Qantas lock-out an ambit ploy with Asia ops in view

Why are these men - Qantas CEO Alan Joyce (left) and chairman Leigh Clifford - smiling? They're at the annual general meeting of Qantas where unions protested against company policies. The next day (yesterday) Qantas management took the extraordinary step of grounding its entire fleet, locking out workers allied with unions that had been disrupting operations over the previous several months, causing economic losses and passenger frustration. A couple of months ago, I wrote about the troubles in an oblique manner when I blogged about the Qantas plan to set up a new full-service airline in Asia. I was wrong: the problems didn't go away. So the reason these two guys are smiling has more to do with managerial solidarity than with the airline's fortunes, which took a hit as thousands of stranded passengers found themselves looking for alternative carriers to take them to their destinations, checking into hotels, or sleeping on the floor in airport terminals - not a comfortable way to pass the time while on holiday.

Unions expressed puzzlement yesterday when asked the reasons for the lock-out. The federal government expressed irritation with Qantas management as there had been no prior warning before the action took place. The disruptions are embarrassing for the Labor government, whose industrial relations policies are more favourable to unions than those of the Opposition. The mainstream media was caught short yesterday - a Saturday - and to this point there have been no strong recounts showing all the factors in play and explaining to the public just what went wrong. On Twitter, overseas travellers have been reporting that their local news outlets are ascribing the disruption to union action.

Yes, there have been union-actuated disruptions over the past few months, but the general consensus - government, unions, Australians tweeting - is that this management action was excessive in its severity. I think that it is designed to bring the government into the negotiations. The Australian reported the day before yesterday (the day of the AGM), that the airline's plans for Asia expansion are the main sticking point for unions:

Baggage handlers and other ground staff meanwhile launched the latest in a series of strikes today, in a bid to force Qantas to scrap plans to refocus its overseas operations on Asia, as the airline warned its future was in jeopardy.

“The cost of us agreeing to (union) demands is the future of Qantas,” Mr Joyce said, accusing three key unions of seeking to straitjacket the company through their demands.

“Demands that restrict the company with such severe conditions will endanger the survival of the company in the long term, because it will mean that Qantas can't be flexible,” he earlier told Sky News.

Unions claim the airline is just seeking to save money by sending jobs overseas as it plans the launch of a premium new airline to be based in Asia, the key plank of its strategy to boost falling international revenues.

They are seeking guarantees on wages and job security and have vowed they will not give in.

If this is true, then Qantas' grounding is an ambit claim undertaken with one eye on the federal government and the other eye firmly focused on movements in Australian public opinion. By scripting the story in terms of union intransigence in the face of union-unfriendly business developments, Qantas hopes to wedge the unions away from these two major stakeholders. And I predict that Qantas will be successful.

It's a daring move by Joyce and Clifford. Many Australians will view with a jaundiced eye attempts to shift the totality of blame onto the unions, and may even label Joyce - an Irishman - out of touch and unable to understand the unique Australian characteristics of the players and the operating environment he's working with. But once the government enters the fray there will be pressure placed upon it to view the Qantas plans for Asia in a positive way. Suppressing valid economic activity is not the kind of accusation this Labor government will want to engender among the electorate. What we'll see in the following days will be attempts by the government to mediate between the parties. There will be further claims made by the airline, and further expressions of confusion from the unions. The outcome will be continued operation of the fleet, however. Further down the track, there will be some form of accommodation between the airline and the unions in relation to overseas operations. While it will be important for the government to ensure that business expansion into Asia continues, it will also be important to give the unions a way to save face.