"CRIKEY" hits the nail on the head
Qantas - an inside view
Pemberton Strong
Crikey's aviation expert
Crikey has reported extensively on Qantas in recent months. Here's a well-informed insider view on the way an Australian business icon operates.
30 July 2004
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As of Sunday, August 1, there will be only 19 days to the release of the Qantas result for 2003-04 and there's every sign that it will among the best the airline has reported.
But don't expect much in the way of boasting. There will more in the same vein as the letter CEO Geoff Dixon wrote to The Australian Financial Review last week (More special interest pleading from Qantas). Of course he's right, but as exporters and importers have found for years there's no such thing as a "level playing field". Its a mirage, a figment of some businessman's dream or an economists momentary flash of desperation. Even the most committed and competitive of businessman knows there's a host of things and happenings out there that will tilt the playing field against you. It's how you react and adapt that separates the moaners from those who succeed.
But regardless of the cries for special help, Qantas continues to flesh out the empire, this week announcing new services from Melbourne to Los Angeles to counter new services added by Air New Zealand, which is flying via Auckland.
And it will go some way to also countering the push by Singapore (and maybe Cathay) to fly Australia-US, which is a sleeping issue at the moment. Qantas, like all successful businesses doesn't like to have too robust a level of competition and Singapore could certainly provide that on the trans-Pacific routes, currently one of Qantas's most profitable.
And Qantas wants to succeed while having a good, old fashioned Aussie whine about the unfairness of all those "furriners".
So what have they really to complain about? Well there's the service to the city of "lurve".
No, I don't mean Las Vegas, I mean Paris, France. Recently I remarked on the Qantas decision to abandon Paris to a code share with another airline (Cathay). Here's what a well informed Crikey reader wrote in reply: " Qantas pulled out of Paris because it lost $22 million last year and similar amounts the year before. Qantas would have liked to increase its services from three a week to seven (economies of scale would have brought it into profit). However the French government and Air France prevented this."
Hmmm interesting, and there was more.
"The introduction of the new business class product and the increase of services to London (more to come) and Los Angeles was a result of business travellers again travelling after SARS and the uncertainty of terrorism (which is been countered by increased security around the worlds at airports and by governments). It also is driven by relentless competition in the premium market by all airlines."
Advice to travellers. "Frequent flyer points are used extensively throughout the network but it is a complicated issue when and how to get it. In simple terms don't try to use them in business class (say Monday morning, Friday nights, etc.) and any other busy times the suits are travelling. Off-peak is the secret."
And other issues. "Pulling out of Rome and Paris is driven by short-term strategic thinking in my opinion. The average manager's corporate life has been reduced to five years and is heavily dependent on bonuses. It also is a fact that Qantas has no twin engine long range aircraft on international routes at the moment. Most major airlines operate twin engine aircraft to build up routes new or existing ones with lower yields". (Yet its cheap international carrier, Australian Airlines is flying old Boeing 767 twin engine planes on its services. Go figure!)
"Qantas does have four airbus A330-200 twin engine long range aircraft, but these are being used on domestic sectors.
"Only GOD, CEO Geoff Dixon, knows why."
"Recently the penny dropped and the boys, Geoff, and John Borghetti, the putative successor to Dixon? wanted to convert these Airbuses to international configuration with the lovely sky beds in it. However they were told the floors in the aircraft need to be strengthen at a cost of A$65 million. Ouch. So we keep flying our only long-range twin engine aircraft on domestic routes!
"Qantas relies heavily on feeder service from British Airways in London and American Airlines in Los Angeles. The majority of future growth is directed towards those ports. Given that Qantas has its major eggs in two baskets one can only hope there is no major hiccup there, otherwise the immediate impact would be severe."
On the move to establish an international cabin crew base in Brisbane, the insider had this to say.
"Qantas international cabin crew have bases in Sydney (around 85%), and the rest in Melbourne and Perth. There are around 25% of cabin crew who commute to Sydney, Melbourne or to a lesser degree to Perth. In your article you mention cabin crew leaving in on the Gold Coast and Brisbane having a little 'lurk'.
"You imply that they travel free domestically to work". (No it’s the businesses they keep on the side while not flying) "FACT: every cabin crew member or pilot (there are hundreds of pilots who also commute from anywhere in Australia) have to pay for their ticket to their home base. In addition your are on staff travel ticket where if there is no seat available and you can't travel. There's no such thing as booking and having a confirmed seat. Standby is the word, and it is not much fun after a 12- 18 hours night/day shift tour of duty from somewhere overseas or before you are going to work":
(Pemberton Strong: But it is a lower yield to Qantas for staff to be occupying a seat, even paying for it, than a travelling member of the public who pays more.) "And how far do allowances go in Sydney where the cost of accommodation is high. The allowances don't go very far.
"We live away from Sydney because of family and friends. And the tickets aren't so much cheaper these days either then the low cost carriers.
"A Gold Coast Qantas commuter I know recently booked several flights on a low cost domestic carrier as was cheaper then Qantas staff travel. So much for nice little "lurks."
"However operational requirements sometimes require cabin crew or pilots to operate from another port due to aircraft configuration changes or the start or beginning of a scheduled service. This is a common occurrence at all airlines. In Qantas it is less common with cabin crew as they can operate all different international aircraft types and also operate sometimes on domestic services. Pilots can only operate they aircraft type they are rated to fly (eg. 747-400 only) and have therefore a much higher positioning rates.
"It has a lot to do with crew scheduling. This in itself is worth a whole book in regard to incompetence. Wages are depending on your category. International Qantas has customer service managers (in charge of the flight), supervisors (in charge of economy), business first flight attendants (first and business class) and flight attendants. Rates are based on category."
And then there is the contentious issue of that international crew base in London, to be run with the assistance of labour hire group, Adecco, no doubt. "Qantas has currently overseas bases in Auckland and Bangkok. These 'little foreign slaves' earn half or less than Australian-based cabin crew."
"Conditions are third world for them as they have no rights whatsoever. "Its like "here is your roster, shut up, perform otherwise your contract will not be renewed in two to three years. "We also reserve the right to fire you anytime we think we don't like you, COURTESY OF ADECCO/ QANTAS. And these Adecco managers are gold frequent flyers on Qantas regular travellers in first and business class. Needless to say Geoff Dixon (GOD) and his mates are also chairman lounge members and get frequent flyer points for every trip they do in first class.
"And NO, does not cost them a cent. And then they use those points for family and friends to travel also free. No problem using the points for bookings there. Good isn't it?
"The proposed London base is again being forced upon Australian crew to cut costs and undermine the power of the Australian cabin crew union. I concur with your assessment about British wages. Qantas UK crew (offered to Qantas International and domestic crews initially), are Australian cabin crew (a small initial percentage has to be English) on the London base on a two year contract will (if it gets up, watch this space) be eventually replaced by English crew (pick a Leicester, Manchester or Irish accent). The lady behind this scheme is Lesley Grant, New Zealand born, with experience at Air New Zealand and Ansett!
"Finally, ALL bases have managers, assistant managers and support staff. Currently ALL senior managers pay is performance-based. Unless they can provide plans and results how to "screw" those below them financially they are out very quickly.
"Hence Geoff "(GOD)s sustainable "screwing program" of $A1.5 billion.
