Discuss about the Industrial Conflict at Qantas.
Australian airline industry has been experiencing turbulent times, the recent one being an industrial dispute involving Qantas airlines. The Qantas Industrial disputes refer to a series of serious disputes locking several trade unions in Australia and Qantas airline. It is this grim backdrop that saw the grounding of Qantas airline’s entire fleet. The disputes have its roots in the new enterprise agreements between Qantas and unions in the last quarter of 2010. A series of activities saw the Transport Workers Union (TWU) and Qantas airline go into a dispute with the former demanding that the airline provides a guarantee of improved working condition and improvement in wages. The dispute, however, gained heat following the airline’s decision to launch new operations in Asia.
The airlines witnessed several industrial actions which caused delays as well as disruptions to the airline’s schedule. The actions saw the airline incur costs of over $ 68 million a day. Following several protected industrial actions, the dawn of October 29, 2011, ushered in a decision by the airline to lock out all the employees (including pilots and engineers). Even more shocking, the airline’s CEO, Alan Joyce, announced an unprecedented and spontaneous decision to ground all the airline’s domestic as well as international flights. The airline incurred huge costs, customers were left stranded as they were forced to disembark from planes, and 600 flights were canceled, among other serious results. The essay aims to analyze the industrial dispute in different angles as follows.
Why don’t other Airlines in Australia Experience Similar Industrial Conflict with Qantas’s?
Although Qantas has proved itself one of the leading airline legacies in the world, it has been unable to find easy solutions to achieve trust, commitment, and high productivity among its employees unlike other airlines such as Virgin Blue. Qantas’s move to cut cost by outsourcing and restructuring in the light of rising fuel prices saw tension rise among the airline’s staff about their pay and job security. However, other airlines in the industry seem not to experience the level of conflict witnessed in Qantas (Creedy, 2011, p. 2).
First, contrary to Qantas, Virgin Blue is highly-unionized with its services being modest in comparison with Qantas’s. However, Virgin Blue Airlines have established a low-cost budget travel niche which has seen it gain a competitive advantage over Qantas. Being highly un-unionized, Virgin Blue has been unable to handle dispute among employees and avoid the pressure from trade unions such as Transport Workers Union (TWU).
Second, other airlines such as Virgin Blue have adopted a constructive managerial culture that highly values not only the needs of its employees but also their views. The practice has resulted in increased trust and commitment among employees. Other airlines attribute the absence of industrial conflicts and disputes to their ability to establish a constructive relationship with both the labor unions and their staffs. Sam (2003) argues that unlike Qantas, other airlines such as Virgin Blue mainly aim at fostering mutuality as well as partnership coupled with staff engagement.
Besides, other firms in Australian airline industry often hold quarterly briefings with the labor unions and aims at treating their employees, not as mere workers, but as a family. By treating their staff as a source of value and not a cost driver, employee commitment has increased. Marianna (2012, p. 3) argues that Virgin Blue have never retrenched its employees as unlike Qatar it views its employees as a source of value and not cost.
Escalation of Commitments Evident in the Case
Escalation of commitment refers to a situation in which the decision-maker is faced with increasing negative results/outcomes; however, the decision-maker displays a pattern of behavior in which rather than changing the course of action he tries to rationalize his initial decision (Russel et al., 2010, 188). The decision by Qantas airline’s chief executive to ground the airline resulted in massive losses for the firm and serious inconveniences to customers who had to disembark having already booked their flights. However, when appearing before the aviation parliamentary inquiry, the airline’s Chief Executive Alan Joyce did everything to justify his decision to ground the airline rather than taking remedial measures to bring a turn-around. He attributed the airline’s grounding decision and resulting losses to conspiracy theories and tried to justify his decision by arguing that the there was no choice in the wake of the staff unrest.
Is Alan Joyce an Individual or Group Decision Maker?
Alan Joyce is undoubtedly an individual decision-maker. Analysts have criticized his unprecedented and spontaneous decision to ground the airline without the involvement of the airline’s staffs and other stakeholders. Alan Joyce displayed a militant decision and ignored other stakeholders’ concerns and interests. However, Crowe and Kerr (2011, p.14) notes that the CEO displayed a broad move in a crisis
Evidence of SWOT Analysis in Qantas Airline’s Decision to Ground its Operation
SWOT analysis refers to a comprehensive study that an organization undertakes with the main aim of identifying the organization’s strengths and weaknesses and its external threats and opportunities. No evidence of SWOT analysis exists in the case. The company’s management failed to consider the airline’s internal strengths such as a strong base of loyal customers given the fact that it was one of the leading airlines in Australia. Moreover, the company failed to consider the external threat of increased competition by other airlines such as Virgin Blue coupled with the threat of decreasing customer loyalty. Even more perturbing, it is evident that the company ignored a primary internal weakness of decreased staff commitment evidenced by the industrial actions. As such, the company’s Chief Executive, Alan Joyce, made a hurriedly-made decision without consideration of the SWOT analysis. The decision returned to haunt the airline (Hani and Salim, 2013, p.3). Peter (2014, p. 585) argues that if the company had made a SWOT analysis of its business situation, it would have made a different decision that would have saved the airline some of the huge costs it incurred as a consequence of its decision to ground its airlines.
Type of Change Evident in the Case.
The decision of the Qantas’s management to launch new operations in Asia thus moving away from its traditional market, North Atlantic, reflects a transformational change. Also, various aspects of transformational change are reflected in the airline’s management’s decision to ground its operations.
Transformational change refers to organizational change that involves completely reshaping the business strategies and processes which often result in a shift in the work culture. Such changes arise as a result of the rise of unexpected market changes. The change encompasses both developmental and transitional change. In this case, the business recognizes the need to change the way it conducts its operations and make significant operation changes in response to new demand and reduced revenues or increased competition. Qantas’s decision to leave the Atlantic market and exploit Asian market perfectly reflects a transformational change. As evidenced in the case, transformational change is challenging for two main reasons. Given the uncertainty of the future conditions coupled with the key areas of departure between the current state and the future states, it becomes hard to manage transformational change. Such a condition is as witnessed in Qantas airline industrial conflict which resulted in industrial actions. The airline’s management decision to establish Jetstar Japan as one of its low-cost carriers further reflects a transformational change (Joshua, 2015. P. 318).
Is Alan Joyce a Transactional or a Transformational Leader?
A transactional leader serves as the polar opposite of a transformational leader. The main focus of the leadership style adopted by a transformational leader is the maintenance of the existing/normal flow of the organization’s operations. Mark and Pip (2012, p.11), describes transactional leadership as an act of “keeping the ship afloat”. Transactional leaders mainly use disciplinary techniques coupled with incentives to motivate their employees and improve performance by exchanging reward for performance. Further, a transactional leader mainly does not focus on the long-term and strategic goals of the organization but solely concentrates on making sure everything works smoothly currently.
On the other hand, a transformational leader focuses beyond ensuring the smooth flow of daily operations to crafting new strategies for the achievement of the long-term goals of the organization. The leadership style mainly focuses on collaboration between employees, team working, and motivation at different levels of the organization. Moreover, it aims at achieving pushing their employees for higher performance through goal setting, work incentives, and chances for personal and professional growth.
Although he does not display a perfect picture, Alan Joyce is arguably a transformational leader. His decision to abandon the Atlantic market and exploit the Asian market reflect a strategic move aimed not on the current operations but the long-term goals of the organization. (Andreas and Peter, 2016, p.368). Furthermore, his decision to ground the entire airline’s fleet, though a militant move, reflects a transformational leader. Alan Joyce aimed at achieving the long-term goal of the organization by exploiting new markets that would expand the airline’s market base.
Was Alan Joyce’s Decision to Suddenly Ground the Airline Ethical?
Ethics refers to the moral principles and guidelines that guide an individual when making a decision. It encompasses taking into consideration all the needs and interests of all the stakeholders when making a decision. It further involves the analysis of how the consequences of different courses of action will affect the involved parties.
Alan Joyce’s action to suddenly ground the airline’s entire fleet is inarguably unethical. To begin with, the abrupt suspension of all the operation caused inexplicable inconveniences to the hundreds of customers who had already booked their flights. Even more shocking is the fact that even the passengers who had already boarded the planes were immediately ordered to disembark and pick their luggage, while those planes taking for a take-off were turned around. The flights that had already taken off at the time the Alan Joyce made the announcement were grounded at their next destination (Peter et al., 2015, p. 12). Alan Joyce decision exhibited a grim betrayal to the customer loyalty and a dire inconvenience. The airline’s chief executive failed to consider the consequences of his decision and the adverse impact it would have on various stakeholders. Analysts have classified this decision as the “darkest decision” in Australia’s airline history. The decision further led to the loss of over 1000 jobs. The CEO ignored the needs and interest of the two major stakeholders in the company; that is the employees and the customers. Once a company ignores its employees and customers, it is doomed to failure. Irrespective of the utter urgency of a decision in the face of the prevailing circumstances, Alan Joyce decision to ground the airline was unethical.
Following the unprecedented decision by Qantas airline’s CEO Alan Joyce to suddenly ground the airline’s entire fleet, the government became concerned about the imminent danger the decision posed on the Australian economy. Two days after the decision (31 October 2011), the Federal Minister in charge of Workplace Relations announced the end/termination of the industrial action and the company resumed its operations. Analysts, however, remain divided, on the prudence of Alan Joyce’s decision to abruptly ground Qantas’s entire fleet inconveniencing thousands of customers.
Andreas, P.K., and Peter, G., 2016. “Unions and collective bargaining in Australia in 2015,” Journal of Industrial Relations June 58 (4): 356-371
Creedy, S., 2011. Qantas Turns to Asia for Growth. [Online]. Available at <https://www.theaustralian.com.au/business/aviation/qantas-turns-to-asia-for-growth/story-e6frg95x-1226116319898>, Accessed on October 16, 2016.
Crowe, D., and Kerr, P., 2011. “A tilt at the income scales for women”, The Australian Financial Review, 11: p.14.
Hani, A.T., and Salim, A.R., 2013. “Australian Airlines Industry Globalization and Labor Reactions: A Case Study of Pilot Experience,” Journal of Business and Management 14 (3): 01-04
Joshua, H.L., 2015. “The Australian labor market,” Journal of Industrial Relations June 58: 308-323
Mark, S.R., and Pip, F., 2012. “Unions Seek Bill of Rights for Delegates,” The Australian Financial Review, 3 (4): 9-14
Marianna, P., 2012. Qantas Industrial Disputes end. [Online) Available at https://www.theleader.com.au/news/local/news/general/qantas-industrial-dispute-ends/2430591.aspx> Accessed on October 16, 2016.
Peter, B., 2014. “The future of employment relations from the perspective of human resource management,” Journal of Industrial Relations September 56: 578-593.
Peter, B., and Cynthia, B, Odoni, A., 2015. The Global Airline Industry. John Wiley & Sons
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