What do Australians think of Qantas?

[RichardMEL]

In the words of Wil Anderson "Well you've convinced me...."

 

[stm1sydney]

Yeah, it's their captive (rusted-on) market, massive marketing/advertising budget and their influence in Canberra (via CL membership to pollies' children etc) that is keeping them in customers and profitable. Witness that annoying new TVC on continuous rotation during the FWWC: all emotional "spirit of australia" guff and nothing about their product or service.

 

[evanb]

Possibly, but it also eliminated a great deal of competition in the marketplace. Sure Virgin 2.0 has come back leaner or meaner, but I would challenge you to tell me with a straight face that Qantas is facing more competition either in the domestic or international market from Virgin now than it was pre-COVID. It simply cannot be done. Fact of the matter is Virgin flew internationally to a number of destinations like the US and UK. Certainly if we look purely across the ditch to NZ, Virgin's bankruptcy was a huge win for Qantas, now all they got to compete with is Air New Zealand which is a weak competitor at that (some may argue Virgin has Queenstown, but I mean c'mon, no one is travelling to Queenstown). And in terms of hard and soft product that has deteriorated greatly with Virgin 2.0. Bye-bye lie flat business seats on wide body jets, bye-bye lounges when travelling internationally. Now all we got is the middle-seat lottery. Whoop-di-do!

On the domestic side, there are now two more players, albeit small, but the reduction of VA's size has certainly reduced price competition in the market, and quite significantly for some market segments (and yes, let's add trans Tasman to this). But at the same time they're under a lot more cost competition in a macroeconomic environment that is far more difficult (i.e., weak exchange rate, higher fuel prices, and increasing cost of capital).

I'd say it's very different internationally. On trans Pacific, US carriers had to find a place for their large Japan and China capacity that was (and still is) much slower to return. That and the very strong USD has helped UA (and to a lesser extent DL) really squeeze QF. Lower cost Asian carriers are expanding rapidly into Australia. For example, pre-COVID VN offered 15 to 17 weekly flights, now together with QH and VJ it's 35-37 weekly and growing. Philippines, from 21 to 26 weekly. India, from 8 to 14 weekly.

It isn't that they're only facing competition from more traditional transit carriers (I guess we can start referring to them as more traditional transit carriers now?) like SQ, EK, QR, etc, but a new wave of carriers coming in who have even lower cost structures, almost entirely due to labor costs.

A major issue with Qantas is they don't have any overseas bases as far as I'm aware. If you look at major airlines like United, for instance, they have bases throughout the world, many times in countries where labour is cheaper than the US. But I also must question how big of a role labour plays in the grand scheme of things? From what I can tell labour makes up about 30% of the airline's operating expense, which whilst that may sound like a large number there is not much an airline can do. After all, legislation says they need to have so many pilots and crew on a given aircraft. Sure you can squeeze that percentage down a bit, but again we're not looking at huge optimizations here. Other things like taxes and airport fees marketing also make a considerable amount of the operating cost and yet we don't see QF curtailing those.

Yes, labor only makes up about 30% of their operating expense. But for the most part, airlines are facing similar cost functions for other big ticket items. Fuel is largely exogenous. DL tried to change the game on this a few years back by purchasing a refinery and it really hasn't helped them, and probably just cost them. Cost of capital may vary by country, but airlines themselves can't affect interest rates unless they have a benevolent lender. Labor is the one that does vary a lot and that they have more ability to influence.

And yes, QF do have overseas bases, particularly NZ. This has actually been one of the biggest points of friction with unions. When it comes to maintenance, it was the same when they established a major maintenance facility at LAX. It was partly labor costs (not only wages, but conditions), but also the major cost savings in utilisation by being able to use aircraft ground time at LAX more productively.

I think one major factor you need to consider is it's a numbers game, meaning they make money by filling up all their planes. And they do that by offering competitive fares and potentially other perks Qantas is unwilling or unable to offer. Using Singapore as an example, who in their right mind would bother flying Singapore Airlines to Tokyo when Qantas offers a non-stop route? Would you seriously want to waste a couple hours in Changi airport and all the hassle associated with that? The reason why people fly them is because they price the flights lower than the non-stop offered by Qantas. A similar argument could be made for Qatar. Who would fly Qatar to London when Qantas offers direct service to London? And Doha is even less appealing than Changi as a connection point. Again, Qatar has to price its fares competitively.

But because they've got so many flights coming and going out of Changi or Doha, these airlines have built a robust route network that can take travellers from anywhere to anywhere. Yes you may need to connect, but if the price and service are right, people will switch. Another big issue of course is the geography. The fact of the matter is no one outside of Oceania would bother connecting in Sydney or Melbourne. It will easily add half a day or more to your travels given we are literally in the middle of nowhere. The same cannot be said about a hub like Doha which lays in the centre of Europe and Asia.

Sure, but SQ are not their direct competitor to Japan. ANA and JAL are (remembering that their JV with JAL was canned by the ACCC).

QF may have direct services to LHR (same as BA), but it's an enigma for the most part. If you're flying from SYD, BNE or MEL you have to make a stop somewhere, and staying on the same plane is a minor advantage, if at all. But you raise a great point which places QF in a challenging competitive position. They are mostly the end of the line and don't have much ability to build network effects like QR or SQ can. This helps QR or SQ fill seats more consistently with strong yields.

But there are a million places that have the geography to build those hubs. Each has succeeded for different reasons (many others have tried). I'm taking nothing away from them, and it's not a critique on them. Australian consumers benefit from them greatly. I'm simply highlighting the conditions QF face as a result. If QF were everything to everyone, I doubt they would survive, it would simply be too expensive.

Post automatically merged: Aug 9, 2023

They’re an awful airline. There’s really no other way to put it. You cannot rely on their international OTP (to within a few days), services varies from excellent to beyond awful (as opposed to most airlines who run from great to ok) and the chance of meeting an absolutely miserable staff member is very high.

They have a captive market, route duopoly and an extensive media budget. If it all goes to plan, you’ll be fine (not great, but fine). If something goes slightly wrong, you’ve got zero recourse. I’m still waiting on a refund from 2 years ago (that even ACA have agreed on but are ignoring).

That’s the “spirit of Australia” though. I can’t imagine the competitor is any better.

Sounds like ...* Airline.

* (insert name of any developed market legacy carrier in country with high wages and labor protections)

 

[UP4014]

For those who want their main domestic airline to be a global alliance member (which is many of us), we haven't had an alternative since 2001.

Yes, while we complain about QF management the management at the "alternative" airline was worse based on the single fact they failed completely.

 

[Mickey Mouse]

The problem started with the obvious no-brainer decision to keep the name "Qantas" back when the real Qantas was killed in the "Frankenstein's Mongrel" reverse-takeover creation of the current airline which saw the corporate crooks who had been playing around with TAA & Ansett given control of a respected and respectable international airline.

While a huge part of the current problems with QF are down to Joyce, it needs to be remembered that the crook who put him in power, old Scrotum Face (as his mates call him) Geoff Dixon is still profiting behind the scenes - influencing major decisions and taking a large slice of cash at each turn.

Its easy to blame various factors for QF's current state, as had been done in this thread. However, there's so much complex interplay between them nothing's completely clear.

So, how about a quick reputational balance sheet:


DEBITS

Joyce - brought in to copy the technique of wealth-stripping shown to work on high-value, legacy organisations. Did the job perfectly - winners to date (in order): Joyce, Dixon, other mates, parts of corporate Australia, politicians, share-holders. Losers: Non-management employees, flying public, taxpaying public.
Most famous achievment - pay. Second most famous achievment - shutting down airline in a hissy-fit. Most famous quote - "match fit".
In addition to the behind-the-scenes work, brought Dixon's plan of an airline-gutting wealth-shifting "budget" airline into fruition, complete with totally opaque financials and industrial grade book-cooking, with desired effects on non-management employment race-to-the-bottom.

Quality - Qantas was famous for a high level of service (in all facets)... even outside of Sydney! Now it is a byword for trash, and is the ACCC's largest source of complaints (so much so that the QF-serving minister has shut down that avenue).

Labour - one of those complicated factors, for sure, but if you want something handled with grace and skill, toward desireable outcomes (even one-sided) - you'd probably be as well served getting Kim Jong Un or Vladimir Putin to have a go rather than Joyce!

Owning politicians - Until recently, few outside of these forums knew of the Chairman's Lounge. Now the general public have another reason to distrust politicians, as the corrosive effect that giving membership to anyone who will work in favour of QF, against the national interest, becomes even clearer. (Say hi to Elbo's son, by the way!)

Local monopoly - in all but name.


CREDITS

There are still some employees who care. They are the difference.

 

[justinbrett]

Almost all of the big airlines today fit into one of two groups
1- majority or near majority (45%+) state owned (eg NZ, MH, QR, EK, SQ, TK, TH etc)
2- Mergers of at least two significant airlines in the same general market (BA/IB, AF/KL, LH/OS/LX, AC/CP, AA, UA, DL etc)

There are a couple of exceptions like QF who don't fit in either. It's the exception rather than the rule (unless a small airline).

Airline companies are terrible investments and many countries see them more of a utility. Considering that, and Australia being a relatively small country at the end of the line, QF is objectively a successful airline; whether their product or customer service is to your liking is irrelevant to that point.

The problem of perception now, with QF being the sole long haul Australian carrier, any decision the government makes that previously would have benefited all Australian carriers, is now taken to be favouring QF. With the lack of a local competitor, QF becomes the defacto state airline in those international treaty negotiations.

As for the CL, that is entirely a matter for government. VA operates a similar lounge (Beyond) that IIRC something like 30% of federal MPs are members of. It is essentially a carbon copy of the QF CL. You might make the argument that QF has more to gain by using this soft power, but really the onus is on the government to set the ground rules for what MPs are able to accept and the ground rules that go with that. This is obviously not unique to airlines. Of course, QF give access to both sides of government (and crossbenchers) which doesn't seem all that efficient when just inviting the cabinet would have the same influence.

 

[Peasant]

Of course, QF give access to both sides of government (and crossbenchers) which doesn't seem all that efficient when just inviting the cabinet would have the same influence.

I suspect QF views these as multi-year (and multi-term) relationships. Don’t underestimate the power and influence of backbenchers on the legislative (or protectionist) agenda either. It’s about having the entire political apparatus on side.

As you say, that’s not QF’s fault, they merely play by the rules of the game. If the rules are to change, that has to be led by the parliament, not by commercial organisations.

 

[justinbrett]

I suspect QF views these as multi-year (and multi-term) relationships. Don’t underestimate the power and influence of backbenchers on the legislative (or protectionist) agenda either. It’s about having the entire political apparatus on side.

As you say, that’s not QF’s fault, they merely play by the rules of the game. If the rules are to change, that has to be led by the parliament, not by commercial organisations.

Of course that would be true if the CL membership was made up exclusively of government officials; yet it is the minority (despite some emotive posts here).

I'm not denying the potential lobbying power as part of the motivation, but it is only part. The biggest part is keeping them flying QF. I think that's especially true in the case of VA. VA used to extend certain privileges (inc lounge access) to all federal government & ADF employees flying on WoAG rates, I believe that's all gone now - but it was an attempt to gain a higher share of government business.

 

[evanb]

Airline companies are terrible investments and many countries see them more of a utility. Considering that, and Australia being a relatively small country at the end of the line, QF is objectively a successful airline; whether their product or customer service is to your liking is irrelevant to that point.

Often what commentators are in denial about is that it's a hugely capital intensive business which sells a time limited commodity with volatile input costs. Yet, the public (and may of our friends on here) want something that just isn't attainable.

When a new long haul aircraft costs between US$150 and 200 million each, and the AU$ price can double due to a volatile currency, and a quarter to a third of your cost base can increase by 400% in AUD terms in a matter of years, you are rarely going to provide consistent returns to your shareholders.

Add to it a lack of scale compared to many of the other airlines people highlight, and the end of the line geography. So many commentators seem to think that they could do a better job, or that someone else (an enigma) could do a better job, but they're probably wrong. They're run out of other peoples' money in a blink of an eye.

 

[Mickey Mouse]

Often what commentators are in denial about is that it's a hugely capital intensive business which sells a time limited commodity with volatile input costs. Yet, the public (and may of our friends on here) want something that just isn't attainable.

When a new long haul aircraft costs between US$150 and 200 million each, and the AU$ price can double due to a volatile currency, and a quarter to a third of your cost base can increase by 400% in AUD terms in a matter of years, you are rarely going to provide consistent returns to your shareholders.

Add to it a lack of scale compared to many of the other airlines people highlight, and the end of the line geography. So many commentators seem to think that they could do a better job, or that someone else (an enigma) could do a better job, but they're probably wrong. They're run out of other peoples' money in a blink of an eye.

Certainly true that it's a "difficult" business (To rework a famous quote in the interests of efficiency, "Airlines are a great way to make a fortune small.")

However, while its obviously impossible to prove, many smart people with insight into the sector would agree with my take that Joyce did not do a good job for the airline (nevermind its customers and nation).

(And if I volunteered as a straw manager and had the QF CEO role over that period .. yeah, like the drover's dog, I could have done a better job than Joyce in the interests of the airline, rather than his and Dixon's pockets).

 

[justinbrett]

However, while its obviously impossible to prove, many smart people with insight into the sector would agree with my take that Joyce did not do a good job for the airline (nevermind its customers and nation).

"Still Trading"

Passed the test that many of his peers failed.

Could others have done better? Perhaps.
Could others have failed miserably? Absolutely.

 

[evanb]

However, while its obviously impossible to prove, many smart people with insight into the sector would agree with my take that Joyce did not do a good job for the airline (nevermind its customers and nation).

I'm in the sector, on the corporate side, and there isn't an airline executive who I have met who doesn't admire his achievements, even if they don't like him. A CEO's job is not to be liked, or even admired.

And if I volunteered as a straw manager and had the QF CEO role over that period .. yeah, like the drover's dog, I could have done a better job than Joyce in the interests of the airline, rather than his and Dixon's pockets).

What are the interests of the airline? Given the Australian market history, I'd say that it's sustainability. He's leaving the airline in a much more sustainable position than when he came in, far less susceptible to external shocks which it was so vulnerable to a decade ago. He's certainly angered a lot of people doing this, but being a people pleaser would be one way to kill Qantas, and quickly.

 

[UP4014]

People talking about MPs and flying.

Can look here and see MPs interests, I could only find one (didn't look at many) that didn't accept a Virgin or QF lounge membership. I didn't look at state MPs.

Register of Members' Interests – 47th Parliament

Register

www.aph.gov.au

Personally I think it has less influence than people think but maybe helps swings a bit more Govt business their way.

 

[Mickey Mouse]

I'll admit I do hold people to a standard based on their pay/income/looting.

It is hard to make hindsight judgements on what other leaders would have achieved, but my points are mainly along the lines of "imagine if we'd had someone who ran the airline well, without leeching and pettiness - regardless of or independent of whether or not they strip the workforce, whiteant the legacy or whatever".

The discussion about QF's survival compared to others tends to overlook the fact that not too many of its international competitors could rely on an airline's dream local market with plenty of cash, a handful of widely-spaced major cities and the last word over who gets to compete in it!

 

[evanb]

The discussion about QF's survival compared to others tends to overlook the fact that not too many of its international competitors could rely on an airline's dream local market with plenty of cash, a handful of widely-spaced major cities and the last word over who gets to compete in it!

If it were so easy then any idiot could make a fortune in the airline market here, except everyone else has failed over and over again. Instead, they tend to burn a lot of money

the last word over who gets to compete in it

Now you're just making things up. Australia has open skies in the international market with most of its largest markets like Singapore, China, United States, UK, India, Japan, New Zealand, and generous market access with others like Malaysia, Thailand and UAE. There are certainly protective markets, but Qantas also face protective markets which they'd like more access to (e.g., Indonesia, France, the Pacific). The irony is that the airlines most at benefit of the recent Turkey and Qatar fiascos is not QF, but SQ and EK. And QR themselves somewhat a beneficiary of Turkey.

QF don't decide who gets to fly domestically either. Anyone with the capital and who can meet the regulatory requirements for an AOC can fly domestically. There are limits on foreign ownership (49%), which is the same as Europe and more generous than many other countries (25% in the US for example). What about cabotage you may ask? Well which of their competing countries do allow cabotage? It's not something that exists in practice to any particular degree. The EU have a single market though. Well, so do we. NZ carriers could already fly domestically in Australia (like JQ do in NZ), and guess what, they do it ...

 

[Mickey Mouse]

If it were so easy then any idiot could make a fortune in the airline market here, except everyone else has failed over and over again. Instead, they tend to burn a lot of money



Now you're just making things up. Australia has open skies in the international market with most of its largest markets like Singapore, China, United States, UK, India, Japan, New Zealand, and generous market access with others like Malaysia, Thailand and UAE. There are certainly protective markets, but Qantas also face protective markets which they'd like more access to (e.g., Indonesia, France, the Pacific). The irony is that the airlines most at benefit of the recent Turkey and Qatar fiascos is not QF, but SQ and EK. And QR themselves somewhat a beneficiary of Turkey.

QF don't decide who gets to fly domestically either. Anyone with the capital and who can meet the regulatory requirements for an AOC can fly domestically. There are limits on foreign ownership (49%), which is the same as Europe and more generous than many other countries (25% in the US for example). What about cabotage you may ask? Well which of their competing countries do allow cabotage? It's not something that exists in practice to any particular degree. The EU have a single market though. Well, so do we. NZ carriers could already fly domestically in Australia (like JQ do in NZ), and guess what, they do it ...

On the "any idiot" point: Shirley, given what you know and have already said, I don't need to point out the difference between being an entrenched dominant/monopoly player and anyone game enough to try and break into the market? Obviously if it looks like the new competitor has gone through the prohibitively expensive process to establish a serious presence here, and are showing a chance of winning on quality and/or price, then low-ball them out of existence! And beg for kudos for the low fares (smallprint: "only available while we have competition, or the threat of it").

On the who gets to decide: QV CL.

BTW: The argument was domestic competition, however, the latest QF decision to exclude QR's expansion was another "win for the Aussies" (those in QF, not Australia).

 

[RichardMEL]

of course the QR thing is so tied into the long running animosity and the QR/VA tie in that truly sticks it to QF where it hurts so of course they would lobby against it - despite them being erstwhile partners (in OW) but really are the two kids on the team who simply can't play nice together.

In this case the loser is Australian public, as those extra services would of course increase capacity and in theory drive down prices to Europe that little bit. Of course, the airline benefit would be more towards VA than QF more likely.

Not the first time, and certainly won't be the last, QF (or any other airline) will lobby with total self interest. In theory the govt authorities (ie IASC) who decide such things really should be basing decisions on the bigger picture, but we all know how it goes.

imo

 

[justinbrett]

In theory the govt authorities (ie IASC) who decide such things really should be basing decisions on the bigger picture

The bigger picture - something most people on here are missing.

There's far more to diplomatic relations than increasing bilateral ASA caps.

I did read - but can't confirm so take it with a grain of salt - the Minister for Transport was supportive of increasing the caps, but was rolled by the Foreign Minister. Which suggests the decision had nothing to do with QF - but other diplomatic factors.

None of us know, it's all conjecture. Many on here just want to go with the 2D "blame QF for everything" script - but real life isn't that simple. Understandable for an airline forum, but there's more to life and politics than aviation.

 

[Mickey Mouse]

The bigger picture - something most people on here are missing.

There's far more to diplomatic relations than increasing bilateral ASA caps.

I did read - but can't confirm so take it with a grain of salt - the Minister for Transport was supportive of increasing the caps, but was rolled by the Foreign Minister. Which suggests the decision had nothing to do with QF - but other diplomatic factors.

None of us know, it's all conjecture. Many on here just want to go with the 2D "blame QF for everything" script - but real life isn't that simple. Understandable for an airline forum, but there's more to life and politics than aviation.

Seems the opposite of what I've heard, but I'll gladly admit to being way out of the loop so long after my final(?) retirement! Also a bit odd if its diplomatic wrt Qatar, given that nation's comparative moral status compared to the regional average

 

[justinbrett]

Seems the opposite of what I've heard, but I'll gladly admit to being way out of the loop so long after my final(?) retirement! Also a bit odd if its diplomatic wrt Qatar, given that nation's comparative moral status compared to the regional average

Doesn't have to be about morals.

UAE is our partner of choice in the region (not talking about EK - again - not everything revolves around aviation). They've let us have a military base there for almost 20 years.

UAE and Qatar aren't great friends. They've only just reopened their embassies to each other after cutting off ties in 2017. Qatar is rather friendly with countries on the other side of the gulf that aren't so friendly with us.

Foreign diplomacy is complex. Anybody thinks this is just about a few extra flights is kidding themselves.