|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Australian Industrial Relations Commission Transcripts |
TRANSCRIPT OF PROCEEDINGS
Workplace Relations Act 1996 16613-1
SENIOR DEPUTY PRESIDENT KAUFMAN
D2006/58
APPLICATION/NOTIFICATION BY AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION
s.158(1) RAO Schedule - Application for alteration of eligibility rules
(D2006/58)
MELBOURNE
10.01AM, THURSDAY, 08 MARCH 2007
Continued from 7/3/2007
Hearing continuing
PN2978
THE SENIOR DEPUTY PRESIDENT: Yes, Mr Friend.
PN2979
MR FRIEND: Your Honour, I wonder if I might raise a programming matter.
PN2980
THE SENIOR DEPUTY PRESIDENT: Yes. What is it?
PN2981
MR FRIEND: I have been having discussions with my learned friends and have formed the view that Mr Woods might be a little time in the witness box and having had some communication with him in regard to that, he’s felt that it might be inappropriate for him to try and rush through and go to this conference and accordingly there’s no need to inconvenience everyone by sitting on Monday.
PN2982
THE SENIOR DEPUTY PRESIDENT: I won’t complain about that, Mr Friend.
PN2983
MR FRIEND: I didn’t think - no one else has, your Honour, so I thought it was convenient to the Commission and it is, as I understand it, convenient to my learned friends if we just sit the ordinary hours and come back on Tuesday when we complete - - -
PN2984
THE SENIOR DEPUTY PRESIDENT: Yes. And we should still finish in the time allocated?
PN2985
MR FRIEND: I would think we’d finish the witnesses by Thursday - Wednesday or Thursday of next week. Then we’d need the dates in the following week for submissions presumably.
PN2986
THE SENIOR DEPUTY PRESIDENT: Yes. Very well. Thank you. Yes, who’s the next - Mr McDonald.
PN2987
MR MCDONALD: Thank you. I propose to make some brief opening submissions before calling my first witness, your Honour. In that respect, could I ask your Honour to have at hand a copy of the application which has been filed by AIPA.
PN2988
THE SENIOR DEPUTY PRESIDENT: Yes.
PN2989
MR MCDONALD: You have that? Thank you. At face value the union’s application seeks to significantly expand its coverage which is presently confined to persons normally employed as pilots on regular public transport airline services extending beyond the Commonwealth of Australia or within the Commonwealth of Australia operated by an Australian airline principally engaged in providing international regular public transport services.
PN2990
Qantas Ltd is an airline principally engaged in providing international regular public transport services. There is no question, in our submission, that AIPA is eligibility rule and its current terms confers upon AIPA the right to enrol a pilot employed by Qantas Airways Ltd irrespective of whether that pilot is engaged in international or domestic services.
PN2991
Nevertheless, AIPA contends in these proceedings - and in that respect one turns to clause 3 of its application under the heading, “Reasons for Proposal” that the operation of the word “principally” - and that’s in the phrase “principally engaged” - is of uncertain effect and has led to the transfer of aircraft flying and employment of airline pilots to companies argued to be Australian airlines not principally engaged in providing international regular public transport airline services.
PN2992
THE SENIOR DEPUTY PRESIDENT: Yes. Just excuse me a moment. Yes, Mr McDonald.
PN2993
MR MCDONALD: We submit that this premise of uncertainty which underpins AIPA’s application is without foundation. The phrase “principally engaged” has been in AIPA’s rules and its eligibility rule since the union was registered under the provisions of the then Conciliation and Arbitration Act in the mid-1980s. Whether one has reference to the criteria of the number of pilots employed by Qantas Airways Ltd on international as opposed to domestic services, and in that regard the evidence is I think that there are 1600 Qantas Airways Ltd pilots on international and about 600 on domestic.
PN2994
Whether one has regard to the value of the capital assets which are allocated towards international operations as opposed to domestic operations, and in that respect capital assets - we’re talking principally about aeroplanes, the evidence will be that there is a clear - weight is in favour of the international operations because those planes are worth a lot more than those involved in the domestic operations.
PN2995
THE SENIOR DEPUTY PRESIDENT: Yes. What about numbers of aeroplanes? Are there more aeroplanes flying internationally than domestically?
PN2996
MR MCDONALD: I think that the - we’re going to put in to evidence so this is clear - we’re going to put in the latest annual reports and there is the fleet breakdown. It’s fairly evenly balanced on my recollection, your Honour, but the bottom line is that a jumbo jet is worth a lot more than the 737-300, a narrow-bodied aeroplane, a huge difference. And at the end - I don’t think that issue is actually in dispute. I think Captain Woods in his own statement makes that observation that if you look at the - in terms of the capital asset criteria, it’s clearly in favour of the international.
PN2997
THE SENIOR DEPUTY PRESIDENT: Yes.
PN2998
MR MCDONALD: There are criteria and Mr Evans gives some reference to this in his evidence - available seat kilometres. Available seat kilometres are the number of seats multiplied by kilometres flown. That’s one criterion. Another is revenue passenger kilometres. That’s the number of paying passengers by kilometres flown. There’s a huge weight in favour of the international operations as opposed to the domestic operations and those are recognised criteria which are used in the aviation industry for the measurement of an airline’s operations. They all point conclusively to the fact that Qantas Airways Ltd is principally engaged in international operations.
PN2999
Our primary submission, your Honour, is that this application falls at the first hurdle. When you look at the grounds which are put up, the only substantive ground is really that which is set out in ground 3, which is premised on an assertion of uncertainty in the rule in its present form - uncertainty as to the meaning of the expression “principally engaged”. It’s noteworthy, your Honour, that notwithstanding this very narrow premise upon which this application is based, that the union seeks to so significantly expand its coverage and in support of that one sees in ground 3 the allegation about the transfer of aircraft flying and employment of airline pilots.
PN3000
We’re yet to hear the way in which Mr Friend puts the case on behalf of AIPA. However, as things presently stand, in terms of our instructions, that stated reason, the reference to the transfer of aircraft, can only be relevant to the union’s application to extend its coverage in respect of Jetstar Airways Pty Ltd. It’s not in issue that four Airbus A330-200 aircraft have been transferred from Qantas Airways Ltd to Jetstar and those aircraft are being used as part of the fleet which is currently flying international operations for Jetstar. And indeed one of the witnesses who gave evidence earlier this week I believe was a Jetstar pilot who was flying one of those planes.
PN3001
Now, that transfer of aircraft is the subject of Federal Court proceedings and I think at the last - the hearing before you in relation to the summons, my recollection is my learned friend Mr Borenstein tendered the application and statement of claim - - -
PN3002
THE SENIOR DEPUTY PRESIDENT: I think it was handed to me - - -
PN3003
MR MCDONALD: Yes, yes. Those are proceedings in the Federal Court, I think Tracey J is hearing them, and the allegation in broad terms is that the transfer of those aircraft offends the freedom on association provisions of the Act; that is that - part of the reason I think that’s alleged is that it’s been done because the pilots who have been flying those aircraft whilst employees of Qantas were entitled to the benefit of Qantas industrial instruments.
PN3004
THE SENIOR DEPUTY PRESIDENT: At what stage are those proceedings, Mr McDonald?
PN3005
MR MCDONALD: There was a successful strikeout on the statement of claim. A further amended statement of claim has been filed and I think there is another strikeout application to be heard on 16 March.
PN3006
THE SENIOR DEPUTY PRESIDENT: Yes, thank you. So they haven’t gone very far?
PN3007
MR MCDONALD: No, they haven’t, your Honour. And there is appeal on foot in respect of the first strikeout.
PN3008
THE SENIOR DEPUTY PRESIDENT: It’s times like this I wish I was back at the Bar.
PN3009
MR MCDONALD: Now, your Honour, don’t tempt me to start making imprudent comments. Qantas hasn’t got to the point of filing a defence in those proceedings but it won’t surprise your Honour to hear from the Bar table that Qantas will deny the allegations when it eventually files a defence of breach of the freedom of association provisions.
PN3010
But what’s relevant for the purpose of these proceedings about that transfer, if one goes back to ground 3 of the application, is that the specific assertion which is made for the purpose of these proceedings is that the transfer of aircraft is being undertaken in order to shut out AIPA from having constitutional coverage for airline pilots employed by such companies and to weaken the industrial strength of airline pilots employed by Australian airlines.
PN3011
Now, as I have indicated, your Honour, on our instructions that’s only relevant to Jetstar and only relevant to the transfer of these four aircraft which are the subject of the four - of the Federal Court proceedings. So at the end of the day, your Honour, you have already heard a fair bit of evidence and no doubt you’re going to hear quite a bit more evidence before the proceedings are over but in terms of the stated grounds for the application we would submit the only issue of substance in these proceedings is whether AIPA should have coverage of Jetstar Airways.
PN3012
There is either a complete absence of evidence in respect of any of the other parties that are subject to the application. We see those - if you turn back to page 2, you’ll see that there are some eight companies that are listed there as well as successors, transmittees and assignees as well as subsidiaries and related body corporates and associated entities of those companies. There are either a complete absence of evidence in respect of the claim and a complete absence of any grounds in the application in respect of those companies; or alternatively the evidence runs and will run strongly against AIPA’s claim.
PN3013
Let’s look, for example, at Sunstate; we’ll see that at the top of page 3, Sunstate Airlines Queensland Pty Ltd and we know from the evidence Sunstate is one of the two companies which form part of the QantasLink business. And I think we heard yesterday afternoon from - is it Captain Millroy, who is a Sunstate pilot.
PN3014
THE SENIOR DEPUTY PRESIDENT: What are the companies? Sunstate - - -
PN3015
MR MCDONALD: Sunstate and Eastern are the two companies which constitute - - -
PN3016
THE SENIOR DEPUTY PRESIDENT: The two Qantas group companies, is it?
PN3017
MR MCDONALD: Two Qantas group companies.
PN3018
THE SENIOR DEPUTY PRESIDENT: There’s a third company, is there not, that’s not part of the Qantas group?
PN3019
MR MCDONALD: National Jet Systems.
PN3020
THE SENIOR DEPUTY PRESIDENT: Yes. And that’s also part of the QantasLink network, I think.
PN3021
MR MCDONALD: It is but it’s not part of this claim.
PN3022
THE SENIOR DEPUTY PRESIDENT: No.
PN3023
MR MCDONALD: Now, let’s look at Sunstate. AIPA has no members in Sunstate. I think the evidence is Sunstate employs about 100 pilots. It has no history of showing any interest at all in the pilots or their industrial interests at Sunstate. And it’s important to bear in mind, your Honour, that that absence of any evidence or any interest in Sunstate, that is the case notwithstanding the fact that Sunstate, along with Eastern, they were both wholly subsidiaries of Australian Airlines in the mid-1990s at the time that Hancock SDP made an order conferring upon AIPA the exclusive right of coverage of Australian Airline pilots to the exclusion of the AFAP.
PN3024
THE SENIOR DEPUTY PRESIDENT: Just remind me what the current status of Australian Airlines is please, Mr McDonald.
PN3025
MR MCDONALD: Australian Airlines which appears in the rule, in the first paragraph of the rule, it no longer exists. I think what occurred, your Honour, is that - I stand to be corrected on this but I think what occurred is that in the midst of the proceedings before Hancock SDP Qantas acquired TAA, Trans Australian Airlines. I think that occurred in around September of 1992 and I think that there was a transitional period - TAA then changed its name to Australian Airlines and I think there was a transitional period during which the separate entity, Australian Airlines Ltd, which appears in the first paragraph of the union’s current eligibility rule did continue to exist as a separate corporate entity but I think for many years that has not been the case. So the reference in - - -
PN3026
THE SENIOR DEPUTY PRESIDENT: And that was then embraced into the Qantas domestic operations.
PN3027
MR MCDONALD: Yes. That’s so. The A pilots. But that is - but it’s to be noted that the reference to Australian Airlines Limited in the opening paragraph of the union’s eligibility rule is not the source of its entitlement to cover domestic pilots employed by Qantas. That’s the exchange you had with my learned friend Mr Borenstein on the opening day of the hearing. That source of coverage flows from the earlier part of the rule.
PN3028
THE SENIOR DEPUTY PRESIDENT: Yes.
PN3029
MR MCDONALD: The reference to Australian Airlines Ltd, and indeed the referred in the following paragraph of the union’s rules to Ansett and IPEC and the like, that’s obsolete.
PN3030
So one must make the observation that Sunstate was a wholly-owned subsidiary of Australian Airlines. It would have been a very simple thing, one would have thought, particularly in the light of the way the union conducts its case here today, for it to have at that time made overtures towards the Sunstate pilots but that didn’t happen. We submit it begs belief as to on what basis AIPA can stand up with a straight face in these proceedings and contend that Sunstate pilots could more conveniently belong to AIPA or more effectively be represented by AIPA.
PN3031
THE SENIOR DEPUTY PRESIDENT: Is that the test?
PN3032
MR MCDONALD: Well, it’s the test in terms of 158(5).
PN3033
THE SENIOR DEPUTY PRESIDENT: But they couldn’t more conveniently belong or better be represented by AFAP is the test, isn’t it?
PN3034
MR MCDONALD: Yes, that is part of that. There is a - I appreciate that, your Honour, but there are two sides to one coin.
PN3035
THE SENIOR DEPUTY PRESIDENT: But is that the obverse - I’m not so sure, Mr McDonald. There’s no onus on AIPA to demonstrate that any pilot could more conveniently belong to it or be better represented by it.
PN3036
MR MCDONALD: I accept that.
PN3037
THE SENIOR DEPUTY PRESIDENT: And I think you were sort of suggesting that, if I understood you correctly.
PN3038
MR MCDONALD: Yes. I accept that, your Honour. At least I can say this, your Honour, based on the cross-examination of Captain Millroy yesterday it would appear that the positive case that is advanced by AIPA in respect of Sunstate appears to be based on issues such as the fact that Sunstate is a subsidiary of Qantas, pilots employed by Sunstate have access to the Qantas credit union, Qantas travel entitlements and the like. And it would appear from the union’s material at least that that’s a common theme which runs through its material.
PN3039
THE SENIOR DEPUTY PRESIDENT: Yes.
PN3040
MR MCDONALD: Now, the difficulty with that line of submission or that evidence, we submit, is that it ignores the fact that each of the Qantas subsidiaries, Sunstate, Eastern and Jetstar, number 1, they are separate legal entities in their own right; number 2, they are in their own right significant employers generally and for the purpose of this case employers of pilots. I think the evidence, your Honour, will be that in total one is looking at approximately 600 pilots employed across those three entities.
PN3041
Thirdly, and probably most importantly for the purpose of this case, each of those separate entities conducts flying operations or is engaged flying operations pursuant to its own air operator’s certificate. We will in due course in these proceedings take you to the provisions of the legislation which govern the issuing of those air operating certificates and which impose significant legal responsibilities upon each of those distinct entities in their own right. Indeed, your Honour, we will submit in this case that where one has regard to the terms of the AIPA eligibility rule in the opening paragraph of that eligibility rule where it makes reference to airline services which are operated by an Australian airline engaged in providing international regular public transport airline services, we will be submitting that the term “operated” is a term of art within the aviation industry and that the term operated means - where it says “operated by an Australian airline”, it means operated in the sense of operated pursuant to an AOC.
PN3042
Now I say something briefly about evidence in respect of Eastern Airlines. We will be submitting that that shows pointedly the adverse consequences of having two pilot organisations competing for members. We’ll be submitting that the evidence will disclose that the activities of the Eastern Pilots Group were coordinated by AIPA and the consequences for the Eastern pilots without any doubt has been the loss of thousands of dollars in back pay as a result of the voting down of the 2005 agreement.
PN3043
As to Jetstar, your Honour, whilst it appears to be at the heart of AIPA’s application, there’s a complete absence of evidence from any pilot from Jetstar in support of that application and by the time this case is over that absence of evidence will be readily understandable. Suffice to say that evidence will support a finding that from the inception of Jetstar AIPA has been hostile towards the growth of Jetstar as a low-cost carrier and has actively sought to undermine the expansion of Jetstar into international operations.
PN3044
The breadth of the union’s application is manifested in other ways and this is not an exhaustive list, your Honour, but for instance at face value the application seeks to have an extraterritorial effect. Two of the companies which are listed, through ..... 1 through to 8 of the application, those companies being Jetconnect Limited and Jetstar Asia Holdings Pty Ltd, the evidence will be that those are both non-Australian based corporations who do not employ Australian-based employees.
PN3045
We will be submitting, your Honour, that section 13 of the Workplace Relations Act prescribes the limits of the Act’s extraterritorial operation and it does so with quite some precision, that is section 13 sets out in a table each of the sections of the act which is capable of having an extraterritorial operation. It’s dealt with very specifically, both in section 13 and in the definitions section of the Act which refers to concepts of Australian based employers and Australian based employees. Section 13(6) makes it clear that the - insofar as section 13 is prescribing the extent of that extraterritorial operation, it includes the schedule that we’re concerned with. The upshot of that, your Honour, is we’ll be submitting that section 158(2), which is the provision which confers upon you the power to consent to an alteration, does not have any extraterritorial operation and thus you do not have power to grant the application in respect of Jetconnect and Jetstar Asia Holdings. We’ll be submitting in the alternative that - if your Honour finds that you do have power that is a matter of discretion you shouldn’t exercise it.
PN3046
The further matter which is noteworthy, your Honour, in the application is that in addition to seeking to extend to successors, transmittees or assignees, and your Honour will recall how productive those words have been of gainful employment of members of the legal profession, your Honour included. In addition to successors, transmittees and assignees of companies caught up within the earlier part of the application, it also extends to any subsidiary, related body corporate or associated entity as those words are defined in the Corporations Act 2001. We’ll take you to those provisions, your Honour, and suffice to say when one gets into the territory of associated entities and the reach of that provision, the union’s application is a very, very broad one indeed and one for which one sees in the grounds in support an absence of any relevant ground and in the evidence in support an absence of any relevant evidence.
PN3047
I should say, your Honour, before I call my first witness, we are putting together and we’ll have this for the Commission and our friends tomorrow morning, a tender bundle of documents which are public documents, annual reports for 2004 through to 2006 from Qantas group, which will contain information such as fleet breakdown and the like, and the air operating certificates for each of the relevant Qantas company - Qantas and its subsidiaries but we’ll have that tomorrow morning.
PN3048
Unless there are any questions at this stage I would like to call Mr Evans.
THE SENIOR DEPUTY PRESIDENT: Yes, thank you.
<GARETH ROWLETT EVANS, AFFIRMED [10.30AM]
<EXAMINATION-IN-CHIEF BY MR MCDONALD
PN3050
MR MCDONALD: Mr Evans, could you please state your full name and your work address, please?---Gareth Rowlett Evans, 203 Coward Street, Mascot, New South Wales, 2020.
PN3051
You have prepared two statements for the purpose of these proceedings, correct?--That’s correct.
PN3052
And do you have those statements with you in the witness box?---I do.
PN3053
And the first statement is one dated 3 October 2006, 49 paragraphs in length?
---That’s correct.
PN3054
Do you have that with you?---I do.
PN3055
I understand that since making this statement your position within - with Qantas Airways Ltd ahs changed. You make reference to that in paragraph 2. Can you update - you’re not currently the group general manager, finance planning and yield. What’s your current position?---I’m now the group general manager, finance, network operations and pricing.
PN3056
Finance, network, operations and pricing?---That’s correct.
PN3057
Okay. And when did you take up that position?---That was last Wednesday.
PN3058
All right. Does that mean that paragraph 3 - is it necessary to make a consequential change to paragraph 3?---Yes. On top of the responsibilities detailed in paragraph 3 I’m now also responsible for network and scheduling.
PN3059
Networking and scheduling?---Network and scheduling, yes, for Qantas - - -
PN3060
THE SENIOR DEPUTY PRESIDENT: Network and scheduling?
PN3061
MR MCDONALD: Yes. I have - - -
PN3062
THE SENIOR DEPUTY PRESIDENT: Yes?---And also for airline operations on the day of operation.
PN3063
MR MCDONALD: Airline operations on the day of operation. Thank you. Now, I understand that paragraph 49 needs to be deleted. You have dealt with that issue in your supplementary statement that paragraph 49 should - - -?---That’s correct. I think that’s - - -
**** GARETH ROWLETT EVANS XN MR MCDONALD
PN3064
Put a line through paragraph 49?---Yes, and paragraph 10 of the supplementary statement deals with those.
PN3065
Deals with that change. But other than those changes to paragraph 2, paragraph 3 and the deletion of paragraph 49, are the contents
of that statement correct?
---They are correct, yes.
PN3066
Thank you. I seek to tender that statement, your Honour.
PN3067
THE SENIOR DEPUTY PRESIDENT: Yes. I don’t think you have exhibits yet, Mr McDonald?
MR MCDONALD: No, your Honour.
EXHIBIT #QANTAS 1 STATEMENT OF MR GARETH EVANS DATED 03/10/2006
PN3069
MR MCDONALD: If I can just ask you to turn to your supplement statement. That’s dated 2 March 2007, which has annexed to it the consolidated interim financial report for the half year ended 31 December. Do you have that?---I do.
PN3070
And the contents of that statement are true and correct?---They are - to the best of my belief it’s true and correct, yes.
I’ll tender that if I may, your Honour.
EXHIBIT #QANTAS 2 SUPPLEMENTARY WITNESS STATEMENT OF MR GARETH EVANS WITH ATTACHMENT
PN3072
MR MCDONALD: Thank you. Nothing further.
THE SENIOR DEPUTY PRESIDENT: Yes, thank you, Mr McDonald. Mr Friend.
<CROSS-EXAMINATION BY MR FRIEND [10.34AM]
PN3074
MR FRIEND: Mr Evans, can you just explain to me your new role. You have responsibility for all of the flying businesses in the Qantas group?---No. I have responsibility for Qantas so that is all the Qantas branded operations. That doesn’t include the turbo operations of QantasLink which are operated separately. But the wet-lease operations of QantasLink being primarily air link, are part of the Qantas network.
**** GARETH ROWLETT EVANS XXN MR FRIEND
PN3075
I see. And what do you mean by the wet-lease operations of QantasLink?---So there’s - effectively QantasLink has three wet-lease operations. Australian Airlines wet leases aircraft to Qantas operated under the Qantas brand.
PN3076
And that means that the Australian Airlines, which is different to the company that is gone, your Honour, the old TAA, it’s a new company - - -?---New Australian Airlines, yes.
PN3077
And that leases the planes plus the crews to Qantas?---That’s correct.
PN3078
So that’s the first one?---That’s the first one.
PN3079
The second one?---The second one is Jetconnect, which is based in New Zealand, also leases the planes and the crew to Qantas. And the third one is Airlink which is actually National Jet Systems which is a company that isn’t owned by Qantas, so National Jet Systems lease the planes and crew to Airlink who then operate the services on behalf of Qantas.
PN3080
Yes. And is that under the QantasLink brand?---That’s under the QantasLink brand.
PN3081
THE SENIOR DEPUTY PRESIDENT: Sorry, just say that again. National Jet wet leases the planes and the crew to Qantas - to Airlink?---Correct.
PN3082
And what does Airlink then do to Qantas?---Airlink then operates those services under the QantasLink brand but they are actually part of the Qantas network. It’s quite complicated the way they - - -
PN3083
It certainly is. The new Australian Airlines, what does that company do? It wet leases planes and crew to Qantas. Anything else?---That’s all it does now so it employs crew, cabin crew and pilots and leases aircraft, wet leases aircraft to Qantas.
PN3084
MR FRIEND: It’s your evidence your first statement that the businesses within Qantas, the particular flying businesses, so Sunstate, Eastern, Jetstar and Qantas Airlines are all operated independently, correct?---Correct.
PN3085
But that network decisions which involve changes to which carrier goes on a route are made on a group level?---Yes. There is discussion at a group level before there’s any significant - significant network change, I believe that’s what - if there’s minor network change then that’s not ..... - - -
**** GARETH ROWLETT EVANS XXN MR FRIEND
PN3086
If you’re going to change from Qantas domestic to Jetstar on a route that would be a decision made at group level?---Certainly if a carrier is going to exit a route or a new carrier is going to come on onto a route then those decisions are discussed at a group level.
PN3087
And the businesses themselves don’t compete with each other directly in the market?---No, there are routes where - there are some routes where we operate two of the airlines on the same route but we don’t directly compete.
PN3088
And I think you or maybe Mr Wheeler used the expression “flying businesses” to describe those different parts of the Qantas group which operate as passenger transport carriers?---Yes. So the parts of the business that fly aircraft we use the generic term sometimes, “flying businesses”.
PN3089
There’s some evidence which will be given that on Monday mornings there’s a meeting involving Geoff Dixon and other people from different parts of the Qantas group to discuss aspects of the whole Qantas group and that everything within the group is coordinated on a regular basis like that. Do you accept that?---I don’t believe there is such a meeting.
PN3090
Can the witness be shown - - -?---There is - occasionally there are senior management meetings where Geoff Dickson has all of his senior managers together to discuss issues but there’s not a coordination meeting as such.
PN3091
All right. Perhaps the witness could be shown exhibit IW-1 to Mr Woods’ statement, please.
PN3092
THE SENIOR DEPUTY PRESIDENT: Are you providing a copy or do you want me to do it?
PN3093
MR FRIEND: I’m sorry, your Honour. I will provide a copy. I must have one somewhere.
PN3094
THE SENIOR DEPUTY PRESIDENT: It’s an attachment to whose statement?
PN3095
MR FRIEND: Mr Woods, your Honour.
PN3096
You’ll see this is from a publication called “Orinda Aviation”. Are you familiar with that publication?---Yes.
**** GARETH ROWLETT EVANS XXN MR FRIEND
PN3097
From February of 2005 - just read the first two paragraphs. I’m not - if you don’t know of the existence of that meeting or not, that’s fine. The sentiment expressed there in the quotation, “the group’s not almost God, it is God”. Is that your understanding of the Qantas view?---I’m not quite sure what this statement is, “not almost God, it is God” actually means. I mean the way we - the way the group is organised is that the businesses are operated independently but with a view to the - maximising the value for the group as a whole. So maybe that’s what he’s referring to.
PN3098
Maybe if I can take you - I’ll see if it’s explained further. You can skip the next paragraph, I think, but there’s then another quotation from Mr Dickson. If you would just read that to yourself?---Yes. You’re referring to the last sentence primarily, aren’t you.
PN3099
Yes. Really everything’s done for the group it would be individual. That’s the way the group is run, isn’t it?---Look, as in any business we want to maximise the value of the group as a whole but that doesn’t necessarily mean that every part of all of the separate flying businesses or other businesses that we have are completely coordinated. They’re actually run very, very separately. But then managed in a way that they contribute to the strategy of the group as a whole.
PN3100
The group as a whole. And the flying businesses are the core of the group’s operations really, aren’t they?---Yes.
PN3101
It’s the raison-d’etre of Qantas?---Yes. We’re a transport organisation.
PN3102
Yes. And one of the examples of the way that Qantas operates as a group is that there’s a common procurement division for all of the businesses, isn’t there?---There is for Qantas and for some of the associated businesses but Jetstar certainly has a separate procurement department.
PN3103
Perhaps I’ll give the witness exhibit - attachment IW-9. You’re familiar with the procurement division?---I am, yes.
PN3104
And this is a document that describes what it does?---Well, my first response to this is dated April 2004 which is prior to the commencement of Jetstar operations.
PN3105
Yes?---So this probably describes - having not read it, but it probably describes the state of Qantas procurement in April 2004.
**** GARETH ROWLETT EVANS XXN MR FRIEND
PN3106
Prior to Jetstar?---Prior to Jetstar.
PN3107
All right. So where it refers to the Qantas group it can’t be referring to Jetstar there?---Jetstar has a separate procurement department where the rest of the group primarily is from a procurement perspective is organised by Qantas procurement.
PN3108
The Qantas employees at QantasLink have Qantas staff numbers?---I’m - - -
PN3109
Not aware of that sort of detail?---I’m not aware of that sort of detail.
PN3110
Yes, that’s all right. Bear with me a moment please, your Honour. Now, have you any experience of Qantas’ industrial relations or human resource management?---Not in a tremendous amount of detail.
PN3111
So you’re not able to comment on whether Qantas has managed to work with AIPA over the years?---No.
PN3112
But you don’t know anything that suggests that it hasn’t?---I don’t have - I don’t have to deal with that in my day-to-day responsibilities so I couldn’t comment.
PN3113
I think you were in Court, perhaps you weren’t, when Mr McDonald opened. He mentioned the fact that the four A330s have been transferred from Qantas to Jetstar recently?---Yes.
PN3114
You’re aware of that?---I am.
PN3115
Those planes were transferred but they weren’t - there was no - I’ll rephrase that. That could have been done by way of a wet lease to Jetstar from Qantas?---Well, I don’t think it could have been in order to actually create what we were - what the group was tyring to create, which was an international low-cost operation.
PN3116
Yes. The wet lease would have meant the costs were higher because of the costs of paying for crew, is that what you mean?---The wet lease would have effectively meant that it was still Qantas.
PN3117
Yes, I see. Can I ask you about - well, you probably don’t know anything about this so I’ll withdraw that. I have nothing further, if your Honour pleases.
PN3118
THE SENIOR DEPUTY PRESIDENT: Yes, thank you. Anything, Mr McDonald?
**** GARETH ROWLETT EVANS XXN MR FRIEND
PN3119
MR MCDONALD: No, your Honour.
THE SENIOR DEPUTY PRESIDENT: Yes, thank you, Mr Evans, you may be excused.
<THE WITNESS WITHDREW [10.47PM]
PN3121
MR MCDONALD: Mr Wheeler is the next witness, your Honour.
THE SENIOR DEPUTY PRESIDENT: Yes.
<MARK THOMAS WHEELER, SWORN [10.48AM]
<EXAMINATION-IN-CHIEF BY MR MCDONALD
PN3123
MR MCDONALD: Mr Wheeler, you have prepared two statements for the purposes of these proceedings. The first statement which is the lengthier of the two is dated 3 October 2006. Do you have that at hand?---Yes, I do.
PN3124
Before I go to that I should ask you please to state your full name and address?---Mark Thomas Wheeler and working address is Level 1, 473 Bourke Street in Melbourne.
PN3125
Thank you very much. You have some amendments that you wish to make to this statement?---Yes, I do.
PN3126
I wonder with leave if I could just lead the witness through these.
PN3127
THE SENIOR DEPUTY PRESIDENT: Yes, certainly.
PN3128
MR MCDONALD: Because it might move things along more quickly. In paragraph 22 the reference to 24 Airbus A320, that currently stands at 23 Airbus A320s?---That’s correct.
PN3129
In paragraph 26 - the exhibit MTW-1 was - that was current as at I think 14 February. We have got - or you have prepared an updated schedule?---There’s an updated statement there, yes.
PN3130
Can I hand the witness a copy and hand a copy to our friend and hand a copy to the Commission as well, another copy. I think we’re short of a copy or two, your Honour. We’ll seek to make some more - have you got that with you, have you?---I do, yes.
PN3131
Perhaps if one or other of those could be handed to our friends, Mr Dowling, thank you. So, can you just - so, I wonder, your Honour, if this could be substituted for exhibit MTW-1.
PN3132
THE SENIOR DEPUTY PRESIDENT: Yes, that’s acceptable to me and if there’s no objection by anybody else? It would appear not.
PN3133
MR MCDONALD: Appear not, thank you. So we have a two-page document, the first page being Jetstar’s current domestic network and the second page being Jetstar’s international network?---That’s correct.
**** MARK THOMAS WHEELER XN MR MCDONALD
PN3134
Can I then take you to paragraph 32. In the fifth line of paragraph 32 the reference - after the reference to a “transition to a fleet of 12 new Boeing 787 aircraft” you wish to insert the words “from August 2008 to 2011”?---That’s correct.
PN3135
THE SENIOR DEPUTY PRESIDENT: I’m sorry, to - - -
PN3136
MR MCDONALD: This is in the fifth line after - - -
PN3137
THE SENIOR DEPUTY PRESIDENT: Yes, I have that.
PN3138
MR MCDONALD: - - - “787 aircraft”, it’s “from August 2007 to 2011”.
PN3139
THE SENIOR DEPUTY PRESIDENT: Thank you.
PN3140
MR MCDONALD: In paragraph 75 you wish to update the reference to 300 pilots to 360 pilots?---That’s correct, yes.
PN3141
In paragraph 97 in the second line you wish to update the reference to 58 Qantas pilots to - what’s the current number?---It’s currently approximately 85 ..... - - -
PN3142
Approximately 85?--- - - - prior to the MOU. Yes.
PN3143
And then in the next line where it currently says “of these 21 were offered positions at Jetstar and 16 of whom have accepted”. Are you able to update that number?---It’s 18 have accepted now.
PN3144
18 have accepted?---That I’m aware of, yes.
PN3145
Are you able - is the reference to “two of whom are still considering the offer”, is that up to date or should that be deleted?---That’s up to date, yes.
PN3146
In paragraph 101 you wish to delete the first sentence?---That’s correct.
PN3147
In the second line of paragraph 101 the reference to “those negotiations”, you wish to delete the word “those” and insert “MOU”?---Correct, insert the - - -
PN3148
And at the end of paragraph 101 you want to add the words “who transferred to Jetstar under the terms of” - - -?---“The MOU”.
**** MARK THOMAS WHEELER XN MR MCDONALD
PN3149
- - - “the MOU”?---Correct.
PN3150
In paragraph 102 in the second sentence, after the word “all” at the start of the second sentence, you want to insert “MOU”?---Correct.
PN3151
So it will read “all MOU negotiations”. In paragraph 103 in the second line, after the word “AIPA”, you want to insert the words “with Qantas”?---Yes.
PN3152
Where it appears on the first occasion, “raised by AIPA with Qantas”?---“With Qantas”, correct.
PN3153
And in paragraph 104 in the first line you want to delete the words “were unsuccessful in negotiating” and you wish to put instead the words “did not negotiate”?---Correct.
PN3154
So that would read:
PN3155
AIPA did not negotiate an increased salary package.
PN3156
?---Negotiate, correct.
PN3157
Save for those amendments, are the contents of your statement true and correct?---They are.
Just before we move to your next statement - can I ask your Honour, if I may, to tender that statement.
EXHIBIT #QANTAS 3 MR WHEELER’S STATEMENT DATED 03/10/2006 WITH ATTACHMENTS
PN3159
MR MCDONALD: I have raised this with my learned friend, Mr Friend, your Honour, I foreshadowed that I’ve got two documents that I wis to put to - actually before I do that, I think I’ll tender the following statement. Can you look at your following statement - - -
PN3160
MR FRIEND: ..... we don’t appear to have a copy of the second statement, your Honour.
PN3161
MR MCDONALD: It’s only - I’m sorry - - -
**** MARK THOMAS WHEELER XN MR MCDONALD
PN3162
MR FRIEND: I’m sure it’s nothing.
PN3163
MR MCDONALD: It won’t take you like to read.
PN3164
MR FRIEND: Yes. That’s fine, because we just haven’t ever seen in.
PN3165
MR MCDONALD: Does your Honour have a copy of the supplementary statement dated 21 February?
PN3166
THE SENIOR DEPUTY PRESIDENT: Yes, I do.
PN3167
MR MCDONALD: So you’ve got the statement dated 21 February?---Yes, I do.
PN3168
Are the contents of that true and correct?---They are.
I seek to tender that, your Honour.
EXHIBIT #QANTAS 4 STATEMENT OF MR WHEELER DATED 21/02/2007 WITH ITS ATTACHMENT
PN3170
MR MCDONALD: Can I hand a document to the witness. Now, Mr Wheeler, I’ve handed you two letters. Can you identify - the first letter is a letter dated 26 May 2004 from John Gissing, head of flying operations, was he a predecessor in your current position?---One before that.
PN3171
One before that?---One before that, yes.
PN3172
To Captain Craig Golledge, president of the Jetstar Council?---That’s correct.
PN3173
And the second - and it’s re pilot endorsement allowance payment?---Correct.
And the second letter dated 4 June is again the same parties, John Gissing to Captain Craig Golledge and the same subject matter, clarification regarding pilot endorsement allowance. I seek to tender those two documents, your Honour.
EXHIBIT #QANTAS 5 LETTER FROM MR JOHN GISSING TO CAPTAIN CRAIG GOLLEDGE DATED 26/05/2004
EXHIBIT #QANTAS 6 LETTER FROM MR JOHN GISSING TO CAPTAIN CRAIG GOLLEDGE DATED 04/06/2004
MR MCDONALD: Thank you, your Honour. I have nothing further.
**** MARK THOMAS WHEELER XN MR MCDONALD
<CROSS-EXAMINATION BY MR FRIEND [10.58AM]
PN3176
MR FRIEND: Thank you, your Honour. Captain Wheeler may I ask you about the overseas operations of Jetstar? Now many flights a week are they?---At the moment I think it’s approximately 30 - in attachment MTW-1, the back of that list those destinations, the frequency of those flights I’m unsure at this stage but it’s approximately 30 flights a week. I know by September this year it will be up to 80.
PN3177
80 flights?---80 flights per week by September 2007. That’s with the six aircraft.
PN3178
The six you mean aircraft come through?---Correct.
PN3179
Those six aircraft, were they originally earmarked for Qantas?---Those six aircraft were procured by Qantas in the incorrect configuration. As a long haul aircraft operating on the Melbourne/Sydney service, as a Cityflyer aircraft.
PN3180
Yes. And they’re the new ones - no, I’m talking about the new ones that are coming?---The new ones?
PN3181
Yes?---In mid-year?
PN3182
Yes?---I’m unsure.
PN3183
All right. The ones that have transferred across were from Qantas?---Correct.
PN3184
And they are now with Jetstar. In terms of miles flown, kilometres flown, obviously the international flights go for a lot further. Do you have figures available about the - - -?---The distances?
PN3185
- - - the distances and how that compares between - - -?---I can give you approximate flying time but I can’t give you how many kilometres. I don’t operate on that - - -
PN3186
All right. What about pilots in each type of - - -?---Pilots employed in each type of operation, our crew rate for domestic is around five crew, ten pilots per aircraft. For the international operation it’s approximately seven crew per aircraft.
PN3187
THE SENIOR DEPUTY PRESIDENT: For domestic it’s how many pilots per - - -?---Approximately five, your Honour. Five crew, being captain and first officer.
**** MARK THOMAS WHEELER XXN MR FRIEND
PN3188
MR FRIEND: Your Honour, I think he went on to say something about the total number per aircraft. It’s seven for international.
PN3189
MR BORENSTEIN: ......
PN3190
THE SENIOR DEPUTY PRESIDENT: I thought he said something about ten. I thought you mentioned ten. I wasn’t quite - - -?---Yes. We refer to it as the number of crew, captain and first officer leaving the two pilots to operate the aircraft. If we had 20 aircraft at five crew per aircraft, it will be 200 pilots. That’s the easy example.
PN3191
MR FRIEND: So you have five pilots per aircraft for domestic?---No, five crew - we refer to it as crew being a captain and first officer. You can’t operate the aircraft just with one pilot.
PN3192
I see?---It’s always referred to as a crew.
PN3193
So how many pilots?---Per aircraft?
PN3194
Yes?---In terms of headcount, ten domestic, and 14 international.
PN3195
Ten per - - -?---Correct.
PN3196
14 international?---Yes.
PN3197
THE SENIOR DEPUTY PRESIDENT: Per aircraft?---Correct.
PN3198
That’s pilot only or crew?---We won’t talk flight crew. We operate 70 cabin crew per international aircraft, 25 cabin crew per aircraft domestically.
PN3199
Yes. And when we were talking about ten and 14 that’s - - -?---Pilots only.
PN3200
Pilots only, thank you.
PN3201
MR FRIEND: In terms of the international operations is it true that Jetstar has a meal service on the flights?---On the international operations?
PN3202
Yes?---Yes, they do.
**** MARK THOMAS WHEELER XXN MR FRIEND
PN3203
And I think it’s true now that - of Jetstar in all of its flights that there’s allocated seating both domestic and international?---There is now. As of 4 October 2006.
PN3204
THE SENIOR DEPUTY PRESIDENT: Does that impact upon pilots whether there’s allocated seating or not?---No, not at all. There’s no change.
PN3205
MR FRIEND: If you look at page - - -
PN3206
THE SENIOR DEPUTY PRESIDENT: Actually, just going back to that does the provision of meals impact at all on pilots where the meals are or are not provided?---The - no, in terms of passengers? No. No difference whatsoever.
PN3207
In terms of anything to do with the pilots?---No.
PN3208
Do they concern themselves with that at all?---No. Our crew meals are totally separately provided and they’re required under our agreement. We’re obviously fed.
PN3209
I understand that. Mr Friend was making - - -
PN3210
MR FRIEND: It’s a different point obviously.
PN3211
THE SENIOR DEPUTY PRESIDENT: Yes. Mr Friend seeks to make a point. I’ll no doubt be enlightened as to what it is at an appropriate time. But just for my understanding the change in Qantas domestic - Jetstar domestic from not providing meals to providing meals to passengers, did that have any impact on pilots?---Absolutely none at all.
PN3212
MR BORENSTEIN: Your Honour said “domestic” and I think he said “international”.
PN3213
THE SENIOR DEPUTY PRESIDENT: No, I said - - -?---You did say domestic, your Honour. It’s accepted, it’s international.
PN3214
Yes, I did say “domestic”. I mean international.
PN3215
MR FRIEND: Mr Wheeler, can you turn to page 3 of your first statement, paragraph 29. You talk about Jetstar Asia Holdings not employing Australian pilots and you say:
**** MARK THOMAS WHEELER XXN MR FRIEND
PN3216
Nor to Qantas’ knowledge does it propose to employ pilots.
PN3217
By that do you mean the Qantas group?---That’s my understanding.
PN3218
Yes. So you’re speaking for the knowledge of the Qantas group when you speak there?---I’m speaking for the knowledge here of Jetstar Asia, that Jetstar Asia based in Singapore, which I have no association with, as far as I’m aware that company does not employ Australian pilots nor Qantas - doesn’t propose to employ pilots. It’s a holding company only.
PN3219
I missed that last bit, I’m sorry, nor Qantas - - -?---As I say, nor to Qantas’ knowledge does it propose to employ pilots. It’s a holding company only.
PN3220
Yes. And so far as the Qantas group knows it’s not going to employ pilots?---That’s my understanding, yes.
PN3221
Nothing further, if your Honour pleases.
PN3222
THE SENIOR DEPUTY PRESIDENT: In paragraph 113, Mr Wheeler, you opine that AFAP is better equipped than AIPA to represent the needs of pilots employed by Jetstar. Could you tell me the basis of that opinion, please?---Traditionally the AFAP, from my experience as having been a member and operating domestic airlines for a long time in Australia, traditionally that has been the pilot group that they have represented. In my time as the chief pilot of Jetstar my only dealings with the AFAP has been through that body representing individual pilots on their behalf when there has been certain actions taken up with those pilots between Jetstar and the individuals. AIPA has never represented any Jetstar pilots in any dealings that I’ve had with our pilots. That’s the reason for the statement, your Honour.
PN3223
Yes, thank you. Anything arising from that, Mr Friend?
PN3224
MR FRIEND: No, your Honour.
THE SENIOR DEPUTY PRESIDENT: Mr McDonald.
<RE-EXAMINATION BY MR MCDONALD [11.07AM]
PN3226
MR MCDONALD: I just have one matter in re-examination. You made reference in your evidence to the planes that have been transferred from Qantas. Are you able to say the basis on which that transfer has taken place?---My understand of the basis is that Jetstar’s international operation was set up as a business case and a project based on timing of where the Jetstar brand was going domestically and the timing was right to commence an international operation to lever off what they already had conducted domestically, having carried in excess of 14 million passengers. The aircraft type, which I’ve stated in my statement that the operation was to use was the Boeing 787. The aircraft has not flow yet. However, the timing was perfect for the company to commence international. Therefore we needed an aircraft to achieve speed to market and appropriate timing. Jetstar under a purely commercial agreement, as I understand, leased that seat capacity of around 310 seat aircraft from Qantas. That’s why the A330 is operating, as I state in there, as an interim aircraft only until the 787 is available to the world.
**** MARK THOMAS WHEELER RXN MR MCDONALD
PN3227
Thank you. Nothing further, your Honour.
THE SENIOR DEPUTY PRESIDENT: Yes. Thank you, Mr Wheeler, you may be excused.
<THE WITNESS WITHDREW [11.08AM]
PN3229
MR MCDONALD: As I foreshadowed, your Honour, our two witnesses Messrs Davey and Lidbury are available tomorrow morning. Now, as I understand it, there is a witness en route for Mr Herbert but I don’t know if he’s here yet, your Honour.
PN3230
MR HERBERT: He’s not here yet, your Honour.
PN3231
THE SENIOR DEPUTY PRESIDENT: Any idea when, Mr Herbert. I gather that the brevity of Mr Friend’s cross-examination has surprised us.
PN3232
MR HERBERT: Yes. We brought Mr Ifield forward as far as we can but we understand he’s either in the air or just landed and he’s not reported yet. He’s not at the Commission yet. He’ll be absolutely on time because that’s what Virgin does.
PN3233
THE SENIOR DEPUTY PRESIDENT: I have no doubt.
PN3234
MR HERBERT: It’s the Melbourne traffic, your Honour, that does it.
PN3235
THE SENIOR DEPUTY PRESIDENT: I think all I can do is adjourn until he arrives. My associate will provide you with a telephone number that you can contact us on and if you’d let us know when he’s here we’ll resume.
PN3236
MR HERBERT: Thank you, your Honour.
PN3237
THE SENIOR DEPUTY PRESIDENT: Thank you. I think everyone can safely have a cup of coffee.
<LUNCHEON ADJOURNMENT [11.09AM]
<RESUMED [2.13PM]
PN3238
THE SENIOR DEPUTY PRESIDENT: Mr Herbert.
PN3239
MR HERBERT: Your Honour, we have one witness this afternoon, Mr Highfield, but as he is the first witness, your Honour, I propose to treat this as being in effect the opening of the case for Virgin Blue. If I could assist your Honour with some short submissions or a short opening as to where we say the position of Virgin Blue is in relation to this matter, because it's quite different from all of the other parties.
PN3240
THE SENIOR DEPUTY PRESIDENT: Yes. Thank you, Mr Herbert.
PN3241
MR HERBERT: Mr Highfield will be ready to give his evidence immediately following that. Your Honour, if I could really adopt largely for my own part the submissions made by my learned friend Mr McDonald in relation to the scope of the application and the grounds and reasons put forward for the application and to say that but in the case of Virgin Blue, the grounds and reasons have no application whatsoever to the circumstances of Virgin Blue.
PN3242
I think my learned friend has opened to the effect that it's the contention of the parties for whom he appears that the only possible ground raised in the application supported by the evidence is that there is an intended case in relation to Jetstar and that because of the fact that paragraph 3 of the application which purports to deal with the reasons for the proposal refer to the existing rules of uncertain effect and has already led to the transfer of application, flying and employment of airline pilots to companies argued to be Australian airlines not principally engaged in providing international regular public transport, airline services, et cetera, in order to shut out AIPA from having constitutional coverage for airline pilots.
PN3243
Well, none of that can possibly apply to Virgin and therefore none of the reasons put forward for this change could possibly apply to the circumstances of Virgin. It is, as the evidence suggests, or was a fresh start airline earlier in this decade. It has none of the baggage, if I can put it that way, associated with the earlier transfers of ownership and the legacy of the decision of Senior Deputy President Hancock and the rest of that material.
PN3244
As we speak, Virgin Airlines is a 100 per cent domestic operation, is not involved in any way, shape or form in the transfer of employment or of planes or anything else of that kind to avoid the operations of AIPA because I think there's no dispute, it currently does not come within the eligibility rule of AIPA at all, so the only ground contended for this change which could conceivably have any application to airlines other than the parties who are intended to be named in the amended eligibility rule, that ground does not and cannot apply to Virgin.
PN3245
One immediately then asks the question, well, then why is it that the rule that is being sought and primarily it is the rule - the amendment which is sought to rule by the removal of the word principally, immediately following the words Australian airline and the addition of the words which provide for successorship, transmission and assignment of the whole or a part of any business. One immediately asks what it is in the application that suggests that the massive expansion of the ambit, of the eligibility rule by the removal of the word principally and the addition of the other words, why it is that that should be taken to apply to airlines such as Virgin.
PN3246
In the event that - and we emphasise and we've made no secret about this in the evidence that's been put forward to date by way of the written statements. In the event that Virgin were to do what it clearly contemplates it will do in the near term and that is engage in some limited international carriage and the answer so far as the application reveals is that there is nothing that suggests that AIPA should have an entitlement to represent the employees of Virgin, and nothing that suggests that the apparently extremely adequate and responsible level of representation and the effective level of representation thus far provided by the AFAP should be disturbed in any way.
PN3247
And there has been in effect no evidence as we understand it led in these proceedings to show that there is a lack of efficiency or responsibility, any deficiency at all in any of those areas in relation to the current relationship and the current effectiveness of the AFAP in relation to the Virgin operations and there is a very great deal that demonstrates that the relationship has been effective and productive and that organisations such as the AIPA could not possibly compete with that at any level.
PN3248
Further in that regard, it's the clear contention of Virgin Blue in these proceedings that the AIPA could not at any level effectively represent the interests of Virgin pilots and it says that for the clear reason that's been articulated in particular in the evidence of Mr Highfield, in the statement of Mr Highfield and that is because the AIPA as presently constituted and as must continue to be constituted in accordance with its demographic base is controlled by persons who have a clear interest in Virgin failing as a business.
PN3249
They have a clear personal interest in Virgin not succeeding in any of its endeavours and most particularly not even starting an international business of any kind and certainly not succeeding in an international business of any kind, because every route, any international route that Virgin succeeds on is one less route available for the Qantas long haul pilots who control the AIPA and it is not in their interests, not in the interests of the controlling members of that organisation, the predominant number of members of that organisation that the Virgin operation continue to be successful and we put that forward squarely on the record in these proceedings, that for that reason, the AIPA simply cannot effectively represent Virgin pilots in the way that's contemplated under the Act that they should in order to give effect to the eligibility rules that they have.
PN3250
By contrast, the AFAP which represents employees in a number of businesses which also compete with Virgin at various levels has a demonstrated track record of responsible conduct and granting local autonomy and that evidence has already been given in these proceedings and Mr Highfield, of course, expands on that and that the local autonomy granted by the AFAP to its employees or to its members in various workplaces has allowed what Mr Highfield describes in some detail in his statement and will describe in evidence open book negotiations in relation to profit share arrangements which is not a facility that his company could ever consider granting to an organisation controlled by the persons who have a very deep personal interest in making sure that Virgin does not engage in international flying, never does, is not successful in doing that because of their own personal interests and their own circumstances.
PN3251
Now, nobody criticises them for doing that and Virgin certainly doesn't criticise AIPA for acting as AIPA must, being a reflection of its membership and everything else, but what they're saying is because of that very factor, its greatest strength in that regard is also its greatest weakness in these proceedings, it must be taken they're not to have the capacity to effectively represent and that the AFAP having a history and a record of being able to effectively represent means that the test under the Act in relation to removing the power of your Honour to make the orders that are sought in these proceedings in this regard has been met.
PN3252
Your Honour, I only need to deal with the first paragraph of the amendments and our evidence goes to that, because the second paragraph simply names a number of companies which have nothing to do with my client, so Virgin's case will be confined to the effect of the amendments which are sought to the first paragraph of the rule. I should add that whilst much of the focus will be on the removal of the word principally, we also, of course, have a great deal of difficulty with the balance of the matters that are sought to be added to that paragraph and I do so very briefly for this reason.
PN3253
The removal of the word principally would mean and I think this is accepted, that if Virgin was to embark on a single international flight from Sydney to Nauru, from Darwin to Bali, that of itself would then mean that all 650 pilots engaged in their 100 per cent domestic operations would then become eligible to be members of the AIPA, the way the rule would then read if this application was successful. No reason has been advanced at any level in these proceedings as to why that should be so.
PN3254
Even if one were to mount an argument as to why international pilots might join what is said to be the international pilots' union, that's one argument, but there is certainly no argument advanced as to why in effect one international flight alone would qualify all of the domestic pilots then to be members of another organisation, so there would then be by that one international flight 100 per cent overlap between the two unions within the Virgin operation and it's the contention of Virgin that having to consider that possibility which Mr Highfield's evidence of course suggests very strongly would be very, very damaging to the whole of the Virgin operation, to have a second union introduce the 100 per cent coverage over the existing union and for all the reasons that he mentions, to have to take that into account in making a business decision, if a window of opportunity were to open slightly in relation to an opportunity for some South-East Asian medium haul route, international route, whether or not that opportunity could be taken up would not be open simply by the economics of the route and how many passengers one could send and the types of aircraft available, but by whether they're prepared to incur the cost at home of thereby accepting a second union into their operation in circumstances where there is no case for it and that is a business or a non-business, shall we say, consideration which could and will be, the evidence will be, a very substantial impediment to Virgin taking up the limited opportunities that arise when they do arise and your Honour will have seen already and will no doubt hear before the end of this case the volatility of the airline business in Australia over the past decade.
PN3255
Who could have imagined a decade ago that the picture would be the way it is today. Ansett and all its subsidiaries have evaporated, Virgin has started. Qantas' operations have swallowed up TAA. There are a group of other airlines and the lower cost airlines are making major in-roads into the market and that another carrier, Tiger Airlines, I think we've heard of in the press, is seeking to move into the Australian market as well.
PN3256
Ten years ago, one couldn't have conceived of the Australian market being what it is today, but the important factor we'll be asking your Honour to take into account is that it hasn't stopped moving and that airlines such as Virgin and everybody else represented at this bar table who is an airline must most with those trends or they must fail.
PN3257
There's one other matter, a legal matter, and the difficulty is in the absence of a detailed application, without an opening by my learned friend, Mr Friend, we are to a certain extent shooting at shadows in relation to what is going to be put against us, but in case it be suggested that because Virgin is not currently covered by the AIPA rule and will not today, if the rule change were made today, will not be covered by it today, that somehow or other Virgin's objection ought to be discounted or dismissed on that ground alone.
PN3258
Can I say about that and I will obviously deal with this in much more detail in closing submissions, depending on what is said against us, but 158(4), the test under 158(4) is a test which relates to persons who would be eligible for membership because of the alteration and another organisation to which those persons could more conveniently belong and that would more effectively represent those persons, the rule - I am sorry, the section is not confined to the situation today as it cannot be.
PN3259
This rule is to be installed as a permanent rule to operation for the future and to operate in relation to persons who for all time effectively fall within the relevant categories that are described in the eligibility rule and the rule simply isn't about the people who are employed by Virgin today or employed by Qantas today or employed by any of the other entities today, certainly it's about them, but it's about everybody who might come along and who may fall within one of those groups in the foreseeable future and the contention that Virgin makes is that it has real planning strategies in place in relation to occupying the space that will be affected by this rule.
PN3260
As a listed public company, it cannot make announcements about things until decisions have actually been made in that regard and it can't speculate about things, as it may do if it were a proprietary company. As a listed public company, unless the plans are actually formulated and definite, announcements cannot be made about those things and certainly speculative announcements by Virgin wouldn't be made in this company because Qantas ears are everywhere and all of its competitors are here, but the evidence from Mr Highfield will be and others will be that there are significant planning matters in place so that it expects there to be a very high degree of probability that it will occupy that space in the immediate future or in the near future or space of that kind that is engaged in limited international operations and it does not - it takes the objection now in that regard because of the impact that it expects will be had by this rule change in the very near future and to that extent, its concerns should not be discounted because to that extent, it represents every other new start airline which may come along within the immediate future within Australia as well and the Commission is entitled to take those matters into account. Your Honour, unless your Honour has any questions, that's all I have to say by way of opening and I would call Mr Highfield.
PN3261
THE SENIOR DEPUTY PRESIDENT: Yes, I will save my questions until the submissions, I think, Mr Herbert.
MR HERBERT: Thank you, your Honour. Call Bruce Highfield.
<BRUCE HIGHFIELD, SWORN [2.30PM]
<EXAMINATION-IN-CHIEF BY MR HERBERT
PN3263
MR HERBERT: Thank you, Mr Highfield. For the record again, could you repeat your full name and your address, please?---Bruce Highfield, (address supplied).
PN3264
You have been employed by Virgin Blue Airlines Pty Ltd as general manager, people, since the commencement of its operations on 21 January 2000, is that correct?---That's right.
PN3265
Mr Highfield, have you prepared two statements of the evidence you're able to give in these proceedings, the first of those statements consisting of 27 paragraphs and some annexures signed by you and dated 29 September 2006?---Yes.
PN3266
Are the facts and circumstances set out - well, were the facts and circumstances set out in that statement true and correct at the time that you made it?---Yes, they were.
PN3267
There is in the statement some references to negotiations that have occurred as between yourself and your organisation and the AFAP?---Yes.
PN3268
I refer in particular, if you could look at paragraph 11, please, of your statement, you talk about that your organisation and the AFAP are currently in negotiations for a new workplace agreement. As it transpires, that's still true?---That's correct.
PN3269
Mr Young on behalf of Virgin is still involved in those negotiations for your company?---That's right, yes.
PN3270
There has been some evidence about the fact that there's been a ballot in relation to those negotiations, but other than the fact that has a ballot occurred, the balance of that statement needs to be read then in paragraphs 11 and 12 having regard to the fact that that was made in September?---That's correct.
PN3271
But subject to those temporal considerations, are the facts and circumstances set out in that statement at the present time true and correct?---That's right.
I tender that statement, your Honour.
**** BRUCE HIGHFIELD XN MR HERBERT
EXHIBIT #VIRGIN1 WITNESS STATEMENT OF BRUCE HIGHFIELD DATED 29/09/2006
PN3273
MR HERBERT: Have you provided, Mr Highfield, a supplementary statement? Your Honour should have a copy of that.
PN3274
THE SENIOR DEPUTY PRESIDENT: Yes, I have. Thank you.
PN3275
MR HERBERT: A short supplementary statement simply bringing the status of the negotiations up to date?---That's correct.
PN3276
And that statement consists of eight paragraphs and is dated today's date, 8 March 2007?---That's correct.
PN3277
Are the facts and circumstances set out in that supplementary statement to the best of your knowledge true and correct?---Yes, they are.
I tender that statement, your Honour.
EXHIBIT #VIRGIN 2 SUPPLEMENTARY WITNESS STATEMENT OF BRUCE HIGHFIELD DATED 08/03/2007
PN3279
MR HERBERT: Thank you, your Honour. That's the evidence in chief for Mr Highfield.
THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Friend.
<CROSS-EXAMINATION BY MR FRIEND [2.33PM]
PN3281
MR FRIEND: Mr Highfield, you say Virgin Blue commenced operations on 21 January 2000?---Yes.
PN3282
What do you mean by that? Commenced flying?---That's the first day of my employment.
PN3283
You said that that's when Virgin commenced operations?---That's when I was employed and that's when I started to employ other people, on 21 January in 2000. Virgin Blue commenced flying operations and gained its AOC some time in August 2000.
PN3284
August 2000?---That's correct.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3285
When did you employ pilots?---Very, very close to the start of operation. As a start-up carrier with virtually no money in the bank, we left those matters until the very last minute before we employed or engaged anybody.
PN3286
When did you start advertising for pilots?---I don't think we needed to advertise directly for pilots. I think word of mouth - we opened a locked bag in Newtown and we were flooded by applications so we actually never made positive moves to employ pilots. There was no requirement to do that.
PN3287
You must have assessed the pilots you were considering employing. I am trying to get some sense of how long that process took before you had them employed, appropriately trained in Virgin procedures to fly the planes?---Yes. What occurred was that John Raby who was working for Easy Jet was engaged as the chief pilot, he had a number of people who were current, Australians who were prepared to come back to Australia and they were current on the 737 because that's the aircraft that Easy Jet flies and those people were ready, willing and able to join John Raby when he required them to join the airline, including his son.
PN3288
When was Mr Raby employed?---John would have been employed probably about May of 2000.
PN3289
Was his employment covered by the first agreement which you made?---No. He was an individually contracted employee. He also had options in the company, so he had a personal stake in the company and wasn't covered by it.
PN3290
So there was no classification in the agreement that covered him as chief pilot?
---No.
PN3291
And none of the conditions applicable to other pilots were applicable to him as chief pilot?---That's right.
PN3292
He then organised these people. When did they first sign on?---I'm not sure what you mean by sign on.
PN3293
Well, I am trying to get a sense of when people first turned up to work to get paid for flights?---I haven't got those dates at my fingertips, but everything was left to the very last moment before we engaged anybody, or any pilots in the business.
PN3294
Did people have any notice before they came, or were they just waiting for a phone call?---I think people would have been given some sort of undertaking from John.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3295
You will employed when Virgin starts, something like that?---There would be a number of caveats and that is that a person would have had to be endorsed, obviously, would have had to have all the current licensing and so on and so forth, so basically everybody, including myself, who joined Virgin Blue was taking a very big risk in coming and very few people really wanted to take that risk, other than those people who were hell bent on returning to Australia and were prepared to risk their flying jobs overseas to join Virgin Blue at the last minute.
PN3296
Yes. You obviously had to do checks on them, check that they were appropriately qualified?---That was the role of the chief pilot and the flight standards manager at the time. That was their job.
PN3297
He was doing that from May?---I couldn't speak on behalf of when John was doing that, no.
PN3298
In relation to that agreement, you say in paragraph 6 that the AFAP adopted a number of very sound commercial and strategic bargaining positions and you note in particular them accepting the underlying safety net award as the Pilots' General Aviation Award. Do you recall saying that?---That's correct.
PN3299
So that was something that you proposed, using the Pilots' General Aviation Award?---Absolutely.
PN3300
You refer to a number of other awards which could have been argued should have been used as the safety net award. What were they?---At the time, I was dealing with a number of unions who seek to belong to or be part of Virgin Blue and I guess it could have been argued and was argued by the unions that the current legacy carriers that were operating at the time, their awards should have been used as safety net awards.
PN3301
What do you mean by the legacy carriers?---Qantas and Ansett at the time, so the traditional - Qantas have something like 13 unions in their business. Most of those unions approached me and most of them insisted on Virgin Blue, a start up low fares carrier, using Qantas and Ansett awards which I found to be completely the wrong way to go.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3302
You weren't prepared to do that? The General Aviation Award has lower rates of pay and less expensive conditions so far as the employer is concerned than the other awards you're talking about with the legacy carriers, is that right?---Well, the General Aviation Award at the time didn't actually specify any rates for a 737. That was by negotiation.
PN3303
So there were no rates for a 737 in the General Aviation Award?---That's correct. There were similar sized aircraft. The Flight West were operating Fokker 100 jets flying out to Norfolk Island, so large jets, so there were some comparisons, but the 737 wasn't in it.
PN3304
And the 737 was the only plane that Virgin was flying?---That's correct.
PN3305
There were rates for the 737 I take it in the Ansett and Qantas awards?---I'm not sure.
PN3306
You would have expected there to be rates?---I would have expected there to be rates, but most of those agreements and awards were paid rates awards by those companies and I found them to be completely the wrong benchmark for a start up airline who was going to be the third carrier. In the wake of Compass and other airlines that had failed in this country, there was very limited success of Virgin starting up using those terms and conditions of employment.
PN3307
The AFAP was quite happy to go along with that?---Not at all.
PN3308
They weren't happy to go along with that?---They had no choice. At the time we started the airline, I had three methodologies by which I could have employed people. That was union agreements, non-union agreements and AWAs. Had the AFAP not agreed with my proposition, I would have done what I had done with other unions and simply excluded them from the process.
PN3309
And done an LK when you had got the employees?---An LK or potentially I could have done AWAs and I would have used and got advice from Jonathan Hamberger at the time that that General Aviation Award was completely suitable to the Commission with respect to a safety net award.
PN3310
Yes, and did you tell the AFAP that it was that or nothing?---Correct.
PN3311
Did they try and argue with you or did they just say okay?---Terry O'Connell argued very strongly.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3312
He did, did he?---Terry O'Connell at the time was indicating to me that the rates of pay that Virgin Blue were paying as a start up airline would need to be and he would be seeking for them to be adjusted if the airline was successful.
PN3313
He has indicated in evidence to the Commission that the General Aviation Award was the appropriate award for the no disadvantage test with Virgin. That wasn't his position at the time, is that what you're saying?---It is the position, it is the General Aviation Award is the - - -
PN3314
No, no, follow the question. Mr O'Connell at the time did not agree that the General Aviation Award was the right award to use?---No. My apologies. He was happy for that award to be used. It was the rate of pay that he was unhappy with. It didn't exist. There was no rate of pay for a 737. We had a rate of pay in mind. Mr O'Connell felt that it was probably a bit low, but he had very little choice to argue with me.
PN3315
He felt it was probably a bit low, so he wasn't very vigorous in his argument in relation to that? Is that what you're saying?---Terry O'Connell had no members at the time. It was a greenfields agreement as we call it and he had no leverage or bargaining power at all.
PN3316
The bargaining power was all your way, wasn't it?---At the time, it was.
PN3317
Because if he wanted to have the coverage with you, he had to agree with what you offered?---It seemed that way at the time.
PN3318
That was really the way the bargaining worked, wasn't it? He knew that you could do AWAs or just employ people and do an agreement with them?---They were the realities. They were the industrial realities at the time, yes.
PN3319
That wasn't quite the case with the second agreement, was it, because there were members with Virgin at that time?---Correct.
PN3320
Are there many changes between the first agreement and the second agreement?
---The work rules remained the same, CO48. The objective of the second agreement was try to move to the exemption to the CO48. That
was unsuccessful. Those negotiations were unsuccessful, so we remained, we couldn't reach agreement on a change - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3321
That was Virgin's objective to move to the exemption, is that what you're saying?
---It was - certainly, yes. It was our intention to move to a more modern set, more flexible set of work rules.
PN3322
Yes, and you couldn't achieve that in the second agreement?---No, we couldn't, so we had facility to try and attempt to do that during the life of the agreement. That wasn't achieved.
PN3323
Were there any other changes, or any other matters?---There were very, very significant pay increases during that agreement.
PN3324
In the second agreement?---That's correct.
PN3325
How significant?---It was four per cent in the first year plus a two per cent profit share which was six per cent. The second year that was a four per cent and a two per cent profit share and in the third year it was a six per cent increase. There were increases to the loss of licence insurance, there were increases to check captains' pay, there were increases to meal allowances in terms of indexation. That pretty much covers it.
PN3326
Were there any changes in respect of matters that Virgin wanted?---I'm trying to understand - trying to think through that. We had been very successful and we were trying to maintain our cost base, but we didn't achieve too many changes in terms - well, we didn't achieve any changes in terms of the work rules which is what we set out to do.
PN3327
The work rules you didn't - you got some other changes?---Well, the major changes are in respect to the work rules, so the company didn't achieve much in the second agreement.
PN3328
It didn't achieve much means it's achieved some things? That's what you're saying?---Well, that's what you're saying. What I'm saying is that we tried to change the work rules. We tried to move to - - -
PN3329
Yes, I understand that. I'm trying to see whether there was any change, Mr Highfield. Now, you say we didn't achieve much, there were minor ones and then you won't say that it was anything at all. It's one or the other. I mean, it's an answer, it's a fairly simple answer. There either were some changes or there weren't?---Well, I think I've described the changes to you. You're probably not familiar with the industry. You have a set of work rules which governs the flight duties times of - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3330
Mr Highfield, we understand about the work rules. They didn't change. Forget about the work rules?---Right.
PN3331
Were there any other changes?---There were changes to the pay and conditions, yes.
PN3332
Any changes that Virgin wanted?---I can't think of too many changes that increased the productivity. Well, I can't think of one change sitting here that increased the productivity of the airline that was achieved during that agreement. There was an increase in our cost base during that agreement.
PN3333
I won't pursue it any further, Mr Highfield. Was the work rules something you tried to change in the most recent agreement?---That's correct.
PN3334
You negotiated that with the Federation?---We are currently doing so, yes.
PN3335
Before the vote in January of this year, you negotiated on that agreement with the Federation? Before January of this year, you negotiated - - -?---Yes, we have been negotiating for some time.
PN3336
I want to talk about the time before the vote in January, okay. You've given evidence in your second statement about the vote?---That's right.
PN3337
Now, during those negotiations, you and the Federation had different positions?
---The Federation provided a log of claims to the company. It was a very substantive log of claims, most of which could not be agreed
to, so we commenced the negotiations with what we could agree with and then have spent the best part of two years trying to work
through those other matters.
PN3338
That's a long negotiation, isn't it?---It's a very long negotiation.
PN3339
In the end, the Federation agreed to put the agreement to a vote?---They felt they'd gone as far as they could and they agreed to do so.
PN3340
Of course, the result of that vote is set out in Mr Woods' statement which you've indicated that you've read. Now, you give some evidence in your second statement about why you think that vote was that way?---Correct.
PN3341
And the primary reason I think you put is the new work rules?---I wasn't asked to weight the reasons that I put down there. I put down a whole range of reasons and as I - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3342
Have a look at your second statement. Have you got it there?---No, I don't.
PN3343
You'll recall in the last question I used the words the primary reason. Have a look at paragraph 4?---Yes, apologies, you're right.
PN3344
You accept that now?---Yes. I'm with you.
PN3345
You also say at the bottom of paragraph 5:
PN3346
I understand from discussing the matter with AFAP representatives that some pilots consider the operation of the bidding system and the securing of an average of 14 days home in every 28 too uncertain.
PN3347
Is it the fact that you've formed your view about the reasons for the rejection of the agreement at least in part on the basis of
information provided by the AFAP?
---No. Well, the AFAP has done their own survey of pilots. We've also been talking to pilots as well and trying to formulate a view
as to why the vote was the way it was.
PN3348
And the AFAP communicated to you what their view was?---Yes, they have, in the meetings that have subsequently followed and are carrying on as we speak.
PN3349
And does that accord with your view?---What accords with our view is a very, very complicated negotiation. It's a massive change.
PN3350
No, no, your view about why the agreement was rejected?---My primary view or my view in total.
PN3351
Well, you've got two reasons there, work rules and overtime. Are those the major things the AFAP say are the problem?---The AFAP gave us a range of issues, including the fact that in some circumstances the vote that we received was not so much about the agreement which in actual fact gave substantive increases, but more to do with the fact that Virgin Blue as a company and its management team haven't been able to reduce the number of days away from home in terms of the trips and it's been a source of problem for a while and perhaps the pilots aren't interested in voting this agreement up until we can resolve that issue through our network's operation area. Having pilots with young families at home could have been a reason why the agreement was voted down, not just relating to the contract itself.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3352
So these are the sorts of things the AFAP are talking to you about?---Well, they're reasons that we're learning about in talking to
pilots, the AFAP are bringing to us. I think all of us are working hard to understand how we can get this
agreement - - -
PN3353
Are there other important ones that you can tell us about now?---Other than I've just mentioned?
PN3354
Yes?---Well, as I said, the vote may have gone down because of a little bit of a process from the pilots, as we picked up in our survey, that we haven't resolved the issue of being away from home and by moving to a more flexible set of work rules, this may not be resolved, so there needs to be more certainty for the pilots in their agreement.
PN3355
Those are the issues that keep coming up in your discussions with the AFAP?
---Mm, certainty.
PN3356
Have they shown you the results of the survey?---We have been given an overview and a summary of the survey results, yes.
PN3357
A verbal summary by the AFAP?---I've been given a verbal summary and I think - I'm not sure whether they have published the results. I think they've probably published the results to pilots of which we got a copy of their notification.
PN3358
Can the witness be shown AIPA6, please? I will hand a copy to him. If you can ignore the first two pages, Mr Highfield. Have you seen the document that's headed update, AFAP update?---Yes, I've seen this document.
PN3359
And that summarises the important matters in the agreement on the last page - I am sorry, leading to rejection of the agreement on the basis of that survey?---I'm sorry?
PN3360
It summarises it. Can you see that on the last page of the document, the five most important issues in order were - - -?---Remuneration, days off, et cetera, yes.
PN3361
So work rules is only number 5 according to the survey for captains and doesn't figure in the top five for first officers. Do you see that?---Yes.
PN3362
But that's not the understanding you've got from the AFAP in the discussions, is it?---Well, I'm not primarily involved in the discussions. That's one of the reasons that we felt that the agreement hadn't got down when that statement was written was because of the work rules and the complications with the work rules. If you look at - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3363
When the statement was written? Mr Highfield, did you say when the statement was written just then?---Yes.
PN3364
That's the second statement?---That's correct.
PN3365
That's today, isn't it?---That statement is dated today.
PN3366
When was it written?---It wasn't written today.
PN3367
When was it written?---Some time in the - I can't recall.
PN3368
You said in evidence in chief that it was true as of today's date. You were actually asked that question. You're not taking that back, are you?---No. What I am saying to you is I didn't write that statement today. I've been on a plane today. I've come in here, we've signed it today and it's been brought forward.
PN3369
Well, you seem to be making a distinction about the time it was written and now to the point of an answer. There is no difference between some past time, a few days ago and today, is there?---No. I understand the line of questioning, but what I am saying is we're in a very, very fluid situation at the moment where these things are happening as we speak, so as we're trying to learn about why this agreement has gone down, we're learning new information, but in terms of the issue around remuneration, you need to understand that remuneration - - -
PN3370
We don't need to explore remuneration. Well, if there's something about work rules and remuneration - - -?---Well, my point is that remuneration and work rules do run hand in hand because remuneration is driven off overtime and overtime and the ability to get overtime is driven by a trigger and the trigger is created by the flexibility of the work rules.
PN3371
All right, but you never mentioned remuneration either in your statement or in your evidence until you saw this document, did you?---Well, that's a matter for the record.
PN3372
We'll leave it at that. Can I show the witness AIPA4, please? I will hand a copy to you. That's a memorandum by Mr Michael Young to the Virgin Blue pilots. Have you seen that before?---I did read the email. It was sent to me.
PN3373
Mr Young says in the second last paragraph that:
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3374
Long haul international flying is to be carried out by a separate company under a separate agreement.
PN3375
That's the intention of Virgin Blue?---We're unable to use the word Virgin for our long haul business and so it's likely to be set up as a separate business, yes.
PN3376
THE SENIOR DEPUTY PRESIDENT: Likely to be what, sorry?---Singapore Airlines control the name Virgin for long haul flying because they own 49 per cent of Virgin Atlantic and they have pre-emptive rights over the name Virgin for long haul flying, so for the same reason that Virgin can't fly to New Zealand, we use the Pacific Blue brand, we will have to come up with a different brand and we will be using a different AOC most likely.
PN3377
MR FRIEND: Well, you wouldn't have to use a different company for that. You could just have a different trading name, couldn't you? If you don't know the answer to that - - -?---I'm not a company secretary.
PN3378
It is intended, however, to have a separate agreement?---That hasn't been - we won't be starting our long haul operation until the end of 2008.
PN3379
Well, the question was not when you're going to start it, but is it intended to have a separate agreement for long haul?---We haven't decided exactly how we're going to employ pilots into this.
PN3380
So when Mr Young wrote that to the pilots of Virgin Blue:
PN3381
To be carried out by a separate company under a separate agreement -
PN3382
he says he's mentioned it previously, that is not the truth?---No. Well, the truth of what he's trying to get across there is that Virgin seek to offer its pilots an opportunity to fly in the new entity and that is what we're trying to explain.
PN3383
I am focusing on the point before that where he talks about separate company under a separate agreement. You say there's no such decision been made?---Well, that's a good point. We are leading to it's going to be a separate AOC and it's going to have a separate set of employment conditions, yes, to Virgin Blue.
PN3384
So it will be a separate agreement?---Well, if it's an agreement or - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3385
Or a separate employment?---Or a separate employment arrangement, so the site agreement has connotations that it will be negotiated.
PN3386
Yes, so when Mr Young said agreement, he was going too far, because it's not true?---Well, Mr Young is a flight operations pilot, so his understanding of the words that he uses in an email to pilots about industrial realities is probably asking a little bit much.
PN3387
Did you see in that survey that trust was one of the problems that Virgin pilots have with Virgin?---Yes, it is.
PN3388
Could you understand how that would arise in those sort of circumstances, given the evidence you've just given?
PN3389
MR HERBERT: I think that's a rhetorical question and it doesn't - - -
PN3390
MR FRIEND: I was moving on?---Sorry, was I expected to answer that.
PN3391
THE SENIOR DEPUTY PRESIDENT: Mr Friend doesn't seem to be expecting an answer. I am not sure that I was either.
PN3392
MR FRIEND: I gave the witness an opportunity, your Honour.
PN3393
Virgin Blue pilots will get the opportunity to fly the long haul aircraft, is that true?---I think in terms of trust, I think we can demonstrate that what we've done for - - -
PN3394
Mr Highfield, you had your opportunity. Virgin Blue pilots will get the opportunity to fly the long haul aircraft, is that true?---That is our intention.
PN3395
If they're flying long haul, they will remain on those aircraft as long haul, they won't move back and forth, long haul and short haul, will they?---We have had discussions about how people can move between aircraft types.
PN3396
Yes, but they wouldn't work one week long haul, one week short haul. It would be a long-term thing, wouldn't it?---Do you understand the airline industry?
PN3397
I will ask the question - - -?---You need to endorse people through a very large and expensive regime of training before they can fly different types of equipment, so it is impractical for a pilot to fly from one aircraft type to another within the week and there would need to be some years - - -
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3398
They would work for years on one or the other?---In order to recoup the training costs.
PN3399
That was the point I wanted to get out, Mr Highfield. In fact, the costs of set-up will be quite large. There's an article in the newspaper and you may not know this or it may not accord with your information, suggests new jets worth $2.5 billion are being secured for the new international Pacific service?---Well, having worked with Virgin for seven years, I find the newspapers a reference for nothing about our organisation. The reality is we're going to invest in seven new aircraft types of which the contracts for those aircraft have not yet been signed and I don't know whether Brett Godfrey has announced to the ASX whether those contracts have signed, but we are looking to purchase or lease seven large long range aircraft, yes.
PN3400
So ball park figures?---I'm an HR guy. It's a billion dollar investment.
PN3401
Well, HR guy, the report also suggests 150 more pilots?---We will require three pilots per aircraft and from our initial look at what we think we can do, we require 8.8 crews per aircraft to run that operation, so seven times eight times three.
PN3402
Seven times eight times three?---That's about right.
PN3403
Yes, 150-odd?---Yes.
PN3404
How many pilots have you got now? I think you give a figure in your first statement?---Around about 150, 160 pilots - sorry, 560 pilots.
PN3405
You have concern about conducting open book negotiation with AIPA you say in your statement because members of its committee are employed by Qantas. What's your main competitor in the domestic market? What's Virgin's main competitor?---Qantas.
PN3406
By that, do you include Jetstar?---Yes, the Qantas Group, yes, Jetstar and Qantas, but our sights are firmly set on Qantas. We're looking at Qantas Mainline as a new world carrier now. As we move from being an LCC, a low cost carrier, we're firmly moving across what we call a new world carrier and our product are aimed at competing with Qantas.
PN3407
Yes, but Jetstar is also a competitor?---That's correct.
**** BRUCE HIGHFIELD XXN MR FRIEND
PN3408
Particularly in the price sensitive market?---They are aiming their sights at picking up the visiting friends and relatives end of the market, yes.
PN3409
And you know that the AFAP has coverage of Jetstar?---I believe they have some members.
PN3410
It's possible that some of them might be on the AFAP convention or the AFAP committee, isn't it?---I don't know the answer to that. It's possible.
PN3411
Yes, so the same issue arises with the Federation as would arise with AIPA, doesn't it, in terms of the open book negotiations?---No, no, I don't think so.
PN3412
You've got - AFAP have Jetstar and Virgin or AIPA and Qantas and Virgin. You compete with both. The same issue must surely arise, Mr Highfield?---Well, my understanding is that Jetstar have a non-union agreement with their pilots.
PN3413
That doesn't mean, does it, that Jetstar pilots aren't privy to information that AFAP has, does it?---Well, I think it's very different circumstances. The AFAP are not negotiating on behalf of Jetstar.
PN3414
Well, they want to. Would that change things, if Jetstar started talking to them? Would you stop having open book negotiations with them then?---It would make it very difficult.
PN3415
So that could happen tomorrow?---Well, people can talk in baths, but with respect to the way it's set up at the moment - - -
PN3416
Yes, so that advantage that you point to in that part of your statement is one that really depends on whether or not Jetstar talk to the AFAP as a union?---No, I think it's a lot stronger than that. No, I don't agree with that.
PN3417
MR MCDONALD: There's one matter that I might just raise, your Honour.
THE SENIOR DEPUTY PRESIDENT: Yes, Mr McDonald.
<CROSS-EXAMINATION BY MR MCDONALD [3.03PM]
PN3419
MR MCDONALD: Mr Highfield, you use the term new world carrier in contra-distinction to low cost carrier. Just explain what that concept is?---A low cost carrier is specifically designed to use a single aircraft type, have high capacity seating in terms of leg room, so you can get more seats in and high utilisation of the aircraft, high capacity and single aircraft type. Virgin Blue is moving away from that model quite firmly. We're moving into using different aircraft types, the Embraer which we've announced, the purchase of Embraers. It's a second aircraft type. We're moving our product, we started frequent flyer point schemes and we're starting to differentiate our market segments in the same way that Qantas does, so we are moving away from the traditional low cost carrier model and we're trying to shake that tag of being a no frills, budget, low cost carrier.
**** BRUCE HIGHFIELD XXN MR MCDONALD
PN3420
THE SENIOR DEPUTY PRESIDENT: Yes, Mr Herbert.
<RE-EXAMINATION BY MR HERBERT [3.04PM]
PN3421
MR HERBERT: Thank you, your Honour.
PN3422
In relation to the last matter you were asked about by my learned friend appearing for AIPA, could I take you to paragraph 8 of your statement, please, your first statement? You talk there about the second certified agreement having been negotiated with Terry O'Connell. Now, we've heard from him. He's a paid official of the AFAP?---That's correct.
PN3423
Is he employed by any of the airlines?---No, he's not.
PN3424
And on this occasion a workplace committee of around four pilots. Who was the employer of the pilots in that committee?---Virgin Blue.
PN3425
With the AFAP, the president of that union, do you know by which airline he is employed?---The president of the AFAP is a Virgin Blue pilot.
PN3426
Have you been confronted with a situation where you've had to negotiate with anybody other than your own pilots and a paid professional
officer of the AFAP?
---No, we have not.
PN3427
Are you aware of any arrangement or any process that AIPA has in place that would confine any negotiations with them to paid professional officers and employees of your own airline?---No. My understanding is there is 40 people in the executive of which 35 or so are long haul Qantas pilots and the remainder are Qantas employees in various airlines.
PN3428
And you're talking about - - -?---AIPA, correct.
PN3429
- - - the committee, whatever named, of AIPA?---That's correct. They're all pilots,
as it has been explained to me, they're long haul and short haul pilots.
PN3430
In your dealings with the AFAP, have you ever been given to understand that the paid officer of that union who attends to assist the pilots' committee as you've described here in paragraph 8 has ever taken information back to other airlines where his other members might be working?---No.
**** BRUCE HIGHFIELD RXN MR HERBERT
PN3431
In terms of trust that's been raised, what's the situation with trust you have that AFAP would or would not do such a thing?---I would believe they would act very professionally and ethically. It's not in their interests, not in the interests of the AFAP to see their major source of income, I assume, from their membership base to be sharing secrets with the competitors.
PN3432
Has an AFAP officer ever tried to divulge to you confidential information they might have obtained from one of your competitors?---No, never.
PN3433
Would you expect that they would not do the same thing with - - -?---If they were sharing information with me, I would be alarmed that they may do the same.
PN3434
In relation to AIPA being made up or its committee as you've indicated and its membership, I think the evidence in this case indicates there's something like 1600 members who are Qantas long haul or short haul pilots, in relation to that, the jobs and the job security of those Qantas pilots, what's your understanding of whether or not their interests would be served by Virgin succeeding or failing with an airline?---Well, I would have assumed it was completely contrary to the interests of Qantas pilots for Virgin to succeed. We have ambitious plans in terms of market share. We're an aggressive competitor and I can't see how Qantas pilots could represent Virgin Blue pilots. I just can't see how that could be possible.
PN3435
Thank you. I have nothing further for Mr Highfield, your Honour. Might he be excused?
THE SENIOR DEPUTY PRESIDENT: Yes. Thank you, Mr Herbert. Mr Highfield, you may be excused. Thank you.
<THE WITNESS WITHDREW [3.08PM]
PN3437
MR HERBERT: Your Honour, we made inquiries of your Honour's associate earlier as to whether the video facilities for Brisbane could be made available tomorrow morning. Our second witness can be available. We understand our second witness will be available tomorrow and we would like to have some indication of when the video facilities might be available so that we can put those two things together.
PN3438
THE SENIOR DEPUTY PRESIDENT: Yes, I think inquiries were being made. I don't know the result of those.
PN3439
MR HERBERT: Your Honour, the availability of that video facility, subject to Mr David, we asked for the availability of video facilities so that we could talk to him about his availability tomorrow, so we could match that up and call Mr David on video tomorrow because it seems that other witnesses are petering out this week.
PN3440
THE SENIOR DEPUTY PRESIDENT: Mr David is your last witness?
PN3441
MR HERBERT: Yes, he's my last witness, your Honour.
PN3442
THE SENIOR DEPUTY PRESIDENT: What I will do is I will have inquiries made as soon as we rise, if you wouldn't mind waiting.
PN3443
MR HERBERT: No, that's fine, your Honour, then we can contact him.
PN3444
THE SENIOR DEPUTY PRESIDENT: Yes, and then after Mr David, what's the plan?
PN3445
MR MCDONALD: We have two witnesses to complete the Qantas subsidiary witnesses, that's Mr Davey from Eastern and Mr Lidbury, Sunstate.
PN3446
THE SENIOR DEPUTY PRESIDENT: Tomorrow?
PN3447
MR MCDONALD: Tomorrow morning and I understood that Mr Alphandary - in the morning Mr Debitt, that's Mr Borenstein's witness.
PN3448
MR BORENSTEIN: We have one more pilot which I think we've going to have at the beginning of the week and Mr Debitt who is landing in Melbourne in the course of the morning and will be coming straight here, but I can't tell your Honour precisely when.
PN3449
MR FRIEND: And, your Honour, we will have Mr Alphandary who I would think would probably deal with the rest of the day and allow us to move to Captain Woods on Tuesday and presumably would deal with Wednesday, then Mr Elsass and Mr Gray, I'm not sure in what order, later in the week will obviously complete the evidence within that compass.
PN3450
THE SENIOR DEPUTY PRESIDENT: Thank you. Have you got a preferred time for Mr David tomorrow, Mr Herbert?
PN3451
MR HERBERT: Not at the moment, your Honour. We didn't want to make a time until we knew a time that video was available, because that can sometimes be a difficult thing and we'd rather not make and unmake plans again. He has some significant time constraints and we were attempting to ask him once.
PN3452
THE SENIOR DEPUTY PRESIDENT: What I will try to do is to get the video link at 10 am Melbourne time which is 9 am Brisbane time.
PN3453
MR HERBERT: Real time.
PN3454
THE SENIOR DEPUTY PRESIDENT: We're still in that situation.
PN3455
MR FRIEND: I should say in relation to that, your Honour, having regard to some of the answers that Mr Highfield gave, I will review Mr Davey's statement straight after court and have a discussion with my learned friend if we can reach the position - it's a very short statement and if we don't need to cross-examine him, I will know straight away, but that's just occurred to me.
PN3456
THE SENIOR DEPUTY PRESIDENT: Perhaps you could do that while we're making inquiries as to the availability of a video link and communicate with my associate. Mr Borenstein.
PN3457
MR BORENSTEIN: Your Honour, we have one matter that we'd like to deal with if it's convenient to the Commission. Your Honour may recall that Mr Pasfield filed a witness statement on the Friday.
PN3458
THE SENIOR DEPUTY PRESIDENT: That's Mr Alphandary's, is it?
PN3459
MR BORENSTEIN: No, Mr Pasfield, the solicitor. This was to do with pilot numbers and I've spoken to Mr Friend about this and believe he agrees with this course. We would like to tender that affidavit, please, or statement and then tender two further documents that relate to what's discussed in the statement.
PN3460
THE SENIOR DEPUTY PRESIDENT: Thank you.
PN3461
MR BORENSTEIN: Now, your Honour, we seek to tender the statement or affidavit as an exhibit discretely and then there are two further documents which we seek to tender as confidential exhibits.
PN3462
THE SENIOR DEPUTY PRESIDENT: When was Mr Pasfield's statement - - -
PN3463
MR BORENSTEIN: Friday, last Friday.
PN3464
THE SENIOR DEPUTY PRESIDENT: Which was 2 March and that attaches
a - - -
PN3465
MR BORENSTEIN: That attaches a letter.
PN3466
THE SENIOR DEPUTY PRESIDENT: Yes, it's just that the letter that's attached is a letter filing witness statements.
PN3467
MR BORENSTEIN: Perhaps we will hand up - no, the affidavit has a letter which is marked PJP1 and which is dated 19 December 2006 which is two pages.
PN3468
THE SENIOR DEPUTY PRESIDENT: That has not been attached to my copy of Mr Pasfield's statement.
MR BORENSTEIN: Perhaps we will hand up another copy of it, your Honour, to save time. I apologise for that.
EXHIBIT #AFAP22 STATEMENT OF MR PASFIELD DATED 02/03/2007 TOGETHER WITH ATTACHMENT MARKED PJP1
PN3470
MR BORENSTEIN: Now, your Honour, the two documents which I've handed up assist in the understanding of the affidavit, but they contain information which was provided to us on a confidential basis to do with names of pilots and union membership and so on. Can I deal firstly with the document which is a letter from AJ Macken and Co to Slater and Gordon dated 2 February 2007 and could I tender that as a confidential exhibit? Your Honour will see that the letter itself contains a summary and a form of explanation of the list of names that is attached to it and other documents that's attached, so that although the contents of the letter itself are probably not confidential, the attachments are.
THE SENIOR DEPUTY PRESIDENT: We will mark the entire exhibit as being confidential. That will be AFAP23.
EXHIBIT #AFAP23 CONFIDENTIAL LETTER AND ATTACHMENTS DATED 02/02/2007
PN3472
MR BORENSTEIN: Just to clarify the position, your Honour, we would ask that access to that exhibit not be given without the Commission's permission.
PN3473
THE SENIOR DEPUTY PRESIDENT: Access to anybody?
PN3474
MR BORENSTEIN: Yes, your Honour.
PN3475
THE SENIOR DEPUTY PRESIDENT: Very well, it will be placed in an envelope on the Commission's file and the envelope will indicate that access is not to be granted without the permission of the Commission which will not be granted unless discussions is had with the parties.
PN3476
MR BORENSTEIN: Without notice to the parties, your Honour, yes. The second document, your Honour, is a reproduction of the list of names which Mr Macken produces in his letter, but with markings that were made by Mr Pasfield as he explains in his affidavit to identify those of the people on the AIPA list who are also members of AFAP. If your Honour has a look at that document, you'll see little black spots on the left-hand side of each name and the black spot designates the fact of membership of AFAP.
PN3477
THE SENIOR DEPUTY PRESIDENT: Thank you.
PN3478
MR BORENSTEIN: So could we tender that, your Honour, on the same basis as the previous one.
THE SENIOR DEPUTY PRESIDENT: Yes. The document containing a list of names and with the word Eastern in the top right-hand corner comprising three pages will be exhibit AFAP24 and that will also be marked as confidential and subject to the same restrictions as AFAP23.
PN3480
MR BORENSTEIN: Thank you, your Honour.
PN3481
THE SENIOR DEPUTY PRESIDENT: Whilst you're on your feet, Mr Borenstein, something that perhaps should have been attended to earlier, on 28 February 2007 a letter was received from Slater and Gordon indicating that AFAP wished to amend its notice of objection by adding a fifth paragraph.
PN3482
MR BORENSTEIN: Fourth paragraph.
PN3483
THE SENIOR DEPUTY PRESIDENT: Sorry, by adding particulars to paragraph 5. Is there any objection to that amendment by anybody?
PN3484
MR BORENSTEIN: I am not aware, your Honour. There's no objection.
PN3485
THE SENIOR DEPUTY PRESIDENT: Leave is granted in that case.
PN3486
MR BORENSTEIN: Thank you very much, your Honour. I am sorry, I overlooked that. I should have dealt with that on the first morning.
PN3487
THE SENIOR DEPUTY PRESIDENT: Yes, well, so should I. Very well, we will adjourn until 10 am tomorrow unless we can't establish a video link, in which case my associate will - - -
PN3488
MR FRIEND: I will not require him for cross-examination.
PN3489
THE SENIOR DEPUTY PRESIDENT: You don't want him for cross-examination?
PN3490
MR FRIEND: Do not want him for cross-examination.
PN3491
THE SENIOR DEPUTY PRESIDENT: Very well.
PN3492
MR MCDONALD: Our witnesses will be here at 10, your Honour.
PN3493
THE SENIOR DEPUTY PRESIDENT: Very well, we will adjourn until 10 o'clock tomorrow morning.
<ADJOURNED UNTIL FRIDAY 9 MARCH 2007 [3.18PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
GARETH ROWLETT EVANS, AFFIRMED PN3049
EXAMINATION-IN-CHIEF BY MR MCDONALD PN3049
EXHIBIT #QANTAS 1 STATEMENT OF MR GARETH EVANS DATED 03/10/2006 PN3068
EXHIBIT #QANTAS 2 SUPPLEMENTARY WITNESS STATEMENT OF MR GARETH EVANS WITH ATTACHMENT PN3071
CROSS-EXAMINATION BY MR FRIEND PN3073
THE WITNESS WITHDREW PN3120
MARK THOMAS WHEELER, SWORN PN3122
EXAMINATION-IN-CHIEF BY MR MCDONALD PN3122
EXHIBIT #QANTAS 3 MR WHEELER’S STATEMENT DATED 03/10/2006 WITH ATTACHMENTS PN3158
EXHIBIT #QANTAS 4 STATEMENT OF MR WHEELER DATED 21/02/2007 WITH ITS ATTACHMENT PN3169
EXHIBIT #QANTAS 5 LETTER FROM MR JOHN GISSING TO CAPTAIN CRAIG GOLLEDGE DATED 26/05/2004 PN3174
EXHIBIT #QANTAS 6 LETTER FROM MR JOHN GISSING TO CAPTAIN CRAIG GOLLEDGE DATED 04/06/2004 PN3174
CROSS-EXAMINATION BY MR FRIEND PN3175
RE-EXAMINATION BY MR MCDONALD PN3225
THE WITNESS WITHDREW PN3228
BRUCE HIGHFIELD, SWORN PN3262
EXAMINATION-IN-CHIEF BY MR HERBERT PN3262
EXHIBIT #VIRGIN1 WITNESS STATEMENT OF BRUCE HIGHFIELD DATED 29/09/2006 PN3272
EXHIBIT #VIRGIN 2 SUPPLEMENTARY WITNESS STATEMENT OF BRUCE HIGHFIELD DATED 08/03/2007 PN3278
CROSS-EXAMINATION BY MR FRIEND PN3280
CROSS-EXAMINATION BY MR MCDONALD PN3418
RE-EXAMINATION BY MR HERBERT PN3420
THE WITNESS WITHDREW PN3436
EXHIBIT #AFAP22 STATEMENT OF MR PASFIELD DATED 02/03/2007 TOGETHER WITH ATTACHMENT MARKED PJP1 PN3469
EXHIBIT #AFAP23 CONFIDENTIAL LETTER AND ATTACHMENTS DATED 02/02/2007 PN3471
EXHIBIT #AFAP24 CONFIDENTIAL LIST OF NAMES PN3479
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/other/AIRCTrans/2007/125.html