As someone who loves — really loves — Qantas, despite my pathological fear of flying and millions of air miles clocked up over the years, I’m worried about where the Flying Kangaroo is headed. And a bit sad.
It really didn’t have to be like this: Qantas is the safest airline in the world of the last 50 years; it was also the most profitable airline in the world for years after its privatisation in 1993.
Management teams led by James Strong and later Geoff Dixon made it the envy of the aviation world; it was “The Spirit Of Australia;” its fearsome reputation for safety was unrivalled and unchallenged; and QANTAS was a byword for quality, service, reliability and world-best practice.
News in the last few days that Qantas faces a drastic and draconian restructure — including the loss of at least 1,000 jobs (and perhaps as many as 6,000), and further withdrawal from its direct international route network –is a sobering reminder that internationally at least, the Flying Kangaroo is increasingly becoming a shell of its past glory.
As I said in my introduction, I have a pathological fear of flying, but have also logged millions of air miles in the last 20 years.
I have dealt with my fears a) by flying (although it never gets any better), but also b) through a “know your enemy” approach of studying commercial aviation as best I can from the armchair, reading every news item on the subject I can, following online industry forums, and knowing as much as I can about airlines, various aircraft types, and aviation issues in general.
As such I think I know a little bit here; not enough to speak with the authority of an industry insider, but enough to speak as a very well-informed frequent flyer and keen follower of the commercial aviation industry.
It’s clear that the domestic operations of Qantas — and its frequent flyer program — are keeping the Qantas Group as a whole profitable.
It’s also clear that the increasing Jetstar-isation of Qantas Domestic is at the forefront of the strategy to optimise domestic profitability growth.
There are certain routes it is now impossible to book a Qantas mainline flight on: recently, I had need to look at a business trip to Coolangatta (which didn’t eventuate) but could only book a flight from Melbourne on Jetstar.
Out of curiosity, I checked and found it was the same if I wanted to go to Maroochydore.
My wife’s parents, when they were alive, lived in Launceston; if we wanted to visit as recently as five years ago, we could fly on Qantas.
My parents moved to Hobart three years ago and if we want to go to see them, the majority of flight offerings are by Jetstar.
I understand commercial reality: that routes need to be profitable, and in the case of Qantas, Jetstar provides an alternative (to the Qantas Group) of a lower cost alternative — even though customers, at best, might grit their teeth and resentfully accept the product offering.
I understand, too, that the entry of Virgin Blue was the initial harbinger of a colossal shake-up of aviation in Australia; this initially led to cheaper airfares, and the cheap fares survived well after Ansett ceased to grace Australian skies.
Yet today, airfares are as high — if not higher — than they have ever been, certainly on mainline trunk routes. At time of writing, if I booked a three-day trip to Brisbane this time next month on Qantas, ignoring Jetstar, with a refusal to fly at 6am but a need to be in Brisbane by 11am and a fly-out time at 7pm on return, I’d be up for about $470.
The similar fare ten years ago was about $140 cheaper.
And Virgin is, mostly, dearer.
International fares are a shudder: look at flying to London and Qantas is now routinely one of the most expensive, if not the most expensive, option of all of the reputable carriers.
Qantas management blames all of this — high costs, high fares, Jetstar-isation, and now withdrawal from more international routes — on a higher cost base compared to its competitors in Asia and the Middle East.
Just a minute…
Qantas has always competed with Asian carriers, and it was never a problem in the past.
It is true that the various Middle Eastern carriers are flooding world markets with capacity and doing so at a slight overall discount to the traveller in terms of fare structures. Yet this isn’t being cited by comparable carriers in other markets as a key challenge to their viability.
The unions responsible to Qantas maintenance staff think they know where to point the blame: the outsourcing to overseas facilities of Qantas maintenance. However, 90% of the company’s maintenance is still done in Australia, and the bulk of what is done overseas is either incidental to the course of flight operations or performed at specialist maintenance facilities (for example, the A380 facility operated by Lufthansa in Germany).
The pilots think they know where to point the blame: bad pay, bad conditions, inadequate training and insufficient job security. Yet as things stand, Qantas management — quite literally — is offering them what they can afford.
And Qantas management thinks it knows where to point the blame: the high cost of oil, airlines operating from second-world countries on low wage structures, and the great global downturn in aviation that happened at the time of the so-called GFC and from which, by all accounts, airlines across the world have rebounded from with gusto.
I think Qantas’ problems stem from two colossal mistakes its board made 10-12 years ago, and that the chickens are now coming home to roost as a result.
One occurred in the aftermath of the Ansett collapse: Ansett’s planes didn’t ignore the service bulletins and maintenance directives issued by manufacturers and aviation authorities all by themselves; and the airline as a brand name didn’t make the commercial decisions that ultimately — literally — ran it into the ground.
Its management did those things.
There were a lot of good people at Ansett who were thrown onto the scrapheap. There were also people at Ansett who made poor decisions that directly contributed to the end result of the airline failing and whose careers deserved to end right there and then, in 2001.
Qantas hired many of these people. Whether it was due to the immediate need for additional personnel to manage its sudden 90% market share at the time, or through a desire to save some of these people, or a bit of both, nobody knows; but the bottom line is that a lot of Ansett people reappeared at Qantas and continued making Ansett-style decisions at the national carrier.
The second of the two big mistakes Qantas made was in fleet planning and capital expenditure.
To order what was then known as the A3XX (now the A380) in 2001 for delivery in 2006, and then the Boeing 787 in 2004 for delivery in 2008, was sheer folly.
The Airbus A380s turned up nearly three years late, and the world is still waiting for the B787.
To make it worse, an airline with an already-ageing fleet bet its entire fleet renewal strategy on aircraft that were still no more than drawings on a slate.
And to make it worse again from a Qantas perspective, a fundamental rule of fleet management was broken: maintaining a consolidated selection of aircraft types.
Not so long ago, if one got on a Qantas plane and it had jet engines, it would have been a Boeing 737, 747 or 767.
This offered real efficiencies in maintaining and operating a small number of products from a common manufacturer.
Today, it could be a Boeing 717, 737, 747, 767, Airbus A320, A330, or A380.
The Boeing 787 is to come and, according to industry rumours, the Airbus A350 (another drawing-board prototype) is being seriously considered for purchase by Qantas in the next few years as well.
Qantas have flatly ruled out buying the Boeing 747-800, which would integrate with its existing 747 training and maintenance program .
An intangible is the sizeable proportion of the travelling public who, for whatever reason, do not want to fly on Airbus planes — the saying “If it’s not Boeing, I’m not going” did not appear out of thin air for no reason.
The near-disaster with VH-OQA — the A380 Nancy-Bird Walton — late last year served only to reinforce these perceptions.
Indeed, after a series of crashes and near-miss/near-disaster incidents involving Airbus planes a few years ago, its Chief Operating Officer John Leahy appeared on television to refute the “Scarebus” label that had been attached to his company’s products.
Yet Qantas had been a Boeing-only customer for decades, and if the consideration was economics of flight, there was an answer — without the need to buy product from Airbus.
It’s called the Boeing 777, and its variants can seat almost as many people as a 747, fly them as far if not further, and at 10-15% less in terms of fuel burn to boot.
Despite being a development partner to Boeing on the 777, Qantas refused to buy.
Had Qantas ordered 30-40 777-300ERs or 777-200LRs or a combination, ten years ago, its fleet of 20 1989-1991 vintage B747s would be long gone, as would many of its 25 equally-ancient B767s, all replaced with a modern, cheaper aircraft more than capable of filling the breach.
Qantas would have had those planes within two or three years of order: at the time the 777 was newish; established enough to have solid flight service credentials, but new enough for timely production to be possible.
Today there is a nine-year backlog for a new order of a Boeing 777.
And the recurrent cost of flying a 20-year-old 747 is twofold: it’s not fuel efficient, and it costs a hell of a lot more to maintain than an updated model like a 777.
But the most incomprehensible aspect of Qantas’ fleet strategy is the wholesale purchase of A320s. Yes, they’re comfortable to sit in (as far as a seat on a plane goes) but it’s not pleasant to fly in them and it further diversifies the fleet composition at a time when new 737-800s are being added as well to replace old 737-400 models dating back to the early 1990s.
Very simply, Qantas ordered the wrong planes.
But of course, mistakes in management recruitment or fleet procurement can never be admitted.
So instead, we have talk of discount domestic airlines in Japan, a premium international airline called something else based in (presumably) Shanghai or Singapore, and Qantas — aside from domestic operations and minor international routes like New Zealand — flying to London, LA, New York, Dallas, Santiago, and Johannesburg.
With reductions even to those destinations in the number of weekly services.
And that’s about it.
And mass sackings if redundancies can’t be voluntarily effected.
As for codeshares on “alliance partners” — well, whoopee. British Airways and Cathay I’d fly; American perhaps, Alaska Airlines…???…
Something tells me I’m not going to Canada in a hell of a hurry.
I don’t know if codeshares are directly profitable to Qantas or not. But even if they are, it’s someone else’s maintenance regime they rely on, and someone else’s standards of service, and someone else’s fare structure…you get the picture.
What a mess.
I don’t think it’s too late to “save” Qantas, but there has to be a better way to do it than what was announced earlier this week.
I’ve been to cities that never close down…and I have, too.
But I fear that next time, it mightn’t be on Qantas.
And whether it is or not, it won’t be my decision at all.
Come on Qantas, you can do better than this!