National roundtable about aviation policy

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Canberra could bear massive cost of Virgin entitlements

The ACTU has warned the Morrison Government that it could end up footing the bill for $800 million in entitlements if Virgin Australia is allowed to collapse. 

Unions are pushing for urgent government support for the aviation sector, arguing that maintaining two substantial carriers is fundamental for the industry. 

The ACTU says the government's Fair Entitlements Guarantee scheme would be called on to cover at least $600 million in entitlements for Virgin's 10,000 direct employees and an estimated $200 million in entitlements for the 6,000 indirect employees. 

The peak body's president, Michele O'Neil, says the Federal Government has to decide whether to use taxpayer funds to "pay out entitlements to people who’ve had their jobs destroyed or use that money to save jobs and potentially acquire an asset for the nation". 

“This is a situation that no one wanted but the reality is stark." 

"Spend hundreds of millions of dollars to watch jobs be destroyed and hand over total control of air travel to single company or invest hundreds of millions of dollars to save 16,000 jobs, give the Government a stake in Virgin and ensure we don'S allow a single corporate airline to have a monopoly over our skies." 

Earlier today, O'Neil chaired a virtual roundtable organised by the TWU and ASU with the aim of promoting a broader discussion about aviation policy and support. 

TWU national secretary Michael Kaine said aviation policy had to based on having "two healthy airlines and, if there's to be relief, then the public must take a stake." 

"At the moment, the future of the industry's playing out in crisis phone calls between CEOs and ministers. 

"That's no way to build sustainability." 

"A private Qantas monopoly is not what we need here." 

Kaine said that Qantas had "shown its colours" by having workers "drain their entitlements" to support the airline, while seeking a $4 billion in taxpayer support. 

"It wants no intervention because it is its interest for Virgin to go down. 

"Let's call a spade a spade and we've seen what happens when Qantas has power." 

"Over the last decade, it's sliced and diced its workforce, it's outsourced them, it's spun them off and it's left them competing for minimum pay and limited hour contracts. 

"We do not want that to get any worse." 

ASU assistant national secretary Linda White said the aviation sector has been ignored for a long time despite its importance in connecting Australia internally and to the rest of the world. 

"We are not a hub, we're a spoke at the end of the world." 

"At the ASU we saw 4500 of our members lose their jobs on the one day [with the 2001 Ansett collapse - see Related Article) and take 10 years to get their money. 

"I don't want to see that again. 

"I don't want history to repeat itself." 

Scurrah urges end of rivalries, as Qantas stays declines participation

The roundtable heard that the Qantas and its chief executive Alan Joyce had been asked to participate in the discussion, but had declined, along with Deputy Prime Minister and Transport Minister Michael McCormack. 

Virgin Australian chief executive Paul Scurrah told the roundtable he was unable to say too much, due to ASX reporting requirements and with the airline's shares on a temporary trading halt, pending further announcements due next week. 

Scurrah said that rivalries should be put aside in the public interest, with 600,000 tourism jobs relying on the industry, 

"Thanks for the support from the people of Virgin, the support they are receiving from their unions is something that I'm very grateful for, and it’s been heartening to see everyone working together to try and keep this great airline running." 

Virgin chief operating officer Stuart Aggs said the airline is "clearly in crisis mode" and is "under significant scrutiny on almost an hourly basis." 

Aggs said it is difficult to communicate fully with employees given confidentiality requirements. 

"Team members are very worried about their futures and we can give them only vague answers which is very frustrating for them and very frustrating for us at the moment." 

Aggs said competition is important for the industry and it has taken 20 years for Virgin to win an overall 30% market share. 

"One of the things that we stand to lose here is that experience." 

"Our job right now is to manage through the crisis and we’re doing that on a 24-hour basis at the moment. . . we are keeping our employees as up to date as we can." 

The chief executive of aviation service company, Dnata Australia, Hiranjan Aloysius, said 90% of his company's 4,000 workers had been stood down 

He said much of the attention is focused on the "top end" with airlines rather than the broader aviation industry. 

His company had bought the former Qantas catering division in 2018 and provided ground services to Jetstar, among others. 

"Our industry is critical to aviation. 

"We are not the airline but we are practically a division of our airline customers." 

Failure to debate uindesirable prospects: Quiggin

Economist, John Quiggin, a professor at the University of Queensland, said that two "unacceptable outcomes" of a Qantas monopoly or a bailout of Virgin's foreign shareholders are not being discussed. 

He said the government's hopes for a "market response", involving Virgin's owners deciding to stump up enough money for it to continue, is "wishful thinking". 

The second possibility is a process of Virgin going into administration and "trying to emerge from it", which would be "disastrous for other reasons." 

Quiggin said he believed the Government will soon be forced into contemplating an injection of public money into Virgin and whether this might involve taking an equity stake in the airline. 

He expected there will be a return to having "substantial public involvement" in the airline industry. 

"Where we expect, for example, if Qantas wants to call itself the national carrier, that  
it should expect, repeatedly, to get advice from government as to what the national carrier should be doing in in the interest of the nation and in the interest of its workers, not simply stick a kangaroo on the tail and say, 'You have to support us and our CEO and whatever choices he makes'." 

Monash University's Professor Greg Bamber said Australia has ineffective regulation, when what is needed is long-term planning. 

"We've got too much sub-contracting, too much fragmentation of labour." 

"Airlines like Qantas, for example, are employing people on all kinds of different arrangements. 

"Even within one aircraft at one time, people might be employed on completely different arrangements. 

"We've seen a worsening in terms of the conditions of workplace health and safety. 

"And we must recall that aviation will be at the heart of the economy and social recovery from this pandemic." 

Bamber said sick leave entitlements should be extended to all aviation workers while maintaining social protection. 

"There are many casual workers and informal workers in this sector who are especially vulnerable." 

In the wake of the prime minister's suggestion that industry funds might bail out Qantas, an architect of the industry super fund movement, Garry Weaven, said global investors had long been wary about investing in airlines. 

Weaven said Virgin is owned 90% by large foreign interests, principally the government of Abu Dhabi through Etihad Airlines 

"If they’re not in a position to re-capitalise the company, then who is?" 

"Really, the answer is only the [Australian] government could be in a position to do that." 

Weaven said he was a "little surprised" by Prime Minster Scott Morrison calling for industry super funds to bail out Virgin. 

"The concern would be that members of his government would probably be the first one to kick the hell out of the [super] trustees if they went down that path. 

"The trustee law requires the trustees of all of the industry funds to make investment decisions on investment grounds in the long term interest of maximising returns." 

Weaven said trustees could take account of public goods such as job creation, but  
first and foremost they had to "focus on excellent long term returns". 

"As I would see it, only really the government at the moment would be in a position to invest money and they would do it on grounds of government policy and strategic  
intervention for the long term rather than for the pure economic returns." 

"I think that’s a bit of furphy." 

Don't forget the plight of aviation regulators: Union

Dale Beasley, from Professionals Australia, expressed concern for the aviation sectors regulatory bodies, such as Air Services Australia and the Civil Aviation Safety Authority. 

Beasley said these public sector bodies got much of their funding though a cut of aviation fuel excise which is now drying up. 

An advisor to Labor aviation spokesperson Catherine King told the round table the government's initial aviation support package included some funding for the ASA but Labor is looking for more details. 

The Morrison Government last night announced a $165 million support package to help Qantas and Virgin provide a basic domestic network over the next eight weeks. 

Qantas said in a statement that it would allow it to increase Qantas and Jetstar flights from 105 a week to 164 week to all capital cities and 36 regional destinations. 

Virgin said in a statement last night that the "minimal domestic schedule will enable Virgin Australia to reinstate some of its stood down flight, cabin and ground crew, along with other operational team members". 

ACTU secretary Sally McManus late this afternoon praised the development, saying "I think it is a good decision, because it will guarantee an income source, of course, for those airlines, but also those routes as well."

Video of roundtable (large file, about 5GB)