Visiting the local pub or bottle shop may create an impression of beer drinkers spoilt for choice. But the variety of offerings is increasingly controlled by the duelling duopolies of producers and retailers drunk on their market power. It’s Coles and Woolworths again. And it’s prices. Zacharias Szumer investigates.

As inquiries run by both the Senate and the competition watchdog are putting their magnifying glasses on the power of Australia’s supermarket duopoly, MWM is taking a closer look at Australia’s liquor market.

Kicking things off, this correspondent recently got on the beers. Which is to say: he spoke with people in Australia’s independent brewing industry to understand how massive duopolies are taking a huge gulp of the profits at all stages of the supply chain.

But let’s have a few at the pub first. Even here at our friendly local, it might be hard to escape the influence of a major duopoly: Carlton & United Breweries (CUB) and Lion. According to the managing director of Coopers, CUB’s got about 50 per cent of the market and Lion about 30. Both are owned by Japanese companies: respectively, Asahi and Kirin. Coopers is a distant third.

A bevvy of nefarious tactics

Brewers often have contracts with pubs to get their beer on tap. The two companies have managed to “lock at least 85 percent of beer taps in the country,” according to a recent budget submission by the Independent Brewers Association (IBA).

They also use various nefarious techniques to limit choice and sales on the taps they don’t directly contract – or at least that’s what your correspondent has heard.

For example, if one of the big players has an India Pale Ale (IPA), they will seek contract terms that ensure it’s the only IPA on tap.

Sometimes it’s just “knowing that a brand is strong and excluding it,” an industry insider, who asked not to be named, told MWM.

Financial rebates offered to pubs for selling a certain quantity of beer from the big suppliers also create an incentive structure that “throttle[s] the sales of the independent beer”, the insider said.

To hit the rebate target, pubs will price independent beers ‘artificially higher’ or order fewer kegs, so they just happen to run out at 9 pm on a Friday night, pushing customers to order beers owned by the duopoly.

While not going into detail, Kylie Lethbridge, CEO of the IBA, said the peak body had been hearing from its members about various “exclusionary practices.”

“That is definitely very much what we have been told and what we’re being told more and more lately,” Lethbridge said about financial rebates leading to underhand tactics.

The big two in booze retail

After a pint or two at the pub, we head to the bottle shop, where another two players have dominant slices of the market.

On one hand is Coles, which owns Liquorland, Vintage Cellars and First Choice. On the other, Endeavour, which was spun-off by Woolworths in 2021, and owns Dan Murphy’s, BWS and the delivery service Jimmy Brings.

While the demerger may have helped cleanse the Fresh Food People’s hands of vice, Woolies has stayed in the cut, remaining Endeavour’s fourth-largest shareholder with a roughly 9 per cent stake.

Together Endeavour and Coles account for around 55 per cent of the market. If you throw in the other two major retailers – Aldi and Metcash (which owns IGA Liquor, The Bottle-O, Thirsty Camel, Porters and Cellarbrations) – the four companies’ share is over 70 per cent.

.Because of the power they have” the big retailers “can dictate price.

Kylie Lethbridge, CEO of IBA.

Both Endeavour and Coles have come under scrutiny in recent years for their expansion of home-brand alcohol products branded as boutique or independently produced.

While a recent Four Corners episode focused on misleadingly marketed boutique wine, the beer industry has also seen a proliferation of “pseudo-craft beers”, as the IBA’s budget submission calls them.

At Coles-owned outlets you might have seen brands such as Tinnes, while at BWS or Dan Murphy’s you’ll encounter Zytho or the interestingly named Crony pale ale.

The insider told MWM that the big two will essentially seek to replicate an independent product that’s already on the market, both in recipe and branding, but sell it at a cheaper price.

They also keep any details about being a ‘home brand’ of sorts hush-hush. It’s not illegal, just a little bit naughty.

What about the liquor! | The West Report

Plans for independent brews get shelved

Endeavour puts out most of their ‘private label’ booze through a subsidiary called ‘Pinnacle Drinks’. In 2023, Pinnacle launched 550 new products. The year before, it was 479.

It’s an “incredible number”, IBA board member Richard Adamson told parliament last year, and it’s created a struggle for independent brewers to get their products on shelves. He added:

Anecdotally, we’re seeing that one in five to one in four shelf spaces for beer is now one of their private-label brands, so we are getting squeezed out of the major retailers’ shelf space at the same time,

Appearing the day before Adamson, Coopers’ managing director told parliament that, in opposition to the big two, independent retailers were more likely to let “consumer preference dictate what is on the shelves.”

Because private-label brands have the financial might of major corporations behind them, they can also dish out far more dosh on marketing and promotions.

For instance, the Coles-owned Tinnies beer brand recently signed a lucrative sponsorship deal with Cricket Australia.

Both Coles and Endeavour-owned brands also have free access to detailed sales data from their parent companies, while independent brewers might have to shell out roughly $150,000 for subscription services to access this data, the insider said, although such services only provide “what the retailers are willing to share.”

Competition canned

Perhaps by now, we’re sick of all these big players throwing their weight around. So, let’s head to our local craft beer brewery.

But here, too, before the beer even leaves the factory floor, independents face another duopoly, as only two companies in Australia make printed aluminium cans: Visy and Orora.

These two “behemoths”, as the insider called them, also dominate the cardboard production that encases slabs and six-packs.

Orora is owned by the Japanese giant Nippon. While Visy is owned by the family of Australia’s third-richest man Anthony Pratt, who regularly donates massive sums of money to both political parties.

There’ve been “numerous cases” where the big two have “post-contract, changed terms or changed pricing on people. It’s been pretty difficult,” the insider said.

IBA’s Lethbridge also explained how some of these contract changes make it particularly hard for small brewers.

Peter Dutton’s angry crusades. You never know what you’re gonna get.

This post was originally published on Michael West.

Getting control of an ASX company is the holy grail for an entrepreneur; it means deep pools of other people’s capital to capitalise upon. So it is that colourful tech venturer, Giuseppe Porcelli of Lakeba Group is having his second tilt at The Boards. Michael West reports.

Will colourful Manly entrepreneur Giuseppe Porcelli of Lakeba Group fame finally get to control a public company listed on the ASX through the back-door?

Porcelli is no stranger to creative accounting. He somehow managed to convert a simple offshore software development business generating very little cash into an investment behemoth with “revenues” of $100m. That is if you believe the “independent valuations” that he is yet to disclose to anyone, even shareholders.

Many even doubt that investing in businesses you control actually qualifies for this special accounting categorisation as an investment company.  After being questioned at Lakeba’s AGM in 2022 the original auditor, ASK Accounting, saw discretion as the better part of valour and soon resigned. This left the door open for PKF, a mid-tier accounting firm, to be appointed as the new auditor. The result? A dramatic revaluation of Lakeba’s investments. Downwards, of course.

CaddyShack, CEO of the year antics and turkey sandwiches: Lakeba back in the revenue bunker

This gives some insight into Porcelli’s apparent need to be seen as a big immigrant success story at any cost. He craves publicity as much as others crave tiramisu. His ultimate goal seems to be to head up a company listed on a public stock exchange, any public stock exchange, regardless of whether that is the best option for shareholders.

Some years ago, Porcelli stage-managed an attempt by Lakeba, his then relatively unknown private business, to take control of Mobecom Ltd (now Gratifii Ltd), a flailing public company in the loyalty program business. His cunning plan was to sell Mobecom one of Lakeba’s early stage ventures called Paid by Coins and build some tech in exchange for a LOT of Mobecom shares.

An extraordinary number given the very early stage of Paid by Coins and its relatively minuscule revenues. So extraordinary, that the deal was eventually unwound completely as being contrary to the best interests of Mobecom shareholders. This was in no small part due to the concerns of the then incoming Mobecom CEO, Iain Dunstan, who clearly did not see the same value in Paid by Coins as was claimed by Porcelli and the previous CEO of Mobecom that was replaced by Dunstan. Deal dead. Strike 1.

Smooth Talker: Lakeba entrepreneur Giuseppe Porcelli takes tech punters for a rude ride

Interestingly, even though this crafty deal was unwound before it was fully consummated, Porcelli still claims it as an exit on his Lakeba website in an apparent attempt to show a semblance of success in his 10-year old “venture creation” business. In line with its tag line, Lakeba has done plenty of “Conceiving”, a bunch of “Creating” but not so much “Commercialising”.

The reality, according to several long suffering shareholders, is that there has been no return whatsoever on their investment despite regular promises from Porcelli that “this will be our year”. Promises that are now as thin as the finest Italian prosciutto. It seems that the hefty revenues previously claimed by Lakeba as the result of startlingly opaque increases in valuations of its ventures has not converted to any actual returns. Like oral contracts, paper returns aren’t worth the paper they are written on.

The Mobecom fiasco has also led to some good old-fashioned litigation by several shareholders of Lakeba who claim they were misled regarding Lakeba’s revenues when investing back in 2019. Apart from the distraction and expense of litigation, a successful outcome for the shareholders could lead to others making similar claims against Lakeba.

In any case, following the Mobecom “deal”, Porcelli tried a new tack. Build a digital bank by acquiring a tiny credit union that already had the banking licences required. A new Lakeba venture, Ezi Financial Services Pty Ltd, was set up and capital raised at a lofty valuation to build the tech and buy the licence.

Other more qualified organisations with much deeper pockets had also tried to launch a digital bank and failed, but Porcelli pitched that he had the secret sauce that could pull off this minor miracle.

Unfortunately for the investors, the deal with Maleny Credit Union also fell apart relatively quickly despite the loud trumpeting of Lakeba’s supposed ability to build the underlying technology required to turn a quaint one-branch credit union into a world-class digital bank. The result? The Maleny Board lost faith in Porcelli’s abilities and pulled the pin. Strike 2.

Go forward a few years and here we are again. A recent announcement from another public company, Domacom Ltd, indicates that they are in discussions with Lakeba to acquire Bricklet, another one of its controlled ventures. Bricklet has promised to change the property market by letting people buy fractions of properties, wineries, farms, anything, but it seems the market is still somewhat dubious about it all.

Like the old timeshare model, it’s easy to buy but hard to sell when you want to cash out. Not to say the fractional model doesn’t have a place, just that it has proven hard to convince people it is the best place to park their hard-earned dollars.

Domacom is in the same market, and looking at its share price it seems to be having a similar problem getting punters to buy into the concept. It has a current market cap of just $4.8m with a share price that has dropped dropped 83% in the last year to just 0.011c. So who is saving who? Or are they both clinging to a one-man life-raft?

So what’s the proposed deal? Well it looks like Bricklet will lend a chunk of cash to Domacom to solve its current cashflow problems, then invest in Domacom following which Domacom will “consider” buying Bricklet.

Given the very early stage of this deal, details are scant. However, you can bet London to a Brick(let) that the acquisition will be via a share swap so that control of Domacom will shift to Lakeba. That’s the Porcelli Way. It is looking unlikely to be a cash acquisition given Domacom is proposing to borrow money from Bricklet to pay its debts. It’s looking more like a cheap back-door listing just like the failed attempt on Mobecom.

Whether this deal goes ahead depends on double due diligence. First, Bricklet has to check out Domacom before lending it money, and then Domacom has to check out Bricklet to see if it wants to buy it. We await the result with bated breath, as do the Lakeba shareholders who are no doubt hoping for some sort of liquidity event after all this time.

Bricklet has had its own share of problems. A recent attempt to partner up with a business packaging up farms for sale as “bricklets” on the Bricklet platform. “We had the product and just needed a platform to manage the process” said Brian Sher of The Family Farm.

“Bricklet seemed like the answer but our legal advice was that it was probably operating as an unregistered MIS. Even worse, we think their legal documentation made the model totally unworkable for farms, so we pulled out of the deal”.

Sher had other concerns about the way Bricklet was being managed. “We got charged all sorts of fees, including stamp duty, even though they were not properly disclosed. We totally lost faith in the platform and its management.“

Will the due diligence of Bricklet’s business yield a positive outcome? Let’s hope Domacom’s advisors  don’t subscribe to MWM and find out about all the other dodgy dealings at Bricklet that have been reported to us (). If so, it may be strike 3 for Porcelli… Watch this space.

Ocean view, or really a carpark view? ASX property float a tough sell

This post was originally published on Michael West.

Digital disruption has come to the disability and aged care sectors, with mixed reviews. The digital economy and its effect on itinerant ‘gig workers’ now reaches well beyond rideshare and home delivery services. Zacharias Szumer investigates.

Perhaps evincing a masochistic taste in literature, this correspondent recently decided to sink his teeth into the gig worker reforms subsection of the Senate inquiry report into Labor’s Closing Loopholes bill.

While certainly not a page-turner, the section was somewhat enlivened by a detectable level of vitriol directed towards a company called Mable.

Mable, which acts as an intermediary between care workers and their clients, incurred the committee’s wrath for insisting that it wasn’t a gig economy platform at all and thus shouldn’t be regulated alongside Uber, DoorDash and co.

While the aforementioned rideshare and food delivery platforms engaged with the process in a “constructive” manner, the report’s authors wrote, Mable had deployed “spurious arguments” to request it be wholly carved out of the reforms.

While it seems that Mable’s efforts weren’t totally successful, and the Fair Work Commission may still be able to impose minimum standards upon its workforce, some experts say cross-bench amendments to the bill have made it significantly harder (more on that later).

Clear as mud: gig workers’ rights versus Uber, Deliveroo, Ola and Menulog fight for flexibility

Horizontal marketplace or digital platform?

Mable was launched in 2014 with a mission to “unlock productivity gains” in Australia’s aged care and disability sectors. It says it now has over 17,000 independent contractors and 22,000 clients on its platform.

On Mable, approved aged care and disability clients and workers connect via self-made profiles. In addition to hosting this digital marketplace, Mable also provides insurance and helps process invoices, among other services.

Unlike a service such as Uber, where the company offers a job at a certain price and a worker can either take it or leave it, Mable contractors and clients quote their own price. Although, as in any market, there’s no guarantee they’ll get it.

Mable contractors are also paid per hour rather than per job.

Because of these differences, Mable insisted to the Senate that it isn’t part “of the ‘gig economy’ or in any way similar to platforms in rideshare and food delivery”.

Leaving aside the precise delineations of the ‘gig economy’, in one sense, Mable is applying a well-established gig platform business model; for the last decade, it has steadily run at a loss, aiming for expansion and market share over profitability.

Uber, by comparison, was launched in 2009 and only became profitable in 2023.

To stay afloat prior to profitability, such companies rely on large injections of investor finance. For instance, Mable received $100 million from one of the world’s largest private equity firms in 2021.

Flexible contractors or overstretched digital serfs?

Mable’s Closing Loopholes inquiry submission cited a company-commissioned YouGov survey that found “91 per cent of digital platform service providers rated their experience as ‘very good’ or ‘good’”.

“Support providers on Mable rate their overall experience, satisfaction with hourly rate and whether they feel trusted, significantly higher than support workers employed by traditional providers,” the submission said.

A Mable spokesperson told MWM that the company was clearly providing a desirable work opportunity as its growth was occurring at a time when “there are thousands of direct employment opportunities available in the care and support sector”.

Several Mable contractors who appeared alongside the Health Services Union (HSU) at an October Closing Loopholes inquiry hearing painted a less rosy picture.

One said that “Mable doesn’t check on the wellbeing of workers or provide them with feedback” and that the “occupational health and safety standards for workers were not up to the standard.” One commented that:

There’s so much pressure to do unpaid work … You’re always under pressure, and you don’t have full control over your work.

The HSU told the Senate that digital platform care workers earned “on average anywhere from 5 per cent to 55 per cent less than already low-paid comparable workers when platform fees and superannuation are taken into account.”

The Senate report found that Mable “does enable workers to earn below the minimum award wage,” but Mable says its workers “earn more on average” than their counterparts in traditional employer-employee relationships and other digital platforms.

Internet vox pops and Mable PR

Seeking to cast a net beyond official statements and union-facilitated witnesses, MWM sought feedback about Mable on several disability and aged care-related issues on internet forums, posting in several private Facebook groups and making this Reddit post.

Responses were mixed.

Mable “encourages workers to bid to the bottom to get work, which after fees often result in getting paid less than formal employment,” said one worker, while another said they were “very happy with Mable.”.

One support worker, who has now moved on to direct employment, described Mable as “a great stepping stone,” while another said the platform takes “a pretty unreasonable cut, but you can bump your rate up to cover it”.

FYI: Mable takes a 10 per cent commission from the worker and a 7.95 per cent service fee from clients. E.g. If a contractor requests $50 per hour, they’ll get $45, while Mable will get $5 plus around $4 from the client.

Some workers complained that payment was slow, while others said they’d had “minimal problems with payments.”

While most comments and private messages received were critical of Mable, the disgruntled are perhaps more likely to leave reviews than those who were content.

Shortly after posting on Reddit, MWM was contacted by Mable’s PR rep to arrange for him to hear several worker and client testimonials – all of which were, unsurprisingly, quite positive.

Jacob Darkin, who is both a support worker and NDIS client, told MWM that his experience using the platform was overwhelmingly positive, saying that Mable offered a safe way to connect with highly skilled workers.

“I think if they just keep listening to what people want – whether it’s support workers or people with disabilities – and try to make improvements so we benefit, then I think they’ll be a provider for a long time,” he said.

While Darkin is a paid member of Mable’s Independent Disability Advisory Committee, he said he was offering his comments voluntarily.

Two other support workers, one of whom is also a member of Mable’s advisory committee, also shared positive testimony about working via Mable, highlighting their preference for platform flexibility, in terms of setting one’s own wages and hours.

A loophole for Mable?

While Closing Loopholes finally passed in early February, cross-bench senators David Pocock and Jacqui Lambie secured amendments that may hinder Mable from being captured by the gig work reforms.

“It is important that the reforms only capture those they intend to,” Pocock wrote in the senate inquiry report, but Labor’s draft bill went “far beyond the scope of capturing the gig platform courier drivers and would impact sectors like personal and aged-care providers.”

Thanks to Pocock’s amendments, contractors on platforms like Mable will now need to satisfy at least two, rather than just one, criteria to be considered “employee-like” by the Fair Work Commission. The Mable spokesperson told MWM that

Mable is particularly grateful to Senators David Pocock and Jacqui Lambie for their advocacy and support.

In response to questions from MWM, Pocock said he had met several times with Mable and similar providers during the legislative process but stressed that his amendments were not sought on their behalf, saying that the changes were “requested by every peak employer body”, including the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Business Council of Australia.

He also said the amendments were not intended to get “personal and aged-care providers excluded” and stressed that there was still enough regulatory wiggle room for the government to ensure companies like Mable were covered if it so desired.

The HSU, Labor sources and Mable itself also told MWM that, in their opinion, Pocock’s amendments didn’t clearly let platforms like Mable off the regulatory hook.

HSU acting national secretary Tim Jacobson told MWM that Mable workers clearly “experience low bargaining power and are subject to significant amounts of control in the way they perform their work,” which are two of the required criteria.

However, Dr Fiona Macdonald, industrial and social policy director at the Centre for Future Work, said it was

difficult to see how care and support workers engaged by individual consumers” would satisfy the increased requirements,

“A worker could be considered to have some authority over the performance of their work and to have some bargaining power in relation to the services contract, as this contract would be between the individual worker and an individual consumer,” she said.

As a result, the amended “legislation may fail to provide protections for the most vulnerable workers using gig care and support platforms”, said McDonald, who authored a 2023 report arguing that the “gigification” of care work undermined workforce sustainability and gender equality.

Uber and Google – how PwC got them to dud Australia of billions

This post was originally published on Michael West.

Australia’s leading business lobby, Business Council of Australia, glosses over its tax avoiding members while cashing taxpayer cheques. Zacharias Szumer delves into the latest donation disclosures from the AEC.

It’s getting to be a bit of a slog trawling through the Australian Electoral Commission’s (AEC) annual disclosures – the not-so-user-friendly trove of data that gives only a partial glimpse into the money funding political parties, independents and politically engaged organisations.

The AEC’s 2022-23 disclosures, released on February 1, largely revealed the usual players – the main shifts in recent years being the increasingly large sums being thrown to groups such as Climate 200 and Advance.

While sliding into spreadsheet-induced torpor in search of an original angle, your correspondent had a look at two of Australia’s most powerful private-sector lobby groups: the Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry (ACCI).

The BCA and ACCI are both networking and lobbying outfits, although the BCA is a tad more elite. While the ACCI represents businesses of all shapes and sizes, the BCA’s membership is restricted to Australia’s largest companies – or, more specifically, their CEOs.

For the AEC’s purposes, however, both are – or at least have previously been (more on that later) – classified as ‘significant third parties’. This means they spend enough money trying to influence elections that they must disclose details of any payments made to them above the AEC threshold – currently around $15,000.

Biggest political donors revealed amid calls for reform

DFAT grants over $1.5M to BCA

Most of the BCA’s sources of funding were from the usual suspects – AGL, Amazon, Atlassian, and AstraZeneca (all before we get to the second letter of the alphabet).

As one would expect, these are the companies that pay the BCA to lobby for lowered company tax rates and against increased transparency rules that would stymie multinational tax evasion.

Nonetheless, the BCA is happy to receive public money for its own multinational networking services – as revealed by several payments from the Department of Foreign Affairs (DFAT).

In 2022-23, DFAT made two payments totalling $220,000 to the BCA to provide services and support for the Australia-India CEO Forum.

Those payments were part of a $1.34 million grant DFAT awarded to the BCA to strengthen the Australia-India business relationship “by supporting the Business Champions and revitalised CEO Forum to regularly meet, to identify opportunities and address challenges in the economic relationship.”

The department paid out another $75,000 to the BCA to support a similar initiative between Australia and New Zealand – part of a grant worth a total of $325,000.

As a member-funded lobby group for Australia’s most powerful corporations, one could ask whether the BCA should be receiving any public money at all, let alone over $1.5 million, to help facilitate international corporate networking.

But we’ll leave those judgements to those more qualified to make them.

Capitulation Complete: Government caves in to multinational tax avoiders

The ACCI has bowed out of electoral politics

When it came to the ACCI’s financial benefactors, however, MWM was unable to see anything at all; while the ACCI declared over $6 million in receipts, it didn’t provide any detail about any of those transactions. 

Similarly, in the 2021-22 financial year, the ACCI declared $7,456,323 in total receipts but didn’t provide info on any of that either. 

That stands in contrast to the details they published in the two years prior: 2019-20 and 2020-21. 

This disclosure discrepancy has seemingly arisen because the ACCI has exited electoral politics, declaring $0 in ‘electoral expenditure’ since 2020-2021. It thus no longer qualifies as a significant third party – although the AEC’s website still lists it as one. 

In contrast, the ACCI declared a cumulative $52,084 in ‘electoral expenditure’ in the 2019-2021 period. 

Readers may wonder how such a body, which regularly and loudly lobbies government and the public, didn’t spend any money on shaping electoral preferences.  

The answer is that, for the AEC’s purposes, ‘electoral expenditure’ means money spent for the “dominant purpose of influencing the way electors vote in a federal election” – a definition narrow enough to exclude advocating for certain policies that just happen to be more closely aligned with one side of politics. 

MWM hasn’t seen any indication that the ACCI clearly sought to sway voters in the 2022-23 period, but if any readers have info, we’d be more than happy to receive it.

The BCA, fake pub-tests and the impending propaganda blitz

This post was originally published on Michael West.

Pilots at Qantas’ Perth-based subsidiary Network Aviation went on strike for 24 hours Thursday, causing disruptions for thousands of passengers, with more union action planned for next week. Just one of the many issues for new CEO Vanessa Hudson to sort out. Michael Sainsbury reports.

Despite all the promises by CEO Vanessa Hudson of change, the evidence so far is rather more of the same. That includes predecessor Alan Joyce’s predilection for outsourcing all the hard bits, including the hard decisions.

Hudson has so far farmed out the company’s image management to Boston Consulting Group (BCG), operations planning to McKinsey & Co, and now its industrial relations to the Fair Work Commission.

An increasingly bitter relationship between the pilots of the company’s Perth-based Network Aviation and the Australian Federation of Air Pilots (AFAP), which covers about 90% of the 250 pilots in the group, saw them strike yesterday. Qantas cancelled 35 regional flights stranding paying passengers and fly-in-fly-out workers.

More Qantas Group flight pain, pilots fight on over pay

Pilots at Network Aviation (NA) have voted down three attempts at a new Enterprise Bargaining Agreement. NA pilots are the worst paid in the Qantas group; at present, 70% of NA pilots are paid below award levels, according to the union. Qantas’ says they want a 50% pay rise, but that would only take them up to award levels.

After the last rejection, Qantas went to the Fair Work Commission (FWC) seeking a finding of ‘Intractable Bargaining‘, a last resort Industrial Relations tool to break the impasse of stalled negotiations. If successful, this would see the FWC settle the dispute. NA pilots voted Thursday to continue rolling strikes, and another two-day action planned for next week was announced by AFAP on Friday..

“In terms of conditions, all we want is what every other pilot in the group has,“ a union rep told MWM.  However,

the even bigger problem is that we cannot attract pilots with any experience to the group, and many of our experienced pilots are leaving for much better paid work overseas.

Enter the consultants

And so to McKinsey’s mission which is – and this is not a typo – to ‘make the planes run on time’. An airline’s central task is to supply excellently maintained aircraft to fly their passengers to their destination on time. So, why was Hudson hired if she could not perform this core business task?

Qantas insiders have told MWM the answer is really simple, a simple combination of having enough pilots, engineers and a fleet of aircraft that is big enough, young enough and available.

Hudson’s problem is that she has none of these, so ‘fixing’ the problem will take many years.

McKinsey is the second set of consultants Hudson has called in, with BCG being brought in as soon as she took the top job to help ‘repair the company’s image with passengers’. So far, this appears to have amounted to more Grange wine in the Sydney First Class lounge, as per Qantas Facebook groups, and a slight improvement in on-time performance for the mainline flights (not Jetstar), yet this still sits below pre-COVID levels.

The problem is that the airline has changed its core business from providing logistics to financial engineering. It doesn’t help that she has created an executive team of which barely 10% has long-term operational experience.

Pilots on the run

It’s not just Network Aviation that is screaming for pilots, it’s the entire group. To add insult to injury, Emirates, Cathay Pacific and Japan’s ANA are all running targeted recruitment of Australian pilots at present; multiple pilot sources toll MWM.

The larger problem is a global shortage of pilots. The total number of active commercial airline pilots was 351,000 in 2023, according to CAE, a leading supplier of flight training services. In June 2023, the group projected a need for 252,000 new commercial pilots by 2032 – a number that sits in the middle of forecasts for aircraft demand by major aircraft makers Boeing and Airbus.

Insiders also said that Qantas disguised its lack of pilots with its pre-Christmas announcement it was “taking some flights out of our schedules” during December and January.

A thin and ageing fleet

Qantas is also running out of planes due to the under-investment during Alan Joyce’s tenure, and it is now cutting back on a range of international services. This week, an internal note from Nick Bull, head of the international cabin crew, said that the regularity of flights from Sydney to New York, Johannesburg, Dallas, Los Angeles and Santiago would be cut. The spin from Qantas was, as usual, ‘supply chain issues’, ‘supplier delays’, and a lack of maintenance workforce. The last, at least, is true, but self-inflicted.

As for the planes, one A380 is in Abu Dhabi, having its heavy check. “They have found cracks in the wings which is no surprise,’ one engineer told MWM. “This means it has been delayed two months, which in turn has delayed another A380’s heavy check and yet another A380’s landing gear change.”

The landing gear is going to run out of cycles very soon, so it will need to be parked until its maintenance slot becomes available later in the year.

The company’s 25 A330s have an average age of 16.6 years, with Qantas ranked 126 of 149 airlines running these planes in terms of age. “They are very delicate and seem to have a high rate of delays and reschedules to do maintenance problems,” the engineer said. Qantas sources say its A330s have an on-time record of only 35% compared to 100% for its leased Finnair plane that flies from Singapore to Sydney, with another Finnair on the Sydney-Bangkok route next month.

Maintenance woes – and price gouging

“There is higher aircraft utilisation, no spare aircraft as well as more and more aircraft having work that must be done that’s been put off,” the engineer said. “You can only defer things for so long, so ground time delays are inevitable. Overtime is offered every day, but it seems people are getting over doing the extra time. There is a continual line of job ads with no decent candidates left to employ. We have taken back some engineers who took redundancy packages, which is good.”

We still have a spare parts shortage, as we only seem to buy large and expensive items when needed. This leads to long delays whilst the part is sourced from overseas.

And by the bye, just this week, former Australian Consumer and Competition chief Alan Fels accused Qantas of “price gouging” in his landmark report on Australian corporate market power for the Australian Council of Trade Unions.

The duopoly in the aviation sector in Australia is dominated by Qantas, and there is price gouging by Qantas,

Fels said, also finding that Qantas prices have contributed to inflation during 2022.

But none of that is likely to stop Hudson and her team from snaring their bonuses this year. The ghost of Alan still looms large…

New Qantas chief Vanessa Hudson confronts a turbulent ride from shareholders at AGM

 

 

This post was originally published on Michael West.

Once the Governor-General’s proud pet project, the controversial Australian Future Leaders Foundation has vanished from the charity register. Jommy Tee reports the latest on the elusive charity … even a recent sighting of the mysterious King’s Cup itself!

This post was originally published on Michael West.

A government subsidised workforce of lsrael lobbysts is targeting regulators and employers across the fields of media, medicine and business to sack employees who criticise the government of Israel’s war crimes against the Palestinian people. Joel Jenkins reports.

This post was originally published on Michael West.

We are spammed relentlessly but when Aussie Home Loans and Accredible spammed Andy Schmulow, they bit off more than they could chew. Andy shows us how to bam the spammers.

This post was originally published on Michael West.

Aged care providers are charging elderly residents fees for services which are not provided. Dr Sarah Russell exposes Arcare and calls for Minister Anika Wells and regulators to step up.

This post was originally published on Michael West.

Six months after the late Peta Murphy’s parliamentary committee report on online gambling was released, the Albanese Government is yet to make its response. Freedom of Information documents show why.

This post was originally published on Michael West.

“Bet with mates, start a multi-together!” cries Sportsbet. Meanwhile, Australia’s biggest bookie has pulled off a multi of its own, a trifecta dudding politicians, punters and the ATO too

This post was originally published on Michael West.

Lakeba Group managed a meteoric 25-fold rise in revenues, then went revenue negative. Michael West reports on the latest hijinks from the kaleidoscopically colourful tech entrepreneur Giuseppe Porcelli.

This post was originally published on Michael West.

Small businesses are struggling enough in the current economic climate without combatting aggressive lenders. Michael West looks at the case of Ben Shamgar and “Australasia’s most open-minded lender” Bizcap.

This post was originally published on Michael West.

Colourful digital evangelist Giuseppe Porcelli hoodwinked his investors into taking shares in Lakeba Group which were not actually “shares in Lakeba Group”, but rather shares in “Lakeba Shares”. Michael West with the latest from LakebaLand.

This post was originally published on Michael West.