Former CASA chairman warns Qantas' international operations in danger of bankruptcy

By Geoffrey Thomas | July 14, 2011

Qantas A380. Photo: Courtesy, Qantas.

Former Australia Civil Aviation Safety Authority chairman Dick Smith—also one of the country's most controversial and outspoken entrepreneurs—has infuriated airline unions by predicting that Qantas International will go bankrupt unless it moves its operating base to Asia.

Speaking with The Australian, Smith warned that high wages and government policies that have opened up routes to/from Australia to too many carriers have put QF's mainline international operations in danger. He claimed that QF was in a similar position to manufacturers forced to move offshore because of an inability to compete with lower-cost competitors.

Smith told The Australian that servicing on aircraft in Singapore was 50% cheaper than in Australia, and many airlines were operating at much lower costs than QF. "I feel sorry for [Qantas CEO] Alan Joyce, I feel sorry for the pilots and I totally blame the government," he said. "The politicians have decided that we should have this open skies [regime] where you have to compete with completely different wage scales and salary scales. If they [QF] don't move virtually everything [pertaining to international operations] up into Asia, they will go broke."

Joyce will announce major structural changes to QF Aug. 24 with many services to be cut or restructured. There are also strong indications that QF will set up an Asian-based, full-service airline.

Smith's comments angered pilot and engineers unions worried about job security and poised to take industrial action (ATW Daily News, July 12). Responding, Australian Licensed Aircraft Engineers Assn. Federal Secretary Steve Purvinas told The Australian, "Anyone can get a cheap fix done on a car—unfortunately, in our game, when something is missed, it tends to resurface at 30,000 ft."

Australian and International Pilots Assn. VP Richard Woodward slammed Smith, saying he had never worked as a professional pilot or at an airline. "Sure, things are tough out there, but there are other international carriers making significant amounts of money right now in these difficult times," Woodward said.

Discuss this news 9

13 Jul20:52

I recall recruiting Singapore

By Vic Bibby

I recall recruiting Singapore LAME's to work in Australia in the late 80's and early 90's when none suitably qualified could be found here, some made a life here and they weren't all airline people. None of the planes we serviced had any more problems than anybody else. Yes there are different standards but Steve, time for those type of words is long past. In this day and age you cannot keep putting the Australian LAME on a pedestal as the be all end all of aircraft maintenance like you do as the reason, you just cost more for the same service because you are Australian, its as simple as that. I know that the truth can hurt at times but you should look for other reasons to preserve what you have and that many in this industry do not have.

13 Jul22:17

Dick Smith seems to be

By PC

Dick Smith seems to be suggesting some of government support for Qantas. I believe this is not the right solution and legacy airlines must reduce their costs first. Firstly Qantas management must work TOGETHER with their unions. Qantas will not be the next JAL!

13 Jul22:19

Ouch ! The truth hurts, and

By Anonymous

Ouch ! The truth hurts, and in this case, what poor timing for the Union purposes.
Gosh, just as they're about to tighten their hold on the 'goose that laid the golden egg's neck.
...
Poor underpaid, downtrodden Union workers, so abused...

14 Jul01:01

Qantas pilots are going to

By James

Qantas pilots are going to kill Qantas International if they cannot accept the reality of what is happening with global aviation. I really hope they wake up to themselves before it is too late.

14 Jul03:22

The Capt of an El Al Israel

By reb

The Capt of an El Al Israel Airlines B-777 destined to NYC, recently could not fold the udercarriage after takeoff, thus returning for an emergency landing after dumping fuel.The Capt's skill & a pure miracle saved 200+ lives. A strut crack was the problem. It is reported that this was serviced in Singapore.

14 Jul18:22

I once met a former Qantas

By White Knuckles

I once met a former Qantas engineer who said the joke amongst the engineers was to see who could do the least work in a fortnight. They behave as if Qantas were still a government airline.
But Qantas management is equally to blame for Qantas' problems. They are flying an aging fleet through inconvenient hub destinations. Other airlines have gone point to point and taken Qantas' market from them. When i first started travelling you'd have trouble finding an Australian who did not travel with Qantas. I last went o/s with Qantas in 2001. In the three o/s holidays since then i have flown with other airlines. In each case i chose them because they flew point to point, thus reducing my travel time by about six hours. I was even quite happy to pay a small premium above the fare Qantas were charging just to shorten the agony of a long flight.

14 Jul20:50

And the point you are making

By Richard

And the point you are making 'Reb' is? SQ is based in Singapore, and has had only one major accident in its life. Any comments on where it services its aircraft?

14 Jul22:07

This is how too much

By Flying Kiwi

This is how too much government intervention in labour policies hamper growth and/or sustainability of enterprises on a macro level. Qantas is indeed rationalising its international operations with a business perspective in mind, which people shouldn't fault it for. It's only business.

15 Jul00:28

I have enjoyed a lifelong

By RB211

I have enjoyed a lifelong aviation career as both a Pilot and a LAME. I have had the pleasure of working closely with a number of overseas based MROs and operators and I can assure all that Australian LAMEs are no worse than their similarly trained overseas counterparts. They are very well paid for the skill set they bring to the industry, as are their overseas counterparts, and rightly so. The difference is that in the last several years, the ALAEA has corrupted the LAME profession with arrogance, commercial ignorance, greed and the political aspirations of one quixotic individual. There are many excellent LAMEs in Australia, none of these serve on the governing group of the ALAEA. Mr Purvinas, your ridiculous actions are costing many of your members their families and homes. You have managed to dilute a once professional organisation into a motley crew of would be waterside workers (no offence to waterside workers intended). And Mr Woodward, I have no doubt your are a skilled aviator and the travelling public should be thankful for that however, Mr Dick Smith has run many successful businesses, at all times maintaining his impeccable ethical standards. Have you?