This morning’s sharp review of the situation at Qantas by Ian Verrender in the Sydney Morning Herald and The Age business pages points very clearly at the critical question, which is what does Qantas do now?
Verrender’s suggestion, that Qantas go back to the basics, and apply itself to being an airline of quality and relevance, seems an unlikely course for the current board or the man The Australian declared to be the country’s ‘most influential chief executive.’
The article is prompted by the failure of the brashly trumpeted Asia premium carrier plan, which did cause the occasional editorial here as well.
Verrender says of that plan:
It would be unfair to label the abandoned Asian plan as half-baked for it never reached that stage. There was no oven, no cake tin and certainly no ingredients.
But it goes further than this. The only credibility Joyce will likely have in the future in business negotiations in Asia is as a comedian, and only if the audience is in the mood to be amused rather than offended.
If Qantas is to find its future in Asia, it needs to have leadership that doesn’t blab in advance about all the things it is going to do, in Asia’s market, before getting around to telling the parties it needs to negotiate with, although it appears to have gone public when it had not even reached a stage beyond pointing to the atlas and rattling off a list of countries.
Credibility is critical to the direction of a company. It isn’t credible to tell shareholders there will be no new investment in its core product until it starts to show returns, and tie those returns to an Asian project that in what detail was revealed, seemed ridiculously fanciful, and never had a chance in hell except in the minds of a conga line of people claiming to be financial analysts.
It isn’t credible to go public with death threats before a police investigation, nor to cause a police investigation which was abruptly abandoned after some costs to the public, without at the very least producing the sort of evidence that would have the remotest chance of supporting a criminal case.
It isn’t credible to so bitterly complain about losing 82% of the overseas market from Australia to competitors, and then reduce London flights in a way that can only encourage even more of its shrinking customer base to fly there on a competing airline.
All that we seem to have gained from Qantas in recent years is ideological rhetoric against unions and its staff, whether in or out of unions. This isn’t to argue for a moment that there aren’t very real labor/management issues that companies like Qantas need to address. The trick surely is to address them in a timely and constructive manner, not stuff around for ages and then chuck a tantrum that ends with management going on strike and locking out its customers, only to result in one FWA arbitration so far that could have been reached a year earlier without trashing the brand and its shareholders.
There are other matters that really need to be at the fore at Qantas other than ideological knickers twisting. The very first one is plainly on show at Air Asia X, where the critical question is whether the low cost carrier model can be successfully applied to long haul operations, and where from it’s point of view, the answer is “N0.”
This is a critical question too for the Qantas subsidiary Jetstar. Is Jetstar, like Air Asia, going to work best within the short-to-medium haul sectors, or can it be successful to Los Angeles, London, and the major centres of the Asia Pacific further away than say Denpasar?
It is not a matter of what people might want the answer to be, but a matter as to what is reasonably possible, and this is something that Qantas needs to assess and act upon, and it requires some very hard and smart and prompt work to resolve in the interests of the future strategic direction of the Jetstar franchise and the parent full service brand.
19 Comments
So this is what you get when you have a union busting board including two ex Rio execs and a lawyer from Freehills. They busted the union, because that is what they know. Problem is they also busted the airline. Now my work flies me by Virgin. So much for the shareholders.
Agree totally with Socrates. You have a board Chairman whose only focus would appear to be break the unions at any cost. Then whilst persuing that strategy they canibalise possibly Australia’s most iconic brand by setting up Jetstar. How could anything go wrong? When will the shareholders will wake up and who will they hold responsible. As I commented yesterday,I can feel a Sol Trujillo moment approaching with the classic “leaving to pursue further opportunities” or less likely “spend more time with his family”.Seriously the Board cannot escape close scrutiny and accountability after this.
Keep up the good fight Ben. It seems the mainstream media are starting to wake up to this incompetence.
Ben Beveridge seems to have gone quite……..
So has Geoffrey Thomas, aviation expert.
Great piece by Verrender.
One thing that I find curious, though, is the suggestion that Virgin “offers a vast international network, built at minimum cost” through Etihad, while Qantas is “offloading customers on to British Airways”. Aren’t both airlines doing exactly the same thing here (just, one onto an airline subject to developed-world operational and safety rules, and one onto an airline based in a union-banning hellhole with no rule of law)?
JohnB no they are different. Q had a network of sorts and is dismantling it and then tried to expand via press release and its vivid imagination. Virgin did not really have a network and is teaming with what the public perceive to be quality OS partners and growing an international network.
For travellers I think the main difference is that Virgin Australia is making arrangements with other carriers to get people via one stop to a whole range of destinations that Qantas either doesn’t offer via alliances, or has in the case of its enhanced dump-London-flights-onto-British Airways strategy, ensure that those trying to get to places other than London continue to be frustrated or discouraged in their attempts to fly Qantas or punished with huge delays.
It is the difference between smart and dumb.
True. I’m surprised Qantas doesn’t make more of its OneWorld partner FinnAir: Helsinki is a far more civilised place to change for most of northern/eastern Europe than inter-terminal at LHR, with very little congestion. Still double-change, but a vast improvement within the current alliance framework.
This is where I’m coming from above: I agree the Asian, Red Q strategy was insane and that QF should have been focusing on building alliances – with BA including proper flight coordination rather than eight-hour waits in Bangkok, with FinnAir, with Cathay (which has obvious problems as a competitor flying into Aus, but again is a fellow OneWorld airline with a massive European network), expanding its US network by integrating closer with AA, and also building links with non-aligned carriers.
But that strategy doesn’t seem to include flying passengers from Asia to Europe – I don’t forseee Virgin ever putting their own metal on the Abu Dhabi – LHR leg. Cutting direct Europe flights down to a token prestige-based presence (like the new QF1), at least until the next generation of airliners make nonstop premium flights SQ21-style feasible, would have made sense *if* Qantas had been following a network strategy rather than wasting its time on its imaginary castle.
(actually, that’s not *entirely* fair – sponsoring MH into OneWorld does eem to have been an attempt at this strategy, which would have allowed connections in KL to a fairly wide range of East Asian, North Asian and European destinations… pity Alan failed to spot that MH was effectively bust…)
Fushnchups
I had a few run-ins with him on earlier topics re QF. I was at pains to point out that my only connection with QF was as an FF and a love of the airline and all I was suggesting was that the Qantas board should think a bit more imaginatively and develop its, not inconsiderable strengths, instead of constantly cutting back its structure and handing it over to Jetstar.
It cannot seem to do this under the current management. I’m afraid he (Ben B) always came across to me as a condescending, supercilious pain who rubbished the contributions of some other posters as well, posters who are a lot more knowledgable than I am.
I agreed to disagree with him (nicely) and all I got for my pains was another spray of condescension. He eventually listed his many talents so I’m surprised he is not CEO of at least a dozen airlines by now and on the board of many others – about 100 airlines he has “advised” if I remember correctly.
I suppose he will have an answer for this latest development.
Poor QF – get rid of Joyce!
johnb78
I agree with you re Finnair. I have a preference for daytime flying, being a leisure traveller and not in a mad rush to get, jet lagged, to a meeting on the other side of the world.
IIRC Finnair flies from SIN, BKK, HKG and NRT to Helsinki, and to which QF still flies (so far?). The only codeshare seems to be the flight via SIN which leaves SIN at around 1.30am (don’t fancy that!). I think the others are daytime flights with good connections to much of northern and western Europe before sunset (but I stand to be corrected on that). In other words a good time to check into a hotel, get a meal, good night’s sleep then play tourist – or arrive refreshed to a business meeting.
I appreciate the money is at the pointy end but surely not every business insists that its people take a “red-eye” just to get to work asap, especially crossing several time zones?
@johnb78: I love the idea of using Finnair through to Europe via SIN – maybe someone at QF will take note and start making an attractive codeshare deal on it (it seems expensive at the moment). Helsinki is a definitely more attractive place to transit than LHR or FRA if you refuse to go direct to Europe on Etihad/Emirates/SQ etc. Finnair go to most places in Europe you’d want to go, first thing in the morning so it wouldn’t be too unpleasant.
I don’t get all the outrage over Qantas dumping Bangkok as a transit through to Europe though, as they now use SIN exclusively. It was always a second-rate way to get there (crappier airport, distance a bit further to Europe given flight paths.), and I believe the yields were correspondingly lower. Picking up traffic originating in BKK would have been much harder than SIN, and the O&D traffic to BKK from Australia is backpacker/holiday maker stuff, unlike SIN, putting further pressure on yields. The strategy of dumping it and leasing the slots to BA made perfect sense to me (ie. they didn’t just ‘give it away’), but the decision gets singled out for special vitriol by Ben as evidence of QF’s incompetence.
Finnair to anywhere but Helsinki will still be two stops. Etihad, who QANTAS used to codeshare with for crying out loud, offers single stop to Europe. Who would you prefer as high yielding passenger?
R Ockape: Etihad’s European coverage is not up there with Emirates, and nor are its codeshares. They’ll get you to London, Paris or Frankfurt, plus a few other places QF don’t already codeshare (the major provincial UK cities, Athens, Dublin, the major provincial German cities) – but they don’t do Rome or Amsterdam for a start. Most traffic that isn’t one-stop with QF won’t be one-stop with EY either – and they don’t have the onward connections that BA or Finnair can provide to minor cities.
Also, you can understand QF not wanting to partner with a carrier that’s also trying to eat its lunch on the Australia leg of the flight…
The read-a-book while waiting for a BA connection in Bangkok offer does nothing to win customers away from Emirates or Singapore Airlines on their one-stop Australia-Europe flights to cities Qantas wants you to fly to via Heathrow.
For Qantas to gain traction it needs to offer faster, more convenient connections, not more of the same, which are uncompetitive by design even before we get to other issues.
The Finnair timings to HEL from SIN are not bad at all. Depart SIN at 2335 and arrive HEL at 0635. SQ has flights at worse timings – eg the 0230 to JNB, BOM and DEL or the 0230 to Moscow/Houston.
Ben – the opinions now appearing in the “mainstream” press just go to show that if you want to know stuff in any specialist area then you need to go to the specialist(s). Keep up the good work!
@The Doc – there’s nothing wrong with a late -night departure from SIN. I’ve recently flown SIN-JNB on SQ and it was very pleasant. Enjoyed the amazing food in the city until late, train to Changi, look around a well-designed and appointed airport, and off. Most everything was still open everywhere. Plane then arrives JNB earlyish in the morning, perfect timing for domestic connections.
I might be in the minorty but Im enjoying seeing the very Sydneycentric Qantas getting their fair whack!
After decades of treating its Melbourne customers as second clase citizens by routing most of its international flights via Sydney they have the hide to bemoan their loss of market share to airlines like Singapore,Emirates,Cathay,Maylasia,Thai etc that go direct to their home destinations and are most times cheaper.
Personally I dont care if Qantas go the same way as Ansett or Australian Airlines because esp out of Melbourne we dont need them and wont miss them.
Alan Joyce is obsessed with cheap airlines. Some members of the Board are obsessed with unions. They have made some very bad decisions. You don’t have to know anything about airlines to see that the Joyce strategy of undermining Qantas International and thinking about partnering with an Asian country to set up another premium airline which would compete with their flag-carrier was a recipe for disaster and wouldn’t work. He should go and so should the union-busters and short-termers on the Board and they should be replaced with people who are passionate about excellence in air travel.
Great article, until service on board improves on Qantas they are likely to decline further. Yes when one thinks about travellng Internationally on Qantas it’s difficult as they have closed so many routes!!! Dometically we re kind of trapped into using them,however i for one getting really bored with the staff attitude. Even in biz loungs a smile from staff is uncommon. Hubris and condescension to customrs is commonplace. Maybe better if they let the airline die and start again. On this vein the board and management need to reconnect with any motivated staff to improve things otherwise it will be too late. I can see a possible sudden shift of many biz passengers to Virgin domestically which would really affect qantas. The main question in why do we still care about QF? Yes the decision to stop flying to Bkk was harebrained. The airport there isn’t the best but far ahead of Australian airports.