Planning to fly soon?

OH, to have been a fly on the wall when Qantas chief executive Alan Joyce recently bumped into BHP Billiton metallurgical coal president Hubie van Dalsen.

Despite running two very different businesses, the pair found very obvious common ground when they sat down for a transit-lounge chat. Which should not surprise, I suppose, given Qantas and van Dalsen's BHP Mitsubishi Alliance are currently the two most prominent hostages to union collectives attempting to recapture lost influence over management using the doors opened by Julia Gillard's Fair Work Act.

The Prime Minister has described the negotiation process overseen by Fair Work Australia as "hard bargaining". The emerging reality is that the modus of negotiation that is a cornerstone of Fair Work processes should more accurately be described as endless bargaining.

As one insider commented to me this week: "The way it is all set up, it is like playing Monopoly knowing that you are never going to get past go, you are going to land on the Go to Jail space every single time you go around the damn board."

Both Qantas and BHP Mitsubishi Alliance are currently stuck in a stare-off with unions that are able to take industrial action while continuing what the new regime calls "good faith bargaining". While progress of each set of disputes is different, the common theme here is that there seems no real way of breaking a deadlock born of company resistance to the unions' determination to reclaim influence lost through the cold hard years of the Howard government.

It is not really well appreciated out there that at Qantas and BMA both the management and unions are locked into enterprise agreement disputes that might well last for another 18 months.

This is because the FWA is flawed and because federal and state governments seem thoroughly uninterested in addressing those flaws.

Take the BMA situation as a case in point. The miner and the unions have been in talks for nine months and spent 32 full days in formal negotiation and endless hours in less formal discussion. The unions will not discuss financial terms until the company accepts a platform of conditions that address subjects such as rosters and their management and the terms and conditions of contractors.

Management will not accept those are matters that sit within the ken of unions to control. So, despite offering 5 per cent wage rises over each of the next three years and the removal of conditions on a $15,000-a-year production bonus, BMA has not even got down to talking money yet.

The result is that last weekend BMA told the unions it would take its offer to workers and hold a secret ballot before the month's end. Doubtless BMA expects to lose that ballot, but at very least its workers will appreciate the company's bona fides on issues like remuneration.

The problem is that when that ballot fails, both sides will return to good faith bargaining. What happens after that is anyone's guess.

Will the unions press the issue further by holding ever longer strikes (they are currently running a program of six-hour stoppages, which is not quite one full shift)?

Well that is likely, but the stoppages so far have not made that big a difference to BMA's production and given the pool of contractors across the BMA operations, it would seem likely that no matter what happened, the miner would continue to produce under any circumstance the unions might enforce.

Indeed, that is BMA's approach. It will keep its gates open no matter what. If its people want to work they will be able to. There will be no lock-outs here and contractors will not be used to do the job of any one on strike.

Now that is all very well, but how does this get resolved? Well, given that neither the unions nor management can backdown, then it gets down to the workers and how long they can tolerate the loss of income that flows from strike action.

In other words, the expectation is that the deadlock will eventually be felt hardest by the workers and they will eventually yield to the inevitable and take their money and get back to work.

How long that will take, well, only time will tell. But no one is betting there will be a settlement this calendar year.

During their meeting of the minds, Joyce is understood to have explained to van Dalsen that Qantas simply has to maintain its resolve and face down the various unions representing his ground staff, engineers and pilots because if it doesn't then there will not be an international business in 10 years' time.

The risks facing van Dalsen are nothing like as potentially terminal, but staring down the so-called Single Bargaining Unit that represents the CFMEU, ETU and AMWU is nonetheless as mission critical for BMA as it is for more broadly for BHP Billiton.

The resolve to resist in both cases emanates from both boardroom and executive management and reflects their refusal to cede control of any part of their day-to-day operations to unions. End of story.

In both cases here, unions opened discussions over new three-year enterprise agreements that were predicated on the recognition of union authority over manning, shifts and their allocation and the terms under which either Qantas or BMA could use contract employees.

Acceptance by the airline or the miner would render contracting pointless and would re-insert unions as the gatekeepers standing between management and its workers.

Joyce has made it clear to his unions time and again that he simply cannot yield on issues that go to the heart of his ability to manage Qantas effectively. And if TWU boss Tony Sheldon is any guide, the unions are starting to get the message. Having called TWU members for four-hour stoppages at airports next Tuesday, Sheldon told The Australian's Ewin Hannan on Thursday that Joyce and his chairman Leigh Clifford had not moved "one iota" during months of discussions. And they are not going to because they can't afford to because there is too much at stake to go back to the bad old ways.

The facts here are that Qantas is not making money by flying customers to international destinations and that situation cannot go on for too much longer.

But even when Qantas International does make money it doesn't make anything like its cost of capital. And that too cannot continue indefinitely.

So Joyce is committed to a new strategy that will see its cut-price offer, Jetstar, set up a new airline in Japan in partnership with JAL and Mitsubishi and then Qantas become a major investor in a new top-end carrier that will be based at one of Asia's bigger hubs.

The extension of the Jetstar brand underlines the success of its no-frills business model and creates a fair bit of potential for the brand's further franchising in other growth markets.

The Jetstar model is, of course, built on workplace flexibilities not currently available to the core Qantas business.

Now this dispute is not necessarily about introducing those flexibilities to Qantas, but it is about ensuring that JetStar's productivity is not threatened and that management is free to promote the cause of productivity within the mainstream business.

One of the interesting differences in the Qantas and BMA stand-offs is their response. Joyce is a service provider and one desperately concerned about the dwindling viability of core parts of his business. Almost by necessity, then, he seems prepared to risk amplifying strike action by attempting to mitigate its impact on customers. Which is why Qantas has, for example, trained head-office staff to handle baggage and act as ground staff during the TWU stoppages.

Sheldon's response to this development was, I think, particularly informative of the way the FWA has inspired the recovery of the union movement's 1980s mojo. Speaking to Hannan, Sheldon warned that if Qantas used "overseas-trained strike-breakers, the tarmac will become the wharves of this decade in terms of industrial action".