Qantas Airways at risk of troubles from subsidiary Jetstar Airways

Jetstar employees are on a strike for better wages and safety (Source: Australian Associated Press video)

The walkout started on December 13, continuing over the weekend, with some 250 Jetstar Airways ground staff and baggage handlers and over 700 pilots at Australian airports in Sydney, Melbourne, Brisbane, Cairns, and Adelaide leaving thousands of passengers stuck with delayed and cancelled of more than 100 domestic flights by the airline.

Strikers protested over pay and health and safety concerns, raising the budget airline’s logo and placards saying “Jetstar You’re Below the Belt”, “I’ll Fly when it’s Fair” and “Jetstar, Safety is no joke”, according to the Queensland Times.

The industrial action sparked less than 24 hours after Australia’s governmental NSW workplace safety regulator ordered Jetstar to immediately rectify equipment that has the potential to crush its workers or see them sucked into a jet engine.

In addition, Jetstar refused demands of the Transport Workers Union (TWU) and Australian Federation of Air Pilots (AFAP) for 4 per cent annual wage increases, minimum job hours, and safety improvements, saying that the wage claims are “unsustainable” and offering staff a 3 per cent rise instead.

Jetstar staff were asking for more rest breaks, a guaranteed 12-hour break between shifts, and 30-hour working weeks.

“In the case of pilots, the union is asking for what amounts to a 15 per cent wage increase in the first year in a group where captains earn more than $300,000 a year. For some groups, their salaries would increase by $60,000. We can’t agree to that,” said Jetstar CEO Gareth Evans.

The strike is showing no sign of an end as baggage handlers and ramp workers are planning to take protected industrial action again on Thursday and pilots will do low-level work bans until December 20. According to the Daily Telegraph, pilots have guaranteed they would not strike between December 21 and January 3, however, Jetstar ground staff and baggage handlers have not promised to avoid impacting Christmas.

Therefore, the airline has announced to cut 10 per cent of its flights in January and said that customers travelling from December 13 to December 20 can request a full refund prior to flying.

While disruptions and cancellations in December and January may cost the low-budget airline between $20 million to $25 million, Jetstar Airways would also consider selling three long-haul aircraft within its fleet as they have been performing at a loss in 2019. The downturn of its wholly-owned subsidiary might also ring the warning bell for Qantas Airways.

Qantas Airways officially entered Vietnam in 2008, acquiring an 18 per cent stake of the formerly Pacific Airlines – which was mainly owned by State Capital Investment Corporation (SCIC) – for $30 million.

Vietnam-based Pacific Airlines then had its name changed to Jetstar Pacific Airlines and is currently operating a fleet of 18 Airbus A320s, with 70 per cent of the shares held by Vietnam Airlines and 30 per cent owned by Qantas.

After 26 years of wallowing in losses, Jetstar Pacific reported its first fruitful year in 2018 with VND34 billion ($1.48 million) of profit. This year, the airline has announced the after-tax revenue of VND205.6 billion ($8.93 million).