IR laws under Labor blamed for emboldening unions to make ‘ridiculous wage demands’

An airline faced with its first industrial action in 23 years has lashed out at laws ‘emboldening unions to make ridiculous wage demands’.

An airline subjected to its first industrial action in 23 years of operation last year, says laws passed by the Albanese Government have emboldened unions and employee groups to make “ridiculous wage demands”.

Alliance Airlines’ managing director Scott McMillan was speaking after an investor briefing on the company’s half year results which highlighted the cost burden of industrial relations changes.

Investors heard that in the current financial year, labour costs would increase by $10m above CPI, and a further $21m in 2026.

Mr McMillan said new industrial relations laws passed by the parliament in late 2023 and taking effect last year, were resulting in the significant cost hikes.

“These laws have emboldened unions and employee groups to put on fairly ridiculous wage demands,” he told The Australian.

“We are spending a lot of time and effort and money, making sure we don’t get ourselves to a point where we would end up with an unsustainable cost base. The whole industry is in the same boat.”

Alliance Airlines managing director Scott McMillan at the company’s Brisbane hangar. Picture: Lyndon Mechielsen

Negotiating new enterprise agreements with various work groups had “for the first time in Alliance’s history” resulted in protected industrial action being taken by engineers, Mr McMillan said.

Queensland and South Australian-based pilots also voted in favour of protected industrial action but any disruption was averted when a deal was reached in the Fair Work Commission.

Negotiations were continuing with Western Australia pilots.

With the pay rises granted amounting to “higher than cumulative CPI”, Mr McMillan said they had no choice but to pass on the increases to customers.

“It’s not just Alliance, it’s everyone, and it’s not just aviation, it’s the whole of commerce,” he said. “It’s just this wave of cost increases that are materially above inflation rates.”

Last year Virgin Australia pilots sought and received pay rises of up to $42,000 in the first year, and almost $60,000 over the life of the three year agreement, to just under $300,000.

The large increases were justified by the Australian Federation of Air Pilots, after Virgin pilots accepted sizeable cuts during the pandemic to help the airline recover post-administration.

Qantas domestic pilots are still in the process of negotiating a new short haul agreement after narrowly voting down the first offer last year.

A second offer is expected to be put to a vote shortly.

Already Qantas is facing significantly higher labour costs, as a result of “same job, same pay” laws passed by the Albanese Government.

Last year, the airline agreed to increase the pay of around 2400 cabin crew sourced from labour hire companies to the same level as Qantas’ own crew.

At the time, Qantas CEO Vanessa Hudson warned the move would add about $60m to labour costs in the 2025 financial year and put upward pressure on airfares.

“Costs up and no productivity offset does erode our competitive position,” she said in August.

Mr McMillan also took aim at the government’s pledge to acquire Rex in the event no buyer emerges by mid-year.

He said any buyer, including the government, would face the same problems with the airline — an ageing fleet of Saab 340s.

“The long term issue for anyone is that the Saabs are no longer built, you can’t get any spare GE engines because the US military is taking them all,” he said.

“That issue is not going to be solved by the federal government.”

Although Mr McMillan saw merit in the Commonwealth’s efforts to keep Rex afloat for a while, he said that should only be until other regional airlines are in a position to fill any void created by Rex’s demise.

“There’s five or six really good regional airlines that should be afforded the opportunity to take over (from Rex) because regional operations are really state-based,” he said.

“I just don’t see how a government is going to be able to run it. Who from the government has the wherewithal to run a regional airline? No-one. Let private enterprise solve this one.”

Originally published as IR laws under Labor blamed for emboldening unions to make ‘ridiculous wage demands’