) flight on a BAe146 from Perth to Cocos Island way off in the middle — well almost — of the Indian Ocean.
The distance between Perth and Cocos Island is at the limit of the BAe146’s range so every kilo of weight was critical to the marginally economic operation.
A passenger, keen to explore the magnificent reefs around Cocos Island loaded his
bags with wetsuit, flippers and empty oxygen bottle and was alarmed to find that he was way over the weight limit.
All the charm in the world couldn’t persuade the check-in agent to waive the charges so the wannabe “Jacques Cousteau” retreated to rethink his costly predicament.
In a stroke of genius that the famous Frenchman would have been proud, the intrepid diver donned his entire diving kit complete with wetsuit, goggles, snorkel and tank and staggered to the check-in desk some 20kg lighter in the baggage department – but much heavier in body weight.
The check-in agent — and passengers — were dumbstruck as there is no rule on how much a passenger weighs— nor on how uncomfortable he made himself in the process.
The agent did allow him to check the oxygen bottle for free.
Guess the airline
Here’s a profile of a mystery airline. Does it sound like a financial success?
Airline X has set a record for annual passengers carried in eight of the last nine years, with traffic up 5.1% year-over-year in its most recent full year and up 43.8% compared to 2000. Base flight ticket revenue is increasing at an even faster pace, rising 8.5% year-over-year in the most recent full year. Ticket revenue is up 73.4% compared to 2000. On the carrier’s most important route, which comprises about one-third of its traffic and revenue, passengers rose 5.1% in the most recent full year and ticket revenue increased 9.4%. Business-class ticket revenue on the route heightened 11.7% year-over-year.
Airline X must be highly successful financially, or at the very least, must easily earn a profit, you say. What if I told you that, in addition, the country in which Airline X is based believes the carrier to be so vital that it supplements the airline’s nearly $2 billion annual revenue with another $1.4 billion in subsidies yearly? This is fiction, you say, such an airline does not exist. And if it does, Airline X’s executives must wake up daily with smiles on their faces; in the capricious air transport sector, they have found the perfect operating environment.
Airline X does not exist. But what I have described above is US rail line Amtrak’s figures and circumstances. And despite the rising traffic, growing revenue and steady flow of government subsidies, Amtrak loses big year after year. Freakonomics recently posted an interesting collection of opinions on why Amtrak can’t make money and whether it ever can.
Superman’s safety wisdom
The US National Transportation Safety Board last month released its final figures for 2010 transportation fatalities, and the results again emphatically affirm Superman’s famous cinematic assurance to Lois Lane that flying is the safest way to travel. And, statistically speaking, flying commercially is by far the safest way to get from one point to another.
Total US aviation-related fatalities in 2010 were 472, below total fatalities from boating (733), rail (813) and roadway (33,883). Nearly all of the aviation fatalities occurred in the general aviation sector (450), while just two occurred in the commercial segment and they were cargo pilots flying the UPS 747-400F that tragically crashed 50 min. after takeoff from Dubai International. There were no passenger fatalities, as was the case in 2007 and 2008 (the Colgan Air Q400 crash killing 52 people occurred in 2009 and remains the sole fatal US passenger airline accident of the last five years).
To put things in perspective, 44 people died in bus accidents in the US in 2010 while 618 died in bicycle accidents. Some 4,280 pedestrians were killed in US road accidents in 2010.
A grim day for the Air Capital of the World
Although it was no surprise given the cold chill that’s sweeping across the US defense industry, Boeing’s decision to close its Wichita plant is still a significant and poignant chapter in the history books of both the company and the city.
Wichita has a long and important connection with aerospace that is almost at odds with its size. The Kansas city is proud of its association with aircraft pioneers such as Clyde Cessna, Walter Beech and Bill Lear, who all founded companies there and helped this small American heartland town, population 631,000, earn its nickname Air Capital of the World.
So while Boeing has reduced its workforce in Wichita over the years and since the mid-2000s has streamlined production to just military work (the closure affects only Boeing’s defense and space business unit), today’s announcement that the plant will close by the end of 2013 is still an aerospace milestone.
But also an inevitable one. The Pentagon is being forced to confront a major budget reality check now that the US has officially ended the Iraq war and is working to bring its Afghanistan operations to a close in 2014. Combined with huge domestic economic problems and immense political pressure to reduce the country’s debt, the US Defense Department is being faced with the prospect of having to slice up to $1 trillion from its budget over the next ten years – cuts that include $500 billion on top of the $470 billion that the Pentagon originally agreed to.
Of course, it says much about the Pentagon’s spending habits that such a cut could even be contemplated. Still, US defense companies are anticipating significant reductions in business and are making plans accordingly; many are looking to diversify into commercial aerospace and transportation markets. For companies such as Boeing, which already has a diversified portfolio, the shift in budget priorities should be easier to manage. Boeing will release its 2011 fourth-quarter results on Jan. 25. It will be interesting to hear what president and CEO Jim McNerney has to say about the new and frosty budget climate that led to the Wichita decision and how that will shape Boeing’s future business strategy.