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 Australia 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 • Qantas 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 Oneworld. 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 Jetstar Qantas, Singapore Airlines, Virgin Australia 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 Brisbane, Sydney Melbourne, 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.