Travelling into the future
The COVID-19 pandemic has pushed many sectors to the brink, and none more so than the aviation and tourism industries, fighting unprecedented turbulence and headwinds. Borders are closed, international flights are off the cards until next year, hundreds of aircraft are grounded, and most employees are stood down or facing redundancy. So how has the industry responded so far? Has this caused inexorable change to aviation and what measures can one of the world’s oldest airlines adopt to chart a safe path out of the battering storm?
Qantas Group CEO Alan Joyce AC joins Kerry O’Brien, undeniably Australia’s premier interviewer, to discuss the challenges facing the aviation and tourism industries in the face of COVID-19.
Livestream
Transcript
Professor Carolyn Evans
Vice Chancellor and President, Griffith University
Good evening, everybody and welcome. For those of you I don’t know, my name is Carolyn Evans, and I’m Vice Chancellor of Griffith University co-host of tonight’s event, along with our partner HOTA, it’s such great pleasure to welcome you here for our inaugural, Creating a Future for All conversation. Allow me to begin by acknowledging the traditional custodians of land on which we meet today, pay my respects to the elders past and present, and extending that respect to all Aboriginal and Torres Strait Islander people. Could I also acknowledge our chancellor, Mr. Henry Smerdon and members of the Griffith Council and executive Criena Gehrke, the CEO and Ned Pankhurst, the Chair of the Home of the Arts, Sam O’Connor member for Bonney, opposition and shadow Assistant Minister to the Opposition Leader, and many members of the Gold Coast City Council, colleagues, students, friends, alumni and partners, both those of you who are here with us tonight, which is lovely, and over 800 people who are joining us on the live cast.
Tonight is the first of our Better Futures for All series of conversations held in partnership between Griffith University and HOTA. In these conversations, we aim to present you with really outstanding thinkers and leaders, people who can help us think in complex, thoughtful ways about the future that we want to create, and perhaps also warn us about the futures that we might be creating in the post pandemic world. We knew that as a university, we wanted to ensure that this great community of which were part played a prominent role in these important national conversations. Griffith prides itself on being an active member of the Gold Coast community. We create jobs including knowledge economy jobs for our staff, we undertake life changing research in anything from vaccines to artificial intelligence to advanced manufacturing. We create a home where locals can stay on the Gold Coast to study a wide variety of disciplines. And in normal years, we attract a wide range of students nationally and internationally to this great part of the world, enhancing both our society and our economy. Our particular point of pride tonight, we had the highest range, tourism and hospitality program in the world, the best in Australia, but the third best in the world, which actually ‘ain’t bad’. We also have one of the largest aviation schools in this country with over 800 students currently enrolled, and wonderful partnerships in tourism, hospitality and aviation. And many of those partners are represented here tonight. It’s wonderful to have you here. Now I first sat down to discuss this idea with Kerry O’Brien, brokered by the wonderful Julianne Schultz to discuss this series last year, and none of us had any idea of course, what 2020 would bring us. But we were concerned, concerned about the degradation of public debate, its polarization, its trivialization with complex, important long-term issues just reduced to sound bites, tweets or Instagram feeds.
Today, with significant new economic, political, social, cultural, and indeed even personal challenges brought to us by COVID-19. The need for conversations that are detailed and thoughtful and challenging on the issues of the day are only more acute now than they were back in December. I was just delighted in those circumstances, that Kerry O’Brien, one of Australia’s foremost journalists, commentators and writers, agreed to be one of the driving forces behind these conversations. He’ll be known to many of you. Through trailblazing ABC current affairs programs like This Day Tonight, Four Corners being the first presenter on the groundbreaking program Lateline, the editor and presenter of the National 7.30 Report for 15 years, the quality of his work was recognized with six Walkley awards, including a Gold Walkley award for excellence in journalism. We really just couldn’t ask for a better person to lead us through these conversations. We’re also delighted to have our first guest, Alan Joyce AC AC, as I think you all know, Alan’s a chief executive of QANTAS Airways, a role that he’s held for over a decade, he’s had a lot of challenging times in that role, but I suspect not many as challenging as the current one. He’s a member of the International Air Transport Associations Board of Governors, a director of the Business Council of Australia, a member of Male Champions of Change, a supporter of Indigenous education and patron of The Pinnacle Foundation, an organisation that works with disadvantaged and marginalized LGBT Australians. You can tell from that brief overview and from many of us having heard him speak before. He is passionate, of course, about his role about aviation education and technology. But he’s also a firm believer in the importance of diversity in the community in the workplace, and his been an advocate for that in our broader society. It’s a terrific way to kick off a series that will including coming months Sally McManus and Bruce Pascoe, as well as many others that we’re looking forward to sharing conversations with.
So, without further ado, I invite Kerry and Alan to the stage.
Kerry O’Brien
It’s going to be very difficult to get thunderous applause tonight, I can see. Alan, welcome to the first conversation of this new series. Thanks. It’s been 10 years since we spoke. That’s right. I’m surprised you came back. Now, you’re here tonight, not just as one of Australia’s pre-eminent corporate leaders, but also because your industry is absolutely in the eye of the pandemic storm, like no other, particularly when you add tourism to aviation. And on that score in the past 24 hours, your international industry body IATA has revised its figures on full international recovery to four years instead of three, in 2024. And that, just to me underscores how incredibly unpredictable and deeply uncertain the experts are about bringing the pandemic under control.
Alan Joyce AC
I think it’s, you’re absolutely right, there is a huge amount of uncertainty on this. And even when we’re looking at our projections over the next few years, it’s very hard to fix on one potential outcome. And that’s why we’ve always said flexibility is really required the flexibility to adapt to changes as they occur. And I think even in the short term, we’ll talk about the long term, even the short term with the announcements that were made by the Premier up here yesterday, that meant one third of our schedule, published for August, we need to take out. So we need to adapt to that and move on fairly fast. We know that things will change like this over the next year. But we are confident about the long term, the medium term or the long-term future. You know, I think people get more confident about a vaccine and treatments. We’ve said in our three-year plan, and we have a three-year plan to turn the airline around. It needs to be ambitious and needs to be aggressive and needed to make sure that we turn the business back to where it was before COVID-19. And that three-year plan, I think will allow us we believe, to have an operation that can get us into doing things like Project Sunrise, the ability to fly from the East Coast back to Europe and allow us to take aircraft that we were planning to take delivery of, allow us to start hiring people again. But in order to get there, we have to make some dramatic and drastic or very heartbreaking decisions, which is letting 6000 of our people go standing down 15,000 people for nearly a year, retiring the 747’s earlier, putting the atri 80s the super jumbos into the desert into Mojave for at least three years. And radically changing everything we do in order that we can come out of this strong enough to be able to invest for the future and grow again and recruit people again, we’ve done it before we did it in 2013. This is a lot bigger, it’s a lot bigger crisis. It’s a bigger crisis that the aviation industry has ever seen. And it’s going to take a lot more effort to get everybody through it for QANTAS is probably the best positioned airline in the world to get through this crisis.
Kerry O’Brien
So you were talking before these latest IATA (International Air Transport Association) figures you were talking about three years as were they, are you now in agreement with them that it could easily be as much as four years on the global
traffic.
Alan Joyce AC
It could be on global but we’ve always said that there’s going to be different speeds on different markets. And you could see in the domestic markets that before Victoria had the second wave we were making really good progress more rapidly than other countries. We thought before Victoria had the second wave, we’d have 45% of our domestic capacity up and running this month, and potentially up to 90% by the end of the calendar year. I don’t think any other country in the world is getting close to that. And I added did say in the forecast that domestic will come back before International.
Kerry O’Brien
Well, you’d hope so.
Alan Joyce AC
Yeah.
Kerry O’Brien
You were hoping by the end of this year?
Alan Joyce AC
We are still seeing you know, the leaders in each of the states are taking the action that they need to get the COVID-19 under control. So we’re still optimistic that by the end of the year, we can see growth and I can take it here in Queensland in the intrastate travel, as an example. And we’ve seen our capacity get back to 40 to 50%. Already of what it was pre COVID. Some routes are going gangbusters, Perth to Broome, Brisbane to Cairns, we’re seeing Sydney to Ballina, the balance of markets where people in the state can travel with the borders closing. And we heard at this week that Air New Zealand with virus just about eliminated in New Zealand are getting back to 70% of their domestic shedule this month. So there is optimism there in our minds that that that will happen here. And the research we’ve done has shown there’s a huge pent-up demand and the actions we’ve done when we put Jetstar on sale, for the recovery sale they sold the biggest day of bookings in their history. $19 airfares went in the space of 50 minutes 5000 them here to the Gold Coast and there were not 35,000 air fares within an hour and $39 to the Gold Coast as an example. There’s huge pent-up demand for people wanting to travel when they feel it’s safe to travel and they have certainty about traveling. We need all of them to kick in and we could get those numbers.
Kerry O’Brien
So when you see the Victoria numbers surge the way they have, then you see Queensland say not just no to Melbourne people but no to Sydney people. I mean, there’s 10 million people wrapped up in one hit. That that doesn’t faze you is what you seem to be saying? Because you know that whether it’s in three months or six months or nine months, that when you do come back, things are just going to be fine.
Alan Joyce AC
I think what we’d like to say I think everybody in the tourism industry would like to see is real certainty over what’s going to happen with borders. And I think there’s different approaches being taken by different states. That’s clear. And we know in other industries certainly is being given that what happens – for what needs to be safe for gyms to open, cafes to open, events that have actually have more people. And with aviation, we seem to have borders that are different rules for different states.
Kerry O’Brien
Different states are in different circumstances.
Alan Joyce AC
They are but some states are very similar. And we and I think the principal, we all agree that health has to be the top priority. But we always said, and I think it’s the National Cabinet’s view, that we’re not after elimination, we’re after suppression. And if we’re after suppression, we’re going to have the outbreaks that we’ve had in New South Wales, but they are managing it. And the numbers were still less than 20 with 30,000 tests taken place in New South Wales. So there is questions about what’s the criteria for closing a border down? And what’s the criteria again, for opening up? If we’re going after suppression which is the strategy.
Kerry O’Brien
Let’s go back to when news of COVID-19 actually first began to develop to a point where we started to take notice of it. When did the sheer enormity of it first really hits you? When did it dawn on you how big this was going to be?
Alan Joyce AC
Well, we’ve had an I think every airline would have a history of knowing pandemics could be really bad. So SARS in 2003 cost QANTAS over $200 million that there were if you remember back then there were eight thousand people infected by SARS and 800 people died. And that was always a worry. And this is this is a different scale. So we had on a risk register the potential for a pandemic. It was there. And when MERS occurred, when H1N1 occurred, it always came onto our radar screen. There’s a risk here, because of that $200 million impact before. But it was a little bit like the frog in the hot water. The temperature just started increasing. And probably we didn’t know as until we got there how bad it was.
Kerry O’Brien
Until it started to boil.
Alan Joyce AC
Until it started to boil. And it was it was in essence; we are planning departments had the plan that this could occur if it goes out of control international borders close bit by bit. There may be domestic borders of the state gets badly impacted. And then we have the grounding of the entire airline. So we had that plan or that forecast. But we thought it would take six, nine, twelve months. It happened in weeks instead of months. So the speed of this caught I think everybody by surprise. I remember in January we were so worried about this as a potential impact in January when it started coming out of China. I rang the Chairman and he said that was the first he heard of it saying we are worried about this. We take it could be an issue. But we thought the worst case was something like SARS. There’s nothing like what we had today.
Kerry O’Brien
So you’ve since taken the decision, as you said, six thousand people sacked fifteen thousand laid off. Now, how did you arrive at the figures of six thousand and fifteen? And how do you determine which six thousand, you’re going to lose?
Alan Joyce AC
So what we have to do, which we did a lot of research asking people about a propensity to travel, we’ve looked at what we think are the changes that are going to take place, because people have gotten used to doing things differently, like video conferencing, we’ve looked at what we think are the potential I have for substitutions, people wanting to travel domestically, instead of internationally. And we’ve looked at our best plan over this period of time of what that could mean. So we’re out of that we think the entire industry like IATA is going to shrink, we think we’re going to shrink less than a lot of other airlines. So Air Canada is an example are forecasting a 50% reduction in their size, and New Zealand 30%. And we’ve got airlines in Europe, are all in the 30 to 40% category. We said, given the domestic, given the fact we have a loyalty program, we have Jetstar, they’re given some of the opportunities we think are here for us, we need to shrink by 20%. And that’s where we came up with the six thousand. And that meant returning aircraft like the 747. And that means scaling down a lot of the things that we were doing, we also figured that international is going to take a lot longer to recover. And the research tells us that so that’s why we parked the A380’s for at least three years in the desert, where he are going to bring them back but it’s gonna be later. And then I came up with the people that we need to stand down for an extended period of time, because the ramp up is probably not going to be linear, it’s going to be patchy. But it will take time to get to those levels. And that’s why the fifteen thousand people were the estimate. And then what we’re doing the way we’re selecting, we’re asking expressions of interest for people to take voluntary redundancy. We know in each group, given this certain amount of cabin crew that won’t have jobs, a certain amount of pilots that won’t have jobs, we’re asking for expressions of interest. And then we will see if we get people wanting voluntary redundancy. If not, we’ll have to go into compulsory redundancy.
Kerry O’Brien
So is there an element of opportunism about this? That it’s that it could be seen as an opportune moment that you felt there was too much fat in the in the airline anyway. And so this becomes, in a sense, a convenience for you to lose some of those people.
Alan Joyce AC
No. Because I mean, again, I go back to 2013. And we lost a lot of money in 13, we had to make big changes to the airline, we took a lot of the fat out back then, because the airline needed to survive. And then over the next six, seven years, we recruited people. And we were planning, we were literally weeks away from ordering the A350s, which would have created huge employment and huge growth. So we were on a trajectory all the way through of growing people, aircraft, investment, and network. And this knocked us for six. And it’s put us backwards. And this is us coping with that environment, not taking – this is what’s needed to survive. This is less than nearly every other major airline in the world is doing because we are in a stronger position. But this is what survival looks like.
Kerry O’Brien
So how confident Have you have those fifteen thousand that you’ve stood down? How confident are you that all fifteen thousand of those will be back in the fold and within what time frame?
Alan Joyce AC
So we we in our plan we have that we are hopeful that we can get international up and start flying in July next year. We think the most of those stand downs are related to international, if international gets delayed, we don’t have a vaccine, it’s not under control. And a lot of countries we don’t get bubbles, then the met the standouts may have to last longer. If it happens earlier, we’ll be calling people back earlier, but it’s our best guess. And you know what the Prime Minister even said, nobody knows. The government doesn’t know when the borders can open up. We don’t know. But we have to plan on something to give our people some level of certainty. I then say we need flexibility around is things could be different. And things could be better than we think. And then we’d like to activate the A380’s earlier. Things could be worse than we think. And we might have to push things out for a while.
Kerry O’Brien
So tell me about the bubbles. You’ll have you’ll have the possibility of kind of capsule travel between Australia and particular countries. Do you think that that is the way it will come back? It seems to me we don’t really know what’s going on in large parts of Africa, we don’t really know what’s going on in large parts of Asia, we can see the mess that’s going on in North and South America. It’s hard to find a bright spot anywhere amongst them, except possibly New Zealand.
Alan Joyce AC
And that’s where I think this will start. And I think the government, both governments have been talking about the opportunity to open up New Zealand. And we know it is the largest they have from Australia, the largest tourism market and into this country, it’s the second largest market after the Chinese. So that’s a big prize, it gets tourism and kicking in again, and it’s a big economic activity between the two. And what seems to be clear on the premises around the bubble, is that the countries which sign up to it have to have a similar level of COVID-19, exposure, infection rates, and have to have at the same level of control. So we know that that’s a prerequisite. But then there are places in Asia that also seem to be getting close to that level as well. So you could see this, if people have the same border controls, you could see this being a collection of countries over time. And that’s probably before a vaccine, the only way we’re going to see significant increases in international, and hopefully New Zealand, we’re optimistic. And I think that our colleagues in New Zealand are optimistic that that will happen potentially, before vaccine.
Kerry O’Brien
Now we’ve actually got a local question, because, as I think Carolyn mentioned, there are 800 students in the Griffith Aviation School. And we’ve had several of those students send pretty much the same question. What’s the future for us?
Alan Joyce AC
I’ve been in the aviation industry, 32 years, my old boss in Airlink has told me get used to having a crisis every seven years, because that’s typically where it occurs. He was precisely right, so take over that period of time. And I found out for most people who are involved in it, it’s a great career to have. It does go through in some cases, boom, and bust and at QANTAS we’ve been trying to take the boom and bust out and diversify in the business. And that’s helped us be one of the strongest if not the strongest airline in the world, there’s still huge growth forecasts in aviation. So we will take us potentially 24, 23 to get back to where we were in 19. But every forecast from Boeing from Airbus, from IATA has aviation industry growing in the next doubling in the next thirty years. So we have always said as an example, worldwide, there’s a need for over nine hundred thousand new pilots over that period of time, that may get delayed a bit, but it’s still there. Because when economic activity increases, people purchasing power increases, there is the need for those jobs. And we’ve invested enough in a training school in Toowoomba and that that we think is still a great investment that we’ll need that eventually, we also have the replacement of pilots because pilots are aging, pilots are retiring, we will probably have a few hundred pilots from QANTAS retiring in the next few years. And eventually those jobs will come back. And if we need to recruit for Project Sunrise, there’ll be a lot of pilots needed in the business before COVID-19. I think we recruited Andrew David’s here, a thousand some pilots in the space of a year or so. So we want a massive growth when it came to this. And I think we’ll get back to that.
Kerry O’Brien
Now there’s been so much talk about how the post pandemic world is going to be a new world, things are going to be done differently new ideas, and certainly new ways of working and so on. So is it really going to be a new world for aviation apart from as you say that, that the aviation companies the airlines are going to be smaller?
Alan Joyce AC
I think with all of this there are opportunities and there are going to be challenges. And I think we know that a lot of people are saying technology like Zoom and Microsoft Teams as many people will probably travel with us. And there may be some element of that. But I’ve talked to a couple of our biggest customers. And one of the CEOs of our one of our largest customers actually had a good analogy which I like. He said that his suppliers, his customers and his employees. Over the decades he’s built up a reservoir, a reservoir of knowing them a reservoir of those contacts. He’s relying on that now through these video conferencing and doing business. Eventually he needs to build that up again. And we know personal contact, people interacting with each other or each other has a huge difference from doing over often social media over the internet, in fact, Mr. Head of QANTAS domestic is here. And he was stuck in New Zealand for a few months couldn’t get in. And we said to Andrew, you need to get back. And since he’s been back, it’s made a massive difference having him on the ground, are talking to people, dealing with people, we are a people organisation, Most companies are. So I believe that will come back, maybe there’ll be a hit, but it will come back substantially. I think there are other opportunities as well, because I think we are changing the technology of the way we do things. So so for example, when I checked in at today, when I saw it, everybody at the airport, people were using the app moved to, to actually doing it themselves, and not having contact with people using technology. And there’ll be a lot more use of technology. Some of the airports are looking at how they use technology completely different. Western Sydney is talking about how everything below the wind wing could be automated, and a lot more efficient. Now, that means it does mean that jobs will disappear, because technology replaced them. And well we have to do is find the other jobs that are going to replace those jobs. And there are plenty before COVID-19 QANTAS was nearly at the stage where I had more programmers and data technicians than I had pilots. Because that’s the way of the future. We need people to do STEM subjects, we need people to be investing in it. And having that technology, having that investment in technology is really key. And we need more people to do that. And I’m sure that as we get back into growth, we’ll be looking for those skill sets again.
Kerry O’Brien
So in terms of the New World, it’s only months since you were on those first big groundbreaking long-haul flights from Sydney to London and Sydney to New York. And the passengers were guinea pigs and they’re being tested all the way over and all the way back on how they were reacting to these long flights and so on. That seems like a very long time ago. Now is that still very much a live ambition for you
Alan Joyce AC
Very much. So I actually think the business case is probably even stronger, people will want to get directly to their destinations, they want to get to the destinations without having to stop. So we’re big believers in it, we still have the aircraft available for Airbus nobody’s ordering aircraft. So we have a bit more time to make the decision. We had an agreement with our pilots. And we when we did the research and those research flights, the reaction was unbelievable. It went around the globe. I mean, CNN told us it was the biggest story CNNs run that year, BBC the same thing. So got people’s imagination, people know, it’s actually a great business concept. People know that to visit Australia, this is the way to do it. So I’m a big believer in that, I think it’s we need to strengthen our balance sheet, we need to get back to profitability. But once we do that, and we have the confidence that the markets returning, we’ll invest in it. I will point out Perth London, again. I mean, it was the highest customer satisfaction ratings, the longest route on our network, highest customer satisfaction ratings, and the most profitable international route nearly from day one. And that shows that people are really, really interested in this.
Kerry O’Brien
So the 747’s were kind of on the way out anyway, weren’t they are and is it a case, the case that the pandemic simply hastened the demise?
Alan Joyce AC
They were. For us we already planned that they were going to be retired in six months. For other airlines not the case. Now they’ve accelerated British Airways was probably gonna keep them until 24-25. And two days after all retirements, they said that they were going to take the aircraft out. So I think it’s accelerated it is old technology. It’s forward engines. The two-engine aircraft of the 787 is a lot more efficient, has a lot bigger range, the economics a lot better, the maintenance costs a lot better, it’s more reliable. And that’s the way of the future. It was heartbreaking doing. I did an event last week. And I have to say I could people sometimes say to me why does QANTAS have this passion? And you could see it in our people. Why does this brand do this to people, and you could see it last week we had in a huge hangar where we usually have thousands of people doing these events. We had one hundred and fifty, mainly our employees, and I was talking to them. As we were saying goodbye to the last of our 747 the queen of the skies as we called it. And I was taken aback when I was given my speech by everybody being in tears. The emotion they had for that aircraft leaving was phenomenal. And this was part of their lives. It was part of Australia’s life. It was there for the highs and lows in Australia. It took every Olympic team that won medals since 1984. Home, it took every sporting trophy home, it took the Queen here a few times as a Republican, maybe I should mention that too many times. It took the Pope here. And that aircraft he promoted. It was the first aircraft we had with an indigenous color scheme on it, which promotes the longest continuous culture in the world around the globe they were groundbreaking at the time. And it was there for the really tough moments when Darwin needed rescuing. After Cyclone Tracy in 1974. It had six hundred and seventy-four people on it. A world record still to this day of the amount of people on an aircraft because we need to get people out. It was there in Cairo. And I always remember the thing that sticks in my mind about it was that that woman on the radio when I was CEO back when the Arab Spring happened. And she was saying for two weeks, she felt their her and her kids were going to die in Cairo, she’s seen people being killed on the street, she’s seen people being shot. And she said on the way into the airport, in the van she saw the kangaroo at Cairo airport, and she and our kids were in tears because they knew they were safe. Now one other piece of metal would have that emotional link for people. And that forty-nine years of that amazing aircraft that we had the sixty-five we operated had so many stories. I could have talked for hours about how much it has meant for Australia, meant for people. So it was bittersweet, saying goodbye to it because I can see the future from a businessman is great. But saying goodbye to that history was heartbreaking. Heartbreaking for probably all of us.
Kerry O’Brien
You know, one of the it’s funny the things that catch your attention, particularly for a journalist who is used to thumbing through stories daily, you know, endlessly, God knows how many hundreds of 1000s over the years I’ve perused. But one of the things that really caught me about this whole, the aviation saga with the pandemic, is the thought of all those 1000s of aircraft just parked in the deserts around the world, in America here, wherever. I mean, and I’ve seen almost nothing reported on them other than the fact that they’re out there somewhere. I mean, are they being turned over every I mean, what is someone going to have to blow the sand out of the engines?
Alan Joyce AC
I will I tell you what, we had our oldest living employees 95 at the at the event, and he worked on the flying boats and Rose Bay in 1942. And he had he said his first job was cleaning out the spark plugs at the time. And I said luckily, we don’t have spark plugs. So we don’t have to turn them over. But we do have in LA, we have a big hangar with a huge amount of engineers where we did A380 maintenance. And so the Mojave Desert where they’re parked is two areas away, so they drive out. It’s better to have it there because it’s humid air. And so they don’t deteriorate as much as non humid dry air. So you don’t deteriorate as much as the engineers can get out there. And they do turn them over. But there’s a lot of them that go into a part of the desert. That’s like the elephant’s graveyard. It’s the aircraft that are just there. If you’ve never been to Mojave Desert to see them. It’s a sight. It’s a tourist attraction itself. But one of the advantages that we had, we scrambled to find parking areas for two hundred and twenty aircraft, which is what we grounded and it’s not two hundred and twenty parking areas because they’re usually in the air. But one of the advantages we did have is none of the runways were being used. So the aircraft are essentially parked on the on roadways. So lucky Brisbane built a third roadway, it’s a great parking spot for aircraft. That was a joke.
Kerry O’Brien
Now on the domestic aviation front again, my move to the Byron district 10 years ago coincided with your decision to seriously shrink the QANTAS Gold Coast service and leave your interest there largely to Jetstar which I have to say, drove me into the seductive arms of Virgin at the time. Is the cause now for QANTAS to come back to the Gold Coast with a much bigger presence?
Alan Joyce AC
Yeah, and even before COVID-19 we were building our presence in the Gold Coast. And we figured that QANTAS for a long time couldn’t make money in the Gold Coast because the airfares became so low and Virgin changed that dynamic against ANSETT when they took over. And so we need to put Jetstar there and to keep a presence and to make a contribution. But with great changes that were made in QANTAS all the way from ‘13. And its cost base was a lot lower its product was a lot better. We started making money with QANTAS on the Gold Coast. So the plan was to do both brands and build QANTAS up quite significantly. Now with the changes of Virgin are likely were reading in the press so we don’t know they’re likely to move at back down-market a bit more aware Virgin Blue was. And so that gives I think QANTAS even more opportunities for the corporate market and the SME market. And places like the Gold Coast once this recovers is a place for those to really significantly grow. We’re also finding places like Hamilton Island, Maroochydore, we’ve put QANTAS back in, and it nearly overnight, it’s been making money on them, so that the dynamic has changed. And I think it’ll change even more so when Virgin comes out of administration.
Kerry O’Brien
So of course, tourism is at the heart of the Gold Coast economy. And at the heart of a lot of other regional economies around and the major economies around Australia. How smart is Australia’s tourist industry and how heavily do you engage in it?
Alan Joyce AC
Yeah, so we have I think, Bob from Tourism Australia’s here today. So we work very closely with the tourism organisations. TA, the state tourism organisations. Paul Donovan from Gold Coast Tourism is here Hi Paul. So we do work very closely. We’re the largest private supporter of tourism to Australia. I mean, when you’re Qatar Airways or Emirates, you have hundreds of destinations you’re promoting. We’re really promoting one destination, internationally here. So we put all of our eggs into that basket and really go out there and very heavily promote it. I think there is an opportunity in the short term, while COVID-19 it’s happening because we had roughly eight million, Bob correct me if I’m wrong, but eight million overseas visitors coming into Australia each year, we had 11 million Aussies going overseas. So in theory, those Aussies, if you can get them to do domestic tourism for a period that’s on will fill that gap. And we need to get them to go to places like the Gold Coast like Cairns, a lot of international tourists we’re coming to and to fill that gap. And I think there’s a real good opportunity on that, because a lot of those international visitors anyway, we’re coming to Sydney and Melbourne as well, where a lot of the Aussies are from Sydney or Melbourne wants to go to these destinations. So we should look at this as how do we get there. And I think that’s why we have this optimism about domestic getting back and domestic responding to it. It is getting very competitive internationally. You know, we can see some of the other destinations that people go to, like Jetstar i think is the largest international carrier flying into Bali. And we could see Aussie numbers growing and growing and growing, because you get a great summer holiday with great accommodation for very cheap prices. And you can drink a lot in Bali. And there’s a lot of Aussie’s going there. So we know there are places that are very competitive. So raising the game with the product on the ground, raising the game with things for people to do. Creating more experiences we all know is something that we have to continue to work on. And continue to promote the natural advantages. We have the Great Barrier Reef, Uluru all through Ningaloo Reef I mean there’s so many places most Australians haven’t been to as well, the Bungle Bungles that we just need to keep in plugging them, giving people ideas, giving people options for domestic holidays,
Kerry O’Brien
Listening to a description of Australians arriving in Bali, I’m not quite sure how many Balinese would see that as an attractive picture, going there for a cheap holiday and to get on the piss.
Alan Joyce AC
But it’s good for their economy, though, I have to say
Kerry O’Brien
In those terms, how good are we in this country at protecting our social and ecological environments as we exploit them, being careful not to kill the goose that lays the golden egg?
Alan Joyce AC
I think very good. I mean, I’m on the Great Barrier Reef chairman’s panel, which has been a really has had a lot of big corporates working and helping. What do we need to do to help protect the Barrier Reef and there’s a lot that is dependent on world C02 emissions, world carbon that we can’t do much about. But there’s a lot we can do. In order to help them there’s a lot of projects that are going on the Great Barrier Reef. Like for example, one of the projects that QANTAS is involved in, we have the biggest carbon offset program of any airline in the world. Over 10% of our customers offset the carbons. And a lot of that projects go back into cases in Australia. And we were up North in Babinda south of Cairns, where we’re planting through the offsets that everybody here is doing. We’re actually planting a rain forest again, which has two benefits. It’s taking C02 out of the atmosphere to compensate for the flying, but it’s also stopping the runoff from the sugarcane crops, the fertilizer getting into the water, which was promoting the growth of the crown of thorns, which is killing and impacting the barrier reef. And so it has a number of factors, because it’s cleverly designed to try and help them. And what we want to get to as an organisation, which I think a lot of Aussie companies are trying to do is we gave the commitment, the first airline group in the world, ourselves and the British Airways group, to be carbon neutral by 2050. Because we want to minimise our impact on the environment. And we agreed before COVID-19, that we’re going to get rid of single use plastics this year, on the aircraft, one hundred million. That’s how much QANTAS was using one hundred million pieces of single use plastics, we’re eliminating them from the from our aircraft by the end of the year. So I think everybody has to be socially environmentally conscious. It’s what our shareholders are looking for. It’s what our customers are looking for. It’s what employees are looking for. And we have to do our fair share, to minimise our impact on the environment. So we can protect what actually generates our business, which are these natural, amazing natural wonders,
Kerry O’Brien
Of course, impact on the environment. And this also comes into, I mean, it’s a very practical aspect of the QANTAS picture, but also, it goes to social corporate social responsibility, which I want to get onto in a minute. Let’s talk about climate change. Now. I mean, you talk a lot about QANTAS’ contribution to reducing carbon emissions. And of course, airlines have a huge carbon footprint relative to the rest of the world. Firstly, how hard is it to actually deliver on what you’ve what you’re doing? Is that really a tough challenge? Is that really a tough response? Has it really cost QANTAS, all that much to do the things that you are speaking about, about reducing your carbon footprint?
Alan Joyce AC
So to get there, it’s I mean, it is a stretch target out there. But we’ve always achieved the stretch targets we’ve given. Because at the moment, unlike other industries, like the car industry, there isn’t a technology solution for aviation. Batteries don’t work on aircraft for long distances. So I’ll give an example, Melbourne, Sydney, would need at thirty-two times the weight of the fuel in batteries to fly. So it’s just not there. And eventually, maybe we’ll get there. But we are a long way away from that technology working. So what are the solutions, they are offsetting, which I do believe can make a big difference. They are sustainable aviation fuels that are coming from other and we are testing and have been testing a number of different fuels from a mustard seed that can be produced and can work on an aircraft can give the power ratio needed to actually operate a jet, which we thought may be the problem. But you can grow mustard seed. So what we’re trying to do with sustainable aviation fuel, is to get to a producing of potentially a crop or algae that doesn’t have unintended consequences, ie take away from field stocks and increase fuel prices for everybody because airlines are buying. And the mustard seed was interesting as an example, because it could be a rotation crop used in between crops. So we’ve got very interested in that. There’s also one, the Nazis had had a mechanism Fischer-Trol, which was actually taking city waste, and converting it into jet fuel, and fuel. And it’s an old technique from the 30s British Airways have invested heavily in the plant in the UK to do that. We’re keen on that as a potential option. And there may be multiple sources. And if you could get to a very high level of your field being sustainable, you can get to those targets. And what what’s really key is this new technology, because the emissions from a 787 compared to a 747 is 20% below it. So we’re already making those changes by just replacing the fleet. It’s a lot more fuel efficient and a lot less co2 coming out.
Kerry O’Brien
Do you have any sort of timetable in your head when you can see these fuels actually kicking in taking over?
Alan Joyce AC
We were all there is at the moment, the possibility and we do buy, you can buy fuel in LA so your flights on the way back and we flew a fly from LA to Melbourne. That was pure, sustainable fuel. The California government have invested very heavily in helping subsidize that industry because the cost of the moment is three times the normal aviation fuel. But once you get volume, every projection has a coming down to maybe at the level or even below normal aviation fuel. So it needs investment and need scale and we’re putting in we were before COVID-19 putting in tens of millions of dollars of our own money to help develop and working partnership with some universities. And some states, some of the states are very keen on it, we buy before COVID-19, we’re buying 4.6 billion a fuel each year. If we could create that as a, as an industry here in Australia, we talk about the jobs of the future, where we’re growing crops as rotation, given the money to the farmers, and then having plants because they’ll have to be local to produce and convert those crops into sustainable aviation fuel that creates jobs and significant amount of jobs. And I mean, what is actually was importing 4.6 billion worth of product could be a natural industry here in this country. So there’s a lot of benefits. And we’re trying to work with governments to try and get that started and established here. And we think we can, and within the next decade, get to a few percent initially, but up to 10%, and sustainable aviation fuel, we need to be at like 60 to 70% by 2050, in order to for that target to be met. So it needs a very big growth profile. And that’s why we’ve given ourselves the time in order to get there.
Kerry O’Brien
So do you personally as an individual, as a now Australian citizen, but as an individual, you have a strong personal commitment to seeing the climate change challenge responded to credibly? And quickly? And if so, how frustrated are you by the pace at which Australia is dealing with the challenge?
Alan Joyce AC
I’m a believer in man impacted climate change. And I think we all need to do something to fix that. And to improve things. And even if you don’t, I’ll do the counterfactual, even if you don’t, and there are a lot of people in the markets where we’re encouraging. We know tourism is a big part of what happens here. There are a lot of people in Europe, that will not travel at the moment on flights, because they call “flight shaming” in Europe, because they believe the C02 damage is actually too much. And Greta Thunberg actually started the campaign, so …
Kerry O’Brien
Do you support her? In the privacy of your own mind, I wonder whether you saw the appeal in what she was doing, regardless of yes, airlines were the target. But the attraction of this dynamic young person taking a stand on something that governments, many governments were half turning their backs on, arguably, including our own?
Alan Joyce AC
I think. No doubt, no doubt, she’s an impressive young lady. But I think we can throw the baby out with the bathwater is the way I always put it. So you have a problem. And it is the C02 emission of aviation. But you the aviation positive benefits are massive. They’ve made the world a smaller and better place, they’ve allowed people and cultures to understand each other. They’ve made a huge difference to Australia, I wouldn’t be here a lot of Australians wouldn’t be here without aviation. they’ve improved trade and commerce between countries, they’ve probably been helped keep the peace for a long time because of that interaction and our understanding, that’s too much of a positive to throw that baby out with the bathwater so I would disagree that the solution is to stop flying. I think the solution … of course I would but I do fundamentally believe it. I don’t think most of most people would it’s how do we fix that? How do we get that so you don’t have to make a choice between the environment and all those positive benefits? And that’s what the aviation is, is still it’s the only industry in the world that’s committed to a price on carbon from 2022. It’s the only industry in the world that’s given itself targets that it will get to it, we’ll get to having half the whole industry as a whole once half of the C02 emissions of 2050 that I had in 2005.
Kerry O’Brien
Can corporate Australia do more?
Alan Joyce AC
I think every company could do more. It’s like everything. I don’t think you always you can always rest on your laurels. I take safety as a big thing you’d say QANTAS has been voted the safest airline in the world for five years. Do you think QANTAS can’t do more? Of course it can. It can never rest on its laurels. It has to be paranoid, and always has to be in continuous improvement. That’s what the best businesses the best organisations do. And I think in all of these issues, there’s more that we all can do. We can do more, we have a plan to do more. We have a plan to get the carbon neutral by 2050. And I think a lot of companies, Telstra just said this year, they’ve gotten the carbon neutral. So they’re doing more and getting there. Everybody’s has aspirations. Everybody is trying to get there. Nobody’s there quite yet.
Kerry O’Brien
So that’s the ecological environment. What about the social environment? We’re talking about the ecological and social? What do you think is at the heart of the image that we project abroad about the quintessential Aussie?
Alan Joyce AC
Look at my history, as you know, I left Ireland in 1996 because I was not an openly gay man, a gay man, I felt a country that had a ban on homosexual acts was not a place for me. And I wanted to come to Australia because I felt this was an egalitarian, open society. And ya had this image of, of Mardi Gras and how, how open people wore of being gay. And I have to say, I have not been disappointed, because I’d say where else in the world with an openly gay Irish man be the CEO of the leading iconic brand in the country. That is the definition of egalitarian. That is the definition of being a fair and an open society. Now I have to say, I’m also really proud of my homeland. So since I left it’s a country with a dramatic transformation, it’s gone through a transformation, that it had marriage equality two years before Australia. I never thought that would happen, and has a dramatic transformation, where the Prime Minister for the last three years with high rankings has been an openly gay man and had had a massive support from the community. And it’d be prime minister does a break Irish politics is weird to share the Prime Ministership, but become Prime Minister again and two years, two and a half years time. And where else would you have seen that transformation? So I’m probably very aligned. I’m more than probably I’m very proud of my two nationalities, my Australia and my Irish one, because they’re both phenomenal countries. And sometimes we talk things down, we have to celebrate the positives and how well our society is actually moving, how well it’s changed. And one of my proudest days was on the stage in that park in Sydney, when I found out that 62% of Australians voted in favor for the equality of the LGBTI community and 80% voted, it was would have been the biggest electoral victory for anything in Australian history. How proud could you be of that? How proud could you be of the Australian people? Our politicians didn’t get us there, the people there, that was amazing.
Kerry O’Brien
Okay, so this is the context in which I want to talk about corporate social responsibility through your eyes. And in that, and how you go about identifying the social issues affecting Australians that you believe QANTAS should engage in and even take a stand on. So with marriage equality, if you had not been gay, and had not wanted to marry your partner, would the issue have been as important for you wearing your corporate hat?
Alan Joyce AC
So I think two things brought us to the forefront of that campaign. And one is that I signed a letter with 32 other CEOs. And that letter was written to the government as to the Prime Minister, from 32 other CEOs as well as to move on marriage equality. Peter Dutton picked on my name out of that, and said, Alan Joyce should stick to his knitting. Nobody remembers the other 32 people.
Kerry O’Brien
And even using the term knitting had a bit of a load to it.
Alan Joyce AC
I think yes it did.
Kerry O’Brien
Not that I know anything about your knitting, but we know what I mean,
Alan Joyce AC
I’m a very bad knitter. But then the other thing was on a stage like this in Perth, our breakfast meeting to talk about a Project Sunrise equivalent of a man who was homophobic did a homophobic attack and put a pie into my face. And it was because of our support of marriage equality. But corporate Australia was behind this. Marriage equality had one thousand six hundred companies in the ad, showing that they were supporting it, because all these companies felt the same way. I believe that there was a business case for it. I wasn’t doing I mean, personally, it was the right thing to do, I felt, but I also believe there was a business case because we could see the research, our customers were really behind it. And when you look at the vote, pollsters, you know, places like the eastern suburbs, that 78% they’re QANTAS customers, and in favor of our employees, we have a huge LGBTI community, as you can imagine, they were behind it. And we had a lot of our shareholders, I went around the globe on a review was we do of shareholders. And I had one big shareholder in Boston, saying when he was reading all the clippings on what we’re doing, said you’re not doing enough. You’re not putting enough behind this because that’s why we invest in companies like you, because we think companies that have ESG, environmental, social and governance capabilities, and are very socially conscious outperform. And we think you need to be doing more in that space. So we knew there was a business case with all of our stakeholders. And I think that proved to be right. I have to say what really confirmed the for me was when Richard Branson came down here and he came down when we’re in the midst of all of this. And he said in an interview he was giving, I was in support of marriage equality before Alan Joyce AC was Virgin are actually, really, the biggest supporters here. So he’s a smart businessman. So he knows when it’s right, as others say, at the time Margaret Court was doing a boycott of QANTAS. And because we were supporting it, and somebody asked her, how are you going to get from Perth now to anywhere because Virgin are in the same boat. And soon after that Greyhound buses came there with that they also support marriage equality. So I don’t know how Margaret got to the tennis Open last January, I’m still surprised that
Kerry O’Brien
So sticking with the with the question of how you choose your issues. What about an issue like poverty? Does it bother you that 3.2 million Australians are living on or below the poverty line? And these figures were before the pandemic, including seven hundred and seventy-five thousand children? Is that an issue that corporate Australia should be concerned about?
Alan Joyce AC
I think a raise, and I think people know that we need to continue to grow the economy and to grow wages. And I think good companies, I’d say look at my background, my grandfather grew up in a tenement building in Dublin, with 35 people there. Both my parents had to leave school when they were 12. Because they, they couldn’t afford to go through. even finish secondary education. I was the first one in my family to finish secondary education, let alone tertiary education. So I know, I know what it’s like coming from that type of background. But I also know what can help you out of that. And education, we’re here to talk about education, the thing that got me and my family out of it is education, we need to get the skills, we need to get the training, we need to get that right to fix it. And business is talking about and is the best thing and how we get there. We need to in good companies have to actually look at all of our stakeholders, I think this focus that some have just on shareholders is wrong. Because there is a virtuous circle that benefits shareholders immensely. When you get it right for your employees, get a right for your customers and get a right the community. And before COVID-19, we were given pay increases above inflation of 3%. But we’re also given bonuses outside of EPA’s. And we get bonuses of nearly $300 million. Because the company was doing well. And we wanted to give that income to our people. So everybody shared in the benefits of a good company do well. And when things were tough for certain communities, when the bushfires happened, we raised and donated $3 million to people affected by that, you know, and our people have the social conscience, which I think is really important when people are knocked by. So absolutely. And I think what we know, I mean, we talked earlier Kerry, I mean, I don’t think we all know the way we’ve gone back to fixing this is not a communist model, because that doesn’t work. So capitalism is the best way but it’s where it needs to benefit everybody. And we need to figure out what are those mechanisms that get people there? It’s helped my family it got also a poverty and I think education getting companies that have this social responsibility. They’re doing the right thing by its people I think as well.
Kerry O’Brien
There’s a there’s a logic to all of this and when I was interested that you picked out egalitarianism is a big attraction for you. In Australia because 3 million poor people out of 25 million, it’s not egalitarian from where they stand. What about the increasing gap between rich and the rest, former Liberal leader John Hewson, still a practicing academic economist, has pointed out that the top 85 billionaires who could squeeze into a double decker bus owned as much wealth in the world as the bottom 50% of the world population. That’s 3.5 billion people a double decker bus, a billionaires is the same wealth as 3.5 billion. A similar picture is true for Australia. While the wealth of the top 1% has been growing continuously, the wealth of the bottom 50%, 50% has been falling. Now is that healthy for this country, the country that’s supposed to be about a fair go for all.
Alan Joyce AC
But I think, you know, everything. Everything that we talked about is relative. We do have here. So in Australia, because I think it is egalitarian and still a huge amount of positive. We do have a social welfare system that a lot of other countries don’t have. I mean, America, the wealthiest country in the world doesn’t have health system or social welfare system that rivals anything that we have here, which I think is great. And I think you know, we need to continue to improve that and continue to invest in it. I think we’re at the same and Ireland invested very heavily in free education in its social welfare system that’s helped a lot of people out of poverty. And we’ve moved in this country, and in Europe, a lot of people out of poverty. And have we got more to do? Of course, it’s like everything we’ve talked about on the environment. I don’t think these are anything that you can rest on. But I think there’s not one silver bullet to fix these days. So I’ve been looking policies across everything.
Kerry O’Brien
But if you’re looking at a contribution, or a lead that corporate Australia could and some would say, should display I dug some figures out of a book I wrote two years ago showing that in 2017, salaries for the top 100, chief executives in Australia rose by an average of 12%, while average weekly earnings rose by 2.4%. So a CEO on say $3 million a year would have copped a pay rise of $360,000 and a worker on $80,000 a year, would on average got a rise of $16,000. And workers salaries, as you know, have been stagnating ever since while executive salaries have continued to go up, including yours. So do you think that that model can genuinely seriously sustain a healthy democracy into the indefinite future?
Alan Joyce AC
Well, I take the QANTAS example, which I do believe that’s what we were doing again before COVID-19, we’re in a different world. We were recruiting people. We were growing, and we are grown wages above inflation. We were given bonuses on top of that we had done significant promotions I talk with pilots with cabin crew, at the average pay increases we were given were way above any of those numbers that you’ve said. So you do what you can do in your control. And I think ever you’re a good company like QANTAS you make sure if you’re doing well, everybody does well, if you’re doing badly, everybody does badly. I haven’t taken the salary for four months now, my senior team haven’t, because of what we’re going through.
Kerry O’Brien
How hard did you personally find that compared to say somebody who’s lost their job?
Alan Joyce AC
I absolutely agree. And it’s, but it was the least I could do to say that this is the writing that everybody should be demonstrating. You know, you know, I think I’m pretty proud of my guys that did the same thing, because they’ve worked as hard now as they’ve ever done. A lot of people could, because the salaries you’ve talked about, could retire and leave it. They’re not. They’re dedicated to fixing and trying to get those people back to work. Try to get people in, you know, it wasn’t our fault. It wasn’t our people’s fault what happened, we’re trying to do our best to get them back to work to get them employed to get the salaries going, what else can we do, that’s what we can do. And we have that the end of the when it goes well do what we were doing before COVID-19. Give the people those bonuses, give the people those pay increases. We can’t afford them today. We’re gonna have to make tough decisions today. But we want to get back there. We want to order the aircraft for Sunrise. So we can give those pilots promotions, get those people back in jobs. That’s what we’re after.
Kerry O’Brien
But let me come back to the to the broader question, which is, when you look at that disparity, that when you’re talking about those, the differences in those percentage increases, broadly speaking, and you know that the gap is continuing to widen, between those at the top and the rest, not just those at the bottom. But the risk, is that a long-term sustainable model, you say, communism has collapsed as a as a credible alternative? It’s the only ism we have? Do you really think that that is a sustainable model, where you have such discrepancies and those discrepancies are continuing to grow?
Alan Joyce AC
Well, you have to you have to improve on it, and you have to do better. And the way it is here we can well, we talked about I mean, I think I’m a big believer in education. And there’s a lot of jobs, a lot of the problems we have are large jobs are disappearing. And a lot of jobs, technology is changing a lot of things. And we have, we have a big task of training people in the skills of the future. I’ll take one example. We talked about the pilots that we have their high paid jobs, they are extremely well-paid jobs and our big growth opportunity. So at the moment, we’d like to get to pick the best pilots in the world, we’d like to get to a stage where we could have equal male and female applying. We’ve only 14% of females I think the stats was they’re doing STEM subjects. So they’re not training in the right job. So when I look at the average pay, I give as an example. So it’s an area of inequality in the system. The man again paid a lot more than the women in quarters. Why? Because I have a lot more pilots than I have. And I’ve got the women in flight attendants. So how do you fix them equality like that. And it’s the same in the economy. Generally, you need to train people in where the high growth jobs are, where the high-income jobs are. And they’re in technology at the moment. They’re in coding, either in pilots or in engineering. They’re in areas that we are not training people right at the moment, but so that’s part of the solution. The solutions will take a while to get there.
Kerry O’Brien
Because in the interim, you’ve got young people coming out of universities with as many as two degrees with Masters with doctorates and not able to get jobs that have anything to do with the skills that they have been studying up on. I’m not sure if you saw the figures from the Productivity Commission overnight, showing that Young Australian workers have suffered a decade of lost income growth. Young workers from age 35 down have been losing while they’re young 35 as young if you’re my age, young workers from age 35 down have been losing income year by year since 2008. For under 25, the trend is worse going all the way back to 2001. And this is all before we face the worst economic slowdown since the Great Depression. Do you think that is sustainable? What are we doing for a whole generation of young workers?
Alan Joyce AC
So averages can disguise a lot of things Kerry, as you know. care to us? I can say because my experience of it is that we were hiring again, before COVID-19 programmers and having difficulty getting them data analysts. And the salaries that we were talking about in those groups were growing, and they were growing rapidly. And we were fighting against tech companies and banks to get those people and I wasn’t I was seeing growth in those areas, because that’s why we had the skills and where the jobs are. So if you train people in jobs that don’t exist, if you train for a person to actually manufacture, what would it be something antiquated, a gramophone, and that was their job, are they gonna have a decline in income when they come out? Yes. Because the technology of today is completely different. And we need to make sure people are adapted to that and get that.
Kerry O’Brien
Do you think there’s been something of a con and I don’t mean a deliberate one but a con on, on the young people coming through the schooling and education system? That they are being that they are being encouraged into tertiary education because they’re told that without a tertiary education there buggered that this is the new world. But the tertiary education that they’re getting, is still leaving them without a job in many cases, or with low paying jobs.
Alan Joyce AC
I think it’s up to all of us to talk about what the careers of the future are, what the skill sets of the future going to be. And making sure that people when they’re picking the courses, picking the training, are actually picking the right things that companies, businesses, and that the government is after. That’s really key on all of us to get there. And that’s why we made a big deal as an example of our pilots. I think it’s a great career to get into. And we talked about the nine hundred thousand that are needed. Are we getting enough people doing the skill sets needed to do that now? And the pilot, I mean, a pilot once you go through the ranks and it is a seniority system,
Kerry O’Brien
You keep talking about the pilots, I mean, the pilots are at the top end of the of the pay scale in your industry, apart from the top executives. But I mean, when you look at those, those Productivity Commission figures, that the wages of the young have been going backwards year by year by year by year, that’s not because of education. Isn’t that because of stagnating wages generally? Isn’t that because of the nature of the modern workforce and casualisation?
Alan Joyce AC
So I’ll say that that wasn’t the case of QANTAS. We were recruiting and growing. We weren’t given people Aldiss, our API’s were paid 3%, which is above inflation. So there was wages growth across the board. And can I say, yeah, yeah, you’re right. pilots are the I mean …
Kerry O’Brien
I’m interested in talking to you now, not just not just with regard to QANTAS in the airline industry. But you as a senior corporate leader in this country. Does that picture generally disturb and worry you?
Alan Joyce AC
Of course it does. But you have to figure out how we fix it. And you fix it. It’s it’s bit by bit, you have to fix it with these different activities, and every company has to contribute, and to what they need to do in order to make a difference. And that’s the way we’ll get there. It’s not just saying this problem is too big. It’s gone backwards. There’s a lot of stats, we talked about the environment as well, we know that’s gone backwards. Companies like ourselves are trying to fix that. We have ideas about how we’re going to get there, the best thing you can do to promote secure jobs and wages growth is have successful businesses as well. So the other thing we also have to do is ensure that we continue to have that and continue to have that investment that and there are again, on the stats, you could go through each of the individual segments and saying is the mining industry seeing big wage growth as the same big road? Yes. That’s the other young people …
Kerry O’Brien
That’s a relatively small workforce.
Alan Joyce AC
Yeah, but now it’s still I mean, we’ve seen huge growth in the fly in fly out market in Western Australia. It’s still growing that where is today, and I can pick pilots because there’s young kids coming into pilots, and they have a huge growth opportunity and wages that laid out for them. It’s in the agreements, it’s there until they retire. So there are differences to that, and we have to have more of them that make the difference and get people encouraged to do that.
Kerry O’Brien
I know that you support the government’s current formula of business tax cuts and industrial relations reform, to lead an economic recovery after the pandemic, presumably accompanied by spending cuts to other arms of government, because they’ll be focused on over a long period now much longer than it was going to be of reining in the deficit to some degree. But is that the best we can do in this country, we talk about new ideas, new ways of doing things. We know that at the heart of any growth in Australia, there has to be productivity gains, and those productivity gains are not just about replacing people with machines, they’re not just about being delivered by technology, are they? So is it really the trickle-down theories of the 80s that we’ve got to rely on to find our way out of this next big recession?
Alan Joyce AC
Well there’s, there’s a lot you can do. We are competing in a global world. And I’m a big believer that the corporate tax rate is an issue for this country. And I’ve said that before. Because when we look at the corporate tax rate that we see in the UK, and in the US, there is global money, and it’s going to be invested at where they people think they can get the best returns. And I’ve give you an example, at the moment, Project Sunrise, a great one for us. And it’s going to take billions of dollars in aircraft investment, billions of dollars in capital. Now, if I was British Airways, or American Airlines, I’m paying a lot less tax on that return. So all things being equal, who’s going to get the investment, it’s going to be those carriers at the other end, that the only advantage we have is that we’ve developed a unique IP about flying ultra-long haul. That’s compensating, I believe, because the other carriers are saying they don’t want to do it. But in my mind, if there’s so many different examples like that, in Australia, which there will be when it companies deciding, Do I base it in London? Do I base it in New York? Or do I base here in the Gold Coast, or in Sydney, it can make that difference. And what does that mean? That means jobs are going overseas, that means less people are going to be employed. And when big companies get impacted by like QANTAS, we have thousands of little suppliers. I think we have thirteen thousand companies, again before COVID-19, small companies that buy services for us. So if QANTAS is not growing, QANTAS is not investing for the future, at the microcosm of Australian industry is not growing, it’s not getting jobs, it’s not getting the investment. And that’s what happens when you have a disadvantage like this. So you need to generate that investment, those jobs. And on the industrial relations environment. We know that there is significant inefficiencies that get built in over time. So we’ve looked enough, we’ve had an agreement with our pilots to change the agreement of the 787’s …
Kerry O’Brien
You keep coming back to the pilots.
Alan Joyce AC
I know. But it’s because there’s a good example for the pilots, pilots beforehand, we were making a decision about what do we buy those aircraft and the pilots sat down with us and did an agreement that gave us same pay, but gave us a 30% improvement of the productivity. It made the business case to invest in those aircraft. And it created those sales and promotions that were there. So saying the productivity doesn’t come from industrial relations, it can and can it generate benefits? Yes. The types of pilots got a promotion and got growth out of it. Did it give wage increases? Yes. Did the pilots fly more? Yes, they went from six hundred or so errors a year to something like eight hundred errors a year. So we got our productivity benefit. But nearly every airline in the world already had that productivity benefit. So you can see in those two examples of why I think it can create jobs in this country and benefit small and large businesses. If we fix the tax issue and we fix some of the I.R. issues.
Kerry O’Brien
On the tech stuff, I saw the respected Keynesian economist JK Galbraith quoted on tax cuts the other day saying, “if you feed enough oats to the horse, enough will pass through to feed the sparrows”. Now, I guess that’s why it was called trickle down in its day, and I asked again, in that context, whether that’s the best we can do? Because every time there is a tax cut a corporate tax cut, you can bet that almost within hours, the campaign starts for the next tax cut and the same is true in other Western economies. And I would have thought that there were other issues on which you could sell Australia to foreign investors, apart from corporate tax cuts, but I mean the stability in the country …
Alan Joyce AC
There is stability in the UK. There is stability in the United States. Well, maybe after the next election stability in America.
Kerry O’Brien
Stability in America. Do you want to talk about that?
Alan Joyce AC
Can I say, but can I say that there’s also a bigger thing than the tax revenue directly from companies to corporate tax? So a couple of our losses back in ‘13, we didn’t pay corporate tax for a couple of years, a few years. But did we pay taxes? Yes, $2 billion a year. What were they from? They were from GST and generating activity. They were from employment and generating employment, which generated PAYE. They were from stamp duties, they were from all a range of taxes that we contributed the economy. So just looking at one dimension of corporate taxes, is just wrong. But it does have an impact for investors. But the impact of a large company being successful in an economy is broader than that. It’s bigger than that. And we need to look at the whole spectrum of what it contributes. That’s how you judge whether this works or not. And that’s, that’s why I’m still a believer, because it would be those thirteen thousand small businesses that will really benefit out of this. It’s not just the big business, it’s the ecosystem that benefits, it’s the employees that benefits, and then the country benefits. And when we talk about this, the union’s talk about trickle down. It’s bigger than that. And it’s more important than that.
Kerry O’Brien
Okay, so we’ve come to the end here. But I have a last question. What would you want said about you when you’re gone? Not gone from this room or gone from QANTAS, but gone from this mortal coil? What would you most want to be remembered for, by your partner, by this nation?
Alan Joyce AC
Because I lead a team that’s responsible for, I think, the most iconic brand in the country.
Kerry O’Brien
Apart from the ABC, but that’s public.
Alan Joyce AC
It doesn’t have the same emotion. But I think because I lead the most iconic brands in the country, I hope people would see me as a good custodian. That’s taking the airline, from where it was and left it in a great spot for the future. Because I am really passionate about the brand of the company and its people. It’s got amazing people. It’s got an amazing impact on this country. And it’s a national asset, that I hope like your contribution to the ABC, that people will see later. He did the right thing about our brand, he did the right thing by its people. He did the right thing by its customers, and he left it in a better position than he found it. That’s why I’ve signed up for another three years, because I can’t leave now. We need to make sure that this company turns around in the next three years and is as strong as it was last year.
Kerry O’Brien
Alan Joyce, thank you very much as the first guest of the Griffith HOTA talks which going on into the indefinite future like QANTAS.
Alan Joyce AC
Thanks, Kerry. Thank you.