The Flying Kangaroo

by Jim Eames

  But the company was struggling, with only a thin strand of its normal worldwide service still operating and fuel bans imposed by ACTU member unions forcing aircraft to make technical stops at close destinations like Port Moresby, Noumea, Fiji and Jakarta to load as much fuel on board to enable them to reach Australia and get out again. At one point the fuel situation became so critical that the company made arrangements for a tanker to transport 23,000 litres of fuel from Singapore to Noumea to relive the pressure.

  By late February, with more than 100,000 passengers affected and despite a Fraser government directive employing the RAAF and the RNZAF to relieve some of the pressure by using Hercules transports to carry stranded passengers across the Tasman, Qantas was reaching crisis point. With the company bleeding revenue, the board warned the government there was a possibility it may have to stop operations for six months and require a cash injection of more than $250 million to recover from the strike.

  But moves were taking place behind the scenes. Unknown even to those running the dispute in the sixth-floor ‘war room’, chief executive Keith Hamilton—who had left Haynes and his team to run the dispute but was now seriously concerned at the price the airline was paying—had made direct contact with the ACTU’s president Cliff Dolan. Reports also later emerged that Hamilton had discussions with Bob Hawke, but this was never confirmed.

  The first those in the ‘war room’ knew of change in the air was when Hamilton appeared one morning and himself took the chair at the regular briefing of the Haynes committee.

  Insisting the dispute needed to be quickly resolved, in one brutal manoeuvre he axed Trevor Haynes from the committee and announced he would lead the team to the Commission hearing that day. Hamilton’s appearance before the Commission would be one of his rare public appearances during his time as the airline’s chief executive, but it sent a strong message that daily confrontations were to be curtailed and an agreement reached to solve the dispute.

  By 13 March, after a total of 37 days, the strike was over. Compromises by both sides marked the 1981 strike as the beginning of the end of the use of staff labour by Qantas. But the bitterness generated by the dispute remained for some years, particularly between some male members of the cabin crew and the female flight attendants, the latter lodging complaints of continuing harassment, citing repeated phone calls to their rooms in the middle of the night, rude notes left under their hotel doors, even instances of honey being smeared on aircraft phone handsets.

  The company itself also came under fire from the female flight attendants, who accused it of discriminatory practices in relation to a lack of promotional opportunities within the cabin crew structure, denying them the ability to reach the rank of chief steward or flight service director. In a paper outlining their case twelve months later, their overseas branch president, Lesley Squires, also claimed that the 1981 dispute had itself promoted attitudes of bullying and harassment by a small minority of male cabin crew.

  Squires accused male cabin crew members of compiling a ‘hit list of girls who flew’ that had been distributed to certain male flight service directors with a suggestion ‘to make life miserable’ for the hostesses named on the list.

  While Squires acknowledged the large majority of male cabin crew were ‘thoughtful sensitive and friendly colleagues,’ she claimed it was a company responsibility to resolve the issue. Eventually, ‘the girls’ as they would be referred to, won the right to their own promotional structure and seniority as full members of the airline’s cabin crew. The 1981 strike was the last major staff labour battleground between the company and the union movement before the dramatic grounding of the whole of the Qantas fleet worldwide under a new management in 2011.

  When Qantas’s results for the 1980–81 year were tabled in parliament in October the company announced a loss of $19 million, adding the comment: ‘Had it not been for the serious industrial dispute in February–March 1981, the company would have achieved a near break-even result.’

  There were other casualties. Trevor Haynes soon left the company for a senior executive role with another transport group, only to die in a helicopter accident off the Queensland coast. Those who manned the ‘war room’ were also saddened by the untimely death of Haynes’s second in command, Ken Appleton, who succumbed to cancer several years later.

  Colin Geeves, the airline’s industrial relations director, who had played a major role in formulating the company’s role in the dispute, was also a victim of the dispute, finally retiring several years later after being shifted aside by the company. The company’s treatment of Geeves further convinced many who worked with him that industrial relations in Qantas was a ‘poisoned chalice’ that would be sacrificed on the altar of union demands when the company saw fit.

  As for the ‘spitting’ incident: Les Hayward and those involved, now all retired, still meet occasionally at reunions. ‘We’re the best of mates,’ says Hayward with a smile.

  Though the manpower aspects of the strike would be settled and an atmosphere of relative industrial peace would prevail, the dispute once again highlighted the vulnerability of the airline to the lifeblood of its operations—fuel supply.

  In fact, the fuel bans introduced during the cabin crew strike marked the twelfth time in twelve months the airline had been denied fuel supplies, most occasions as a result of oil industry industrial problems that had nothing to do with the airline.

  But fuel was no longer simply an industrial problem. By the 1970s it had reached the stage where its price was now ranked alongside wages and salaries as one of the airlines’ major cost impediments, a far cry from the days of the 1960s where every new annual fuel contract signed by the company was at a lower price than the previous one.

  The main change came with the formation of the Organisation of Petroleum Exporting Countries (OPEC) in the 1970s that, along with wars in the Middle East, sent the airline’s annual fuel bill from $17.5 million in 1972 to a whopping $208 million in 1980.

  Fuel costs now had a bearing on a whole range of decisions by the company: from how it set its fares to the engines it purchased to power its fleet, with whole task forces established to study every possible avenue to save fuel. Many savings would come with the arrival of the Boeing 747, with aircraft engine manufacturers being pressed for significant improvements in fuel efficiency. When Rolls Royce guaranteed a 5 to 6 per cent fuel improvement over the Pratt & Whitney engines on the early 747 aircraft, it wasn’t long before the Qantas fleet was being re-equipped.

  Technology too was now allowing individual engines to be closely monitored during flight for fuel burn. Even the aircraft’s fuselage was subject to aerodynamic study, with the slightest leak in door seals being quickly attended to.

  Nothing on the aircraft escaped scrutiny. Older, heavier seats and catering equipment were replaced by lighter versions and materials used for blankets, curtains and carpets became part of the weight-reduction equation.

  Despite achieving the most energy-efficient aircraft possible, the cost of fuel itself would continue to be one of the airline’s major challenges up to the present day, with Qantas announcing a record-high fuel bill of $4.5 billion for 2014. It’s probably fortunate for their peace of mind that there’s no one in Qantas today who can remember filling a Boeing 707 for 12 cents a gallon—or just over two-and-a-half cents per litre!

  23

  WHEN THE WHEELS FELL OFF THE TRICYCLE AND OTHER POLITICAL PROBLEMS

  There’s no escaping politics for a government-owned airline: they are just something accepted as coming with the territory.

  In Qantas’s case, its iconic status combined with its high profile guaranteed that even the most minor of political eddies was capable of distracting it from its core business for a few days or a week, only to be swept away as quickly as it had come. In the company itself, many such cases became known as ‘cheap shots’, often contrived around a politician knowing that even an off-the-cuff criticism of the airline would guarantee him or her a good ‘run’ in
the media for a day or so until it was either found to be justified or sank without trace when proven otherwise.

  One Liberal government senator is remembered for stepping from his first-class seat, presumably at the taxpayer’s expense, and rounding on the company for serving ‘Canadian’ bacon for breakfast when an Australian airline should be required to support its local product. Whether he didn’t know or hadn’t bothered to check that Canadian bacon is a generic term for the product didn’t really matter too much. His criticism made the newspapers and radio for 48 hours but received little coverage when the true story was explained.

  When a radio shock-jock lambasted the airline on his top-rated network for not having a particular brand of wine available in first class, he didn’t bother to explain that the wines for first class were selected by a team of Australia’s premier wine experts, led by such industry luminaries as Len Evans, and his particular label just hadn’t made the ‘cut’ for the current three-month on-board wine listing. Neither did he reveal his commercial relationship with the winery. It was a decade or two later before the term ‘cash for comment’ enforced radio commentators to declare their interests.

  Such examples, while they might generate questions in parliament and gain media exposure, were merely irritants when compared to the main game of politics in the airline business, where millions of dollars and the political and financial interests of industry giants were at stake.

  So, no one in Qantas was in any doubt that a radical plan to revolutionise the Australasian airline industry would see the airline confronted by the combined might of the joint owners of Ansett—Sir Peter Abeles and Rupert Murdoch—and their powerful influence on the Labor government.

  The plan would be known as ‘The Tricycle’—a proposal to merge Qantas, Australian Airlines and Air New Zealand into one entity and was designed as a solution to a whole range of developments that were confronting Qantas and the aviation industry worldwide.

  It was mid-1987 and Qantas had been watching with concern the impact of privatisation and mergers that was occurring overseas. In the UK, British Airways had been privatised and airline mergers in the United States were creating mega-carriers with both international and domestic arms. Their sheer size and economic muscle threatened to swamp the market places of smaller players like Qantas and Air New Zealand. At the same time, Qantas had been pressing the Australian government for an equity injection of several hundred million into the airline within the next four years to keep the airline’s debt to equity ratio within reasonable bounds. While some considered privatising the airline might overcome the problem, the very idea was anathema to sections of the Labor Party.

  Meanwhile, across the Tasman, the New Zealand government had made no secret of its desire to sell off a large part of Air New Zealand, if necessary to a foreign buyer, a prospect that might result in one of the mega-carriers controlling a carrier on Qantas’s doorstep.

  The merger plan gradually gained momentum with Qantas itself, although those involved were only too aware that any proposal to merge Qantas, Air New Zealand and Australian Airlines would require substantial compensatory benefits for Abeles. Thus, in its early consideration, the plan incorporated giving Ansett access to the lucrative trans-Tasman route, an offer that would bring an expectation of between $30–60 million in increased profits to the Australian domestic carrier.

  In mid-March 1988 chairman Jim Leslie flew to Canberra to meet with Minister for Transport and Communications Gareth Evans, carrying the still top-secret proposal in his briefcase. Leslie, his chief executive John Menadue and Menadue’s deputy, John Ward, had every reason to keep the issue secret as long as possible. Only too well aware of the close relationship Abeles enjoyed with Prime Minister Hawke and his government, they didn’t want to risk the whole proposal being derailed before they had the chance to fully explain its wide-ranging advantages.

  Leslie’s later notes of the meeting revealed a hint of his surprise as Evans, along with his departmental secretary Peter Wilenski, welcomed the proposal. There is little doubt that one of the key factors in the proposal—the prospect of selling off sufficient shares in the venture—was the one that most appealed to them. This one action would solve Qantas’s equity problem without recourse to the government’s budget, provide an added boost to the Closer Economic Relations (CER) agreement with New Zealand and presumably meet the New Zealand government’s aim to privatise its state-owned enterprises.

  Over dinner that evening Evans and Leslie agreed they should seek a meeting with Hawke as soon as practicable. Leslie also stressed that both he and Evans should then immediately meet with New Zealand Prime Minister David Lange. Leslie considered this essential before Ansett got to the New Zealand prime minister first.

  But even before Evans had set up a meeting with Hawke, the cat was out of the bag and Tricycle was no longer a secret. Abeles was on the telephone from London, warning if it went ahead he would immediately cancel any arrangements Ansett had with Qantas, enter into arrangements with other foreign airlines and make it as ‘difficult as possible’ for Qantas. Evans later admitted to Leslie it was likely that Abeles had also telephoned Hawke.

  Whether Abeles was fully aware at this stage of the tantalising profits he was being offered on the Tasman route is not known but later developments indicated that, even if he had, they wouldn’t have been enough.

  Two days after his initial meeting with Evans, Leslie was back in Canberra for a meeting with Hawke, who quizzed him on whether Ansett should be given access to other international routes, a long-held Ansett ambition. Leslie made it clear that would be against Australia’s national interests as there were now only four other countries in the world—the United States, Canada, France and Japan—that had two international airlines.

  Evans and Leslie left the meeting, taking with them a Hawke request that the issue remain confidential until he had had the opportunity to talk to Abeles on the latter’s return from overseas. Within days, Abeles made it clear in a telephone call to Leslie that the merger would not proceed unless Murdoch and he agreed to it, but signs also began to appear that it was Murdoch who was really driving the Ansett argument, with Evans admitting that he was receiving pressure from other senior government ministers and the union leadership.

  Alarm bells were soon to grow louder when, at a meeting between Evans, Abeles and Murdoch, Ansett made it clear they wanted half the capacity on the Tasman route and a restriction on any use of Qantas Boeing 747s on domestic routes in Australia, at least until 2000. They later extended this demand to banning the use of Boeing 767 aircraft.

  Gradually, with Ansett demands increasing, along with the prospect that if the matter went to cabinet, it would suffer a defeat due to old allegiances between the Hawke government, the union movement and the domestic carrier, the merger concept was heading for life support. Added to that, by late April 1988, a decision by the New Zealand government to look further at the sale of their national carrier, the merger proposal began to unravel and ‘wheels’ began to fall off ‘The Tricycle’.

  Many in the industry still speculate how the future Australian aviation industry might have looked had the ‘Tricycle’ gone ahead, although the coming decade would still see massive changes in the Australian aviation industry.

  Qantas would acquire a share in a privatised Air New Zealand by other means, Australia’s domestic aviation industry would be deregulated, and Ansett would achieve its ambitions as an international carrier, only to be eventually taken over by Air New Zealand and subsequently collapse in 2001. British Airways would take a stake in a merged Qantas and Australian Airlines before Qantas too was privatised.

  The Tricycle may have been a bold plan but there were too many political rocks in its path.

  WHEN DIPLOMACY COLLIDES WITH ‘CHINESE WALLS’

  Negotiating air service agreements between countries is a complex business that can bring into play not only the aims of the respective airlines but also the national interests of the governments involved,
and circumstances can differ depending on the ownerships of the airline itself.

  For decades, particularly in post-war years, privately owned Pan American was readily identified as an instrument of US foreign policy, its services often acting as the vanguard for developing relationships into areas considered of strategic or trade importance to the United States itself. But government-owned flag carriers like Qantas occasionally needed to walk a thin line between their own commercial aims and the diplomatic minefield presented by existing international relationships. There is perhaps no better example of the dilemma confronting Qantas than when the airline proposed opening a service to Taiwan. With already well-established services to Beijing and Shanghai, there was little doubt how authorities there would view any parallel flights into a territory they considered should still be part of mainland China.

  Negotiations for Taiwan services began in the late 1980s under the watchful eye of the Department of Foreign Affairs who, although supporting the venture, was anxious not to create too much concern with ‘big brother’ across the Taiwan Straits. While it was obvious mainland China was aware of the talks, great care was to be taken to ensure any offence would be limited.

  The first problem to be overcome related to the formation of the company that would operate the service, leading to the creation of an entity to be known as Australia Asia Airlines. That done, there was then the task of repainting the Qantas 747s that would fly to Taipei with a new colour scheme, with the Australia Asia logo replacing the normal Qantas one, and a special tail design representing a Taiwanese dancer with long streamers. Initially, crews to fly the service were to be issued with uniforms of a different colour from their normal Qantas attire but gradually this was reduced to a requirement for different badges and caps specially manufactured with Australia Asia motifs.