Plane talking
How not to grow Qantas?
August 16, 2011 – 4:30 pm, by Ben Sandilands
Perhaps the most amazing thing about today’s phase one of the Qantas restructuring is that it actually makes it harder to fly the airline all the way to London.
If you are a Qantas passenger who stops off for some reason in Bangkok or Hong Kong, you can’t continue your journey non-stop to London on a Qantas flight, as it wants to sell you a seat on a British Airways flight, an experience that you are unlikely to willingly undertake voluntarily a second time, on a carrier that makes Qantas look stellar in every department.
British Airways is even further removed from the shiny new jets and amenable cabins of Emirates, Etihad, Cathay Pacific and Singapore Airlines, than is Qantas, all of whom will do what Qantas is now going to be less capable of doing, which is to get you to London on the same airline with only one stop.
It is a truly bizarre and perverse way of making Qantas international better for London flyers.
Qantas is giving away its very capacity to fly people to London. Singapore Airlines flies, make that flew, fewer Australians to London than Qantas, but it does do it in an A380 three times a day, not twice daily, which is the Qantas plan. And it does A380s daily to Paris and Zurich too.
Turning to America, Qantas sacrificed San Francisco dailies for four times weekly flights to Dallas Fort Worth earlier this year so that, it claimed, passengers could make better connections using its American Airlines partner.
Which is bollocks. Not only is the supposedly business friendly flight less than daily, but it can’t reliably get a full load of passengers and their checked luggage on the same plane to DFW. Nothing like living in a dirty shirt and set of jox and sox for a day at either end of a long trip because Qantas has an alliance fetish.
The connections are pathetic considering that the jet has to stop in Brisbane on the way back to have any chance of getting to Sydney, and occasionally also has to detour to Noumea, or Nadi, or Auckland.
It is also amazing that Qantas CEO should insist that it has to ‘change in order to survive’ when the under performance of a management team that actually harms the customer experience is the very first thing that needs changing.
The presentation and speech Joyce filed to the ASX today is full of such disconnections. At current exchange rates Qantas is according to Joyce suffering a 20% cost disadvantage compared to its smarter, better funded, less taxed and more customer oriented competitors. But Lufthansa, Air France KLM and even British Airways have higher cost disadvantages compared to their Asian and Middle East competitors, and they continue to successfully operate between Europe and Asian ports. Especially in the case of British Airways, which gets a no-compete deal from Qantas between the UK and Bangkok and Hong Kong in return for giving up daily return flights between Bangkok and Sydney.
There are plausible suggestions in the market that Qantas will drop its A330 flights between Auckland and Los Angeles and Los Angeles and New York in favor of an American Airlines return to the Pacific routes for the first time in its own metal since the mid 90s. And this is an airline which is a financial basket case. If true, such a further transfer of the action from Qantas to a foreign airline doesn’t compute.
The rhetoric in the Qantas presentation is almost tragic in its references to its frequent flying program, because if a recent analysis by Macquarie Bank is correct, that program is making 57% of it earnings from selling points to grocery chains or other third parties to ‘reward’ people who, on the current statistics, are likely to buy fares on foreign carriers rather than Qantas in the ratio of four to one.
While no-one could reasonably argue against Qantas investing in entirely Asian operations to participate in the Asian air transport market rather than try to use them to rotate low cost pilots and cabin crew through Australian skies, the concept of competing against the established premium brands of Cathay Pacific and Singapore Airlines or All Nippon or whomever with its own fleet of single aisle A320s is questionable, or comical.
The as yet unnamed and unlocated new Qantas joint ventured Asian premium carrier would be up against the wide body twin aisle luxury of those carriers, which have the brands and distribution networks and connections to defend their home turf.
Somehow Qantas has to do better. Even the proposition that it can’t afford to match the cheap fares of its Asia based competitors looks shaky when it is often the case that those carriers are selling at a premium over Qantas to business travellers because they offer trips to European cities that are half a day faster than the purgatory of flying over them to make connections to a woeful British Airways product in order to then fly backwards to the intended city.
Joyce is right about one thing, Qantas is in peril. But it is in peril from itself.
Pretty much sums it up, plus how much money was wasted on these pathetic Newspaper ads this morning?