Subject:From:Date:To:----- Original Message -----Subject:...

Subject:
From:
Date:
To:
----- Original Message -----
Subject: finally the truth is coming out....
For those who haven't seen it, Senator
Xenophon's speech of 23rd Aug is reproduced
below.
Senator XENOPHON (South Australia) (19:37): I
rise to speak tonight on an issue that is
close to the hearts of many Australians, and
that is the future of our national carrier,
Qantas. At 90, Qantas is the world's oldest
continuously running airline. It is an iconic
Australian company. Its story is woven into
the story of Australia and Australians have
long taken pride in the service and safety
standards provided by our national carrier.
Who didn't feel a little proud when Dustin
Hoffman uttered the immortal line in Rain
Man, 'Qantas never crashed'?
While it is true that Qantas never crashes,
the sad reality is that Qantas is being
deliberately trashed by management in the
pursuit of short-term profits and at the
expense of its workers and passengers. For a
long time, Qantas management has been pushing
the line that Qantas international is losing
money and that Jetstar is profitable.
1 of 7 29/08/2011 1:13 PM
Tonight, it is imperative to expose those
claims for the misinformation they are. The
reality is that Qantas has long been used to
subsidise Jetstar in order to make Jetstar
look profitable and Qantas look like a
burden. In a moment, I will provide detailed
allegations of cost-shifting that I have
sourced from within the Qantas Group, and
when you know the facts you quickly see a
pattern. When there is a cost to be paid,
Qantas pays it, and when there is a profit to
be made, Jetstar makes it.
But first we need to ask ourselves: why? Why
would management want Qantas to look
unprofitable? Why would they want to hide the
cost of a competing brand within their group,
namely Jetstar, in amongst the costs faced by
Qantas?
To understand that, you need to go back to
the days when Qantas was being privatised.
When Qantas was privatised the Qantas Sale
Act 1992 imposed a number of conditions,
which in turn created a number of problems
for any management group that wanted to flog
off parts of the business. Basically, Qantas
has to maintain its principal place of
operations here in Australia, but that does
not stop management selling any subsidiaries,
which brings us to Jetstar.
Qantas has systematically built up the
low-cost carrier at the expense of the parent
company. I have been provided with a
significant number of examples where costs
which should have been billed back to Jetstar
have in fact been paid for by Qantas. These
are practices that I believe Qantas and
2 of 7 29/08/2011 1:13 PM
Jetstar management need to explain. For
example, when Jetstar took over the Cairns-
Darwin-Singapore route, replacing Qantas
flights, a deal was struck that required
Qantas to provide Jetstar with $6 million a
year in revenue. Why? Why would one part of
the business give up a profitable route like
that and then be asked to pay for the
privilege? Then there are other subsidies
when it comes to freight. On every sector
Jetstar operates an A330, Qantas pays $6,200
to $6,400 for freight space regardless of
actual uplift. When you do the calculations,
this turns out to be a small fortune. Based
on 82 departures a week, that is nearly
half-a-million dollars a week or $25? million
a year.
Then there are the arrangements within the
airport gates. In Melbourne, for example, my
information from inside the Qantas group is
that Jetstar does not pay for any gates, but
instead Qantas domestic is charged for the
gates. My question for Qantas management is
simple: are these arrangements replicated
right around Australia and why is Qantas
paying Jetstar's bills? Why does Qantas lease
five check-in counters at Sydney Terminal 2,
only to let Jetstar use one for free? It has
been reported to me that there are other
areas where Jetstar's costs magically become
Qantas's costs. For example, Jetstar does not
have a treasury department and has only one
person in government affairs. I am told
Qantas's legal department also does free work
for Jetstar.
Then there is the area of disruption handling
where flights are cancelled and people need
3 of 7 29/08/2011 1:13 PM
to be rebooked. Here, insiders tell me,
Qantas handles all rebookings and the traffic
is all one way. It is extremely rare for a
Qantas passenger to be rebooked on a Jetstar
flight, but Jetstar passengers are regularly
rebooked onto Qantas flights. I am informed
that Jetstar never pays Qantas for the cost
of those rebooked passengers and yet Jetstar
gets to keep the revenue from the original
bookings. This, I am told, is worth millions
of dollars every year. So Jetstar gets the
profit while Qantas bears the costs of
carriage. It has also been reported to me
that when Qantas provides an aircraft to
Jetstar to cover an unserviceable plane,
Jetstar does not pay for the use of this
plane.
Yet another example relates to the Qantas
Club. Jetstar passengers can and do use the
Qantas Club but Jetstar does not pay for the
cost of any of this. So is Qantas really
losing money? Or is it profitable but simply
losing money on paper because it is carrying
so many costs incurred by Jetstar? We have
been told by Qantas management that the
changes that will effectively gut Qantas are
necessary because Qantas international is
losing money but, given the inside
information I have just detailed, I would
argue those claims need to be reassessed.
Indeed, given these extensive allegations of
hidden costs, it would be foolish to take
management's word that Qantas international
is losing money. So why would Qantas want to
make it look like Qantas international is
losing money? Remember the failed 2007
private equity bid by the Allco Finance
4 of 7 29/08/2011 1:13 PM
Group. It was rejected by shareholders, and
thank goodness it was, for I am told that
what we are seeing now is effectively a
strategy of private equity sell-off by
stealth.
Here is how it works. You have to keep Qantas
flying to avoid breaching the Qantas Sale Act
but that does not stop you from moving assets
out of Qantas and putting them into an
airline that you own but that is not
controlled by the Qantas Sale Act. Then you
work the figures to make it appear as though
the international arm of Qantas is losing
money. You use this to justify the slashing
of jobs, maintenance standards and employment
of foreign crews and, ultimately, the
creation of an entirely new airlines to be
based in Asia and which will not be called
Qantas. The end result? Technically Qantas
would still exist but it would end up a shell
of its former self and the Qantas Group would
end up with all these subsidiaries it can
base overseas using poorly paid foreign crews
with engineering and safety standards that do
not match Australian standards. In time, if
the Qantas Group wants to make a buck, they
can flog these subsidiaries off for a tidy
profit. Qantas management could pay the
National Boys Choir and the Australian Girls
Choir to run to the desert and sing about
still calling Australia home, but people
would not buy it. It is not just about
feeling good about our national carrier?in
times of trouble our national carrier plays a
key strategic role. In an international
emergency, in a time of war, a national
carrier is required to freight resources and
people around the country and around the
5 of 7 29/08/2011 1:13 PM
world. Qantas also operates Qantas Defence
Services, which conducts work for the RAAF.
If Qantas is allowed to wither, who will meet
these strategic needs?
I pay tribute to the 35,000 employees of the
Qantas Group. At the forefront of the fight
against the strategy of Qantas management
have been the Qantas pilots, to whom millions
of Australians have literally entrusted their
lives. The Australian and International
Pilots Association sees Qantas management
strategy as a race to the bottom when it
comes to service and safety. On 8 November
last year, QF32 experienced a serious
malfunction with the explosion of an engine
on an A380 aircraft. In the wrong hands, that
plane could have crashed. But it did not, in
large part because the Qantas flight crew had
been trained to exemplary world-class
standards and knew how to cope with such a
terrifying reality. I am deeply concerned
that what is being pursued may well cause
training levels to fall and that as a result
safety standards in the Qantas Group may fall
as well. AIPA pilots and the licensed
aircraft engineers are not fighting for
themselves; they are fighting for the
Australian public. That is why I am deeply
concerned about any action Qantas management
may be considering taking against pilots who
speak out in the public interest.
A lot of claims have been made about the
financial state of Qantas international but
given the information I have presented
tonight, which has come from within the
Qantas Group, I believe these claims by
management are crying out for further serious
6 of 7 29/08/2011 1:13 PM
forensic investigation. Qantas should not be
allowed to face death by a thousand cuts?job
cuts, route cuts, quality cuts, engineering
cuts, wage cuts. None of this is acceptable
and it must all be resisted for the sake of
the pilots, the crews, the passengers and
ultimately the future of our national carrier.
7