Here’s a question for you. Where in the world can you turn a profit into a loss, lose $235 million in half a year, preside over a calamitous single day share price drop of 9%, and not only keep your job, but deny all responsibility and blame others?
The answer: the Qantas boardroom.
Qantas CEO Alan Joyce has been quick to blame external factors — the high dollar, ‘legacy’ issues, the price of fuel, competition — for the airline’s woes as it moves to cut $2 billion dollars in costs and up to 5000 jobs.
But these issues are taking the fall for a more fundamental problem: Australians simply aren’t choosing to fly Qantas any more.
Why Qantas customers have lost the ‘Spirit of Australia’
Back in the late 80s, before the government sold off Qantas, Australia was a very different place. The government still owned the airline and controlled which airlines could serve our island continent.
Australians, overwhelmingly, flew Qantas internationally. It was enforced brand loyalty. And it came at a price…to the consumer.
But from the nineties, after the government sold Qantas, and routes opened up for competition. International airlines have since swamped the Australian aviation market competing for our travel dollars.
And this is the problem for Qantas: the international carriers do it better. Qantas customers are wising up to the fact that the international players fly better and newer planes. Their staff are friendlier, serve better food and entertainment, and fly better routes.
Qantas job cuts are just a piece of ‘the package’
Alan Joyce, busy sticking his cap out to the government, hasn’t addressed this. Last week’s announcement looks like exacerbating the problem.
He’s deferred the purchase of new aircraft, and cut 5000 jobs, including service and catering staff. He’s also cutting back on routes, leaving competitors — the same group he’s blaming for Qantas’ woes — to snap up Qantas customers.
Here’s another question for you: why would anyone fly Qantas internationally when it flies fewer routes, older planes, and has worse food and service than its competitors?
The answer is they aren’t. This is why Qantas is in the trouble it’s in today.
Callum Denness
Contributing Editor, Money Morning
