Australian Aviation Industry

Why an Aviation Employee Survey?

Employee engagement surveys are not a new concept; in fact most employers in our industry have conducted them for some period of time. The problem with conducting internal company engagement surveys is that the results are just that internal. Whilst data collected during this process may be of some assistance, its real value cannot be determined without a corresponding and measurable industry comparison. In many cases the information obtained through the internal surveys are never released to staff or shareholders. Instead those persons rely on limited interpretation and commentary by Senior Managers. A case in point was the 2012 employee survey undertaken for Qantas Airways. Information collected lead to the following statements by the CEO The ExCo team and I have reviewed our Engagement Survey results this week. Our overall score was 66%, this was a 4% decline from last year,

Employee Groups With Measurable Input to Survey

Qantas Virgin Group Jetstar Qantaslink Skywest Forstaff Aviation John Holland Aviation National Jet (Cobham) CHC Helicopters Bristow Helicopters Regional Express

and is a true indication of the incredibly tough year weve just been through together. The good news is that two thirds of our people are engaged and believe in where we are headed as an organisation, and what we need to do to get there. The above statement was met with surprise by staff who suspected the 66% related only to the number of surveys returned and this was being used to justify support for change that may have been absent. After consultation with Employees and Managers within the industry, it was determined that a wider Industry based survey was required where similar questions were put to those in the industry, the results to be made publicly available for the benefit of Employees, Management, Investors and those who patronise the businesses that form the Aviation Industry in Australia. AND THE PARTICIPANTS WERE? No one company has the ability to conduct an Industry survey but there is a movement that represents over 60% of those Employees. Professional Employee Associations and Unions. Over 2750 (approximately half from Qantas) employees participated in the 54 question survey from a wide cross section of Industry Employees including Pilots, Engineers, Flight Attendants, Ramp Services Staff, Customer Services Staff, Support Staff and; Managers.

Alliance

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Employee engagement What is it? What are its benefits?

The primary assumption is that if an employee is engaged the company gains the optimum performance input from the employee. A number of research papers have been written on employee engagement notably, W.A. Kahn in the early 1990s as referred to by Rich, B.L. et al 2010: People exhibit engagement when they become physically involved in tasks, whether alone or with others; are cognitively vigilant, focused, and attentive; and are emotionally connected to their work and to others in the service of their work (Kahn, 1990).

Put simply, engagement involves investing the hands, head, & heart (Ashforth & Humphrey, 1995: 110) in active, full work performance.

Herbert Kelleher, the previous CEO of Southwest, once made the following comment that summarizes the Southwest philosophy:

Who comes first, the employee, customers, or shareholders?

Thats never been an issue to me. The employees come first. If theyre happy, satisfied, dedicated, and energetic, theyll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy.

Research has shown that employee engagement is linked to a range of employee inputs to business success factors such as: Employee performance/efficiency Productivity Safety Attendance and retention Customer service and satisfaction Customer loyalty and retention Profitability

Joe Nocera reported in the New York Times May 24, 2008 in an article The Sinatra of Southwest Feels the Love:

There isnt any customer satisfaction without employee satisfaction, said

Gordon Bethune, the former chief executive of Continental Airlines, and an old friend of Mr Kellehers. He recognized that good employee relations would affect the bottom line. He knew that having employees who wanted to do a good job would drive revenue and lower costs.

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Survey Groupings
The survey questions were aimed at gathering employees opinions on how they felt about the management of the company and how employees were treated. The scores were then compiled to give an overall rating for each company on overall employee engagement. Whilst some surveys may be wholly about employee engagement the survey used was derived to get a broader picture more relevant to the aviation industry of employees opinions. From the survey questions asked the results were grouped by relevance under the following headings: Communication Safety Perception Management Individual

Survey Methodology
The Survey was compiled under license available on the surveymonkey.com website. The questions were modelled on existing airline/aircraft industry employment surveys to ensure the data returned was based on similar subject matter enabling valid comparisons by those who may be interested in using the information.Industry employees were encouraged to complete the survey through the website link https://www.surveymonkey.com/s/ HQX65PV and by social media and contact with their employee organisations.

Communication This grouping refers to the employees opinion of the effectiveness of company managements communication in both directions, informing employees of developments and listening to opinions of staff. Questions in this group covered: Providing staff a clear sense of direction Sharing team goals into clear responsibilities for the employee Recognition for a job well done Building teamwork Making the effort to listen to the opinions of employees Keeping employees informed about matters affecting them Encouraging employees to come up with solutions to work-related problems Acting on previous surveys and feedback Safety This grouping refers to the employees opinion of the effectiveness of company management in delivering the safest aviation safety outcomes for staff and passengers. Questions covered:

Obstacles at work to the employee doing their job well Employees ability to sustain the level of energy needed to perform work Employee being sufficiently informed about company's organisational behaviours of Safety, Service, Innovation, and Integrity Management providing the tools and resources for employees to achieve excellent performance Employee being concerned by pressure at work The employee recognising that the company cares deeply about safety Employees being comfortable reporting safety concerns Management taking corrective action when safety concerns are raised Management setting a good safety example Evidence of deliberate violations of standard operating procedures Employees belief that the Company learns from safety incidents Employees belief that people are treated fairly after being involved in a safety incident Senior management putting safety before profits

AVIATION INDUSTRY EMPLOYEES SURVEY 2012

Perception - This grouping refers to the employees overall perception of the company they work for. The questions related to the employees loyalty and commitment to the brand. Questions covered: Belief in the goals and objectives of the Company Support for the Company vision Pride to work with, and in, the Company Employees perception of the Companys quality of products Employees perception of the Companys brand image Employees perception of the Companys prospects of improvement

Management - This grouping refers to the employees views of the companys management performance. For example: Employees belief that senior management are taking the Company in the right direction Employees trust in the people running the Company Employees belief that Senior management make decisions promptly Senior managements performance in providing leadership Senior managements performance in managing change Senior managements performance overall

Individual - This grouping refers to the employees view of their opportunities in the Company and how they fit in. For example: Confidence that they can achieve their personal career objectives within the Company Getting along well with work colleagues Knowing about possible career paths within the Company Management making adequate use of recognition, other than money, to encourage good performance Recommending their Company as a good place to work Commitment by extra effort beyond what is required to help the Company succeed Employees satisfaction with remuneration level

Unlike Internal company surveys the concept of an Industry survey allows participants to answer freely without fear of repercussion from employers who may have access to an individuals responses

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Survey Demographics
Includes all Employees who Responded to Survey
Acknowledgement must be given to Employees of the following companies who responded to this survey however due to low return rates will not have their responses split for the purposes of company comparison

Airservices Australia Cathay Pacific Air New Zealand Brindabella Hawker Pacific CASA QDS RAAF Gate Gourmet Network Aviation Aeropelican AMSA Emirates Aerocare Express Ground Handling Air North Tiger Toll Aviation Subcontractors

Employees who responded to the survey workplace mainly centred in the major domestic ports in order of Sydney, Melbourne, Brisbane, and Perth.

AVIATION INDUSTRY EMPLOYEES SURVEY 2012

Age and Service

Approximately 81% of employees are aged 35 or over with the average age calculated as 43. Approximately 45% are aged 45 or over. Approximately 16% of the workforce are in the over 55 age group, who are entering the potential retirement demographic. This may indicate that within the next 10 years based on current industry growth predictions, and unless there is a downturn, at least 16% of the workforce may need to be replaced

Approximately 50% of employees who answered the survey have more than 10 years service with their employer and 28% have greater than 20. This indicates a relatively highly experienced workforce.

AVIATION INDUSTRY EMPLOYEES SURVEY 2012

Engaged employees work with passion and feel a profound connection to their company. They drive innovation and move the organization Not engaged employees are essentially checked out. Theyre sleepwalking through their work day, putting time not energy or passion into their work Actively disengaged employees arent just unhappy at work: theyre busy acting out their unhappiness. Every day, these workers undermine what their engaged coworkers accomplish
Source: Adapted from Engaged employees inspire company innovation. (2006, October 12). Gallup Management Journal

Rating Scales
Most individual questions that are presented in this booklet are based on a 1-5 rating scale with 5 representing the most positive answer and 1 representing the least positive. The rating scale is a common survey standard used across all industries. Example My manager does a good job at building teamwork Agree 5 points Tend to Agree 4 points Not Sure 3 points Tend to Disagree 2 points Disagree 1 point Points are added together and displayed as a mean average.

Overall Engagement
The measure of an employees engagement can be calculated using a number of different methods. This survey uses a complex set of predetermined calculations that measure the overall engagement across 45 key questions. A majority of those questions are separated to allow measurement across the 5 distinct categories with some questions only applying to the overall score due to their general nature. The formulas used to calculate engagement work on the basis that the most positive answer would represent 100% potential with the most negative answer allocated 0%. Answers somewhere in between are weighted with those who are unsure adding a benefit of 50%. A simple question such as - Is an employee engaged or not? - is discretionary and subject to the views of the reader. In nearly all cases an employee could become more or less engaged. For the purposes of this survey we consider an employee to be engaged if that individuals engagement score is greater than 50%. An engaged workforce to be one that cumulatively scores above 50%.

AVIATION INDUSTRY EMPLOYEES SURVEY 2012

Safety
The Aviation industry is regulated by the Civil Aviation Act 1988 and its Regulations, it sets safety and airworthiness standards for the Australian industry in compliance with International convention obligations pursuant to ICAO. Aviation employees live daily in a highly safety conscious industry and as is well known air disasters have the potential for massive loss of life and civil damage. The survey contained a number of safety explicit questions, grouped in the results reported earlier in this report under the heading Safety. One would hope that most employees in aviation would not respond in the negative i.e. would return a Tend to Agree or Agree response. Typical safety questions and responses across all companies were:

Employee Safety Questions Response

My company cares deeply about safety I feel comfortable reporting safety concerns My company takes appropriate and timely action when safety concerns are raised My manager sets a good safety example I do not see evidence of deliberate violations of standard operating procedures I believe my company learns from safety incidents After a safety incident employees at my company are treated fairly Senior management of my company put safety before profits

Qantas Group Positive 56% 74% 70% 70% 80% 64% 59% 22% Negative 44% 26% 30% 30% 20% 36% 41% 78%

Virgin Positive 87% 89% 85% 87% 93% 87% 73% 76% Negative 13% 11% 15% 13% 7% 13% 27% 24%

Whilst any response in the negative side of the ledger is of concern the Qantas Group employees surveyed responses are extremely worrying. Particularly (a) Qantas caring about safety (where 56% of responses were favourable versus Virgin at 87%); and (b) in regard to Senior Management putting safety before profits (where Qantas responses were 22% favourable versus Virgin at 76%). In nearly all questions Qantas Group employees had more than twice the number of negative responses per employee compared to Virgin.

AVIATION INDUSTRY EMPLOYEES SURVEY 2012

Alliance Airlines

Communicating with Staff

400 staff Dedicated nationwide FIFO Founded 2002 Headquarters Brisbane 26 aircraft

Staff likelihood of recommending services to family or friends -

8 out of 10

Bristow Helicopters

374 staff Mostly Oil and Gas services Founded 1967 Headquarters Perth 34 Helicopters

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CHC Helicopters

Communicating with Staff

325 staff Emergency, Oil and Gas Founded 1969 Headquarters Perth 38 Helicopters

Cobham Aviation Services Australia (National Jet)

1600 staff FIFO, Wet Lease, Customs Founded 1989 Headquarters Adelaide 33 Aircraft

Staff likelihood of recommending services to family or friends -

7.9 out of 10

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Helicopter Sector

Maintenance Providers

Regionals

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Airlines

Airlines Overall Engagement Order

1. Alliance 88.1% 2. Cobham 77.4% 3. Virgin 75.8% 4. Skywest 57.6% 5. Rex 39.3% 6. Qantaslink 36.9% 7. Qantas 32.1% 8. Jetstar 24.0%

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Forstaff Aviation

Individual within the Company

680 staff Aircraft Maintenance Founded 1998 Headquarters Avalon Vic Mostly Qantas contracts

Jetstar Airways

4200 staff Regular public services Founded 2003 Headquarters Melbourne 65 Aircraft

Staff likelihood of recommending services to family or friends -

3.5 out of 10

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Individual within the Company

John Holland Aviation Services

450 staff Maintenance Founded 2007 Headquarters Melbourne Mostly Virgin, Jetstar, Tiger

Qantas Airways

27000 staff Regular public services Founded 1920 Headquarters Sydney 140 Aircraft

Staff likelihood of recommending services to family or friends -

4.5 out of 10

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Qantaslink

Perception of Company

Part of Qantass 27000 staff Regular public services Founded 2002 Headquarters Sydney 58 Aircraft

Staff likelihood of recommending services to family or friends -

5.2 out of 10
Regional Express (REX)

1000 staff Regular public services Founded 2002 Headquarters Wagga Wagga 48 Aircraft

Staff likelihood of recommending services to family or friends -

4.9 out of 10
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Skywest

Perception of Company

600 staff Regular public services Founded 1963 Headquarters Perth 18 Aircraft

Staff likelihood of recommending services to family or friends -

6.4 out of 10
Virgin Australia

8000 staff Regular public services Founded 2000 Headquarters Brisbane 93 Aircraft

Staff likelihood of recommending services to family or friends -

8.3 out of 10

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Air Traffic Control

In our country is run by Airservices Australia. 100% of ATC respondents either disagree or tend to disagree that Management put safety before profits 100% of ATC respondents do not trust Senior Management

View of Management

Cathay Pacific Australia

Staff likelihood of recommending services to family or friends -

6.6 out of 10
62% are proud to be in Association with Cathay

Pilots

58% of Pilots think they are fairly paid whilst 42% do not 22% do not feel comfortable reporting safety concerns

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View of Management

Network Aviation
Staff likelihood of recommending services to family or friends -

5.9 out of 10
57% of Network Aviation respondents think their company will get better over the next 12 months

Air New Zealand (Australia)

Staff likelihood of recommending services to family or friends -

9.2 out of 10
83% of Air NZ respondents are seldom bothered by pressure at work

Flight Attendants

54% of respondents were male and 46% female 62% of Flight Attendants think they are fairly paid whilst 38% do not
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Sub-Contractors
31% of subcontractors are seeking other work whilst another 46% would consider another job if it was offered 81% think they are fairly paid whilst 19% do not

Safety

Customer Services Staff

14% have been with the company for more than 20 years 57% of respondents were female 62% included staff travel as the reason they stay with their company

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Qantas Engineers

Safety

60% have been with the company for more than 20 years 74% work beyond what is required to help the company succeed 15% would recommend the company as a good place to work 4% think Senior Management are taking the company in the right direction 2% have full or partial trust in the people running the company

Qantas Managers
53% have been with the company for more than 20 years 91% work beyond what is required to help the company succeed 42% would recommend the company as a good place to work 43% think Senior Management are taking the company in the right direction 25% have full or partial trust in the people running the company

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Qantas Pilots
Rate their airline 3.5 out of 10 55% believe they have enough energy to get through the day 45% are over 44 years old 40% are proud to be in association with their company 24% feel uncomfortable reporting safety incidents 29% think that people involved in safety incidents are treated unfairly 34% think their company does not learn from safety incidents

Highlights
The highlight is the ranking of Alliance Airlines, consistently at number one in all categories and displaying a high level of employee engagement. An indicator of why the Alliance employees response level was so high may lie in the Alliance Half Yearly results reported to the Australian Stock Exchange December 2012 for the last half of 2011: Alliance Aviation Services Limited (ASX:AQZ) today reported revenue for the half year ended 31 December 2011 of $84.7 m million, a 45% increase over the previous corresponding period. Pro-forma EBITDA increased by 24% to $22.5 million. Alliance Managing Director, Scott McMillan said: The underlying fundamentals of our business remain very strong, with our activity at historically high levels. We are seeing continued expansion of the mining and energy markets. We have a strong position in the growing FIFO market, as we are seen as a reliable operator, with market leading on-time performance. Owning our own fleet and maintenance capability across Australia enables us to continue to strive to improve this important differentiator of our business. Alliance has invested substantially in its heavy maintenance operations in Adelaide and Brisbane enabling us major maintenance tasks, ensuring we are in full control of our fleet.

Jetstar Pilots
Rate their airline 2.4 out of 10
24% are over 44 years old 14% believe they have enough energy to get through the day 7% are proud to be in association with their company 59% feel uncomfortable reporting safety incidents 80% think that people involved in safety incidents are treated unfairly 72% think their company does not learn from safety incidents
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Jetstar was the worst performed airline ranking last in all categories except Management. Qantas Group Airlines followed similar trends with all categories of engagement below 60%.

Reasons Employees Stay with their Company in order of preference:

1. Pay 2. Work/life balance

Questions
Wouldnt this survey be biased due to the large number of union member responses? The Airline Industry in Australia is heavily unionised with many operational departments containing 95%-100% membership across all companies. The response comparison between one company and another would not differ by union status as membership levels are similar nationwide. Access to this survey was available to union and non-union employees via various different means with less than 10% of responses linked directly to email addresses of union members. Has this survey been endorsed by Airline Management? No. Based on feedback we are aware that some companies are concerned that the results of this survey may conflict with public comments made regarding internal company surveys.

3. Working in aviation 4. Work environment and team 5. Position matches interests 6. Staff travel 7. Lack of external career opportunities 8. Working for an iconic Australian Brand 9. Future career opportunities 10. The quality of their manager

Who will receive a copy of this survey? This survey will be available to investors, shareholders, employees, management, journalists, politicians and any other interested parties and the information within may be freely shared in whole or part. Will there be a follow up survey in 2013? It is intended that an Australian Aviation Industry Employee engagement survey be conducted annually. Preliminary results were presented to the International Transport Federation and the concept is likely to be adopted worldwide.

Who co-ordinated this survey? The survey and its presentation were co-ordinated by the Australian Licenced Aircraft Engineers Association.

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