How would you run Qantas?

[gupayami]

High labour costs, not being at a hub, not being govt subsidised. Qantas can't possibly compete with CX, SQ, EK et al. It needs to rationalise itself to only profitable routes. Ideally HKG would have been a better hub than Dubai and it could then service the presumably highly profitable HKG-LHR routing. Aussies don't want to go to Dubai but they sure want to go to HK. I note only CX and BA run direct flights on this route at the moment - I presume HK airport did not allow Qantas to service this route. It's assymetrical warfare - our second rate privately run airports allow open slather to any airline (including CX) and Qantas probably has its hands tied on where it can fly. Unfortunately I don't see a happy resolution to this problem. At least allowing 100% foreign ownership would allow access to different funding sources.

 

[MEL_Traveller]

High labour costs, not being at a hub, not being govt subsidised. Qantas can't possibly compete with CX, SQ, EK et al. It needs to rationalise itself to only profitable routes. Ideally HKG would have been a better hub than Dubai and it could then service the presumably highly profitable HKG-LHR routing. Aussies don't want to go to Dubai but they sure want to go to HK. I note only CX and BA run direct flights on this route at the moment - I presume HK airport did not allow Qantas to service this route. It's assymetrical warfare - our second rate privately run airports allow open slather to any airline (including CX) and Qantas probably has its hands tied on where it can fly. Unfortunately I don't see a happy resolution to this problem. At least allowing 100% foreign ownership would allow access to different funding sources.

QF flew HKG-LHR but withdrew from that route some years ago. It operated as the QF29/30 MEL-HKG-LHR

 

[gupayami]

Interesting MEL, I didn't realise this. After a quick google I found this post. Being cynical I wonder if HKG didn't give QF favourable timings...

davidkeating.wordpress.com/2011/10/24/qf29-hong-kong-to-london-how-qantas-trashed-their-own-route/

 

[gupayami]

Apologies that I'm not allowed to post a proper link - I need to create another 6 posts apparently

 

[mrbuskin]

I'd make the state and federal governments pay for all of their CL memberships.

Seems to me that these job "perks" are given for free when they should be paid for (correct me if I am wrong)

 

[Hvr]

I'd make the state and federal governments pay for all of their CL memberships.

Seems to me that these job "perks" are given for free when they should be paid for (correct me if I am wrong)

You're wrong. The biggest impact would be that business people don't have access to their government peers and could not discuss matters at hand etc. The costs to QF of CL is tiny in the big scheme of things and they have obviously determined that it is worth it financially.

 

[MEL_Traveller]

You're wrong. The biggest impact would be that business people don't have access to their government peers and could not discuss matters at hand etc. The costs to QF of CL is tiny in the big scheme of things and they have obviously determined that it is worth it financially.

while I agree with the concept in principle that MPs should probably have the security and peace and quiet afforded by the CL, some should be thrown out to fend for themselves with the masses (like Senator Bernardi).

 

[medhead]

Not sure about the idea of competing with EK since they are partners.

 

[gupayami]

I meant competing in terms of profitability, that's true they are strategic partners

 

[markis10]

Interesting MEL, I didn't realise this. After a quick google I found this post. Being cynical I wonder if HKG didn't give QF favourable timings...

davidkeating.wordpress.com/2011/10/24/qf29-hong-kong-to-london-how-qantas-trashed-their-own-route/

I don't think anything could have saved it, your blog link mentions poor hub ops but that's a red herring, NZ that've also axed the same flights as the route is already saturated with locals, CX has 35 services a week.

 

[RSD]

I haven't read through the 21 pages of posts to see if anyone has already suggested it, but at the moment Qantas looks like a business basket case so frankly I think it's only future is back in government hands. The sooner they buy it back the better because they are losing more customers every day, and customers = jobs. It's only going to get worse and keep going downhill while things stay the same, and unbearable for many of us to watch.

 

[RSD]

I guess I should answer the next part too - once the government takes it over what should it do then -

Firstly we need to set some objectives -

• reestablish loyalty for QF international
• find smart ways to reduce costs (that don't impact the customer experience)
• reenergise the staff
• make it something that Australians are proud of once again - proud of its safety record, proud of its achievements, proud that it represents a really visible symbol of Australia and what it means to be Australian
• financial objectives should be that it is running cost neutral in five years and is then cost neutral after that including replacement aircraft etc, the first five years will require a lot of capital investment

To have a loyal following a traditional international airline (non-LCC) needs -

• an identity - Qantas had one but the shine has long gone
• a frequent flyer program - Qantas has a good one
• A modern fleet - that can be fixed
• and it must offer a decent range of destinations (the more far-flung ones can be two legs with the second leg on a partner airline) - and that is part of Qantas's problem - it doesn't fly to anywhere near the number of destinations that it used to when it was "truly one of the world's great airlines" so a lot of people are instead becoming members with frequent flyer programs on other airlines that go to a lot of destinations.
• Qantas international needs to also realise that it needs to do a lot more out of Perth - expecting people to fly from Perth to Melbourne or Sydney to go to London or Hong Kong on your airline is dreaming - same with Adelaide. At least if you fly from Adelaide to Perth then onwards you are always heading in the right direction!
• Do both A380's going to Dubai need to go on to London - or can one split off and go to a continental Europe destination instead? (after a quick swap of some baggage cans in Dubai)
• Get JB back from Virgin - he knows the product, he knows the market (both domestic and international) and he knows what Australians want

To cut costs -

• modern fuel efficient aircraft - QFi only flying A380's and 787's (-8 & -9) - fewer aircraft types means smaller spare part inventories, less staff training etc
• for same reasons - 787's on domestic east-west routes
• Give Alan Joyce a package to leave - he's going to cost you money to get rid of, but will cost a lot more to keep

Jetstar -

• Sell off JQ international and all of the JQ offshoots in Asia - you aren't going to be able to compete with Asian LCC flying to/from Australia so don't try
• Rebrand JQ domestic as "Qantas Holiday Express" and fly it on domestic holiday routes only - eg Melbourne - Gold Coast.

Anyway it's nearly 2am so we can finish this in the morning...

 

[AnonymousCoward]

Interesting MEL, I didn't realise this. After a quick google I found this post. Being cynical I wonder if HKG didn't give QF favourable timings...

davidkeating.wordpress.com/2011/10/24/qf29-hong-kong-to-london-how-qantas-trashed-their-own-route/

Cathay has ~5 flights a day. BA has another 2, and Virgin Atlantic also has one. I doubt QF could make the HKG-LHR route work.

 

[AnonymousCoward]

I guess I should answer the next part too - once the government takes it over what should it do then -

Firstly we need to set some objectives -

• reestablish loyalty for QF international
• find smart ways to reduce costs (that don't impact the customer experience)
• reenergise the staff
• make it something that Australians are proud of once again - proud of its safety record, proud of its achievements, proud that it represents a really visible symbol of Australia and what it means to be Australian
• financial objectives should be that it is running cost neutral in five years and is then cost neutral after that including replacement aircraft etc, the first five years will require a lot of capital investment

Playing devil's advocate here:
I think the question that you'd need to address is: why are taxpayers funding this? When the money could perhaps be better spent on health/education/transport/NBN etc, that would benefit the entire population?

 

[RSD]

Playing devil's advocate here:
I think the question that you'd need to address is: why are taxpayers funding this? When the money could perhaps be better spent on health/education/transport/NBN etc, that would benefit the entire population?

Good question.

If QF went under tomorrow then it would leave a lot of domestic routes with no carrier, or not enough physical capacity available which would severely disrupt the country so I guess it is money spent on transport. I think the tourism industry would benefit more if QF was in government hands which would create jobs growth. The other thing is that if the government don't step in then there will be another 33,000 people unemployed sometime in the not too distant future.

I'm sure that the government waste far more on other things than it would cost to buy and run Qantas. I would be surprised if the treasurer isn't factoring in that he may shortly need to suddenly have a lot of $ available to get Qantas out of the poo in one way or another.

 

[markis10]

Good question.

If QF went under tomorrow then it would leave a lot of domestic routes with no carrier, or not enough physical capacity available which would severely disrupt the country so I guess it is money spent on transport. I think the tourism industry would benefit more if QF was in government hands which would create jobs growth. The other thing is that if the government don't step in then there will be another 33,000 people unemployed sometime in the not too distant future.

I'm sure that the government waste far more on other things than it would cost to buy and run Qantas. I would be surprised if the treasurer isn't factoring in that he may shortly need to suddenly have a lot of $ available to get Qantas out of the poo in one way or another.

You will find the routes that only QF operate are regulated or subsidised in general, certainly regionally thats the case. I doubt they will step in, having had lots of reasons to sell QF and forgive the debt in the past.

 

[AnonymousCoward]

Good question.

If QF went under tomorrow then it would leave a lot of domestic routes with no carrier, or not enough physical capacity available which would severely disrupt the country so I guess it is money spent on transport.

If those routes were profitable, then I guess the administrator would be able to sell them off to another operator.
If they're not profitable, then I don't think the government should be stepping in to run a subsidised services at taxpayer's expense. Better to have operators tender for the routes, and offer a subsidy to whoever offers the most attractive price.

I'm sure that the government waste far more on other things than it would cost to buy and run Qantas.

Such as?
Airlines have got to be one of the quickest ways to destroy capital - as they say "what's the fastest way to become a millionaire? Be a billionaire and buy an airline." Governments like Italy's and Malaysia's have poured billions of their taxpayer's money into keeping their airlines afloat. And for what? So that others can benefit from artificially low prices? or to sustain inefficient/uncompetitive airlines? I really don't want our government likewise wasting money.

 

[smit0847]

• Get JB back from Virgin - he knows the product, he knows the market (both domestic and international) and he knows what Australians want

Imagine is JB was appointed the new CEO of QF! That would be the biggest news in Australian aviation since Ansett collapsed. He would remove QFi and OW pretty quickly though - he's a fan of 'virtual alliances'.


Personally while the Govt is in deficit I don't believe they should be further losing money by taking on an airline. Far bigger priorities. If QF did collapse tomorrow, yes there would be some pain but either VA or a new airline would uickly rise from its ashes and take its place just as VA did when Ansett collapsed. There would be an awful lot of planes a liquidator would be trying to get rid of cheaply and an awful lot of people looking to fly. From pain can come opportunity.

 

[Kieran2274]

Imagine is JB was appointed the new CEO of QF! That would be the biggest news in Australian aviation since Ansett collapsed. He would remove QFi and OW pretty quickly though - he's a fan of 'virtual alliances'.

I'm not sure John Borgetti would even want the job - he's got much more freedom and capacity to do what he wants at VA. He might view coming back to QF akin to putting on handcuffs - there is just so many pockets in QF that slow organisational reform down.

 

[777]

I'm not sure John Borgetti would even want the job - he's got much more freedom and capacity to do what he wants at VA. He might view coming back to QF akin to putting on handcuffs - there is just so many pockets in QF that slow organisational reform down.

More to the point: I'm sure his contract at virgin includes a non compete clause for a period of time should he leave for any reason.