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Qantas is perfectly entitled to spread its wings

Lainie Anderson

by Lainie Anderson

21 Aug 05:55am

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Filed under: Alan Joyce, Aviation, Competition, Qantas

46 comments

If you’re willing to sleep around, don’t be surprised if your partner gives you the cold shoulder.

Blue skies ahead? Pic: qantas.com.au.

This week the nation cried foul at the thought of Qantas, our beloved flying kangaroo, shooting through to Asia.

First of all, Qantas hasn’t done a runner. As CEO Alan Joyce says, the company is looking to shed 1000 of its 35,000-strong Australian workforce and establish two news carriers in Asia to increase its global competitiveness.

With Qantas International losing $200m a year, Mr Joyce says “we don’t have the option of pretending that things will change if we stay the same. They won’t”.

And it’s hypocritical for us consumers to feel spurned anyway. We’ve all been cheating on Qantas for years – lured by glowing, pony-tailed Virgins and cheap flights offered by other carriers already enjoying the cost benefits of Asian hubs.

I first flew overseas at the age of eight, to visit my grandparents in Fiji. I’ve still got the coaster and menu from the exotic Qantas Funjet plane, stuck into a highly insightful diary which reads: “I looked out the window and got very dizzy. The plane was going very fast.”

In those days it was Qantas or nothing. Air travel was rare air, a big deal that didn’t occur every other month. The captain was godlike, the ‘flight hostesses’ more like models than waitresses.

These days, though, we catch planes like we used to catch buses. We snare $59 fares and city-hop to watch football. We fly into Asia for long weekends of bargain shopping.

Sure, we love ‘the idea’ of Qantas, our revered national carrier of 90 years. Who didn’t shed a tear when those Qantas kids first stood on Uluru to belt out I still call Australia home?

But money talks. Qantas holds around 65 per cent of the domestic Australian market, but just 18 per cent of us fly out of Australia on Qantas or Jetstar.

And this isn’t about love. It’s all about location: it might hurt a little to admit, but Paul Keating was geographically accurate when he said Australia was at “the arse end of the world”.

Essentially, Qantas needs to fly more people – and not just Australians – to more parts of the planet. To do that it needs to be based in a high density market on a geographical ‘hub’ that allows it to draw simple lines from A to B, C and D.

What better place than Asia, which Mr Joyce says will account for 16 per cent of the world’s middle class within 20 years.

Aviation commentators say the new Qantas route is a risky one. But if the company actually succeeds in making big coin from new international operations, where’s the downside?

What’s more, better performance globally could well lead to better deals locally.
There was certainly a time when national airlines carried the pride of the nation. Back in the 1990s, British Airways caused a furore by replacing its Union Jack tailfins with a series of global motif designs. At the launch of the new look, former British PM Margaret Thatcher used her hanky to cover the tailfin of a model plan, hiding its ‘shame’.

But increasingly deregulated ‘open skies’ have ended all that. The major routes are now fair game to big, cashed-up and perfectly positioned transnational operations. Exhibit A: Emirates. In this environment, Qantas can’t remain constrained to our little corner of the globe.

University of NSW aviation expert (and former Qantas employee) Ian Douglas says Australians should forgo sentimentality over “what in the end is just a transportation company” and take pride in the fact that Qantas is a successful business in one of the world’s most unprofitable industries.

He says lamenting the move by Qantas into Asia is akin to saying “the ANZ Bank shouldn’t open in India or London. Surely we want our Australian businesses to go out into the world and be successful?”

And here’s the best part: Qantas is an Australian-owned company. The profits will still call Australia home

Most commented

46 comments

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    • Erick says:

      06:26am | 21/08/11

      I remember when QANTAS was Australian-owned and its aircraft were serviced in Australia, its planes didn’t have so many bits dropping off in flight.

      I can has Australian airline?

      Reply

    • Tony of Poorakistan says:

      08:39am | 21/08/11

      They may as well remove the kangaroo logo and put a pair of chopsticks or a bowl of curry on the tail

    • marley says:

      08:43am | 21/08/11

      Not so sure about that, Erick.  Qantas hasn’t had a fatal crash in the jet era, but there’ve been plenty of glitches over the years.

      I don’t know why everyone assumes that only Australians are capable of competent aircraft maintenance.  For example, Singapore Airlines has only had one fatal crash, due to pilot error, not maintenance;  Cathay Pacific has had two, one due to being shot down by the Chinese, one due to a bomb on board;  Malaysia has had two, one due to pilot error, one due to a hijacking; JAL has had six, but at least four of them were due to crew error.  In other words, the Asians are as capable of good maintenance as Aussies are.

    • Erick says:

      09:53am | 21/08/11

      @marley - I’m not assuming that only Australians are capable of good aircraft maintenance. But I have noticed a lot more reports of in-flight mechanical failures since QANTAS outsourced its maintenance.

      Why was maintenance outsourced in the first place? Because it was cheaper to do it elsewhere. If I’m going to fly on a plane, I don’t want its safety checks performed by the cheapest guys - I want the best. Whether the best are in Australia or Singaprore doesn’t matter.

    • dovif says:

      09:54am | 21/08/11

      If the Union are happy with a 20% pay cut for all its staff, so that Qantas can complete with the likes of Singapore airline and Emirites. Then you might have a point

      A lot of Australian are happy to fly other airlines, because they are cheaper, and Union refuses pay cuts, so jobs are lost.

    • Stephen says:

      10:30am | 21/08/11

      Erick, 

      Qantas is still Australian owned and will continue to be so.

      Very little of Qantas’ maintenance is done offshore. That maintenance done offshore is supposed to be overseen, checked and signed off by Qantas Licensed Aircraft Maintenance Engineers (LAMEs). (The Qantas LAME union conveniently forgets to mention that fact)

      Are you asserting that maintenance done offshore is of lesser quality than that done in Australia?  The Lufthansa/RR A380 engine maintenance facilities in Germany would beg to differ.

      Are you saying the aircraft maintenance facilities in SE Asia, you know, the ones that maintain the aircraft of Malaysian Airlines, Thai Airways International and Singapore Air aircraft are off a lesser standard that Australian facilities? Maybe you should look at the incident records of those airlines before bagging offshore facilities.

      Aren’t we being a tad racist here Erick? I hope you are not asserting that a qualified Asian LAME is any less competent that an equally qualified Australian LAME just because he/she is Asian and gets paid less.

      Most of Qantas’ incidents have occurred in aircraft maintained in Australia. Qantas’ incident record is no worse than any other major international airline; in most cases it is much better. They may have had some incidents but they have still not lost a life in the jet era. How many other airlines can claim that?

      Without change Qantas will slowly go broke because of its unprofitable international operations. They are looking overseas to bring back some profits to those operations.

      Would you prefer Qantas to go bankrupt and 35,000 employees lose their jobs or for Qantas to shut down its international operations with the loss of many thousands of jobs? Or perhaps Qantas should seek ways to improve the profitability of its international operations with a minimal loss of jobs.

      This move to set up further overseas operations is no different to BHP setting up overseas operations to improve their bottom line.

    • pat says:

      04:54pm | 21/08/11

      You want a free market Erick? You have to deal with things like this then, or is protectionism ok when it tickles your jingoistic tendencies?

    • Mike says:

      08:35pm | 21/08/11

      @ Pat-  Free market? Well Asia sure isn’t playing along. Never have. China lied through its teeth to get into the WTO. Japan, South Korea? Pfft. Yes I want a free market but we sure ain’t got one. If they aren’t willing to play by the rules, at some point enough becomes enough.

    • Fox says:

      11:17am | 23/08/11

      @dovif
      QANTAS pilots earn considerably less than Emirates and SQ pilots. Why should they take a 20% pay cut on an already lesser wage as you suggest? You should read Lussier and Achua 4th edition. Your comment shows how out of touch you are with what is really going on

    • Kika says:

      12:32pm | 23/08/11

      Erick - IS IT that there are MORE failures now that they have outsourced maintenance, or is it that the Unions are blabbing more to the media about them as a way of furthering their own agenda??  A close family friend works for CASA and refuses to fly anyone other than Qantas, still.

    • acotrel says:

      07:00am | 21/08/11

      QANTAS is probably correct to move offshore, there will probably be economies of scale which will improve their profitability, however I suggest that their standards might suffer, and that is what the company’s reputation has been built on. I believe that most CEOs have no idea how to measure the productivity of their organisation.  Notionally a simple ratio of profit to wages bill is relevant, if the investment in infrastucture/assets can be ignored.  We have smart young MBAs who come out of university, all fired up.  Their usual approach to improving the ratio is to downsize the wages bill by cutting staff levels.  Getting a genuine productivity gain by improving profit is usually beyond them.  QANTAS has a problem maintaining profitability in a globalised market place.  The impetus is towards moving to the lowest common denominator with respect to safety and service. I can understand there move to Asia, but I suggest we should look at where it can end.  It might comfort some people to blame union action towards improving wages and conditions.  However the move offshore of Australian companies is widespread, and it often happens in regional areas where unions are not active, and wages are lower.  Perhaps we should consider whether the benefit of being part of the free market is worth the cost.?

      Reply

    • Tony says:

      12:02pm | 21/08/11

      What market do you suggest we join?

    • Gregg says:

      08:55am | 21/08/11

      ” Qantas is perfectly entitled to spread its wings “

      They surely are Lainie but perhaps you’re enough of an investigative journalist to look beyond the flapping of the wings and see the real story.

      Sure, there are some real economic reasons behind Joyce the baby faced assassin getting busier with the toe cutters, but what is it that will be driving the economics?

      We have long seen on our TV screens the rioting by the disaffected or hire a mob against the G8 and WTO associated companies and probably thought what a bunch of !!!! and why do they not get a job.

      Have we moved on to further unemployment, the EU, US, the UK of the last week or so we’ll not too readily forget and one thing that does seem to be consistent is that unemployment in developed countries will go up as more and more companies outsource to lower labour cost countries, the very reason for all those asian or indian call centres.

      So while it’s a case of not being hypocritical as you say, we should all realise some of the reasons why the Asian airlines can operate at lower cost and understand the impact of that on Australian employment.

      And Lainie, we should also not be so naive with
      ” And here’s the best part: Qantas is an Australian-owned company. The profits will still call Australia home “
      Just as many Australians, if through their super funds may have seen their shares in international companies plummet, do you not think that Qantas shares cannot be bought by investors living wherever if they thought the Qantas $1.40 price was a good buy.

      This might well be the thin edge of the wedge as to where the other 34,000 Australian employees of Qantas end up.

      Who knows, The Punch may even yet decide they could have people abroad writing articles far cheaper than any Journalists in Australia.

      Reply

    • Tony says:

      12:08pm | 21/08/11

      So now we are blaming the riots in Britain on Qantas??
      Qantas is competing in an international market and has to be competitive internationally.
      How many of the qantas critics would fly qantas if the flight prices doubled? Thats right, very few, they would all be tapping away online looking for cheaper flights.
      Save your preaching for your inner-city dinner parties.

    • Gregg says:

      06:50pm | 21/08/11

      @Tony,
      ” So now we are blaming the riots in Britain on Qantas?? “
      I’d reckon that was a big leap of assumption!

      ” Qantas is competing in an international market and has to be competitive internationally. “
      Now you’re getting warm .

    • RyaN says:

      09:09am | 21/08/11

      What will Qantas carbon tax bill be in the first year?

      There is your answer as to why they are moving offshore and they need to do it before the carbon tax kicks in otherwise Gillard and her thugs will fine them for doing so.

      Reply

    • Mattb says:

      10:12am | 21/08/11

      I could be wrong here RyaN, but aren’t Qantas already being charged a carbon price on fuel on their flights to Europe?. I’d say Qantas would have already accepted the fact that they will be paying a price on carbon in the future, regardless of where they are based.

    • Green Power says:

      12:16pm | 21/08/11

      @ RyaN - Did you even read the article or listen to what Mr Joyce and others have said? They’re looking at expansion and a larger share of international markets, can you comprehend that? A better understanding of IATA regulations might help your cause.

      As for the Australian domestic market, QANTAS said it would increase domestic fares by $3.50 in the 2013 financial year as a result of the carbon tax. QANTAS holds around 65 per cent of the domestic Australian market…do you seriously believe that QANTAS would forgo that share of a market and leave our shores for the sake of $3.50 which will be paid by the end user?

      You should think about the big picture before jumping on your keyboard and simply relaying Tony Abbott’s rhetoric…which is becoming extremely tiresome…ad nauseam comes to mind.

    • Changa says:

      12:40pm | 21/08/11

      RyaN - If you can’t say anything other than an unfounded rant. say nothing!

    • iansand says:

      01:33pm | 21/08/11

      I fly carbon neutral when I fly.  It costs me less that $5 for each east coast leg.

    • Bruce says:

      01:41pm | 21/08/11

      Ryan: Agree. You can bet that behind the public reason for undertaking these changes they have taken into account the carbon tax issue. Qantas is certainly not going to admitt this publically. Many other industries who are affected by the carbon tax are revueing their workforce, costs and structual strategies now. Any good business is going to do this.

    • RyaN says:

      03:49pm | 21/08/11

      Just like that oil refinery that is closing in Sydney, if you don’t like the facts then keep doing a Gillard.

      How amazingly co-incidental that Qantas after how many years of Qantas operating out of Australia that is now going to change at the EXACT time that is the leeway year before the carbon tax comes in.

      Sad that you people cannot see the wood for the trees.

      Oh and Changa, I’ll say whatever the hell I want, fact is if you have an actual contribution or argument to make then make it otherwise you’ll just be doing exactly what you just did which is to make a complete discredited fool of yourself.

    • Karl says:

      06:00pm | 21/08/11

      Iansand - do you really believe that crap about flying “carbon neutral”?

    • iansand says:

      08:27pm | 21/08/11

      I don’t know, Karl.  Is there something you know that I don’t?

    • Chris_D says:

      10:08am | 21/08/11

      I once flew business class with QANTAS to America, about 20 years ago, and it cost nearly $7000 back then.  These days I can take the whole family (5 of us) to SE Asian destinations on budget carriers for about half of that.
      My patriotic dollar can only stretch so far.

      In fact, we are heading back to Vietnam in 2 weeks!

      Reply

    • Max, of Rocky says:

      11:04am | 21/08/11

      Qantas is only the really public first emanation of carbon tax tentacles.  This government is making an art form of interfering with business doing its thing under current laws.  This is just the thin edge of the wedge, carbon tax only one of many Labor/Green hissy fits.  I can see in my minds eye, Juliar stamping her foot and having a little spack attack because she can’t get her way.  Naughty girl, go into the corner and stay there till you calm down and may be reasonable.

      Reply

    • Mayday says:

      02:11pm | 21/08/11

      Green Power tells us “QANTAS would forgo that share of a market and leave our shores for the sake of $3.50 which will be paid by the end user?”

      Repeat…....paid by the end user and I think you are right Max this government interferes in almost every aspect of our lives not just business.

      Initially Ms Gillard tells us that 1000 companies would pay, now its 500 companies and everyone knew they would PASS ON THIS NEW TAX so they came up with a compensation package.

      CHURN I think describes the compensation package which will involve more public servants producing nothing!

      This government should keep its nose out of everyone’s business and stop the social engineering under the guise of governance.

    • Condor says:

      11:52am | 21/08/11

      Anyone that would begrudge a company for seeking greater profit is a clueless hypocrite

      I’d bet they’ve got imported cheap bargain furniture and electrical goods in their house

      We all seek maximum return for minimal outlay. A company should be expected to be no different. You’re on your own to maximize your own benefit in this world. Harden up

      Reply

    • Jay Santos says:

      01:24pm | 21/08/11

      “...Anyone that would begrudge a company for seeking greater profit is a clueless hypocrite…”

      As long as it was accompanied by great customer service and competition for my hard-earned.  But it doesn’t.

      The Federal government has gifted Qantas with a Pacific route monopoly for decades…and they have squandered the privilege and in turn, this bred an arrogance that continues to this day.

      Old planes, crap service and high prices is no way to run an airline, profitable or not.

      It also shouldn’t take 6 hours door-to-door to fly from Melbourne to Sydney at 7AM ojn a weekday…but it does.

      Regularly.

      And they think a stale muffin and an encore screening of Julia phucking Zemiro’s CrapKwiz is going to make up for the three meetings I have had to cancel or push back?

      Not bloody likely.

      Qantas sucks.

    • marley says:

      01:30pm | 21/08/11

      After all, Aussies are choosing to fly Asian carriers rather than Qantas to Asia because they want “maximum return for minimal outlay”.  It’s hardly fair to demand an Aussie business to have values which differ from those of Australians in general.

    • Condor says:

      06:23pm | 21/08/11

      Jay Santos
      There are many competitors on many routes. I choose the one that best caters to my needs and demands for quality.

    • annie says:

      02:20pm | 21/08/11

      i have flown to Europe 19 times in the last 30 years i have used Qantas twice. Then on advice from the travel agent i flew Singapore and the difference in service was significant. Since and for the last 16 further flights i have used other than Qantas. on price and remembered quality of the service ie disgusting toilets, poor in flight service and attitude. I flew last June via Emirates and it was just about the best quality yet and in a new plane not 30 year old Jumbos as Qantas still appears to fly on long haul routes.

      Reply

    • Andrew says:

      02:41pm | 21/08/11

      You want to revise your 18% figure there Lainie? Qantas International carries 18.4% of passangers, Jetstar adds in an additional 8.2% which was never part of the 18% quoted.

      Thus the QF group actually carries 26.6% (or over a quarter) of all OS bound passangers. Ignoring the fact that the remaining 73.4% of passangers include codeshares (and thus may have even been booked via the Qantas website, for example British Airways or Air Pacific) and passangers flying to destinations not serviced by Qantas.

      Lets not forget that the QF group actually made a profit, thus doing nothing was infact an option.

      As they say, there are lies, damned lies and statistics, and Alan Joyce has sure made librial use of statistics to make his point.

      Reply

    • Rev says:

      03:26pm | 22/08/11

      It’s not profitable.  It wouldn’t matter if they were taking 100% of international passengers, no profit = bad

      Codeshares?  Come again?  The partner airlines don’t let Qantas pinch there seats for free!

      QF Group made a profit?  Awesome!  Being a business with shareholders, lets keep doing that, by not running our international arm at a loss.  You know, return on investment and all that.

      There are only two statistics I’m sure Joyce really cares about - the bottom line and how many planes fell out of the sky.  And one of these probably more than the other wink

    • Dave-o says:

      04:30pm | 21/08/11

      I don’t know too many companies that have to sack staff to expand their business. Has Qantas been employing 1,000 people to prevent them from expanding? Is 3% of their workforce actually Gremlins hell bent on destruction.

      The decline in Qantas is directly proportional to the age of its fleet, the decline in service and lack of innovation. A380’s were a poor choice, and will ultimately be the footnote in a great companies career.

      Reply

    • Kika says:

      12:34pm | 23/08/11

      Worked in a bank lately??

    • stephen says:

      05:18pm | 21/08/11

      I’ve watched this Irish CEO closely.
      He’s a good man. Trust him.

      Reply

    • Angus M says:

      10:43pm | 21/08/11

      Everything related to quality, experience and above all passenger safety is slowly being compromised.
      The last thing an airline wants is to move its name down the list closer to Garuda. Watch the share price continue to plummet.

      Reply

    • marley says:

      07:26am | 22/08/11

      Well, look at it this way - maybe this will give it the chance to move up the ranks closer to Singapore Airlines.

    • NESLIHAN KUROSAWA says:

      01:09am | 22/08/11

      Hi Lainie,

      It is not so much who owns the airline, Qantas in this particular case, but how it is run & managed!!  I have noticed most airlines who can count on making a lot of money from their international flights like the Emirates, are very flexible with their understanding of customer service which includes, things like excess baggage & in flight service understanding!!  Same could be said for their airfares which are seasonally adjusted.

      We have relied on Asian Airlines in the past, but not anymore!!  From my personal experience the Korean Air lost a suitcase with all our belongings, after three years offered to pay me $400, which was ridiculous.  When it comes to Qantas, at least they had the decency to track it down, and a s matter of fact it was sent Islamabad instead of Istanbul!!  The Qantas London office, after three long months located it & the actual suitcase was returned to me in Munich, Germany!!

      Now that is what I call the European touch, and the gentleman who was working for Qantas, at Frankfurt Airport said something like “it is shame that such an airline like Qantas, actually employed staff who could not even spell at this computer age”!!  For me personally,  it is little things like this make all the difference.  Simply put, you can not beat the value of honesty & hard work, when it comes to airfares as well as customer service before & after you purchase your tickets.  I think enough said!!  Best regards to your editors.

      Reply

    • Travis says:

      01:21pm | 22/08/11

      Sorry Lainie but this is just more BS from QANTAS. Marketed as a “new spirit” but it is really just a continuation of the same policies the airline has pursued since privatisation. Job cuts and outsourcing to lower wage countries. So much for the spirit of Australia. Sadly on some routes they are the only carrier. I am still unimpressed at having to pay $65 for a “name change fee” because the QANTAS check in attendant read my Driver’s Licence incorrectly and put my middle name before my first name.

      QANTAS’ safety record will continue to suffer if it continues down this path. I for one have to seriously question its “commitment to Australia” which I do believe was its last advertising slogan after outsourcing Maintenance crews to S/E Asia.

      Reply

    • can't compete says:

      06:56pm | 22/08/11

      salaries are too high, cost of living even higher - we can’t compete with asia - a months salary here is a years there - ....! as for those worried about foreigners worker on our planes…hello ? who are australias best students? asians, best surgeons? asians - what do our ‘western’ kids wanna be? paris hilton or britney spears at best - no value in educating ourselves - watch the movie - idiocracy if you’d like to see where we going ....

      Reply

    • Kika says:

      01:01pm | 23/08/11

      ahaha totally agree. We bemoan Qantas for bad service but expect them to be of Asian quality? Hello! They are lazy Aussies just like we are. Hahaha.

    • Michele says:

      04:08am | 23/08/11

      Lainie, assume we’ll be seeing you around the Chairman’s Lounge…...

      Reply

    • Kika says:

      12:43pm | 23/08/11

      I don’t get it. We herald Qantas for being ‘safe’ yet when it comes down the bottom line we’ll fly Singapore Airlines or Malaysian because they are cheaper. Does safety concerns play a role when you fly with them instead?

      Reply
 
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