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RURAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE
25/02/2011
Pilot training, airline safety and the Transport Safety Investigation Amendment (Incident Reports) Bill 2010

CHAIR —I welcome the Virgin Blue Group. The Virgin Blue Group has lodged submission 17 with the committee. Do you want to make any amendments or any additions?

Mr Howell —No, thank you.

CHAIR —Do you have an opening statement?

Mr Howell —Yes. My opening statement will be brief. I actually have no Irish heritage at all. First, apologies from our Group Executive of Operations. He did intend to join the inquiry, but has actually gone to Christchurch at short notice to look after our staff over there. Thank you for affording us the opportunity to be represented at the committee. Our submission outlines the views in relation to a number of the terms of reference.

If I may, I will provide a brief overview of the group’s position on several of these points. We actually have four airlines in the Virgin Blue Group: Virgin Blue; V Australia; Pacific Blue, our New Zealand subsidiary; and Polynesian Blue, our joint venture with the government of Samoa. We have 1,200 or so pilots and approximately 100 aeroplanes. The pilots come from a variety of backgrounds, with varying levels of experience. All of the pilots have had to meet the Virgin Blue minimum experience requirements and progress through our selection process and then through the competency based training and checking system before they can commence operations within the group.

The approved training and checking system ensures pilots continually maintain their competency in order to be able to continue to operate, thus the group has established a training and checking system whereby competency based training and assessment is more relevant than flight hours alone. That said, the group does specify some requirements using hours as a baseline; for example, for promotions to captain. Virgin Blue does not believe that mandating a change to the minimum hours required to operate RPT services would enhance the safety of our operation.

Retention of experienced pilots, also one of the terms of reference, has actually not been an issue within the Virgin Blue Group, with the attrition rate generally at less than 1 per cent. However, we do note that the industry is cyclical in nature; there are peaks and troughs. That depends in large part on what is on offer, but primarily outside the country. The Virgin Blue Group believes that a key aspect of any safety management system is a good reporting culture from front-line employees and a just culture afforded to those employees by management. Changes that may affect the balance between the two need to be carefully considered. We would be pleased to take any questions.

CHAIR —Senator Cameron has indicated that he will be putting some questions on notice with regard to maintenance at Virgin.

Senator STERLE —I have read your two-page submission. It would be nice to have Mr Borghetti here. Are Australia’s skies safe?

Mr Howell —Yes, I believe that they are, generally.

Senator STERLE —Is Australia leading the world, or are we lagging behind?

Mr Howell —That is a very difficult and subjective question. We have significantly different conditions to deal with than many other parts of the world.

Senator STERLE —Have a go.

Mr Howell —The air traffic environment is significantly different. The weather conditions are significantly different. In fact, environmental hazards within Australia are different to those that we might actually be looking at in different countries. Our accident rate—if you want to use that as a metric—is very low compared to the major Western countries.

Senator STERLE —Where are the possibilities for improvement, in your view?

Mr Howell —Within the holistic system, so outside Virgin Blue?

Senator STERLE —Yes.

Mr Howell —That is a very broad question.

Senator STERLE —Take it on notice. I say that, not being rude, but I am mindful of the time. Do you train your own pilots through in-house or outsourced training organisations?

Mr Howell —The initial training achieved by our flight crew is conducted by external organisations. Boeing Training and Flight Services conducts our 737 training, Swiss Aviation Training conducts our initial Embraer training and at this point in time Airbus is conducting our A330 training.

Senator STERLE —Is this on Australian shores or offshore?

Mr Howell —The 737 training is conducted generally in Brisbane, the Embraer training is in Brisbane and at the moment the Airbus training is in either France or Kuala Lumpur at one of the Airbus facilities.

Senator STERLE —Are there any differences in standards between all four Virgin Blue entities?

Mr Howell —There are some differences in standard operating procedures. If you are looking for difference in recruitment, Polynesian Blue does not operate as a standalone airline, if you like; it is a commercial entity. Effectively, we are talking about three airlines for the purposes of comparison. In general, the standards between the three airlines are very similar. We do have slightly different recruitment criteria for Pacific Blue and Virgin Blue, which both operate short-haul aeroplanes, so we only have captains and first officers, whereas V Australia, our long-haul entity, actually also recruits cruise first officers or second officers, as they might be known otherwise.

Senator STERLE —But the training standards are across the whole four groups? If the planes are all similar, the training standards are identical?

Mr Howell —The training standards are similar. There are some small variations, but the standards are similar.

Senator STERLE —Does Virgin Blue have a cadet training program or any other form of training?

Mr Howell —We do not at this time have a cadet training program, but it is work that has been underway and under review for a while now.

Senator STERLE —What does that actually mean?

Mr Howell —We have actually been through the process of engaging with several entities and reviewing proposals from them for a cadet training process.

Senator STERLE —Entities would be?

Mr Howell —Training organisations including CTC and Oxford—I cannot remember who else off the top of my head that we have actually reviewed—but it is a process that we are actually evaluating right now.

Senator STERLE —Do you do it anywhere else in the world? Does Virgin have cadets?

Mr Howell —In other Virgin group airlines?

Senator STERLE —To the best of your knowledge. If you do not know the answer, take it on notice please. Would you agree that it would be a worthwhile cause?

Mr Howell —Cadet programs, certainly. Cadet programs can add significantly to the ongoing supply of professional flight crew.

Senator STERLE —As you have said, Virgin Blue has a number of foreign subsidiaries, namely Pacific Blue and Polynesian Blue, which you did mention. Does Virgin use foreign based crews to man these operations as well as Virgin Blue and V Australia operations?

Mr Howell —All Virgin Blue and V Australia flight crew are employed in Australia. Pacific Blue is a New Zealand based entity and operates under the auspices of the New Zealand civil aviation regulations, and it uses New Zealand based crew for its operations.

Senator STERLE —Over the years, what kinds of changes has Virgin made to its training procedures as well as to the amount of training that is conducted?

Mr Haynes —We have made a number of enhancements, I guess, over the past five to six years for pilot training. We have gone from a standalone endorsement from Boeing Training and Flight Services to a supervised or an audited system where they now train our procedures. We have our check captains sit in on those training programs. We also have their instructors come and sit in on our in-house recurrency training programs. We have increased the training sectors that we do when we initially bring a pilot into the company. I think that is about it.

Senator STERLE —You said your in-house recurrency programs?

Mr Haynes —Yes.

Senator STERLE —What exactly is that?

Mr Haynes —That is the requirement under the civil aviation regulations and orders to provide line proficiency checks and simulator checks which cover emergency procedures and normal flight operations that have to be conducted throughout a period of time, say 12 months. Our pilots go into the simulator approximately four times a year for four hours.

Senator STERLE —Whose simulator?

Mr Haynes —Our simulator.

Senator STERLE —Where is that?

Mr Haynes —We have two 737 simulators, one based in Brisbane and one based in Melbourne. We have an Embraer simulator based in Brisbane.

Mr Howell —The 777 simulator is in Sydney.

Senator STERLE —How many hours a year would your pilots spend in the simulator?

Mr Haynes —They would probably spend about 16 hours a year.

Senator STERLE —Probably?

Mr Haynes —No, they spend a minimum of 16 hours a year in the simulator.

Senator STERLE —So it is exactly the same as Qantas?

Mr Haynes —Exactly the same as Qantas.

Senator STERLE —I note from your submission that progression in a pilot workforce should be based on performance and capability rather than seniority. Can I take it from that that you do not believe there is value in experience?

Mr Howell —No, that is not what we said at all. Our comment relates to the concept proposed by some that the only method of safe career progression is through a strict seniority system. The selection that we have used has always valued experience. Experience, particularly within our business, gives us the capability to ensure that our initial assessment of an applicant actually is accurate. The longer we have a pilot employed, obviously the clearer understanding we have of his or her capability. Experience, if nothing else, or the test of time, if you like, is a great way of ensuring that we have been accurate in our selection process.

Senator STERLE —I highlighted in your submission, ‘This is backed up by significant ongoing investment in training systems and technology.’ If you do not have a cadet training scheme, where do you get your pilots from now?

Mr Haynes —We get them from a variety of sources, including the regional airlines, other overseas airlines and the Royal Australian Air Force. In the last 150 pilots that we employed, I think we took 14 per cent from Rex and approximately nine per cent from the Royal Australian Air Force. We have pilots from Hong Kong Airlines, Air Pacific and Air Vanuatu. We bring people across from V Australia, such as relief first officers into first officer positions.

Senator STERLE —Would you be able to break that up for us and get back to the committee on notice. I understand the progress from regional airlines, but it would be interesting to see what percentage comes from other airlines. I want to hear from VIPA, the Virgin pilots union. For some reason, and you might know what it is, they do not want to appear before us. We will address that. I want to hear from them. If your pilots did come to a public hearing, would they have any fear of any retribution from Virgin if they raised safety issues in the public arena?

Mr Howell —No, I would not expect so. If they are raised in a public form in a constructive manner, we have no history that I know of to deal with that in any way other than positively. I certainly think you would find right at the moment that our safety culture is probably at its peak.

Senator STERLE —I would really like to hear from Virgin—if you are able to; I appreciate it might have to go to a higher authority—that you would encourage pilots to come out and speak for and on behalf of the company with concerns and air them in the public arena. Rather than the answer being you would not expect so, I would rather hear you say that you would endorse and welcome the opportunity for the pilots to front this committee and have a full, open and fair hearing without any fear of retribution, without any fear of demotion and without any fear of loss of wages or victimisation.

Mr Howell —Certainly I will take that to a higher authority as you ask, but I can certainly guarantee that there would be no pressure on me to execute any punitive acts on pilots who actually speak out on safety related matters.

CHAIR —On that issue, in your submission you state:

From Virgin Blue’s perspective the proposed provision of legislative immunity to pilots and other flight crew who report on safety matters would not enhance safety.

Does that mean that you are opposed to immunity in legislation?

Mr Howell —If I recall, I do not believe that we have actually stated anywhere that we are opposed to immunity.

CHAIR —No, but you go on to say:

Virgin Blue’s approach to safety is based on principles of open reporting and a just culture which explicitly avoids the use of safety management systems as a punitive tool.

If that is the case, surely you would not mind if it was legislated? Excuse me, I just have to get your permission to have your photo taken by the press.

Mr Howell —That is fine. I believe that the statement that we made was that, given the culture that we have within the business at the moment, we do not see that legislated immunity for reporting was required. We have gone out of our way, and in the recent past I think it has been reinforced more significantly than ever before, to ensure that we separate our safety investigation processes from our disciplinary processes.

CHAIR —The difficulty we have encountered is that many pilots have rung us off the record who do not want to lose their jobs.

Senator STERLE —Which is pathetic. It is absolutely pathetic that—

CHAIR —We are not pointing the finger at Virgin, by the way. Just as a general thing, not pointed at a particular airline, it is just in there.

Senator STERLE —Please take this back to Mr Borghetti. I think Virgin is not taking this inquiry seriously. I think a two-page submission is an insult to this committee. I think it is an insult to the flying public. I think it is an insult that Mr Borghetti cannot even front, and I would request an answer to my questions within the next couple of days.

CHAIR —We are hoping, by the way, on questions on notice, that you could have them back to us by 11 March.

Mr Howell —Certainly.

Senator STERLE —I am asking for a bit quicker, gentlemen, because I do not think it takes much to pick up the phone, with great respect, Chair, to put a call into your CEO who has not even fronted here. So, I am not impressed. Thank you.

Senator MILNE —I have a concern about the offshoring of jobs, outsourcing to other countries, both pilots and cabin crew, through subsidiaries and so on. Obviously you have Pacific Blue operating. Is Virgin now employing pilots and cabin crew from offshore bases?

Mr Howell —Pacific Blue, as I said earlier, is a New Zealand based subsidiary. It employs New Zealand based staff. None of the New Zealand based staff conduct flying within Australia.

Senator MILNE —Is that the only offshore place, if you like, where you would outsource if that was your position?

Mr Howell —Our current position is that we actually are on-shoring maintenance jobs, as you might have seen recently with our announcement of the building of a maintenance facility at Sydney. The announced investment was $40 million and 300 jobs heading to Sydney. We are in fact not pursuing an offshoring strategy at all.

Senator MILNE —I was asking in particular in terms of pilots and cabin crew?

Mr Howell —The growth of the airline groups at the moment is such that Virgin Blue is growing; Pacific Blue is remaining relatively stationary, if you like; and V Australia has grown quite significantly since its start-up some 18 months ago. No, we are not transferring work to New Zealand to be completed by New Zealanders.

Senator MILNE —Can you give me a guarantee or an undertaking that all of your pilots and cabin crew are paid under Australian wages and the conditions of the Fair Work Act, et cetera?

Mr Howell —That is correct.

Senator MILNE —Thank you.

Senator McGAURAN —What are your criteria in relation to the roster system for pilots and a terminology called ‘back of the clock’ roster. Do you have a restriction on the number?

Mr Howell —In regards to the number of ‘back of the clock’ duties or the length of the period?

Senator McGAURAN —Probably both. Both of them feed into a fatigue factor of a pilot. Do you restrict the number of times it can be used in a roster in a year, and in a stretch?

Mr Howell —Do we restrict the number of times it can be used over a year? No. If for some reason we found that one of our crew was bidding for ‘back of the clock’ duties, our crew have the opportunity through a preferential bidding system to bid to arrange their life. Of course, with any preferential bidding system, there is no guarantee that the bid will in fact achieve the perfect roster. But we do have the capability for our crew to avoid ‘back of the clock’ pairings if they so desire. And we have the opportunity for them, if they are of that mind, to bid for as many ‘back of the clock’ duties as they wish.

Senator McGAURAN —But that is the point. This has really opened up a can of worms. That is the point. You are saying that they will want to bid for it. There may be the odd—

Mr Howell —No, I did not say that. I said, ‘If they do wish to bid.’

Senator McGAURAN —If they sought it?

Mr Howell —Yes.

Senator McGAURAN —I would say first of all that that would be an absolutely rare occasion—

Mr Howell —Indeed.

Senator McGAURAN —It is not a good roster at all, but they might get it. It is more my point that executives are requiring them to do it, and requiring them to do it frequently, and frequently becomes fatigue. Now, ‘back of the clock’, for those who want to know, you do something like four days starting at 5 am, and then on the fifth day you start at 10 pm, so your body clock is out. If you keep doing that, you are going to get a fatigued—

Mr Howell —We do have a fatigue monitoring system in place to deal with those particular matters.

Senator McGAURAN —Why don’t you monitor the roster?

Mr Howell —We do.

Senator McGAURAN —But you have just said it is open slather, that anyone can bid for it or if not we will ask them to do it.

Mr Howell —No, actually I did not say that.

Senator McGAURAN —Sorry—you didn’t—but I certainly have the impression. The question was, ‘What restrictions do you have on “back of the clock” rostering?’

Mr Howell —Yes, and the restrictions that we actually have on ‘back of the clock’ rostering are in the enterprise bargaining agreement that was negotiated with our pilots in 2007. They are restrictions around the number of nights that one can work. Your question was about the number that we actually might achieve in a year. There is no specific restriction on that other than the fact that there are restrictions on early starts and late night duties. Beyond the actual mechanics of those restrictions, we then go through the process of monitoring for fatigue using biomathematical tools. We monitor fatigue through fatigue reporting. We actively intervene in the rosters that we believe might actually show up as being fatiguing. We encourage our pilots to engage with their line managers in advance of operating if they believe that they will be subject to any fatigue risk.

Senator McGAURAN —But asking a pilot—I know that they are big boys and they are very—

Senator MILNE —And girls.

Senator McGAURAN —And girls, but that is like asking a truck driver to ring the bell on his boss. Is it not easier if the boss gets the roster right in the first place?

Mr Howell —We actually have buffers built into our rostering system and other restrictions that curtail the way that the trips might actually be assembled.

Senator McGAURAN —I will not pursue it other than to say that, I am sorry, but I am not convinced by your answer that there is any restriction. I might even be convinced there is even a desire of management to run as many ‘back of the clocks’ as they can for cost-saving purposes.

Mr Howell —No, I reject that out of hand.

CHAIR —Do you really think there is an accurate way of telling when someone is knackered?

Mr Howell —Unfortunately, there is no blood test for fatigue.

CHAIR —It is a sort of a bit of a hazardous—

Mr Howell —There is in fact—

Senator McGAURAN —It is obviously the roster will show you if have got fatigue.

Mr Howell —There are in fact empirical tests—

CHAIR —But what does that mean—an empirical test?

Mr Howell —There are ways of determining fatigue. There are tools that one can use to—

CHAIR —Do you test everyone?

Mr Howell —The tools that we are actually using to predict fatigue have been validated through the testing process previously.

CHAIR —Is it random testing?

Mr Howell —The tools have been developed on the basis of quite some long-term research.

CHAIR —Can you table those methodologies to this committee?

Mr Howell —The methodologies for the research?

CHAIR —Well, how the bloody hell do you know whether or not I am buggered, that sort of thing?

Senator McGAURAN —But you are not a good example, Bill.

Mr Howell —We will take that on notice.

Senator O’BRIEN —First, can I say that I regularly fly with Virgin out of Launceston, and it provides a good level of service and competition in that port. I am glad that you are there. Do you think it is a bit embarrassing for Virgin that Mr Joyce, Chief Executive Officer of Qantas, and Mr Buchanan, Chief Executive Officer of Jetstar, turned up today and your chief executive officer is not here?

Mr Howell —I am certainly not able to comment on that.

Senator O’BRIEN —Do you think that is a problem with your level of representation, that you have a level at which you can comment and then you will have to refer matters off?

Mr Howell —You are asking me to comment on whether it is embarrassing that my CEO has higher priorities. I am certainly not able to comment on that.

Senator O’BRIEN —Do you know if your CEO is prepared to make himself available to this committee?

Mr Howell —I have not spoken to him about the inquiry.

Senator O’BRIEN —Is your chief executive officer interested in the outcome of this inquiry?

Mr Howell —I am sure he will be.

Senator O’BRIEN —But you do not know; you have not spoken to him about it?

Mr Howell —I have not spoken to him about an appearance at the inquiry.

Senator O’BRIEN —But you have spoken to him about the inquiry?

Mr Howell —I have spoken to him about the inquiry. I have also spoken to the group executive of government relations specifically, in fact over the last few days. We have been in regular communications about the inquiry.

Senator O’BRIEN —Could you explain the reporting chain for your positions in relation to the management of Virgin? Are you directly below the chief executive officer, or is there a level between you and the chief executive officer?

Mr Howell —My superior is the group executive of operations, who is the accountable manager for the AOC. I report to him, and he reports to the CEO.

Senator O’BRIEN —He holds the AOC?

Mr Howell —That is correct. Under section 28 of the act he is actually the accountable manager for the AOC.

Senator O’BRIEN —Qantas indicated that there was someone else under the AOC who was not here today, and therefore the chain of command for safety passed through the AOC holder, which I would believe would be very appropriate.

Mr Howell —Yes, and that is exactly the same path that we have.

Senator O’BRIEN —If there is a safety issue with pilots, who is responsible for dealing with it—you, the AOC holder or the chief executive officer?

Mr Howell —It depends on the safety issue that we are talking about. I am responsible for the day-to-day operations of the airline, so the day-to-day safety of our flight crew. That is certainly my responsibility.

Senator O’BRIEN —What is the next level?

Mr Howell —The next level is the group executive of operations, who is responsible for the overall safety of the airline.

Senator O’BRIEN —How does it break down, and who has overall responsibility for the standard of safety achieved by the training system?

Mr Howell —For the flight crew training system, the responsibility for that lies with Stuart. He is immediately responsibility for the standards, and I am responsible for the effect on that of the flight operations.

Senator O’BRIEN —Where does the AOC holder’s responsibility come in there?

Mr Howell —The AOC holder is responsible for the overall safety of the operation.

Senator O’BRIEN —That level sits above both of you?

Mr Howell —Correct.

Senator O’BRIEN —In regard to the safety of pilot training?

Mr Howell —The effect of pilot training on the overall safety of the airline.

Senator O’BRIEN —So the policy decisions of Virgin in that regard would be made at that level, if not above it?

Mr Howell —Certainly. We actually have a safety reporting process to the board as well.

Senator O’BRIEN —So there is a board level responsibility which feeds into the decisions about pilot safety and training?

Mr Howell —Yes, in effect.

Senator O’BRIEN —If this committee wanted to talk to those most responsible, it would need to talk to a representative of the board?

Mr Howell —I would imagine that, if you actually were speaking to the group executive of operations and the CEO, they would probably be in a position to advise you as to who the most appropriate person was for your queries. As to the safety reporting through to the board and the oversight from the board, I am not completely familiar with that.

Senator O’BRIEN —I appreciate that you are in a position where you have been delegated to appear by your organisation. I am not seeking to be critical of you because you are appearing—we are grateful for that—but I think you can take it from the questions that have been asked today that we expected a higher level of attendance from Virgin.

Mr Howell —Understood.

Senator XENOPHON —Could I just endorse Senator O’Brien’s remarks in relation to that; I am pretty underwhelmed by Virgin’s submission and the fact that Mr Borghetti could not be here today. The CEOs of Qantas and Jetstar turned up to be subjected to some robust questioning, and I think that reflects well on them and their organisations. I for one think it is important that the CEO of Virgin be in attendance as well as the other people that Senator O’Brien alluded to. I do not know whether we can take this much further, but I will just pick up on one thing. You do not support any enhancement or the provision of legislative immunity to pilots because I think you say that there is already a structure in place at the moment?

Mr Howell —Certainly. I do not believe that it would actually add to our safety reporting.

Senator XENOPHON —But if the legislative requirement simply entrenches and mandates what is already in place, what is the harm in that?

Mr Howell —I do not believe it would have any impact upon our operation. I believe that the just culture that we actually have in place at the moment would provide the opportunity for our pilots to report as they see fit at the moment.

Senator XENOPHON —This is not targeted towards Virgin or any particular airline, but if it means that there is legislative immunity across the board, surely that would be a good thing for some airlines that do not—

Mr Howell —Indeed. I am not able to comment on other airlines’ safety culture, but that is a reasonable thought.

CHAIR —Can you comment on behalf of your own airline?

Mr Howell —Yes, I can comment on behalf of Virgin.

CHAIR —If you need to take it on notice and take it back, please do so, but would you support that legislation?

Mr Howell —I do not believe that the legislation as proposed would make any difference to us.

CHAIR —No, that is not what I am asking. We accept that that is your view, but would you support it?

Mr Howell —As an organisation, I would have to take that on notice.

Senator XENOPHON —If you cannot answer that, when that is one of the terms of the inquiry, why on earth are you here? I am not critical of you, but I am just saying you do not even have authority about one of the terms of reference of this inquiry to say whether or not you support this amendment? That is the case, isn’t it?

Mr Howell —That is the case, yes.

Senator XENOPHON —Chair, I think we need to have Virgin come back. Thank you.

CHAIR —There being no further questions, thank you very much for your time and attendance.

[11.42 am]