Fyfe’s model for the future

Written By: - Date published: 10:23 am, May 13th, 2009 - 9 comments
Categories: wages, workers' rights - Tags:

Despite four days of strike action and growing public outrage over Air New Zealand’s treatment of its Zeal320 flight attendants, CEO Rob Fyfe is still refusing to even start closing the glaring pay gap between these workers and those employed directly by AirNZ.

Why is Fyfe willing to force these workers into even more strike action, damage the company’s brand and leave even more planes sitting on the ground rather than just giving the Zeal320 staff a completely fair pay rise? There’s only 240 of them. Their claims for this round could probably be settled for as little as $6000 each, a step towards pay parity with people doing the same job as them. $1.5 million. It’s nothing to a company that had $4.2 billion in revenue last year.

Fyfe could literally give up his pay rise for one year to solve this dispute. So why is he willing to take so much punishment to stop the flight attendants getting a pay rise?

Because Zeal320 is Fyfe’s model for the future.

Right now most flight attendants are employed directly by AirNZ and get paid much better than people doing the same job who are employed by Zeal320. The 1000 flight attendants employed by AirNZ directly get something like $20,000 a year on average more than their Zeal320 colleagues.

What would happen if Fyfe could get all the flight attendants on to Zeal320 wages? By attrition and redundancies get rid of the flight attendants who are directly employed by AirNZ and replace them with workers employed on Zeal320 wages. Now you’re talking serious money – $20 million a year in reduced wages.

That’s what Fyfe is really fighting for. Not over a puny $1.5 million but because if Zeal320 workers get on track to pay parity with other flight attendants the chance to screw all flight attendants will be lost. And after them, the rest of the AirNZ workforce.

We all saw what Fyfe did in Air NZ Engineering and in Airport Services, his model is to cut and outsource until there’s nothing left. And judging by his 93% pay rise last year, enrich himself in the process. Is this really the business model we want for an iconic company that is 80% owned by the public?

9 comments on “Fyfe’s model for the future”

  1. It could go bankrupt while Jetstar, Pacific Blue and Emirates pillage it across the Tasman and on longhaul with a higher cost structure, or it could have been 49% owned by Singapore Airlines had a certain Finance Minister found that not to his taste.

    Qantas faces the same challenge, its staff are well paid, and it has set up Jetstar to undercut that on routes with low premium traffic. Most NZ routes have low premium traffic.

    Or do you know better how to make an airline a positive net investment when there are less than 5 investment grade airlines in the world today? (pre recession)? If you don’t, then why not sell it and not expose taxpayers to the risk.

    • burt 1.1

      I agree – sell it. The govt is elected by the people to govern – not play at being in business using our money with zero accountability.

      The desire to have a “National carrier” is driven by Ego & emotion. Ego & emotion cost money.

    • Eddie 1.2

      We wouldn’t have flights to regional airports if Singapore Air had bought it instead of the government.

  2. burt 2

    Eddie

    I regularly grumble about MP’s pay rises far exceeding the average ‘workers’ pay rise. I’ve been complaining about his stuff for years. The more myopic and partisan hacks who comment on the standard (claiming to represent workers rights) defended the PM’s circa 9% every year while workers only got 3% by saying that the PM didn’t set her own pay rise.

    Applying that logic: Did Fyfe set his own pay rise or did the majority shareholder (last year when 93% was awarded it was Labour) vote for this payrise ?

    Did Labour reward him for his good work putting a dividend on their investment ahead of workers rights?

    Looks like you are confused again Eddie – I think it’s Labour’s model for the future but I hope National can sort it out. What is the biggest evil Eddie – Having these 200 odd employees move to a 90 day probation period working for Air NZ (The National party model) or having them work via an off shore company (The Labour party model)?

    • Maynard J 2.1

      Genuinely confused here: where does the ‘offshore comany – Labour Party model’ come from? There is no explanation for that comment.

  3. itbit 3

    Fyfe was “awarded” his $1.5 million payrise from profit margins and performance for the year 2007/2008. We all know how he did it. Air New Zealands revenue from cargo alone was $3 billion for the year ending 2008.

    Fyfe’s a very good business man. I’m sure he’s not without his morals. Once upon a time I even had respect for him.

    Not any more.

    If it’s Labours Model For the Future why exactly are the National Government allowing it to continue? This whole thing really only became an issue after the Zeal320 AOC was absorbed back into Air New Zealand and the Zeal/Freedom Contract expired. In late November/early December. The AOC was the last thing remaining of Freedom Air/Zeal320 before the cabin crew to be absorbed back into the parent company. Zeal320 was, until then, a wholly owned Subsidary AIRLINE of Air New Zealand. Now it is, for lack of a better description, a shell company which the only reason I can see for exsisting is to keep wages as low as possible.

    Another point Libertyscott….if Air New Zealand want their fares to stack up against Jetstar and Pac Blue perhaps they should be offering the same standard of service with the same non existant seat space. They have (I believe) 172-180 seats on their (Jetstar) A320’s and (Pac Blue) Boeing 737’s. The seats on the Air NZ A320’s is 152, including Business. To be fair, the expectation that their fares should be as competitive with the budget Airlines is non sense. They offer in Premium Business Class a service with a Chef designed menu, very roomy seating in suede and leather and a 10″ screen with a wide selection of fodder for the travellers viewing/listening pleasure. In Premium Economy and Pacific Class they still have a larger seat pitch than both Jetstar and Pac Blue, a meal for every passenger (you should see the amount of unused meals/juices/splits/food and drink in general that is biffed due to MAF regulations-COST COST COST, they burn the money spent on all that wasted food every time they land and are re-catered) and an 8″ screen with the same selection of veiwing/listening fodder as Premium. The food and drink is all complimetary, as is the $60million entertainment and interior upgrade. As I’m sure you are all aware, on Pac Blue and Jetstar you either pay or starve and you have a deck of cards for entertainment (not that thats not sufficient for many, I’m sure). If you want to stack up the extra costs for all the extra nicks and nacks Air NZ has kindly put in place for it’s valued customers to travel across the ditch as opposed to the service and comfort levels offered by the budget Airlines I’m sure you will see that Air New Zealand are slightly out of touch with their expectations. Their savings of approx 1.5million PA (more than the total pay increase being asked for by the crew) is a very little drop in the large pool of spending that Air New Zealand has done in their commitment to passenger comfort and satisfaction. If they want to pay their crew less than the budget airlines pay theirs, they should be doing a budget service. They would save a shit load more money that way and then they might actually be competitive. I applaud them for wanting to make it seem like Air NZ is so much more wonderful than everyone else in the commitment to their passengers. They just do it by paying the people charged with looking after them a lot less than they like you to think.

    Oh, and one more. To be an Airline you need a few BASIC things.

    1. Aircraft-no brainer, right?
    2. Pilots-or the planes aren’t flying aywhere
    3. Engineers-or the planes might fly a couple of sectors, but after that you’re fadged
    4. Cabin Crew-without these guys all you’re gunna do is carry cargo

    Yes, it’s that simple. Of course you need all the money and the gadgets and the other bit and bobs but without these FOUR things, you are not a passenger Airline. I would say that makes the cabin crew’s job fairly important. Just thought I’d remind you of that.

    Eddie, I agree with you. It took 6 months for Air New Zealand to agree to specify Aircraft type on a draft contract, this was what first aroused my suspicion. The contract was, of course, to be renewed/renegotiated in 15 months. It makes sense as far as cost savings for Air NZ to do this to their employees. So I laugh at other Air NZ employees who shun and write off the Zeal Crew for being (Fyfe’s words, not mine) “disenchanted” with Air New Zealand’s brand and the almighty Koru. Coz guess what? Your job is next, buddy. And if Zeal weren’t sticking up for their rights as well as your’s, sure as shit no one else will be.

    Burt, I know this is what one might coin a “political” blog, but get another bloody hobby. As much as I am sure that to a certain extent, this may be politically motivated and it’s all the Government’s (past and present) fault for allowing it to happen, ultimately Fyfe is running the show the majority of the time. For me, it is he who is accountable. And I don’t really give a shit if Andrew Little or the EPMU are getting air time and kudos from their respective party for all this hoo hah, or that the timing seems off to you, as long as Zeal are negotiated a better deal. The’re might be a whole lot of stuff going on that none of us know about and we can theorize until we’re blue in the face but what matters is that Air New Zealand quit being such pricks, pull finger, stop making the public “disenchanted” with their precious image and get this sorted so these people can just do their jobs.

    Once upon a time I respected Rob Fyfe and Air New Zealand. I wanted to work for them because of their reputation and what they represented as New Zealanders.

    But not anymore.

  4. The Voice of Reason 4

    Burt: The majority shareholder (not a political party, but the government in its wider sense) would not have voted on Fyfe’s appalling pay rise. That would have been a matter for the remuneration committee of the board or some similar mechanism at board level to authorise.

    While the gov’t has the shares, it does not have control over the day to day management of the company. It can make changes to the board if it does not like the boards’ decisions, but it cannot change the decisions.

    So Fyfe is free to keep sucking pig feed from the trough as long is he enjoys the confidence of the board. Which no doubt he does, as the board are likely to be as deep in the swill as he is.

    ps Why do Air NZ need wide body jets? So Rob Fyfe has somewhere to keep his wallet. Boom boom!

  5. Eddie said “We wouldn’t have flights to regional airports if Singapore Air had bought it instead of the government” nonsense, most of those are quite high yielding as NZ has a monopoly on them.

    Itbit: Yes fair point, NZ’s tasman business model has blurred a bit. I have no problem with Zeal staff having a go at increasing their wages, although have to argue worst possible timing, in mid recession. I wont fly Jetstar or Pacific Blue because I find low cost airlines just unpleasant, and I’m NZ Gold Elite because generally I get a good product.

    However, it shouldn’t be a political decision, but business decisions by the airline and employees about what each is prepared to take. Sadly it affects the taxpayer because it is lumped with the airline because of past poor decisions by government and previous boards.

    • itbit 5.1

      Yes it is. So hence I’m saying for them to expect that their ticket prices should be competitive with the budget airlines is just a little too optimistic. There have been many, many emails to Rob Fyfe in support of the crew and some even specify that they are happy to pay extra to fly with Air New Zealand because of the meals/drinks/TV/service. He always gives the same answer: “Perhaps you are but many travellers are not willing to do so, especially in these economic times.”

      They were driving down ticket prices long before the recession was ever metioned. They must have been raking in the cash. And the crew were still on the same wage.

      I suppose then you might call it bad luck that the contract expired and the opportunity came up to negotiate a better deal in the middle of a recession? Recession though it may be, Air New Zealand is still profitable, the business is not just the Airline alone. The majority of their revenue is not even generated by ticket sales so to place such emphasis on this as an excuse to keep these people below a budget airline wage is pathetic in the least.

      It might be bad timing but I suppose they could have just renewed it for 15 months and tried to renegotiate then. But whose to say the recession would be over by then? Perhaps it might have deepened? So when would be the “best time” for the crew to do this?

      If there was no recesson would you fully support these crew in their actions?

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