The Qantas Lockout, - Risks and rocks all round down under.

Qantas' bolt from the blue,- the unheralded immediate suspension of their services wordwide is spectacular even in the rough knockabout world of Australian politics, unions and industrial relations. The stunning immediacy of CEO Alan Joyce's action makes Willie Walsh look like a silver tongued diplomat.Clearly this was not a spur of the moment decision. Both it and its timing must have been carefully considered and agreed by the Qantas board whose Chairman Leigh Clifford had a robust record in handling disputes during his time with mining giant Rio Tinto.

A comprehensive lockout by an airline is probably unprecedented. Strikes are almost always visible a long way off , giving governments time to decide whether they can or want to intervene and customers and staff the chance to make their own arrangements to deal with the situation. Historically strikes have also been ex base so that aircraft competed their whole itineraries and passengers were not suddenly left stranded around the network. Halting checkin and departures systemwide within minutes is something entirely new and adds to the dramatic effect. It is also bound to elicit adverse customer reaction. It must have been considered worth the risk.

So what's going on here?

Qantas is faced with an ever less regulated world. The core historic long haul airline was overwhelmingly protected from overseas competition by extremely restrictive Air Service Agreements between Australia and foreign governments. These started to fall away from the 1970s with the emergence of the new high quality but lower cost Asian airlines and bit by bit the access wall was eroded until with the arrival of the new generation of Middle East carriers it has all but collapsed to the enormous benefit of Australia's tourism and other industries. It is not going to be rebuilt. Qantas' only viable future therefore is to go out and compete, focus more on Asia, and move some labour intensive activities such as engineering to lower cost locations. Old fashioned wage rates and low productivity are not an option.

Union reaction to the new necessities has not been positive. A fierce and sometimes bitter rearguard action has been developed into a running battle against almost any change to the status quo. Life could not go on like this and somehow a new deal has to be forced and accepted. Recent progress has been zero and animosity has increased.

The airline has clearly decided that it can no longer live with the ongoing targeted industrial action of the last few months and that drastic and indeed dramatic action is the only way through. The last straw has probably been cashflow sapping union warnings to the customers that they risk disruption if they book on Qantas over the Christmas/New Year period.

Desparate times, desparate-but considered,-measures.

The timing can not have been accidental. Qantas has certainly gained the attention of Prime Minister Julia Gillard by threatening the smooth return home of the high profile delegates, entourages and media from the Perth Commonwealth Heads of Government Meeting. As host she has probably swung between acute embarrassment and fury. Bearing in mind that many of her cabinet have trade union backgrounds her attention may or may not be helpful to Mr Joyce.Risky.

Next up this week is the Melbourne Cup. Disrupting tens of thousands of the airline's domestic passengers, including its most loyal and influential customers, is again high risk. They may not be inclined to support the airline's action,- or timing.

The third group with whom relations are at risk is the non involved staff who could move from supporting their management to at least questioning it. Stopping flying removes the rallying flag for supporters and demoralisation can follow.

The word which keeps recurring here is risk. The Chairman, CEO and Board must believe that they can force government support for an enduring industrial settlement whether they like it or not. Their gamble is that the government will accept that Qantas is just too important to Australia to be seen to fail and the case for it to mimic Asian costs and service quality is irrefutable. If it doesn't it will be replaced either by its own Jetstar subsidiary, a thing the unions fear greatly and are fighting against, or another operator entirely. That's why the Board has thrown the dice. It has landed rather decisively in the government's lap.