Can this union veto Virgin’s potential choice of CEO?

There is no tinderbox quite like that which sits at the heart of industrial relations in Australia’s aviation sector. So one has to question why Virgin would risk igniting a flare-up with the powerful Transport Workers Union (TWU) by appointing a chief executive that the union is attempting to veto.

For its part the union is firing a shot across the bow – designed to let its private equity owner Bain know that former Qantas executive Paul Jones could be a dangerous decision for the future of industrial relations harmony.

This week, the TWU threatened it would withdraw its support for Virgin’s tie-up with Qatar Airways if the airline appointed Jones, who is currently Virgin’s chief customer and digital officer. The partnership with Qatar is an important element in Virgin’s move to re-launch long-haul international services.

Paul Jones, Chief Customer and Digital Officer for Virgin Australia.

But it’s a big swing for the union given having a say in any executive appointments sits well outside any union’s wheelhouse. It doesn’t play directly into workers’ pay and conditions or even wider public interest issues like the environment.

Secondly, there is no confirmation that Jones is on the short list for the top job at Virgin that is being vacated by Jayne Hrdlicka. He has been widely reported in the echo-chamber of media reports as the front-runner and Virgin’s only internal candidate.

Unions across most industries wouldn’t consider buying into an owner or board’s right to appoint a chief executive.

But aviation industrial relations stands apart from other sectors - both historically and because of what can only be labelled as the Alan Joyce factor.

Sure, all sectors have their share of industrial relations friction - the most recent of which is Woolworths’ battle with its distribution centre workers that is resulting in shortages of product on the supermarket’s Victorian shelves.

But over the past 15 years aviation has been in a league of its own - with legendary industrial relations friction created in large part by former Qantas chief executive Joyce taking a renowned hard ball approach to unions.

Few would forget his nuclear decision to ground the airline in 2011. Industrial relations even spurred the creation of Qantas’ budget carrier Jetstar.

More recently Qantas had to endure the cost and humiliation of losing its legal action over the sacking of 1700 ground handlers.

During his time at Qantas, Jones played a significant role in that decision - and this explains in large part why the TWU is attempting to nip in the bud any move to elevate him to the top job at Virgin.

It is part of the reason that the TWU will feel emboldened to stray outside its lane and threaten consequences if the chief executive appointment is controversial.

While the community generally has limited support for industrial action - particularly if it inconveniences them - their level of disdain for Qantas under the last few years of the Joyce regime made allies of Qantas’ customers and a large portion of its workforce.

Meanwhile, Bain’s form on executive decisions could be questioned by unions who threw their support behind the former Virgin boss Paul Scurrah when it was bought out of administration. Bain said it was also “behind him (Scurrah) and his team” when they took the reins of the airlines. But his reign lasted only a few months before he was replaced by Hrdlicka.

Thus it wasn’t an auspicious beginning to the relationship between Bain and Virgin’s unionised workforce.

At this point Bain would be keen to ensure the process of moving towards relisting on the ASX doesn’t encounter any fresh hurdles.

The last box that needs to be ticked is the appointment of a chief executive. It has already demonstrated that profitability has taken off and has also secured agreement with Qatar to become a 25 per cent shareholder.

Virgin has also been waiting for a re-rating of Qantas’ share price - an element it needed to maximise the IPO pricing.

This box has also been ticked with the flying kangaroo’s share price rising almost 48 per cent over the past six months.

Whether the TWU’s lack of support has the capacity to upset Jones’ candidacy remains to be seen.

But even the threat from the TWU opens up a new frontier in industrial relations.

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