Australian Industrial Relations Commission|2007-05-23

Australian and International Pilots Association - re Alteration of Eligibility Rules [2007] AIRC 420; (23 May 2007)

Note: Appeals pursuant to s.121 (C2007/2804, C2007/2808) were lodged against this decision - refer to Full Bench decision dated 20 December 2007 [[2007] AIRCFB 796] for result of appeals.

s.158(1) RAO Schedule - Application for alteration of eligibility rules

Application by the Australian and International Pilots Association

Alteration of Eligibility Rules - s.158(4) RAO Schedule - more conveniently belong - more effectively represent

[1] On 17 May 2006, the Australian and International Pilots Association (AIPA) lodged in the Registry an application for the consent of a designated Presidential Member to the alteration of its eligibility rules. The application was made under s.158(1) of Schedule 1 - Registration and Accountability of Organisations (the Schedule) - of the Workplace Relations Act 1996 (the Act). Notice of the application was published in the Commonwealth of Australia Gazette, Government Notices, GN 21 on 31 May 2006.

"158 Change of name or alteration of eligibility rules of organisation

(1) A change in the name of an organisation, or an alteration of the eligibility rules of an organisation, does not take effect unless the Commission consents to the change or alteration.

(2) The Commission may consent to a change or alteration in whole or part, but must not consent unless the Commission is satisfied that the change or alteration has been made under the rules of the organisation.

(3) The Commission must not consent to a change in the name of an organisation unless the Commission is satisfied that the proposed new name of the organisation:

(a) is not the same as the name of another organisation; and

(b) is not so similar to the name of another organisation as to be likely to cause confusion.

(4) The Commission must not consent to an alteration of the eligibility rules of an organisation if, in relation to persons who would be eligible for membership because of the alteration, there is, in the opinion of the Commission, another organisation:

(a) to which those persons could more conveniently belong; and

(b) that would more effectively represent those members.

(5) However, subsection (4) does not apply if the Commission accepts an undertaking from the organisation seeking the alteration that the Commission considers appropriate to avoid demarcation disputes that might otherwise arise from an overlap between the eligibility rules of that organisation and the eligibility rules of the other organisation.

(6) The Commission may refuse to consent to an alteration of the eligibility rules of an organisation if satisfied that the alteration would contravene an agreement or understanding to which the organisation is a party and that deals with the organisation's right to represent under this Schedule and the Workplace Relations Act the industrial interests of a particular class or group of persons.

(7) The Commission may also refuse to consent to an alteration of the eligibility rules of an organisation if it:

(a) is satisfied that the alteration would change the effect of any order made by the Commission under section 133 about the right of the organisation to represent under this Schedule and the Workplace Relations Act the industrial interests of a particular class or group of employees; and

(b) considers that such a change would give rise to a serious risk of a demarcation dispute which would prevent, obstruct or restrict the performance of work in an industry, or harm the business of an employer.

(8) Subsections (6) and (7) do not limit the grounds on which the Commission may refuse to consent to an alteration of the eligibility rules of an organisation."

[3] I shall refer to the 'other' organisation referred to in s.158(4) of the Schedule as "the better organisation". Section 103(2) of the Act provides that, in performing its functions in relation to matters arising under the Schedule, the Commission must take into account the public interest and for that purpose must have regard to Parliament's intention in enacting that Schedule. Section 5(1) of the Schedule states that "it is Parliament's intention in enacting this Schedule to enhance relations within workplaces between federal system employers and federal system employees and to reduce adverse effects of industrial disputation".

[4] By its application the AIPA proposed that the Commission consent to an alteration of Rule 4 - Eligibility for Membership, of its rules as follows (changes are underlined):

Any person who is normally employed as a pilot or flight engineer on regular public transport airline services extending beyond the Commonwealth of Australia or (except in the case of flight engineers) within the Commonwealth of Australia operated by an Australian airline principally engaged in providing international regular public transport airline services or by Australian Airlines Limited or by any successor transmittee or assignee (whether immediate or not) of the whole or a part of the business of such Australian airline or of Australian Airlines Limited shall be eligible for membership in the Organisation.

Without in any way limiting the generality of any other provision of this rule or being limited thereby, all persons who are normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated in whole or part and under any name by any of:

(ix) Any successor transmittee or assignee (whether immediate or not) of the whole or a part of any company airline or entity referred to in any of the preceding sub-paras (i) to (viii) above; or

(x) Any subsidiary, related body corporate or associated entity (as those words are defined in the Corporations Act 2001) of any company airline or entity referred to in any of the preceding sub-paras (i) to (ix) above

Shall be eligible for membership in the Organisation.

All persons who are normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated by any of:

(i) Ansett Australia Limited or Mayne Nickless Limited trading as Ipec Aviation (IPEC);

(ii) any successor assignee or transmittee (whether immediate or not) to or of any of the business of Ansett Australia Limited or IPEC including a corporation that has acquired or taken over or acquires or takes over the business or part of the business of Ansett Australia Limited or IPEC, in relation to that business or part of that business; and

(iii) any employer not included in the preceding sub-paragraphs (i) or (ii) who is or becomes a successor assignee or transmittee (whether immediate or not) to or of any of the business of any of Ansett Transport Industries (Operations) Pty Ltd (ATI), East West Airlines (Operations) Pty Ltd (EWA) or Mayne Nickless Limited trading as Ipec Aviation (IPEC) including a corporation that has acquired or taken over or acquires or takes over the business or part of the business of any of ATI, EWA or IPEC, in relation to that business or part of that business

shall be eligible for membership in the Organisation.

All persons who are normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated by any of:

(i) Ansett Australia Limited or Mayne Nickless Limited trading as Ipec Aviation (IPEC);

shall be eligible for membership in the Organisation."

[5] Eight objections to the application were lodged in the Registry pursuant to regulation 124 of the Workplace Relations (Registration and Accountability of Organisations) Regulations 2003 (RAO Regulations) by:

The Australian Municipal, Administrative, Clerical and Services Union (ASU);

The Transport Workers' Union of Australia (TWU);

Eastern Australia Airlines Pty Limited (Eastern);

Sunstate Airlines (Qld) Pty Ltd (Sunstate); and

[6] On 15 December 2006, Mr Macken, the solicitor acting on behalf of the AIPA, advised the Commission that the AIPA had reached agreement in principle with the ASU and the TWU. On 5 March 2007, Mr Macken tendered copies of the agreements reached, [1] and the unions formally withdrew their respective objections.[2]

[7] On 12 September 2006, Slater & Gordon Lawyers, on behalf of the New Zealand Airlines Pilots' Association Industrial Union of Workers (NZALPA) applied, pursuant to Regulation 179 of the RAO Regulations, for an extension of the time prescribed under Regulation 124(1) to lodge an objection to the AIPA's application. Senior Deputy President Lacy dealt with this issue on 12 October 2006 but was not prepared, at that stage, to grant the application, given the AIPA's preparedness to discuss the matter with the NZALPA. The NZALPA's application was not further agitated.

[8] At the hearing, Mr W. Friend with Mr C. Dowling, both of counsel, appeared by leave for the AIPA, Mr H. Borenstein, S.C. appeared with Mr E. White of counsel, by leave for the AFAP, Mr M. McDonald, S.C. appeared with Mr R. Dalton of counsel, by leave for Qantas, Sunstate, Eastern and Jetstar, and Mr A. Herbert of counsel, appeared by leave for Virgin.

[9] The AIPA was formed on or about 3 March 1981 when the overseas branch of AFAP broke away from that organisation. The AIPA was registered as an industrial organisation under the Conciliation and Arbitration Act 1904 on or about 1 October 1986. The AIPA currently has approximately 2327 members. [3]

[10] The AIPA is a respondent to the following Awards and Certified Agreements: [4]

Qantas/Australian Airlines Pilots Integration Award 1994

Qantas Technical Aircrew long Haul Award 2000

Australian Airlines Limited Flight Crew (Long Haul) Certified Agreement 2003-2004

Qantas Airways Limited Flight Crew (Short Haul) Certified Agreement 2002.

[11] The AFAP was formed as the Australian Airline Pilots Association in 1949 and became the AFAP in 1959. It was registered as an industrial organization under the Conciliation and Arbitration Act 1904 in 1985. The AFAP currently has approximately 2300 members employed in the international, domestic, regional and general aviation sectors. [5]

[12] The AFAP is relevantly party to and responsible for the maintenance of the following Awards and Certified Agreements: [6]

Civil Aviation Safety Authority Consolidated Certified Agreement 2006-2008

Eastern Airlines Pilots Enterprise Agreement 2006

Regional Express Pilot's Certified Agreement 2005

Sunstate Airlines (QLD) Pty Limited Pilots Enterprise Agreement 2005

Aeropelican Air Services Pty Ltd Pilots Enterprise Agreement 1999

[13] AFAP's current eligibility/membership rule is as follows:

(a) Any person (not being a person normally employed as a pilot on regular public transport airline services extending beyond the Commonwealth of Australia operated by an Australian airline principally engaged in providing international regular public transport airline services and not being a person normally employed as a pilot on airline services within or extending beyond the Commonwealth of Australia operated by any of:

(i) Ansett Australia Limited or Mayne Nickless Limited trading as Ipec Aviation ("IPEC");

(iii) any employer not included in the preceding sub-paragraphs (i) or (ii) who is or becomes a successor assignee or transmittee (whether immediate or not) to or of any of the business of any of Ansett Transport Industries (Operations) Pty Limited ("ATI"), East West Airlines (Operations) Pty Ltd ("EWA") or Mayne Nickless Limited trading as Ipec Aviation ("IPEC") including a corporation that has acquired or taken over or acquires or takes over the business or part of the business of any of ATI, EWA or IPEC, in relation to that business or part of that business)

who is employed or is usually employed either wholly or partly in the profession of pilot in civil aviation, including a person normally employed as an air pilot by a domestic operator other than those specifically excluded by the foregoing provisions of this Rule, but excluding pilots, seeking, or holding, part time employment, where such pilot, offering his services on a part time basis is, permanently established in a career or interests outside the aviation industry, and who holds a Commercial Pilot's Licence, Senior Commercial Pilots Licence, Airline Transport Pilot's Licence or such equivalent as may be issued from time to time by the Department of Aviation or other appropriate Authority, is eligible for membership, together with such other persons who have been appointed officers of the Federation or who are honorary members pursuant to Rule 2.2(c)."

[14] Qantas Airways Ltd, the overall parent company, and its subsidiaries are commonly described as the "Qantas Group". I shall so refer to them in these reasons

[15] Qantas is the holding company for each of the subsidiaries sought to be included by name in the AIPA's eligibility rule. Qantas is an airline principally engaged in providing international regular public transport airline services. (In these reasons I shall refer to regular public transport airline services as "RPTAS") Qantas employs approximately 1600 long haul (international) and 600 short haul (domestic) pilots. There is no issue between the parties that all Qantas pilots are eligible to be members of the AIPA.

[16] Eastern and Sunstate are wholly owned subsidiaries of Qantas and provide RPTAS under the brand "Qantaslink". Eastern and Sunstate employ approximately 300 pilots. Both Eastern and Sunstate were wholly owned subsidiaries of Trans Australian Airlines, which later changed its name to "Australian Airlines" prior to the acquisition of that airline by Qantas in September 1992. Both Eastern and Sunstate are regional airlines. Although not conceded by Mr Friend, it is likely that none of the pilots employed by Eastern or Sunstate is eligible to be a member of the AIPA under its current rule.

[17] Eastern provides RPTAS to regional destinations in New South Wales, Victoria and Tasmania. It employs 190 pilots [7] of whom 155[8] are members of the AFAP. The AIPA currently has 99 Eastern pilots as its members.[9] Of these only one is financial, the others having paid a reduced joining fee of $50.00 in 2004, but nothing since.[10]

[18] Sunstate provides a RPTAS to regional destinations in Queensland and New South Wales. It employs 115 pilots [11] of whom 104 are members of the AFAP.[12] The AIPA does not claim to have any Sunstate pilots as members.

[19] Airlink Pty Limited is also a wholly owned subsidiary of Qantas. However, Airlink flights are operated by a non-Qantas Group company, National Jet Systems. National Jet Systems provides cabin and technical (which I take to mean "flight") crew, maintenance and operation of the aircraft. [13] Neither Airlink nor National Jet Systems is named in the proposed amended rule, and as neither is engaged in the provision of any international RPTAS, it seems to me that neither would be caught by the amended rule.

[20] Eastern and Sunstate, together with Airlink/National Jet Systems, operate flights under the 'QantasLink' brand. Each is an Australian airline providing RPTAS, operating under its own Air Operator Certificate (AOC), and with its own crew, operational control and management.

[21] On 23 December 2003, "Impulse Airlines Pty Limited" changed its name to "Jetstar Airways Pty Limited" and on 25 May 2004, Jetstar commenced domestic RPTAS operations. [14] Jetstar is a wholly owned subsidiary of Qantas and operates under its own AOC with its own crew, operations control and management.

[22] Jetstar flies from Brisbane, Sydney, Melbourne, Adelaide and the Gold Coast to some 20 Australasian destinations. [15] It currently employs 360[16] pilots, 124 of whom are AFAP members[17] and approximately 30 who are AIPA members.[18]

[23] Since late 2006 it has engaged in some international RPTAS. Again, although not conceded by Mr Friend, it is likely that none of the pilots employed by Jetstar is eligible to be a member of the AIPA under its current rule because, even though it is an Australian airline providing RPTAS and has some international flights, it is not principally engaged in providing international RPTAS.

[24] Jetstar Asia Holdings Pty Limited is a wholly owned subsidiary of Qantas. It does not employ any pilots nor does it propose to do so. It is a holding company which owns 44.5% of the shares in Orange Star Investment Holdings Pte Ltd, a Singapore based company and the owner of the Jetstar Asia brand. [19]

[25] Jetconnect Ltd is a low cost airline and a wholly owned subsidiary of Qantas. It is incorporated in New Zealand and operates approximately 290 flights per week within New Zealand and 63 Trans Tasman flights between New Zealand and Australia. All pilots employed by Jetconnect, together with the company's management, are based in New Zealand. As previously, although not conceded by Mr Friend, it is likely that none of the pilots employed by Jetconnect is eligible to be a member of the AIPA under its current rule because Jetconnect is not an Australian airline principally engaged in providing international RPTAS.

[26] It is contended by the objectors that the Act does not extend to enabling the rules of an organisation to make eligible for membership employees of Jetconnect Limited because it has insufficient connection with Australia.

[27] Qantas Ltd is a wholly owned subsidiary of Qantas. It changed its name to Express Freighters Australia Pty Ltd in August 2006 when it commenced operations as a domestic air freight business. I shall refer to it as Qantas Ltd in these reasons. It operates under its own AOC. It currently employs 16 pilots but it is expected that up to 40 pilots may be required as the freight business expands. [20] It does not employ, nor does it propose to employ, any pilots on RPTAS, as it does not provide such a service. It is clear that none of its pilots is eligible to be a member of the AIPA under its current rule.

[28] Australian Airlines Ltd (ABN 85 009 625 304) is a wholly owned subsidiary of Qantas. It is not to be confused with the "Australian Airlines" referred to in the opening paragraph of the AIPA's eligibility rule. The reference in the eligibility rule is to the successor to Trans Australian Airlines, a company which is now defunct. Australian Airlines Ltd operates under its own AOC. It commenced operation as a full service single class international leisure carrier in October 2002. [21] Australian Airlines "ceased to exist as a brand" in July 2006 as part of a Qantas group "two brand strategy". However it has provided pilots and crew to Qantas pursuant to a wet lease arrangement, under which Qantas provides two class, full service international flights[22]. As I understand it, a 'wet lease' means that, for all intents and purposes, a flight under those arrangements appears as a normal Qantas flight insofar as the flying public is concerned. The Qantas Annual report of 2006 discloses that: The focus on Qantas and Jetstar saw all-economy international leisure carrier Australian Airlines cease to exist as a brand on 30 June 2006. While Australian Airlines' fleet of B767-300 aircraft and crew continues to fly from their existing Cairns base, services now operate under the Qantas brand as two-class, full service international flights.[23] However, the crew continues to be employed by Australian Airlines and it appears that Qantas owns the aircraft.[24] Although there was no evidence led as to the precise arrangement between the companies, it is likely that the aircraft are leased by Qantas to Australian Airlines and then back-leased to Qantas pursuant to the wet lease. Although the pilots provided by Australian Airlines under this arrangement are employed by Australian Airlines they are, in fact, Qantas pilots on leave of absence from Qantas. This arrangement was facilitated by a letter of agreement between the AIPA and Qantas.[25] Australian Airlines is an Australian airline probably engaged in providing international RPTAS. Accordingly its pilots are possibly eligible to be members of the AIPA under its current rule. It is, however, arguable that it is Qantas and not Australian Airlines that provide the RPTAS, in which case pilots employed by Australian Airlines would not currently be eligible to be members of the AIPA.

[29] Mr McDonald contended that the 'Australian Airlines Limited' referred to in the first paragraph of the current AIPA eligibility rule no longer exists [26] and that, accordingly, it is not the source of the AIPA's entitlement to cover domestic pilots employed by the new Australian Airlines Limited. That position was accepted by Mr Friend. In those circumstances, for the purposes of this decision, I am prepared to accept that the reference to Australian Airlines Limited in the first paragraph of the AIPA's current rule does not entitle it to enrol as members pilots employed by Australian Airlines Limited (ABN 85 099 625 304).

[30] Virgin Blue Airlines Pty Ltd (Virgin) commenced operations in 2000 and employs approximately 560 [27]-580[28] pilots. All Virgin pilots are currently eligible to be members of the AFAP and will remain so if the proposed alteration to the AIPA's Rules is granted. At present, 457 of Virgin's pilots are AFAP members.[29] Virgin pilots are currently ineligible to be members of the AIPA, however, they would be eligible if the proposed alteration were to be granted and Virgin commenced to operate any international RPTAS. Virgin does not presently provide any international RPTAS, but it is proposed that international routes on a limited basis will commence during the second half of 2008.[30] It is intended that these flights are to be operated by a separate Virgin company. If that company is to be an Australian airline principally engaged in providing RPTAS, pilots employed by it will be eligible to be members of the AIPA under its current eligibility rule.

[31] The proposed alteration may conveniently be considered in several distinct sections.

[32] The first matter to be considered is the alteration to the first paragraph by the deletion of the adverb 'principally'. Next, the insertion into the first paragraph of the 'successor, transmittee or assignee' extension.

[33] The deletion of the word 'principally' would have a significant effect on the reach of the eligibility rule. In order for a pilot to be eligible for membership of the AIPA under the current rules that pilot must be normally employed on RPTAS by an Australian airline principally engaged in providing such services internationally. Thus, for example, although Jetstar flies on some international routes it is common ground that they only form a small portion of its RPTAS. It is also common ground that, unless the entire Qantas group is considered as one airline, (an argument that I will deal with separately in these reasons) pilots employed by Jetstar are not currently eligible to be members of the AIPA. If the word 'principally' were to be deleted, pilots employed by Jetstar would be eligible to be members of the AIPA because it would be sufficient that they be normally employed on RPTAS by an Australian airline engaged in providing such services internationally. Jetstar is such an airline. The same situation would pertain to any Australian airline engaged in providing any international RPTAS.

[34] Currently, the first paragraph does not extend eligibility for membership to any of the pilots of any successor, assignee or transmittee of an airline that falls within the scope of that paragraph. If this part of the alteration were to be approved, a pilot employed by any successor, transmittee or assignee (whether immediate or not) of the whole or a part of an airline that falls within the scope of that paragraph would be eligible for membership of the AIPA. This would arguably be the case even were that successor, etc. otherwise not to meet the requirements necessary to make its pilots eligible for membership under the first paragraph. For example, if a successor were to engage in, say, the provision of freight, rather than public, transport airline services.

[35] The entire proposed second paragraph is new. It names various Qantas Group companies in subparagraphs (i) to (vii) and the successors, subsidiaries, etc of those companies in the following subparagraphs. Mr McDonald noted that under this part of the rule there is no requirement that any of the airlines be an Australian airline. I also observe that there is not even a requirement that the airline be engaged in providing RPTAS; they merely need to be providing airline services. Qantas Limited, for instance, does not provide RPTAS. Such an outcome is not surprising given that the main reason for the proposed alteration is the AIPA's desire to be able to enrol as members pilots employed by the Qantas Group generally.

[36] Mr Borenstein highlighted the requirements of RAO Regulation 121(2)(b)(ii) to make good his submission that it is necessary to identify with a degree of specificity the class of person to be affected by the rule change. He also referred to several Commission decisions. I agree that the Commission could not perform its function under s.158(4) were it not able to identify the class of persons who is the subject of the proposed rule change. [31]

[37] It seems to me that by undertaking an analysis of the effect of the rule change the class of persons affected by it becomes apparent. This analysis has been undertaken, based on the evidence and submissions.

[38] Mr Borenstein submitted [32] that there are four relevant classes within the Qantas group who are affected by the rule change. They are said to be pilots employed in low cost airlines, pilots employed by regional airlines, pilots employed by airlines that perform some international RPTAS operations and pilots employed by foreign companies. Whilst Mr Borenstein is correct, in my view, it is not necessary to categorize the pilots in this manner. It seems to me that insofar as Qantas is concerned, the rule change may be said to have the effect that all pilots employed by the named Qantas companies as well as their successors, assignees, transmittees and related companies will be eligible for membership of the AIPA. In deciding whether or not to consent to the alteration, in whole or in part, it is necessary to have regard to the operations of all those entities.

[39] The genesis of this application lies in a 2005 application by the AIPA for consent to the alteration to its eligibility rule. Technical objections led to the application eventually being withdrawn. At that time the proposed change was to insert a new sub-paragraph into rule 4 as follows:

"Without limiting the foregoing and without being limited thereby, the following shall also be eligible for membership:

(i) any pilot or flight engineer employed in airline services operated by, or employed by, in or for, Qantas Airways Limited (Qantas) or by any subsidiary thereto or any successor transmittee or assignee of Qantas or such subsidiary;

(ii) any pilot or flight engineer employed in airline services operated by, or employed by, in or for, any airline principally engaged in providing regular public transport airline services extending beyond the Commonwealth of Australia which operates, or advertises that it operates, from Australian cities on greater than illusory or incidental basis."

[40] As is the case with the present application, the proffered reasons for the alteration to the rule predominantly were to ensure that the AIPA has coverage of pilots employed by the Qantas group. It is not surprising that the only objectors to the second paragraph of the proposed current rule change are the Qantas group and the AFAP. It is also not surprising that the AIPA became interested in altering its eligibility rule to ensure coverage of Qantas subsidiaries not long after Jetstar came into existence. The objectors make the point that, although Eastern and Sunstate have operated for many years, it was not until relatively recently that the AIPA showed any interest in representing the industrial interests of the pilots of Eastern. Other than by the making of this application, it has not interested itself in pilots employed by Sunstate.

[41] Mark Thomas Wheeler is employed by Jetstar as General Manager Flight Operations. On 3 October 2006, he made a statement for use in these proceedings. It is convenient to set out several paragraphs:

"15 The Jetstar airline business was launched in May 2004, using Impulse Airlines Pty Limited (Impulse) as its operating entity.

16 In or around December 1992, Oxley Airlines Pty Limited (Oxley) was acquired by the Impulse Group. The Impulse Group took over the assets and rights to the name of "Oxley Airlines" following the appointment of an administrator. Impulse operated as an airline business, flying selected regional routes along the Eastern seaboard.

17 In November 2001, Qantas purchased Impulse. Between November 2001 and May 2004, Impulse operated a regional airline service under the "QantasLink" brand.

18 In October 2003, Qantas decided to use Impulse as the operating entity for its new low cost carrier airline.

19 Impulse held in its own right a high capacity AOC, and managed its own engineering heavy maintenance base, situated in Newcastle. At that time Impulse was already equipped with a fleet of 14 Boeing 717-200s and a workforce of approximately 650 people, including pilots, engineers and cabin crew.

20 On 1 December 2003, the Chief Executive Officer and Managing Director of the Qantas Group, Mr Geoff Dixon, announced that its new low cost domestic airline would be called "Jetstar". On 23 December 2003, Impulse Airlines Proprietary Ltd changed its name to "Jetstar Airways Proprietary Ltd". In February 2004, Jetstar opened for bookings. On 25 May 2004, Jetstar commenced operations.

22 Currently, Jetstar operates 23 Airbus A320 aircraft. By November 2006, Jetstar will commence flights on two Airbus A330-200s, increasing operations to six A330s by mid-2007.

23 The A320 is used by many of the world's most successful low cost carriers and offers significant fuel and technology efficiencies operating short-haul domestic routes.

24 Jetstar currently operates approximately 1,000 flights a week, on 45 existing point to point routes. This will increase once the additional A330 aircraft enter service.

25 Jetstar flies from Brisbane, Sydney, Melbourne, Adelaide and the Gold Coast to 20 Australasian destinations. Its focus is the price sensitive, domestic leisure market with routes less than three and a half hours from key destinations (for example, the Whitsundays, the Gold and Sunshine Coasts, Cairns and Tasmania). Jetstar also operates from Avalon Airport near Geelong, making Jetstar the first Australian commercial carrier to fly scheduled services from a "second" city airport."

27 In December 2005, Jetstar commenced a trans-Tasman service between Australia and Christchurch, New Zealand using its existing fleet of narrow bodied Airbus A320 aircraft.

32 On 11 April 2006, Jetstar announced that from November 2006, it intends to commence flights to 6 international destinations (Bali, Bangkok, Honolulu, Ho Chi Minh City, Phuket and Osaka), on routes directly from Sydney, Melbourne or Brisbane. It is proposed that this flying will be initially undertaken by an interim fleet of six A330-200 aircraft. This will then transition to a fleet of 12 new Bowing 787 aircraft from August 2008 to 2011."

[42] During the giving of his oral evidence Mr Wheeler updated the position. In addition to flying to Christchurch from December 2005, Jetstar did commence flights to Bali, Bangkok, Honolulu, Ho Ch Minh City, Phuket and Osaka in late 2006. A significant majority of its flights constitutes domestic routes. It provides a low cost alternative to Qantas' flights between many capital cities. It also flies between capital cities and larger regional cities and holiday destinations.

[43] Jetstar is not principally engaged in providing international RPTAS.

[44] I have set out the excerpts from Mr Wheeler's evidence to demonstrate how fluid is the corporate structure used by the Qantas group to organize its schedules. This approach is not of recent origin. Both Eastern and Sunstate were wholly owned subsidiaries of Australian Airlines, itself a successor to Trans Australian Airlines , prior to the acquisition of that airline by Qantas in 1992. Australian Airlines is also used as a vehicle, on a 'wet lease' basis by Qantas in the provision by it of some international flights.

[45] Although there has not been a detailed breakdown produced in these proceedings, I infer that since Jetstar has introduced flights on routes that Qantas flew prior to 2004, the number of flights operated by Qantas has reduced on those routes. Indeed, on some routes previously flown by Qantas, Jetstar is now the only Qantas Group airline flying on those routes.

[46] In mid 2004, Jetstar, Qantas, representatives of Jetstar pilots and the AIPA (on behalf of Qantas pilots) reached an agreement whereby Qantas pilots could be employed by Jetstar and vice versa. As a result of that agreement 85 Qantas pilots have applied for positions at Jetstar, of whom 21 were offered positions, 18 accepted and two were considering their positions at the time of the hearing. All the pilots who transferred from Qantas to Jetstar moved from second officer positions at Qantas to command positions at Jetstar. All, but one, who resigned from Qantas to take up permanent employment with Jetstar, are on leave without pay from Qantas whilst they are employed by Jetstar. No pilot has moved from Jetstar to Qantas under the agreement. [33]

[47] The objectors point to the fact that the AIPA's involvement in the negotiations for the agreement was only on behalf of Qantas pilots. It is said that this is an example of how the AIPA fails the no better organisation test.

[48] Mr Friend faintly contended that the AIPA's current rule extends to pilots employed by the Qantas subsidiaries because the Qantas group can be said to be "an Australian airline" within the meaning of that expression in the first paragraph of the AIPA's current rule. He relied on a memorandum of advice from Mr S Rothman SC to the effect that Jetstar, and probably Eastern and Sunstate, are airlines operated by Qantas "which, in turn, is an operator principally engaged in providing international regular public transport airline services." According to Mr Rothman, it follows that pilots employed by the subsidiaries are eligible for membership of the AIPA because they are, as a matter of law, persons normally employed as a pilot on RPTAS operated by an Australian airline engaged in providing international RPTAS. Mr Rothman's opinion was based on the material with which he was provided. He did preface his opinion with the caveat that it was to be brief and was prepared as a matter of urgency. I must determine the matter for myself. On the evidence before me I am not persuaded that the subsidiaries are operated by Qantas. Although they are wholly owned subsidiaries of Qantas each has its own Air Operator Certificate (AOC) in respect of the aircraft they fly. This is a requirement of s.27 of the Civil Aviation Act 1988. Without an AOC an aircraft is not permitted to fly. Although the subsidiaries are ultimately controlled by Qantas each operates its own airline service. The evidence of Mr Gareth Evans, who is employed by Qantas as the Group General Manager Finance, Network, Operations and Pricing, makes this clear.

[49] It follows that, in my view, pilots employed by Jetstar, Eastern and Sunstate are currently not eligible to be members of the AIPA. I also accept the submissions of Mr McDonald at paragraphs 47 to 56 of his written submissions on this issue.

[50] The objections generally fall into two categories: 'technical' and 'merit'. The technical objections were to the effect that the alterations had not been made in accordance with the Act or the RAO regulations and further, they had not been made under the rules of the AIPA as required by s.158(2) of the Schedule. The technical objections were not pursued at the hearing. As there is nothing that suggests to me that the technical requirements have not been met, I need not deal further with this issue.

[51] All of the objectors contended that the Commission could not consent to the alteration because s.158(4) of the Schedule applied. They all contended that the AFAP is a better organisation, that is, one to which persons who would be eligible for membership of the AIPA because of the alteration could more conveniently belong and that would more effectively represent those persons. The AFAP, Eastern and Sunstate also contended that the Commission ought exercise its discretion to refuse consent under s.158(6) because the alteration would contravene an agreement or undertaking, to which the AIPA is a party, regarding the AIPA's representational rights. Jetstar, Eastern and Sunstate further contended that the alterations would change the effect of orders made under s.133 about the AIPA's representational rights, and that such a change would give rise to a serious risk of a demarcation dispute. Thus, the Commission should exercise its discretion under s.158(7) to refuse consent. All the objectors contended that the alteration is too wide, rendering the meaning of the rule vague and uncertain. They all contended that the alteration is contrary to the public interest as well as being contrary to the objects of the Act and the RAO Schedule. Accordingly, the Commission should exercise its general discretion and refuse to consent to the alteration.

[52] All parties led evidence in support of their respective cases. I followed the usual course, in matters of this kind, of requiring the objectors to file material and lead their evidence ahead of that of the applicant. To suit the convenience of witnesses that procedure was modified from time to time. I shall refer to the salient evidence as part of my consideration of the issues.

ANOTHER ORGANISATION - SECTION 158(4) (A) & (B)

[53] All the objectors contended that the AFAP was a better organisation.

[54] In Re Australian Principals Federation [34] Ross VP discussed the approach that should be taken by the Commission in forming its opinion. His Honour held that it was not necessary that a determination be specifically made in respect of each factor identified by an objector. In his view "a global assessment of the submissions and evidence is the preferable course". That approach was endorsed by a Full Bench on appeal from his Honour's decision.[35]

[55] Before me, the thrust of the objectors' submissions was that the AIPA is essentially a Qantas in-house union, dominated by its long haul pilots and with their interests at heart. It is put that there would be a conflict of interest between the Qantas pilots, especially long haul, and pilots employed by its low cost subsidiaries. The objectors contend that the AIPA does not, and could not, have in place mechanisms to deal with this conflict of interest. Accordingly, it is said that the AFAP, with its history of representing pilots generally (other than Qantas pilots), is a better organisation, that is, an organisation to which the relevant class could more conveniently belong and whom it would more effectively represent than the AIPA.

[56] Whilst accepting that the Act does not discourage overlapping coverage and the resultant competition for membership Mr McDonald sought to read down the statement of principle formulated by a Full Bench of the Commission in Re CPSU, the Community and Public Sector Union. [36] In that passage the Commission said, dealing with the then equivalent section to s.158:

"[80] In our view, the provisions of the WR Act depart substantially from the provisions of the antecedent schemes that were the legislative pillars of what we have accepted to be the foundational principle of avoiding overlapping coverage and consequential competition between organisations. We consider, that among other purposes, it is now a purpose of the WR Act to allow for competition between organisations; and, to discourage primarily, if not only, that kind of competition which manifests as a demarcation dispute. That purpose may properly be said to be consistent with encouraging competition between organisations. Although we have expressed our conclusions in different language to that used by Williams SDP, it follows that we do not consider that he was in error in the conclusions he expressed to similar effect."

[57] In the decision under appeal Williams SDP had said:

"[142] ... The underlying philosophy of the current legislation is that, not only are employees to be free to join or not to join an organisation, should they choose to join an organisation, they should be able to join the organisation of their choice. Competition between organisations for membership and representative rights is no longer discouraged.

[143] The changes made by the WROLA Act constitute, in my view, a fundamental change in approach to registration and representative rights of organisations, particularly organisations of employees. Unions are encouraged to be effective, not only so that they can retain, and possibly extend, their existing membership and representative rights, but also so that they can provide choices for employees. That is not to say that the potential adverse effects of competition are not recognised. Controls remain in place to prevent a proliferation of ineffective or unviable organisations. Competition leading to industrial action which is harmful to an employer's operations may be the subject of orders under the amended s.118A. But the fact that overlapping coverage may lead to competition is not the barrier that it previously was to an eligibility rule extension." [37]

[58] As Mr McDonald has put in issue the approach to be adopted by the Commission, I think it desirable to refer to some other passages of the judgment of the Full Bench which dealt with this matter in some depth. I respectfully agree with those observations.

"[81] Williams SDP's reasons for concluding that the changes made by the WROLA Act fundamentally changed the underlying premises of the regime for determining and altering organisational coverage were substantively founded. That foundation exists in the Act as amended, and in the associated parliamentary debates when read with an understanding of the scheme that was partly repealed. Our conclusion in that respect is influenced most by:

81.1 the deletion of objects of 3(e) and 3(f) of the IR Act, and by the inclusion of new object in 3(f) directed to ensuring freedom of association including within that concept the rights of employees to join "an organisation or association of their choice". The appellant's argument that object 3(b) is directed to choice as between organisations with appropriate eligibility coverage does not accommodate the reference or significance of "association" being included in that context. The associated deletion of object 187A(e), and the linkage of the objects set out in Section 3 to the objects of Part IX of the WR Act, reinforce that point;

81.2 the rearrangement and weakening of the conveniently belong rule. That rule was, and so far as it has been replaced by the no other organisation condition, it is a mandatory barrier to securing registration or alteration of eligibility rules resulting in overlapping membership coverage between registered organisations. In part, the re-arrangement and weakening effects are the result of the bifurcation of the test into more conveniently belong and more effectively represent limbs. That change strengthens the comparative requirement of the test for determining whether the applicant organisation or an objector will prevail. Thus the satisfaction required of the designated Presidential Member must be that there is not an organisation that could "more" conveniently be belonged to, and would more effectively represent;

81.3 the new discretion to suspend the no other organisation barrier to overlapping coverage. That suspension is deemed to operate if a designated Presidential Member accepts an undertaking considered to be appropriate to avoid demarcation disputes. In that respect, subsections 189(2), 204(5), and section 203A, all introduced by the amending legislation, are cogent.

81.4 the effective elimination of the use of orders under section 118A for the purpose of structuring an organisation's rights to represent the industrial interests of members. Such an order may now only be made if there is both a demarcation dispute and conduct restricting the performance of work or causing damage to the business of an employer. The long established inter-connection between the making of orders under section 118A or its predecessors and the adjustment of the eligibility rules of an organisation affected by the order was also eliminated as part of that change. Although, through subsection 204(6B), and section 203A, a vestige of that power remains. In those circumstances, the designated Presidential Member may have regard to the existence of a section 118A order for purposes of determining whether an eligibility rule should be altered. However the statutorily prescribed limits within which that part of the discretion operates manifest a markedly greater tolerance of overlapping coverage than was reflected in the antecedent legislation;

81.5 the WR Act generally, and particularly Division VIB and sections 170LJ, 170LK and 170LL. Those provisions allow greater flexibility to unions to negotiate on behalf of, and to represent employees, or to become parties to agreements despite sometimes nominal membership or less than comprehensive constitutional capacity to represent the class of employees to whom the agreement applies. Similarly effective representation under antecedent legislation was generally restricted to and co-extensive with a relevant organisation's constitutional capacity to enrol the relevant employees;

81.6 in addition to the particular legislative changes referred to, the Minister's Second Reading Speech lends support to the view that the WROLA Act was intended to encourage competition between organisations. The relevant extracts from the speech are set out earlier in this decision (at paragraph 25). In particular the Minister noted:

� entrepreneurial unions will succeed in the new legislative environment;

� the conveniently belong restrictions on registration and changes to eligibility rules were replaced by new provisions intended to "overcome the union monopoly situation conferred by the current act";

� the new provisions will assist in the establishment of new unions.

Moreover, the potential consequences of the new legislative environment were taken into account, indeed were part of the policy rationale for other changes made in the amending legislation:

"Mindful of the possibility of adverse effects for innocent third parties from greater competition between unions, the bill provides powers to the commission to make orders to deal with disputes between registered unions over the representation of workers where there are actual or imminent harmful effects on an employer's operations."

[82] There is force in Mr Einfeld's proposition to the effect that a search of the WR Act will not disclose any explicit expression of a legislative policy of encouraging competition between organisations. No object of the WR Act declares such a purpose of the WR Act. None of the provisions to which we have referred touches directly upon any such encouragement. However, among the consequences of the changes to which we have referred is an increased and explicit statutory tolerance of overlapping coverage between organisations. Another is an encouragement of freedom of employee choice about forms of representation, including freedom to avoid organisations altogether. The changes affecting union registration may be assessed in that perspective. In that perspective, it would be obtuse to consider that the result of the changes must be other than increased competition by and between unions for representative roles and membership. In our view it would also be obtuse to hold that such a result is not the intended purpose and effect of the legislation.

[83] Another consideration also points to that purpose. A registered organisation unable to adjust its eligibility coverage relative to another registered organisation would be handicapped in meeting competition. The legislation facilitates competition not only from that other registered organisation. It aids competition also from whatever other form of association or industrial arrangement might be established and to which employees might be attracted in exercise of the greater freedom of choice and association accorded by the WR Act. To read the Act in a way that implies a handicap of that kind on a registered organisation would not be consistent with the regime created by the WR Act. Nor would it be consistent with the declared intention of the Second Reading Speech, or with common understanding of the linkages between freedom of choice and supply side competition in the contemporary Australian polity."

[59] The Full Bench generally adopted the principles enunciated by Williams SDP noting that s.204(4), the equivalent of the current s.158(4) of the Schedule, did not create two tests, but rather:

"the subsection prescribes one condition or criterion. That condition has two limbs, linked by a conjunctive "and". Taking account of the revised wording, and with deference to the condition in paragraph 189(1)(j) [now s.19(1)(j) of the Schedule], it might appropriately be now described as the no other organisation condition. If established, that condition requires that consent to the alteration be withheld. That condition is the designated Presidential Member's formation of the opinion that there is another organisation meeting each and both limbs of the description in paragraphs 204(4)(a) and 204(4)(b)." [38]

[60] In considering whether the AFAP is a better organisation in these reasons I have had regard to both limbs of the test unless I have referred to only one limb.

[61] It is desirable to deal with each of the proposed alterations to the first paragraph separately.

[62] On behalf of the AIPA it is said that the adverb 'principally' needs to be deleted in order to clarify the meaning of the rule. It was suggested by Ian Woods, a Qantas captain and President of the AIPA that as "Qantas operations change from year to year in relation to where most revenue is generated, where assets are deployed and where staff are deployed" [39]the AIPA's ability to enrol Qantas pilots as members might also change, because at sometime Qantas might be principally engaged in providing RPTAS, whereas at other times it might not be so principally engaged. Mr Woods relied on Qantas' annual reports from 2001 to 2004 to demonstrate that in some years Qantas' international airline operations generated the bulk of the company's earnings, whereas in other years its domestic operations did so. He also noted that Qantas' domestic airline service carries more passengers than does its international airline service. However, he accepted that the bulk of Qantas' assets are deployed in its international operations.

[63] The thrust of the argument is that it cannot be said with any certainty that Qantas is principally engaged in providing international RPTAS. It is undesirable that the eligibility rule have an ambulatory effect.

[64] In the grounds of the AIPA's application for consent, it was also put that the alleged ambiguity led to Qantas transferring some of its operations to companies said not to be 'principally' engaged in providing international RPTAS in order to defeat the AIPA's ability to enrol as members pilots employed by those entities. This aspect was not pursued at the hearing.

[65] The word 'principally' has qualified the type of RPTAS in respect of which pilots could be eligible for membership of the AIPA since it was first registered in 1986. At the time of its registration Qantas was the only Australian airline engaged in providing international RPTAS. It had no domestic operations. Indeed, prior to its acquisition of Trans-Australian Airlines in 1992 it was not engaged in providing domestic RPTAS. The AIPA's right to enrol as members Qantas domestic pilots was acquired in 1996 after a lengthy demarcation dispute whereby it was awarded exclusive coverage of those pilots pursuant to s.118A of the Industrial Relations Act 1986. Until the rule change the subject of this application it had not been suggested that the rule was rendered ambiguous because it included 'principally'. None of the parties contends that Qantas is not principally engaged in providing international RPTAS. Nor does any party contend that any of the other airlines the subject of these proceedings is principally engaged in providing such services.

[66] During Mr Woods' cross-examination it became clear that the deletion of the word 'principally' was designed, at least in part, insofar as Mr Woods was concerned, to enlarge the scope of the rule so that any pilot normally employed by an Australian airline engaged in providing any international RPTAS would be eligible for membership of the AIPA. Thus, Jetstar would be caught under this part of the rule, not because it is a Qantas subsidiary and part of the Qantas Group, but because it provides a small number of international RPTAS. It would also catch Virgin should that company engage in providing any regular international flights rather than setting up a separate company to do so, as it presently intends. Somewhat to Mr Woods' surprise [40] it would also render eligible for membership of the AIPA pilots employed by Air North, an Australian airline that provides RPTAS out of Darwin to predominantly Australian destinations. This is because Air North also provides some services to Dili.

[67] Even were the current rule of uncertain application, as is contended by the AIPA, the deletion of the word 'principally' and the addition of the successorship provisions would not render the rule any more clear. For example, how many international flights, and with what frequency, would an Australian airline providing RPTAS have to make to bring its pilots within the rule? Would a sole international flight suffice? Would one international flight a year, or a month, or a week, bring those pilots within the scope of the rule? If an airline were to commence and then cease providing international RPTAS would its pilots continue to be eligible for membership of the AIPA? In my view, the deletion of 'principally' would render the rule uncertain.

SUCCESSORS, TRANSMITEES OR ASSIGNEES - FIRST PARAGRAPH

[68] The second change to the first paragraph is the addition of the words:

"or by any successor transmittee or assignee (whether immediate or not) of the whole or a part of the business of such Australian airline or of Australian Airlines Limited"

The reason given by the AIPA in its application for this part of the rule change is primarily to provide consistency with existing provisions of the rule. The current rule includes successors, etc. of the defunct Ansett companies.

[69] It is not unusual in eligibility rules of organisations to provide that persons employed by successors, etc of named companies should be eligible for membership of the AIPA. However, this proposed alteration has a different effect to that usually the result of such a provision. The first part of the rule has a generic effect. Pilots employed by a certain category of airline are eligible for membership of the AIPA. The deletion of the word 'principally' would extend that category. Successors, etc. of airlines falling within the description will be caught if they are also airlines of that category whether there is a provision specially dealing with successors etc., or not. They are not caught if they are airlines of a different category. For instance, should a successor to an airline caught by the provision not be engaged in providing RPTAS, but rather engage in air freight services, its pilots would not be eligible to join the AIPA. It is not part of the AIPA's case that it wishes to enable pilots employed by such airlines, other than Qantas Ltd, to be its members.

[70] In my view, insofar as pilots employed by airlines who would be caught by amending the first paragraph, the AFAP, as against the AIPA, is a better organisation. It is an organisation to which those persons could more conveniently belong. It is also an organisation which could more effectively represent them.

[71] It is clear that the motivating factor behind the rule change is to enable pilots employed by any of the Qantas group of companies to be eligible to join the AIPA. The deletion of 'principally' extends the rule far beyond that. An organisation (the AIPA) that did not intend its rule change to have that effect and the President of which does not expect pilots employed by such airlines to join it, is an organisation to which such pilots could not as conveniently belong as an organisation (the AFAP) which already has as members such pilots and which satisfactorily looks after their industrial interests. Nor is it an organisation that could as effectively represent those pilots as can the AFAP. To put it positively in the terms of the Schedule, the AFAP is an organisation to which persons, who would be eligible for membership of the AIPA because of the alteration, could more conveniently belong and that would more effectively represent those members.

[72] In any event, having regard to the largely unintended enlargement of the scope of operation of the first paragraph, I would, in the exercise of my discretion, not consent to the alteration.

[73] As this part of the alteration does not affect Virgin, Mr Herbert made no submissions on this aspect of the case.

[74] Mr McDonald's written submissions, which he supplemented orally, were a joint submission on behalf of the Qantas group: Qantas, Eastern, Sunstate and Jetstar. It is notable that Qantas (Qantas Airways Ltd) which operates under the Qantas brand and flies both international and domestic routes is not directly affected by the AIPA's application. Its pilots are eligible to be members of the AIPA under its current rule. .

CONSIDERATION - S.158(4) - AFAP A BETTER ORGANISATION - THE QANTAS GROUP

[75] The second paragraph would make eligible for membership of the AIPA pilots employed by the Qantas Group and their successors, transmitees and assignees as well as related bodies corporate and associated entities.

[76] The objectors contend that the Commission cannot consent to the alteration because, on the evidence, the Commission should be satisfied that there is a better organisation to which pilots affected by the alteration could belong. That organisation is said to be the AFAP.

[77] At the heart of the objectors' cases is the proposition that there is a fundamental conflict of interest between Qantas pilots and the pilots of its subsidiaries. It is said that this has been graphically demonstrated by the actions taken by the AIPA, and inferentially the Qantas pilots, to hinder the introduction, and then the growth, of Jetstar.

[78] The objectors relied on the conduct of the AIPA over a number of years to demonstrate that the manner in which it has conducted itself towards non Qantas pilots leads to the inescapable conclusion that the AFAP is a better organisation.

[79] There is a common thread to the objectors' evidence and submissions as to why it is that the AFAP is a better organisation. Naturally, each objector led evidence peculiar to its own particular interests, insofar as it could do so as a member of the Qantas Group. Four witnesses in managerial positions gave evidence on behalf of Qantas. They were Gareth Evans, who is employed by Qantas as Group General Manager Finance, Network Operations and Pricing; Mark Wheeler who is employed by Jetstar as General Manager, Flight Operations; Paul Lidbury, employed by Qantas as General Manager, Operations, Regional Airlines; and Mark Davey who is employed by Eastern as Manager, Flying Operations.

[80] Their evidence demonstrates that each airline in the Qantas Group operates as a separate RPTAS. Each of the airlines has its own AOC. To a significant extent, Qantas and each of its subsidiaries operates as an independent entity. Each employs its own staff, including pilots, each has its own directors and each administers its own recruitment processes for pilots. I have earlier in these reasons set out some details of Qantas and its subsidiaries.

[81] However the fact remains that Qantas is the overall parent company for all the entities falling within the Qantas Group. As Mr Evans said at paragraph six of his witness statement: "Because Qantas Airways Limited wholly owns these companies within the Qantas Group, it wants the subsidiaries to operate in a way that maximises their individual value and to maximise the value of the Qantas Group as a whole. Because the subsidiaries are involved in airline services, there is considerable scope for synergies and coordination." For organisational convenience the Qantas Group is divided into five business segments, the relevant ones for the purposes of this case are Qantas Airlines, Jetstar and Qantas associated businesses. An executive general manager is responsible for each segment and has the task of running the segment as a profitable business. Although each has considerable autonomy in running the business segment, that autonomy is subject to the decision of the general manager being consistent with the overall strategy of Qantas as set by its board. The Chief Executive Officer of Qantas bears the ultimate responsibility for Qantas and its subsidiaries. Although the business segments involved in flying are managed in an independent manner, major network decisions are made at a Qantas Group level. Significantly, all network decisions which involve changes to the operating carrier on a route (for example switching from Jetstar to Qantas mainline or vice versa) are made at a senior Qantas Group level in order to ensure optimum network coverage and to ensure that other strategic and political issues are addressed. Market pricing decisions are coordinated between the various Qantas Group airlines as are decisions as to which airline flies on which route and when. [41] It seems that Qantas owns all the aircraft flown by the Qantas Group.[42]

[82] For Jetstar, Mr Wheeler detailed how its business model is different from that of Qantas because Jetstar is a low cost carrier. Jetstar operates in the price sensitive segment of the Australian domestic airline market and has operating costs that are consistently around 30%-40% below those of Qantas' domestic operations. Jetstar competes much more directly with Virgin than does Qantas.

[83] Virgin Blue commenced operations in about 2000. It is fair to infer that Jetstar was created in order to enable Qantas to more effectively compete with Virgin. As Mr Wheeler pithily put it 'the establishment of Jetstar allowed the Qantas Group to achieve business model changes to a significant part of its domestic operations, which would have otherwise been extremely difficult or impossible to implement within the core airline.' [43] He then went on to exemplify how this is done.

[84] Mr Borenstein referred to several AIPA newsletters and other announcements to support the AFAP's contention that the AIPA is only interested in looking after the interests of Qantas pilots and that where their interests clash with those of Jetstar pilots, the interests of the former will prevail. [44] Not surprisingly these documents demonstrate the real concern felt by Qantas pilots at what they perceive to be a threat to their careers consequent upon the introduction of low cost carriers, and especially Jetstar. They demonstrate a determination by Qantas pilots, and the AIPA on their behalf, to ensure that the career progression of Qantas pilots is not jeopardised by the introduction of Jetstar. Further, they evidence a determination that Qantas pilots retain their entitlement to fly routes that may be transferred to Jetstar and that they continue to be renumerated under the terms and conditions for Qantas pilots, rather than the comparatively inferior terms and conditions provided to Jetstar pilots.

[85] Mr Borenstein submitted, as did the other objectors, that there is an irreconcilable conflict between the interests of Qantas pilots as compared with those of Jetstar and other pilots who are not employed by Qantas. Qantas pilots are keen to preserve their 'flying' under the Qantas terms and conditions, whereas Jetstar pilots are keen to further their careers under the inferior Jetstar terms and conditions of employment. This necessarily involves Jetstar pilots flying routes that were previously flown by Qantas pilots. That this is so is exemplified by the fact that Jetstar now operates flights on routes that were previously exclusively those of Qantas. Some of these routes are now exclusively flown by Jetstar and others are shared between Jetstar and Qantas.

[86] In its submissions as to why the AFAP is a better organisation, insofar as Jetstar pilots are concerned, the Qantas Group submitted that because the AIPA has always been the Qantas house union and because Jetstar operates in a very distinct segment of the RPTAS industry Jetstar pilots can more conveniently belong to the AFAP. The Qantas Group also noted that the AFAP has as its members approximately one third of Jetstar pilots, whereas, other than a handful of Qantas pilots who are on leave whilst employed by Jetstar, no other Jetstar pilot is a financial member of the AIPA. Mr McDonald also noted that despite its undertaking to amend its rules to provide independence for Jetstar pilots, or at least a degree of autonomy, no such amendment to the AIPA rules has been made. Mr Borenstein noted that despite having told Hancock SDP of "AIPA's willingness to accord 'Australian pilots a significant degree of autonomy … and to provide guarantee of that autonomy" the AIPA rules were never altered to do so. [45] Mr Borenstein noted that despite the AIPA obtaining coverage of the Ansett pilots as a result of Hancock SDP's decision, pilots employed by Ansett were unable to reach an appropriate accommodation for them within the AIPA structure, which led to them forming their own association.[46] It was submitted that this supported the contention of the objectors that the AFAP is a better organisation because its rules allow for a significant degree of autonomy for sub-groups.[47]

[87] This, as well as other historical matters to which I have referred in these reasons, suggests that airline pilots are industrially astute. In my view, the mere extension of the scope of the AIPA's eligibility rule will not lead to pilots from Jetstar, Eastern or other airlines joining it unless they are satisfied that their industrial interests can be better catered for by the AIPA than by the AFAP or some other group.

[88] The Qantas Group submitted that the AFAP can more effectively represent Jetstar pilots because it has a history of doing so. The Qantas Group also pointed to the "significant hostility" of the AIPA towards Jetstar's aspiration to expand into international operations. The Qantas Group drew attention to proceedings in the Federal Court taken by the AIPA, designed, it was submitted, to stymie the expansion of Jetstar's international aspirations. These are detailed in Mr McDonald's submissions at paragraph 147.

[89] Insofar as Eastern and Sunstate are concerned, the objectors submitted that the AFAP is a better organisation.

[90] Eastern and Sunstate operate in the regional airlines market which is a different segment of the RPTAS to that in which Qantas and Jetstar fly. The AFAP has traditionally been the union that has represented pilots who fly in regional RPTAS. Its historical representation precedes the registration of the AIPA and indeed stems from the 1970s. It is submitted that the nature of the operation of regional airlines is significantly different from that of Qantas and that the AFAP with its long experience, contrasted with the AIPA's lack of experience, demonstrates that the AFAP is a better organisation than the AIPA. Attention was drawn to the industrial representation historically provided by the AFAP for both Eastern and Sunstate pilots. It was noted by the objectors that the AIPA led no evidence from any pilot to support its case. They submitted that I should draw a Jones v Dunkel [48] inference that their evidence would not have assisted the AIPA's case. I accept that submission.

[91] The AFAP adduced evidence from several pilots to the effect that they were opposed to the AIPA being able to enrol them as members. They thought that to grant the rule change would lead to a conflict of interest, that it would be divisive and destabilising, and conducive to dissent and disunity. They believed that it would not be in the interests of pilots employed in the Qantas subsidiaries. Mr O'Connell, the Executive Director of the AFAP, was strongly of the view that, if the AIPA were to succeed in its application, there would be a serious risk of demarcation disputes affecting several airlines. There would be friction between Qantas and non-Qantas pilots. The AIPA would be determined to protect the Qantas pilots' "existing flying" and that would clash with the interests of pilots in Qantas' subdivisions, as well as those of Virgin pilots. [49]

[92] A good deal of evidence was led as to the attempt by the AIPA to recruit Eastern pilots whose industrial interests had been represented by the Eastern Australia Air Pilots Council, a branch of the AFAP. There was considerable criticism levelled at the AIPA's presumed involvement in the creation of the Eastern Pilots Group and the hand that it had in the defeat of a proposed enterprise agreement. The making of an enterprise agreement was much delayed with the consequence that Eastern pilots lost a considerable amount of retrospective operation of the pay increase that eventually resulted.

[93] The AIPA was criticised for its enrolment of some Eastern pilots in 2004. It was submitted that the AIPA fomented discontent amongst a group of Eastern pilots, who formed the Eastern Pilots Group, and who induced the Eastern Australian Air Pilots Council, a branch of the AFAP, to undermine the AFAP in negotiations with Eastern for terms and conditions for its pilots. The resultant defection of a group of Eastern pilots from the AFAP to the AIPA is said to have been orchestrated by the AIPA and demonstrates why the AFAP is better able to represent the interests of those pilots. The dislocation caused by the AIPA in its attempt to win members is demonstrated by the formation of the Eastern Pilots Group and the disruption caused by that group in relation to enterprise bargaining negotiations, resulting in a failure to negotiate a timely enterprise agreement with the resultant loss of back-pay for Eastern pilots.

[94] It was submitted that the attempt by the AIPA to gain membership at Eastern was not a genuine attempt to improve the lot of Eastern pilots, but was merely a strategy to assist with its application for the Commission's consent to the alteration of its eligibility rule.

[95] Insofar as Sunstate is concerned, the objectors contended that the lack of interest displayed by the AIPA in the pilots employed by that airline, most of whom are members of the AFAP, demonstrates that the AFAP is the better organisation.

S.158(6) - CONTRAVENTION OF AGREEMENTS OR UNDERTAKINGS

[96] If the Commission is satisfied that the alteration would contravene an agreement or undertaking dealing with the AIPA's representational rights and to which the AIPA is a party, it may refuse its consent.

[97] To properly understand how the objectors say that the rule change would breach several agreements, it is necessary briefly to have regard to the AIPA's initial registration and also to the proceedings before Hancock SDP in 1994.

[98] The first agreement was made in 1986 between the AIPA and the AFAP at around the time of their respective applications for registration as organisations. At that time, their rules were more or less complementary and mutually exclusive with the AIPA broadly representing Qantas international pilots and the AFAP representing pilots employed by Ansett, Trans Australian Airlines and in general aviation.

[99] The 1986 agreement [50] made it clear that the AFAP would have the right to enrol pilots employed by domestic airlines, even if those airlines, or their subsidiaries, were to operate international routes. The AIPA was confined to Qantas and to any new Australian company incorporated primarily to operate international RPTAS.

[100] After 1986 there were several significant developments in the Australian airline industry. The most significant is the so-called 'pilots' dispute' of 1989-1990.

[101] "On 18 August 1989, the AFAP instituted industrial action in support of a wage claim. This took the form of refusals by members to work outside the hours 9am - 5pm. The 'nine-to-five' campaign continued for 6 days. On 24 August, all but a few line pilots employed by Ansett, Australian, East-West and Ipec resigned." [51] Following the pilots' dispute there were several applications made to the Commission under s.118A of the Industrial Relations Act 1988 in relation to the industrial representation of domestic pilots.

[102] After much litigation involving numerous applications, Hancock SDP handed down a decision on 22 December 1992 .[52] His Honour decided to issue orders which deprived the AFAP of the right to represent the industrial interests of pilots employed by Qantas, Ansett, Australian Airlines, East-West and Ipec. He did so despite the fact that the AIPA not at that stage have the right to represent the industrial interests of those pilots. His Honour said "…I now decide that orders will issue which will deprive the AFAP of the right to represent the industrial interests of pilots…This course of action has the obvious disadvantages that pilots will, for a time, lack representation by an organisation…This problem is a manifestation of [the pilot's dispute]. The employed pilots rejection of the AFAP has left them imperfectly represented."[53]

[103] In 1995, Hancock SDP made an order whereby the AIPA was granted, to the exclusion of the AFAP, the right to represent the industrial interests of pilots employed by Qantas, Ansett, Australian Airlines, East-West and IPEC. [54] There had been much litigation before his Honour dealing with the industrial representation of pilots, leading to orders on 1 May 1995, but I do not turn to the detail. It is usefully summarised in the decision of a Full Bench of December 1995.[55]

[104] The upshot of the litigation was that the AFAP was excluded from representing the industrial interests of pilots employed by Ansett, Qantas, Australian Airlines, East-West and Ipec. As a consequence, it seems to me that the orders of 1 May 1985 were inconsistent with the terms of the 1986 agreement and brought it to an end. The alteration to the AIPA's rule would not contravene the 1986 agreement.

[105] As to letters of 29 and 30 January 1996, said to constitute an agreement between the two unions that the alteration would contravene, it seems to me that they do no more than state the unions' understanding of the effect of Hancock SDP's demarcation orders, in order that alterations to the AIPA's rules, consistent with the demarcation orders, could be made without further resort to arbitration.

[106] In my view, the granting of this application would not result in a contravention of any so-called agreement constituted by those letters.

[107] Finally, it is put that a one page document entitled "THE COVENANT OF AusALPA" over the signature of "G.J. Duggan V.P For and on behalf of the Australian and International Pilots' Association" is yet another agreement that the rule change would contravene. Even if that document is an agreement between the organisations, which I think it is not, an agreement "to respect the constitutional machinery for the settling of such differences as may arise between Member Associations and to abide by the decisions reached" would not be contravened by the rule change.

Australian and International Pilots Association - re Alteration of Eligibility Rules [2007] AIRC 420; (23 May 2007)

At a glance

Court

Decision date

Source

Judgment (223 paragraphs)

Australian and International Pilots Association - re Alteration of Eligibility Rules [2007] AIRC 420; (23 May 2007)

Legislation Cited (4)