MOC,
I have to disagree with your assessment. You say that we like to think that people fly QANTAS because of its:
"unsurpassed service, reliability and safety"
That is exactly the reason I USE to fly QANTAS. Over time, all of these aspects have diminished to levels that are equal to or below competitors. This use to be a distinguishing characteristic of QANTAS that meant I was willing to pay a little extra to travel with the flying kangaroo.
Now, under the careful eye of Chainsaw Dixon and his loyal troops, these qualities no longer exist for QANTAS to stand out from the crowd, and I go seeking the lowest price. If this is QANTAS, I'll fly them, if it's someone else, I'll fly that airline.
Bringing QANTAS down to the level of its competition as far as service, reliability and safety goes, means the only competitive advantage left is price. So now managment has to continually cut costs to lower prices to stay ahead. From my experience, it doesn't even have a great advantage here.
I wouldn't consider FF points and Oneworld links to be that attractive to the general community, especially considering the recent publicity regarding QANTAS' FF changes. How many people know anything about Oneworld anyway? Travel agents would be aware of this, but see EeastWest Loco's recent post regarding his attitutde to QF after their recent cutting of payment to travel agents.
Looking at your businesses' cost structure and removing "the fat" is a sensible practice. Slashing your costs at the expense of staff morale, product quality and customer satisfaction is not a formula for long term success in any industry. If you support this plan, can you show me an example of a airline that used this formula for long-term success?