This is a case study analysis section.

Read the case below, and answer ALL the questions listed below the case.

This section is worth 25 Marks.

Can Qantas bounce back from 'perfect storm' as delays, staff disputes, COVID and jet fuel price hit hard? (Source: ABC News, 2022)

For 30 years Tom has piloted Qantas planes all over the world and as one of the airline's most senior captains, it's been a dream career. After being stood down at the peak of Australia's COVID lockout, Tom was thrilled when the call came to head back to the cockpit. But it became quickly apparent that things were not the same. The support staff and almost seamless flow of updates that pilots like Tom had come to expect was missing, he says. Flight cancellations and delays hit record levels in Australia

A record number of flights were cancelled or ran late last month as Australian airlines continue being pummelled by the COVID-19 pandemic and poor weather conditions. "There is no one to talk to and when you go to work you are basically on your own. It's like we're running a virtual airline," says Tom, a pseudonym. "In my three decades with Qantas I've never seen anything like it." Earlier this year Tom piloted an international flight out of Australia with a hunch take-off might be delayed. The queue to pass through security was long. When he got to the aircraft, he learned drinking water was yet to be delivered and the load sheet had not been finalised a document that explains how much weight the plane is carrying and how it's distributed. So far, so normal.

Time passed. The passengers boarded and Tom believing the load sheet must be moments away hit the plane's intercom: "We're just waiting on a final bit of paper-work and we will be on our way," he said. Tom and his co-pilot waited. And waited. They tried calling what Tom calls the "nerve centre" a Qantas employee contactable on a radio frequency whose job is to update pilots on any queries. No answer. Then unexpectedly, the engineers called. "We're opening the cargo doors. Another 15 containers have just turned up and none of the bags have been loaded," Tom was told. Next, the water delivery team admitted that in fact they had run out of potable water, and could not estimate when it would arrive.

By now with passengers buckled up and ready for take-off Tom was looking at a lengthy delay with no one to explain how such fundamental requirements like loading water and baggage had gone wrong. "It feels like a rudderless ship at the moment," he says. "Keeping to departure times has always been sacred in the airline industry. In the past we would be kept informed you will be 10 minutes late, 15 minutes late. Now you must pursue the information yourself and they may, or may not, know the answer."

Post-COVID aviation has been a turbulent experience for Qantas employees facing lay-offs, industrial disputes and understaffing. Things have been difficult for passengers, too, with the latest figures showing travel disruptions worsening from one-in-13 flights cancelled during May, to one-in-12 in June. Overall the performance of Australian airlines was at its worst since records began last month, but unfortunately Qantas was one of the lowest performers with only 58.4 per cent of flights departing on time and 59.1 arriving on schedule. The best performer, Rex Airlines, had 82.7 per cent of flights depart on time, and 80 per cent on-time arrivals. Meanwhile, Qantas management is juggling crippling jet fuel prices, a tight labour market and COVID illness stalking those staff who do make it on shift.

It's not the first time Qantas's business struggles have been laid bare and questions raised over its management and business model. Yet the airline has always bounced back. Is this time different?

In parallel, Qantas management is by all accounts at war with swathes of its staff. Many employees are feeling bruised. Pandemic lay-offs have been swapped for operational glitches as business ramps up with an often unstable workforce and industrial relations tensions play out among key staff including baggage handlers, engineers and pilots. Up to 9,000 staff were laid off during the pandemic with some of those positions, such as baggage handlers, hired back as outsourced labour. Last month the airline lost an appeal against a decision in the Federal Court that found the outsourcing of 2,000 ground crew was illegal. The case is headed to the High Court for another legal round. And now, tension is building with Qantas aircraft engineers who underpin that Hollywood-famous safety record that is also so precious to the bottom line with imminent plans to strike over unmet demands for improved wages and conditions. All this comes not long after tensions with pilots over how they would be paid to fly ultra-long-haul planes as part of the so-called Project Sunrise taking passengers non-stop from Australia to Europe, or New York.

Qantas management has also faced tough negotiations with pilots over new short-haul domestic aircraft due to be delivered from 2024 as part of Project Winton. The pilots' union claims its members were threatened with outsourcing if they did not agree to the deal. The kicker is that against this background of unhappy customers and staff, Qantas has pocketed $2 billion in taxpayer-funded COVID payments and signed off giant EOFY performance bonuses to executives worth around $1 million each, to be paid in stocks in August next year following a period of cutbacks to executive pay. Up to 17,000 other Qantas staff will also be eligible for share rights worth just $5,500, paid out only to those who agree to wage and employment conditions. As engineers argue for a 12 per cent wage rise split across four years, it is a scenario the Transport Workers Union has described as a "sickening betrayal".

Jet fuel prices are notoriously unstable, but to give an indication of the price dilemma facing Qantas consider that in January 2020, just before COVID was set to shock the industry, jet fuel was trading at $2.59 a gallon before bottoming out at $0.96 in April when the reality of the pandemic's impact on air travel set in. The latest figures from June this year saw aviation fuel at $5.86 per gallon.

But the problem of reviving staffing levels may not be so easily fixed, the scale of the staffing problems being experienced now have built up over time and been supercharged by COVID when Qantas was quick to stand-down staff and outsource jobs, but slow to re-recruit and train replacements. Aside from the capacity problems plaguing Qantas and emerging as delays, cancellations, lost baggage and telephone wait times, the issue of ticket prices is a looming problem for travellers. The Qantas business model has used its domestic routes to compensate for slim margins in the international portion of the business, but leaps in jet fuel costs means going forward, domestic profits will be harder to maintain.

"I know that there's still a lot of good smart kids in the system that are willing to become pilots and they all want to work for Qantas," says Webber who teaches in the UNSW aviation program and sees some of those aspiring pilots up close. Perhaps the core question remaining is if COVID had never happened would Qantas be attracting criticism for its failings right now? "I'd say no," says Webber. "Even if the war in Ukraine had happened, that just impacts the oil price. It wouldn't have disrupted operations, the ability to service aircraft or perform ground handling activities and engineering activities. None of that would have been affected." Yet Webber believes Qantas is wrong to focus on this loophole when it comes to explaining to customers why their flights are cancelled or they are stranded in foreign airports. "Qantas has to respond to these things. That's within their control," he says. "They have to find a solution. They have to manage those problems. They have to show leadership. The way they respond to these things is what we must call into question."

Question 2

Using Kurt Lewins force field analysis approach, use evidence presented in the case to identify which forces are driving and restraining change at QANTAS. (10marks)