The Empire Strikes Back
The following media release has just been distributed.
QANTAS CEO RESPONDS TO MISLEADING REPORTS
The Chief Executive Officer of Qantas Airways, Mr Geoff Dixon, said
today that much of the speculation and comment surrounding the proposed
takeover of Qantas was wrong and, in some cases, deliberately
misleading.
Mr Dixon said that any proposed ownership change for Qantas needed
informed debate and needed to take into account the market in which
Qantas operated.
“The international aviation market is grossly distorted by government
ownership and financial support for airlines and airports.
“In this context, Qantas is one of the least protected airlines in the
world and it is fanciful in the extreme to suggest otherwise.
“It is also laughable to see some editorial writers and commentators, in
particular, calling for more competition for Qantas from city states and
countries that skew all their aviation assets for national purposes,” he
said.
Mr Dixon said many of those making near hysterical statements now were
the same people who had opposed just about every change Qantas had made
since privatisation 11 years ago.
“They are, of course, supported by the usual gaggle of monopoly airport
providers in Australia and the government owned and supported carriers
such as Singapore Airlines.
“If Qantas had not fought for its position against such blatant self
interest and if we had not changed work practices, attacked
inefficiencies and invested billions of dollars on product and service,
we would be a much diminished airline now and Australia would be much
the poorer for it,” he said.
Mr Dixon said Qantas had for many years and, increasingly so since its
privatisation, maintained a “social compact” with the Australian
community.
This had, among many things, involved:
Qantas and government working together to achieve balanced outcomes
for Australia in the regulatory system that provided market access
for airlines worldwide;
Qantas making significant compromises in restructuring its various
businesses to keep jobs in Australia;
Qantas providing extensive financial, operational and people
resources in times of crisis, from Cyclone Tracy some 32 years ago to
the collapse of Ansett, the Bali bombings and the Asian tsunami in
more recent times; and
Qantas support, year in and year out, for large and small charitable,
cultural and sporting organisations.
Mr Dixon said this sense of responsibility to Australia was a core part
of Qantas’ DNA and would not change under what would remain majority
Australian ownership if the bid for Qantas by Airline Partners Australia
was successful.
“We acknowledge that Qantas’ iconic status means people, in particular
legislators and regulators in Canberra, have a genuine interest in the
leadership and future of the company.
“This genuine interest should not be overshadowed by the noise from the
self-interested and ill-informed,” he said.
Mr Dixon said it was important to put some facts on record about the
misleading speculation on the following issues:
Qantas Remaining Australian
“Airline Partners Australia’s proposal would see Qantas continuing to be
Australia-based, majority owned and effectively controlled by
Australians,” Mr Dixon said.
“It will continue to be Australia’s national carrier and one of the
primary ambassadors for the country overseas. It is completely wrong to
suggest that would change.”
Open Skies
Mr Dixon said the call for Open Skies by Brisbane and Melbourne Airports
and certain government owned and supported competitors was breathtaking
in its hypocrisy. It ignored the realities of the situation, namely:
The most protected and privileged positions in Australian aviation
are held by the unregulated monopoly airports that have increased
charges by between 50 per cent and 228 per cent over the past six
years.
As revealed in the Productivity Commission’s recent review of price
regulation of airport services, charges in Brisbane in 2005 exceeded
those of airports such as Bangkok, Singapore, Hong Kong, Kuala Lumpur
and Dubai where Qantas’ major international hub-based competitors
reside.
Since 2000, the Qantas Group has increased international seats
departing from Brisbane by 73 per cent and from Melbourne by 24 per
cent.
The aviation policy settings that the Australian Government announced
in February this year, including the decision to not allow Singapore
Airlines access to the trans-Pacific route, weighed the interests of
consumers, exporters, tourism stakeholders and foreign airlines and
the economic and strategic benefits flowing from an Australia-based
aviation industry.
Australia is already one of the most liberalised aviation markets in
the world, with 43 international carriers flying in and out each
week.
All United States airlines can seek to operate on the trans-Pacific
route. Four airlines are expected to be providing direct services
between Australia and the US within two years and four more already
providing one-stop services – hardly the protected route that some
people like to suggest.
Open Skies is a distant goal in an industry that continues to operate
under a bilateral air rights system, and Australia cannot
unilaterally establish global open skies.
Qantas is not allowed to fly on many routes including Shanghai-London
and New York-London. It is capacity constrained on many more routes,
including Singapore-Paris, and Hong Kong-London.
“Rather than blaming Qantas for the shortcomings of their airports,
Brisbane and Melbourne Airports would be better placed to attract
customers by offering more attractive prices and improving their current
service standards,” Mr Dixon said.
Sydney Airport
Mr Dixon said the suggestion that Qantas might get favourable treatment
from Sydney Airport due to the less than 15 per cent equity stake
Macquarie Bank would hold in Qantas under APA’s proposal was wrong.
“From our experience the owners of Sydney Airport, including various
Macquarie infrastructure funds, are solely interested in the performance
of the Airport and not its major client, Qantas. This will not change
due to Macquarie Bank’s limited interest in Qantas,” he said.
“This position is very different to that of our hub-based competitors in
Singapore, Dubai, Bangkok and Kuala Lumpur where the Government owns
both the Airport and the Airline.
“Our approach to dealing with the unregulated monopoly airports,
including Sydney Airport, will not change as a result of the proposed
transaction. Sydney Airport is currently seeking special leave to appeal
to the High Court to overturn the declaration of domestic aeronautical
services under Part iiiA of the Trade Practices Act. Qantas will again
vigorously argue that Sydney Airport should be declared at the High
Court.”
Restructuring
Mr Dixon said Qantas could not stand still as competitors around the
globe aggressively restructured their businesses.
“United States legacy carriers are transforming their cost structures
under Chapter 11 bankruptcy protection, consolidation is also occurring
at pace in the United States, Europe and parts of Asia, and many hub
airlines enjoy the benefits of direct and indirect government support,
including common ownership of airlines and airports,” he said.
“We do not have some of the structural advantages that our competitors
do, so we must continually reinvigorate our business within our
regulatory and policy framework to ensure we remain competitive.
“Change has always been – and will continue to be – critical to Qantas’
success.
“Our track record of outstanding customer service, investment and growth
speaks for itself.”
Frequent Flyer Program
“The Frequent Flyer Program is a strong, viable program prized by our
most valuable customers and a critical contributor to the company’s
success,” Mr Dixon said.
“Some people are trying to draw a parallel between a change of ownership
of Qantas and Ansett’s collapse. That is wrong – we are not broke and
we will not go broke.
“We will not take people’s points away from them. It is in our
interests to make sure the Program is as strong as it can be.
“Like any area of our business, we will continue to review the program
to make sure it is providing benefits that our customers want and
operating well for us – that is no different to what we have done for
many years.”
Full Service
“Our full service operations, under the Qantas brand, are a key driver
of the Group’s profitability, with excellent positions in the domestic
market and in key international markets,” Mr Dixon said.
“As we have stated repeatedly, our two-brand strategy is about ensuring
a strong future for our full service brand, while adding a value-based
airline that is better suited to some markets.
“Qantas is one of the world’s leading premium carriers, ranked number
two globally for customer service for the past two years in the
benchmark Skytrax customer survey. We have achieved this because we
have continued to invest in the business through one of the more
turbulent periods in aviation history.”
Regional Services
“Our extensive regional network, operated by QantasLink, provides an
important competitive advantage for the Group,” Mr Dixon said.
“QantasLink has invested in new, larger aircraft, providing a 17.5 per
cent increase in capacity last year with further growth this year.
“We are committed to regional Australia.”
Jetstar
“Jetstar is the only value-based model established by a full service
airline to have reported profits for two straight years since start-up.
Last month, it became the first long haul international value-based
airline,” Mr Dixon said.
“We are aggressively expanding Jetstar to provide profitable growth in
markets that are not economic with the Qantas product and cost
structure.”
Engineering
“We have undertaken an extensive review of our engineering operations
over the past year, with the aim of achieving globally competitive costs
and efficiency,” Mr Dixon said.
“Rather than take the easy option of moving large parts of our
maintenance activities offshore, we are well advanced on strategies to
restructure our wide-body and narrow-body heavy maintenance operations
within Australia and have already moved closer to world best practice
efficiency.
“This maintains a skilled jobs in Australia.
“If we get this right, we will have the opportunity to bring
maintenance of aircraft that are now offshore back onshore.”
Defence
Qantas’ commitment to ongoing cooperation and support (when requested)
to the Australian Defence Forces is total, ongoing, and always will be.