Airline Revenue Management

Statement on QANTAS and Jetstar Ground Handling Services

QANTAS Boeing B737-800
QANTAS Boeing B737-800 | Image courtesy og QANTAS

As part of its COVID recovery plan, the Qantas Group has informed its people and relevant unions of initiatives affecting its ground handling operations at airports across Australia.

Qantas and Jetstar directly employ people in various ground operations roles – which includes baggage handling and aircraft cleaning – at 11 large airports around the country. They also use specialist ground handlers at airports at 55 other airports they fly to across Australia.

The COVID crisis has driven the need to examine how these services can be delivered more efficiently.

The three initiatives employees were briefed on today are:

  • Qantas is proposing to outsource its ground handling operations at the 10 Australian airports where the work is done inhouse. As part of this, a review will assess both external ground handlers and an in-house bid in search of making this function more efficient. Should the decision be taken to outsource the work, it could impact up to 2000 employees, including some management roles.
  • Qantas is proposing to outsource its bus services for customers and employees in and around Sydney Airport. A similar, but separate, review will also be conducted on this proposal. Should the decision be taken to outsource the work it could impact 50 employees.
  • Jetstar Airways has decided to outsource ground handling at the six remaining Australian airports where the work is done in-house, impacting 370 jobs, subject to union consultation.

 

Customer facing team members at airports are not impacted or in scope for the reviews.

Today’s announcement follows a $2.7 billion statutory loss for the Group in FY20 and a $4 billion drop in revenue in the second half due to the COVID-19 crisis and associated border restrictions. Further significant losses are projected in FY21 and an at least $10 billion drop in revenue due to the ongoing impact of COVID.

Job losses of at least 6,000 have already been announced as part of rightsizing and restructuring the business in response to border closures and more permanent structural changes to the aviation industry. (Possible job losses of up to 2,500 as a result of today’s announcement would be in addition to the 6,000 figure.) Planned capital investment is also being significantly reduced, including the deferral of aircraft orders.

In line with industrial obligations, Qantas and Jetstar will be talking to its employees and unions on the plans announced today.

Comments from QANTAS Domestic CEO Andrew David:

“This is the greatest challenge the aviation industry has ever faced and airlines have to change how they operate to ensure they can survive long-term.

“We’ve already taken drastic action, with more than 220 aircraft grounded, the vast majority of our workforce stood down and assets mortgaged to raise cash. Right now, our domestic capacity is at 20 per cent of pre-COVID levels and international travel is expected to take years to recover.

“We know travel restrictions will lift eventually, but the market will be very different. Every airline will come through this much leaner and more efficient, and we have to be able to compete if we’re going to survive.

“Outsourcing this work to specialist ground handlers would save an estimated $100 million in operating costs each year.

“Today’s announcement will be very tough for our hard-working teams, most of whom have already been stood down for months without work. This obviously adds to the uncertainty but this is the unfortunate reality of what COVID-19 has done to our industry.”

Comments from Jetstar Group CEO Gareth Evans:

“We realise this decision will be extremely difficult news for our ground handling team and their families at what is already a very challenging time.

“But unfortunately this ongoing crisis means we have to make some really tough decisions which impact our team members who have provided a consistent and professional operation over many years.

“Every major airline around the world uses these specialist providers to support their operations. These ground handlers provide these services to many airlines at airports, rather than just one, and provide scalable resources, which makes them very cost effective.

“Contracting this work out also reduces the capital spend required each year. As an example, Qantas and Jetstar would need to invest a further $100 million on ground handling equipment over the next five years, such as tugs and bag loaders, if the work is kept inhouse.

“The Qantas Group sets the safety standards through our safety management system – whether work is done in house or external suppliers. We expect some unions will come out and say these suppliers are unsafe, despite the fact they are used by every other airline in this country. We would never compromise on safety. We’ve already worked with some of these suppliers for decades and we know their track record on safety is consistent with work done in house.”

QANTAS Ground Handling

The 10 airports that Qantas proposes to outsource this work are Adelaide, Alice Springs, Brisbane, Cairns, Canberra, Darwin, Melbourne, Perth, Sydney and Townsville.

Qantas’ review will be undertaken over the next few months.

In line with their enterprise bargaining agreement, employees will have an opportunity to provide a bid for the work and representatives be provided paid time and support to do this. They will need to demonstrate they can deliver on the objectives Qantas needs to meet.

Should the decision be taken to outsource this work, there may be flow on impacts to other parts of the business that support ground handling (e.g. rostering and ground equipment maintenance).

These changes are in addition to job losses announced by Qantas in June due to less flying activity, which saw 775 ground handling employees request a voluntary redundancy.

Jetstar Ground Handling

Jetstar has decided to outsource ground handling at Adelaide, Avalon, Brisbane, Cairns, Melbourne and Sydney Domestic. This is subject to consultation with employees and their representatives. Jetstar already outsources at 17 Australian airport terminals.

Affected employees will be provided a redundancy package and be provided with support to transition to new jobs outside the business. We expect there will be a range of opportunities for impacted team members with suppliers in the sector as the industry recovers.

Source: QANTAS

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