AVIATION ORGANISING REPORT

INDUSTRY LEADERS CONFERENCE 2014

1 FOREWORD

I believe all transport workers’ should receive a fair days pay for a fair days work in a safe environment based on fairness and respect.

To achieve this we must build and maintain our strength - in yards, in boardrooms, industrially and politically. The strength of this union isn’t any individual - the strength of this union is every member working together to achieve this collective goal.

The Industry Leaders Conference (ILC) provided a unique opportunity for our industry leading delegates from across our industries and across Queensland to work together and develop a long-term plan to improve your life.

To help achieve this outcome this report was complied to help frame conversation and underpin planning in the industry sessions. I trust you will find some interesting information within these pages, not only the state of your industry, but the broader transport industry.

You will also find the outcomes of the ILC as determined by your industry leaders working in partnership with your TWU Officials, with an outlook to build strength and one powerful voice for TWU members.

This year’s successful Industry Leaders Conference was built on the success of the first ever two-day TWU Queensland Delegates conference held in 2012 in Gatton. A lot has changed since then, which is why it is important to work together to identify the challenges we face and establish a long term plan to improve the conditions of transport workers’ across Queensland.

Every member and delegate is important to the Transport Workers Union. I trust you will will find interesting information in this report, and thank you again to all those whom took part in the conference.

In unity,

Peter Biagini Queensland Branch Secretary Transport Workers’ Union of

2 INDUSTRY : AVIATION

The Australian Industry Group ranks Transport Postal and Warehousing (includes both aviation and road transport workers) as: • Australia’s 7th largest industry by measure of per cent of national GDP (4.8% ) • Australia’s 4th largest industry by measure of business profits ($22,302m per annum) • Australia’s 9th largest industry by measure of number of employees (563,300 or 5.2% of national employment).

Key Indicators of the Australian Aviation Industry in 2013 Airport International Domestic Operations Airlines Airlines Revenue $4.1b $16.5b $16.1b Profit (EBIT) $1.9b $230.6m $385.5m Average Annual Growth 2009-14 0.6% 5.1% 3.7% Average Annual Growth 2014-19 2.5% 1.5% 2.2% Industry Wages $290.8m $2.4b $2.6b Number of Enterprises 2012-13 186 87 106 Number of Establishments 2012-13 206 292 319 Employment 2012-13 5,628 17,560 27,618 Average Employees per Establishment 2012-13 27 60 87 Average Annual Income $51,267.86 $137,394.91 $94,351.39

There are 932 registered airlines, however only a few airlines constitute a significant majority of Australia’s aviation activities. The figure below shows the market share of airlines servicing Australia.

Market Share of International, Domestic and Air Freight Transportation Services:

3 INTERNATIONAL AIRLINES DOMESTIC MARKET

At a global level, enterprises in the international airline • and Virgin dominate Australia’s domestic air industry are typically members of alliances that promote transport sector network sharing and joint ventures between competitors. • The third and fourth largest domestic passenger There are three major alliances Star Alliance, Sky Team, transport companies, Regional Express (REX) and and . Alliances have formed largely in response Tigerair, accounting for less than 2% of the market to industry privatisation and foreign ownership caps. each • REX and Tigerair are included in the list of In the year to June 2013, 54 international scheduled stakeholders along with Virgin and Qantas airlines serviced Australia including five dedicated freight • Qantas is ranked 19 of Australia’s top 2000 airlines (excludes airlines operating only on code-share companies with total revenue of $15,905,000,000 arrangements.) More than half of the international in 2012. It employs approximately 33,600 staff in airlines servicing Australia individually account for less Australia including all subsidiary company employees than 2.8% of market share. • The company has a fleet of 283 aircraft and services 208 destinations in 46 countries through 44.5% of industry revenue is made up by four airlines, its partnership networks. Qantas subsidiary Qantas, Singapore Airlines, and Emirates. has increased its industry presence to approximately Qantas alone accounts for 23.6% of sector revenue. 8.4% of industry wide passenger numbers • In 2010-11 Qantas carried the largest amount of Share of Australia’s International Aviation Sector: airfreight in Australia with an 18.2% share in the sector. Qantas accounts for 73% of Australian domestic air transport activity.

THE AVIATION INDUSTRY HAS “CHANGED DRAMATICALLY OVER THE PAST DECADE, AND WHILE SOME BUSINESSES AND COMPANIES ARE ON THE RISE, OTHERS FACE A QUESTIONABLE FUTURE, TWU AVIATION INDUSTRY COORDINATOR” PETER PAULOS.

Passenger numbers will continue to increase and revenue for the sector has increased at a compound annual rate of 3.1% reaching $15.9 billion in the five years to 2012-13. However, pressure on airfares, a weakening, yet strong, Australian dollar and strong global competition will impede but not stop revenue growth, which is expected to increase at a compound annual rate of 1.8% reaching $17.4 billion in the five years to 2017-18.

International airline industry profit margins have declined in the five years to 2012-13 as airlines lowered prices and hedged fuel to remain competitive. Airline profit margins are expected to account for 1.4% of revenue. Both profit margins and the absolute value of profit are expected to decline.

4 COMPANY PROFILE: QANTAS GROUND QANTAS GROUP SERVICES (QGS)

Qantas currently holds a 65% market share of the Established in 2009, QGS is a wholly owned subsidiary Australian domestic market, and approximately carries of the Qantas Group and was explicitly set up to avoid 71% of passengers flying in and out of Australia, and the company’s obligations under the Qantas workplace domestically. In terms of passenger numbers, Qantas agreement for ground staff. carries 42% more passengers, than the next highest competitor, Virgin Australia. With its Head Office in Sydney and operations in , Sydney , Adelaide, Perth, QGS’ • Share of international passengers: 16.8% 1,200 employees provide ground handling services for • Share of international freight: 14.6% Qantas and Jetstar. • Share of international mail: 32.8%

• Qantas employs 33,600 workers, and carries 44m passengers in a year FACT: • Investment in Qantas is just over 1.7 billion dollars, ALAN JOYCE’S BASE SALARY ROSE FROM with major shareholders domestic hedge funds, super $1.8m IN 2009/10 TO $2.1m IN 2012/13. funds and investment banks • Average annual income of a domestic airline worker FACT: is $94,351.39, and the average income of a domestic ALAN JOYCE RECEIVED $3.3m IN BONUSES operations worker is $51,267.86 IN 2012/13 TAKING HIS ANNUAL INCOME • In the last three years, the income of an average TO $5.577M. Qantas worker has increased on average by 3% • In the last five years, the average income of Alan Joyce has increased by 42% and his annual remuneration has increased by 72% since 2009 • Qantas’ productivity by key performance indicators has increased over the past five years: • Passenger numbers have increased by 11.63%, with over 80% of seats sold for every flight. • Domestic on-time departures peaked at 87% in the past five years • Domestic on-time arrivals peaked at 86.8% in the past five years • Domestic cancellations are bellow 2%. • What an average Qantas employee contributes: • $235,208.33 in annual revenue, and $8303.45 of profit after tax for the company • Qantas contributes 2.16% to Australia’s Gross Domestic Product and that has increased by 2.38% over five years, and every day a Qantas Worker will contribute approximately $1000 in economic output to the Australian economy. • The half year loss in December 2013, is mainly attributed to the restructuring of Qantas QANTAS’ REVENUE IS OVER $235,000 PER EMPLOYEE. International.

COMPANY PROFILE: MENZIES AVIATION Global provider of passenger ramp and cargo handling VIP lounges, loading and unloading, cabin cleaning, de- services, Menzies operate at 144 stations in 30 countries icing, pushback and towing, independent call centres, employing more than 20,500 people to service over 500 airside and landside bussing, and toilet and water airline customers. services. Menzies also provide Cargo Handling (Ramp transfers to/from aircraft, receiving and break up/down of Owned by John Menzies PLC and with their head office in cargo, real-time track and trace facilities, and electronic Sydney, Menzies operate in Brisbane, Darwin, Hamilton communication with airlines and forwarders) and Cargo Island, Kalgoorlie, Kambaida, Karratha, Melbourne, Perth, Forwarding (Global freight distribution network spans Proserpine and Sydney. over 1000 locations).

The firms largest global division, which accounts for 59% Menzies revenue is close to $67,000 per employee. of revenue is Ground Handling (inc. ticketing, check-in,

5 INDUSTRY: AVIATION

VIRGIN AUSTRALIA HOLDINGS LTD NATIONAL LEGISLATIVE ISSUES

Virgin Australia was originally branded as part of the UK Air Navigation Act 1920 and the Virgin Australia based Virgin Group. The ASX listed company employs Holdings 2012 Re-structure: over 8000 staff globally it is ranked number 81 of • Currently the Act forbids Australian international airlines Australia’s top 2000 companies having transport from being 49% owned • In 2012, Virgin restructured under the justification Virgin is on track to report a $49m loss in 2014, a that the “proposed structure involves securing majority result of losses generated through restructuring. Virgin Australian ownership in Virgin Australia Holdings executives and Richard Branson have been opposed to international airlines by changing the shareholding and any government assistance for Qantas beyond removing governance structure of the international airlines to the foreign ownership cap. ensure compliance with the ANA. The proposed new structure will facilitate overseas institutional investment • Share of international passengers: 7.7% in the domestic business, which will improve the • Share of international freight: 2.1% liquidity of Virgin Australia Group and turn enhance shareholder value” ECONOMIC INFORMATION • Industry commenter’s have viewed the 2012 re- • Virgin contributes $11 billion to the Australian structure as merely to circumvent the Air Navigation economy every year, and contributes $12 million a Act. If Virgin was one company, its domestic arm would year to the Australian Tourism industry be bound by the 51% restriction, limiting foreign direct • It is an emerging market challenger to Qantas, investment (FDI) which has had a deflationary pressure on airline • In one respect this is a rational move by Virgin, as ticket prices for Australian’s travelling everyday it allows more foreign capital to increase its liquidity domestically and internationally position. However, this circumvents the invention of • Virgin’s revenue stream equates to nearly the Air Navigation Act, to have a level playing field with $500,000 per employee. other domestic airlines, so it is hurting competitors such as Qantas and Tiger Air DID YOU KNOW: • This is a political issue, as the Act clearly is • Virgin Australia is a strongly performing company. circumvented and a larger foreign holding of the However, despite indications in the media Qantas company is permitted as there are two separate remains the market leader in the Australian Aviation companies. Further issues arise, as Virgin International Industry Holdings uses Virgin Australia assets, staff, branding and • Virgin currently has had only 1.91% growth in company resources passenger numbers over the past five years, • Effectually, some analysts have suggested that it is a compared to Qantas’ 11.93% average growth in piece of paper, used to circumvent s 11B of the Act passengers numbers over the past five years • Currently Virgin Australia is 77% foreign owned, with • Virgin is currently 77% owned by foreign companies, huge amount of overseas capital invested in Virgin and has a strong liquidity position. However, Virgin • The Minister is therefore incapable of seeking remedy has reported statutory loss in 2009, 2011, and 2013. for statutory breach, as Virgin International Holdings Growth in the company has been far from linear. complies with the restrictions, which allows Virgin to undercut Qantas with a stronger short term liquidity position. COMPANY PROFILE: AERO-CARE Qantas Sale Act and proposed changes by the Abbott Government: THE Aviation ground services and flight support provider, • Prime Minister Abbott has committed to repeal of Part 3 Aero-Care is owned by private equity firm Next Capital. of the Act, removing foreign ownership restrictions • Deputy Prime Minister and Transport Minister Warren With its head office in Brisbane, Aero-Care workers Truss has announced also that the government would provides Ramp Operations, Baggage/cargo handling, remove the restriction on Qantas being more than 25% aircraft cleaning, aircraft marshalling and ground owned by a single entity, limits foreign airlines from services equipment maintenance, in-flight service, in- owning more than 35% and mandates the maintenance flight relief cabin crew to airlines, customer service, be performed in Australia departure control systems, passport control/customer • However, the Government has indicated that it may check in, crew transport, aircraft dispatch and interline repeal the section of the Qantas Sale Act, which requires facilitation. maintenance to be complete in Australia, which risks 600 Brisbane based heavy maintenance workers With 1400 workers, Aero-Care operates in Darwin, Perth, • Currently Virgin conducts 71% of its maintenance in Alice Springs, Cairns, Townsville, Mackay, Gladstone, Australia. However, there is concern that call centres Bundaberg, Sunshine Coast, Brisbane, Gold Coast, Coffs and catering could be moved overseas Harbour, Sydney, Canberra, Melbourne, Hobart and • However, there is some doubt over whether the Adelaide for Virgin Australia, Scoot, Air Niugini, Sydney proposed changes will pass the Senate. The changes Airport, , Qantas, QantasLink, Jetstar, being resolved in the next sitting of Parliament in July

6 & Tiger Airways. 2014. CASE STUDY: USA AIRPORT WORKERS CAMPAIGN The benefits of ensuring decent wages and good working conditions include: The Service Employees International Union Airport Workers • Reduced turnover and the creation of a more stable, United campaign represents more than 4,000 workers experienced workforce serving airline travellers in California’s major airports. • Improved safety and security outcomes for passengers They are uniting for good jobs at California’s airports with and workers affordable healthcare and family supporting pay. • Union involvement in worker safety committees is linked to lower injury rates, while the risk that training and At the first stage of the campaign the Berkley University’s safety measures in outsourced workplaces will get a Centre for Labor Research and Education produced a “short shrift.” report titled ‘Course Correction: Reversing Wage Erosion • Higher productivity and quality of service to Restore Good Jobs at American Airports.’ The report • The fragmentation of the work environment such investigates the erosion of employment standards over as performing duties for multiple airlines on a daily the past decade and offers potential solutions to improve basis, or not knowing where to take complaints or conditions. suggestions, results in the lower accountability and lack of empowerment to fix problems. The Report identifies the ‘costs of low wages’ and attempts by some airports to enhance labour standards. Airports AND THE OUTCOME? have used a variety of policies including the setting of living The campaign is still in its initial stages. So far they have wages, benefit schemes, training, worker retention, and been making a case for industry change and working with labour peace agreements. the industry to come up with solutions.

COMPANY PROFILE: COMPANY PROFILE: TOLL DNATA OCEANIA AVIATION

Toll Dnata Airport Services is a joint venture ground Offers ground handling services to airlines, and also handling company between Toll and Dnata, which supplies, maintains, and manufactures ground handling provides ground and cargo services on behalf of equipment, as well as a charter service. international airlines at major airports in Australia. Oceania Aviation is based out of the Gold Coast and Toll Holdings and Dnata - The Emirates Group are the has operations in Apia (Samoa), Ayers Rock, Ballina, parent companies, with their head office in Melbourne. Brisbane, Coffs Harbour, Gold Coast, Hervey Bay, Newcastle and Weipa, and focus on providing: Toll Dnata provides its operations in Sydney, Melbourne, Brisbane, Perth, Adelaide, Darwin, covering Passenger Ground Handling Services (Check-in and ramp related Services (check-in, crewing, baggage, load control, delay services), Ground Support Equipment (Custom & disruption), Handling Services (ramp devices, loading & manufacturing and maintenance) and Aircraft Charter unloading, aircraft pushback & towing, baggage handling, Services (Complete charter handling service offered for freighter, and cabin cleaning) and Cargo & Mail Services both domestic and international aircraft movements from (cargo & mail handling, trucking and retail postage its airport hubs, the packages can be fully customised). services). Charter services for both passengers & freight are provided. The 250 staff are in operation for Jetstar, Virgin Australia, Virgin Samoa, Qantas Link, Qantas, Our Airline, Alliance With 1,794 staff across Australia, Toll Dnata provide Airlines, Air North, Air Asia, Skytrans, , Royal their operations for Singapore Airlines, Emirates, Cathay Australian Air Force, Broadlex Air Services, Singapore Pacific, China Southern, Air Canada, Air Austral, Alliance Airlines, Emirates and IATA. Airlines, EVA Air, Malaysia Airlines, Philippine Airlines, Qatar Airways, Thai Airways, Virgin Australia, Volga Dnepr – Rusland and partners Toll, Dnata and Alpha Catering.

COMPANY PROFILE: ALPHA FLIGHT SERVICES Global provider of airline catering services. The firm Offers Inflight Catering (Passenger meals and supplies provides perishable goods to passenger airlines in Australia. a range of disposable packaging and individual rubbish It is owned by Dnata - The Emirates Group. bags to airlines), Inflight Retail (Services relating to the facilitation of ground-based retailing and inflight logistics), With 1,142 employees and it’s head office in Brisbane, and Managed Services (Management and development of ALPHA operates in Adelaide, Brisbane, Canberra, catering services. Equipment maintenance, compliance & Coolangatta, Darwin, Melbourne, Perth, Sydney and security, product development, and waste management all Townsville for Toll (Partner) and Dnata (Partner). make up part of this unit).

7 LOOKING AHEAD: ILC OUTCOMES

OUR PLEDGE & OUR PLAN IS TO:

Campaign to win, building one powerful voice for TWU members.

RESOLUTION “We, delegates to the TWU Industry Leaders Conference, declare our full support for the plan to fight to make our workplaces, our communities and our governments work again for transport workers and their families by pledge to fight to win….”

IN OUR WORKPLACES AND INDUSTRIES: • + 70% density across our industries, areas of coverage • Common Industry Claims • Common Bargaining Rounds and Expiration Dates • Improved TWU Delegates Rights, Leave Provisions and Access • Increased Superannuation Contributions above the 9.25% up to 15% • 4% and plus wages increases per annum • No cuts in terms and conditions.

IN OUR COMMUNITIES AND FROM OUR GOVERNMENTS: • Real community and political recognition of the value and contribution of transport workers to our society, economy and community – we are not just truck drivers, bus drivers, forklift drivers, or porters etc – we are transport workers and we Carry Australia. Without us, Queensland Stops! • Safe Rates • Proper Protection from Assaults, Abuse & Violence. We are sick and tidy of being treated as second class citizens and demand equality. That offenders against public transport workers and treated exactly the same as offenders against police and ambulance officers • Portable Long Service Leave so that transport workers can enjoy the benefits of the long service leave act that the rest of our community takes for granted • Fair competition in public tendering that takes wages and safety out of competition and ensures industry best practice is the starting point and that our Government’s don’t promote a race to the bottom.

8 NATIONAL 2035 STRATEGIC VISION:

CORE PURPOSE To give Transport Workers a powerful voice.

CORE VALUES • Principled in building and exercising worker power • Committed to earning and keeping the trust of members • Innovative – continually seeking a better way • Driven to succeed.

ENVISIONED FUTURE By 2035, the TWU will achieve a membership density of 70% where the members lead in recruiting, organising and mobilising in support of their objectives.

“The Transport Workers Union of Australia exists to give transport workers a powerful voice in support of social and economic justice.

We are relentless in the pursuit of building and exercising worker power, guided by clear, strong principles. We are committed to earning and keeping our members’ trust and continually seeking a better way.

We believe workers can win when they stand together. We will unite transport workers in order to raise standards for themselves, their families and the community.” GOAL Achieve the TWU vision: 70% density characterised by member-led recruitment, organising & mobilisation.

OBJECTIVES Organise the Supply Chain in Retail & Aviation.

CORE STRATEGIES • Oranising to scale • Dedicated Resources • Leveraging ‘Principal Employers’ • Safe Rates/Safe Skies.

9 ‘THE TRANSPORT WORKERS’ UNION HAS BEEN STANDING UP FOR WORKERS IN THE TRANSPORT INDUSTRY FOR OVER 100 YEARS’

YOUR TRANSPORT WORKERS’ UNION IS PROUDLY SUPPORTED BY:

10 ORGANISING REPORT

A message from your Assistant Branch Secretary Scott Connolly

The future of your TWU is about every member standing up and working together because you are the union.

Together we can face down the challenges and build a strong union for you, your mates and your family.

It was a big task to come together and map out the future of our industry. But the hard work of our leaders, and that of all our members and delegates across Queensland being active and working together, shows just how much you are the backbone of this union.

The ILC proved an interesting conference and it was positive to see everyone contribute in the forums and industry sessions.

It was an important exercise. The knowledge and experiences of our members and delegates helped identify not only how your industry operates, but how we can raise standards and conditions for a stronger and fairer future.

Organising for Power is not just a phrase but a mantra to live by in the union movement. Organising for power is about working together with you and your mates and your union to gain respect for the way in which you contribute to your community and help drive the economy and improve your working environment.

I encourage you to use this report to discover what is known, what was discussed, and how together, we will build on the strategies discussed at the ILC and take this union into the future.

The Transport Workers’ Union is not just a group of officials – it’s so much more. You are the union. Your strength in numbers, your mates and your families all make up who we are and what we have, and are key to what we can achieve.

Sincerely,

Scott Connolly Assistant Queensland Branch Secretary Transport Workers’ Union of Australia

11 ORGANISING FOR POWER

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