........And with a little help from one or two informed (read competent) journalists, we might just be able to shine a light on the real motives of this CEO and Board....................
Qantas spends big on self-denigration
August 27, 2011 – 12:44 pm, by Ben Sandilands
The Qantas print media campaign of self-denigration continues at the rate of hundreds of thousands of dollars today.
These are full page ads stating the obvious; that Qantas needs to change, but claiming to be building a ‘stronger Qantas’ while remaining in a state of denial over the management failures that have so badly damaged the carrier.
These failures are painfully obvious in fleet management, network and scheduling, and product and employee engagement. There is seems to be an ideological agenda at the top in Qantas that is not acknowledged in the campaign, yet has led to a restructuring that diminishes the Qantas that it is supposed to strengthen.
Qantas has clearly decided that it cannot afford the costs of past excellence in pilot standards and maintenance. And believes that by basing jets and jobs outside Australia and flying them into and out of this country, and even under some circumstances, within it, with employees paid under Asian terms and conditions, and not attracting Australian superannuation obligations on pay taxed in those countries, it can break what it sees as the unreasonable costs of doing business as an Australian company.
Yet this is a process that will not just de-Australianise the costs, but the product, reducing the very difference Qantas seeks to emphasise in its marketing as the ‘Spirit of Australia.’
One possible rationale for this enormously costly print campaign could be to head off the distinct probability that Senator Nick Xenophon might introduce and gain parliamentary support for a bill banning the rotation of Asia or New Zealand or Pacific Island pilots and flight attendants through services Qantas operates as domestic flights.
Maybe Joyce and his chairman, Leigh Clifford, are looking for a Nauru solution, or maybe a Port Moresby solution, to their Australian pay, superannuation levy and conditions problems. There is after all, more than a hint of ‘barking mad’ in the commentary Qantas has offered on the restructuring, and earlier in the year, to the Senate Inquiry into airline safety and pilot training standards.
The key planks of the Qantas off-shoring agenda are capable of being stopped dead in their tracks by legislation.
Qantas can’t possibly be threatened by a 2.5% pay rise for pilots. But it is threatened by a continuance of some very poor decisions in relation to its full service operations by a management overseen by a board nearly devoid of technical airline operations talent, and drawn from executives better known for their careers in the finance sector.
The only veto on change that has counted, very negatively, in Qantas in recent years has been that exercised by management on the necessary or timely fleet and network and product changes that are needed to keep the company in the hunt against its more relevant competitors.
Those failures have deeply harmed the carrier. Not foreign governments like the wicked Singaporeans who are, surprise, taking their time politely listening to how Qantas wants to finance and control a supposedly majority owned Singaporean based Asian premium brand single aisle operation guaranteed flag carrier rights in its bi-lateral air traffic agreements with other nations.
Ditto the Malaysia and China authorities.
Can we imagine how Qantas would have reacted had Singapore Airlines or China Southern or Malaysia Airlines last week announced that they wanted to finance and control a supposedly 51% owned Australian carrier to exploit the markets between here and say the US?
Oops. We already know the answer to that question. We saw it answered during the Singapore Airlines foray into Air New Zealand/Ansett, and later, when it sought direct access for its carrier.
This morning’s ads even come with a graphic that actually charts the failures of its management. This isn’t about unfair competition, or greedy unproductive workers, but an overpaid underperforming management that wants us to believe they are on about something called the ‘Spirit of Australia’ when they are really on about cutting out the costs of flight and maintenance excellence, the very foundations of the Qantas brand value.
This Qantas campaign, aimed at the very section of its work force that it needs to engage, is like the lunacy of the Australian retailers campaign in the new year against on-line sales. All that campaign against e-Bay and Amazon and other on-line commerce portals did was remind consumers how uncompetitive the major Australian retailers had become, and how easy it was to buy better on-line. The solution so intelligently argued by the likes of Gerry Harvey was to try promote a new tax. What were they thinking?
Qantas has totally lost the plot when it come to its international operations. Fairfax Business Day columnist Ian Verrender has a very pertinent column on this lunacy this morning.
Let’s assume that Qantas really did lose $216 million on its full service international business last year. That loss, while undesirable, was an integral part of the total product offering that made Qantas domestic and Qantas Frequent Flyer the successes that they are.
Reducing the attractiveness of international is never going to make it, or the rest of Qantas, stronger. But maybe Qantas no longer cares, and this is just a charade while it pursues the low cost trans border business model is sees as the big earner of the future. The Jetstar franchise is a great business model at a number of levels, but not when it gets caught flying indentured Asian flight attendants around the Australian domestic network at the end of 20 hour shifts that left them too exhausted to continue.
Not when it tries on dodgy pilot schemes in which heavily indebted cadets were supposed to be paid and taxed in NZ dollars, but live and work in Australia.
The restructuring announced by Joyce is like performing a frontal lobotomy on the carrier. Somehow it thinks that by severing half of its London capacity to gift those passengers to unpopular partner British Airways is going to have no impact on the rest of its operations.
It’s like thinking that punting full service customers onto Jetstar flights is going to stop them trying Virgin Australia, which will sell everything from discount to full service options on all of it flights.
Doesn’t Qantas management understand that when it tries to hand over customers to another carrier, half way around the world, they can still get Qantas points by flying all the way on Cathay Pacific, without changing aircraft, and without back tracking out of Heathrow to get to Paris and other European cities.
Doesn’t Qantas understand that instead of meekly accepting outrageous five hour long connections at Bangkok Airport to then experience the inferior and distinctly un-Australian ambience of a BA flight that they might defect, like so many already have, to the single airline offerings of Emirates and Singapore Airlines?
Qantas has set out to vilify its pilots over a 2.5% pay claim and carries on about so called perks when business class passengers are routinely telling Plane Talking that Jetstar employees in uniform are occupying seats in the same cabin for positioning to other parts of the Jetstar network. Qantas management’s answer to dismal fleet planning is to junk four aged 744s and 1000 jobs that supported half of its capacity on the routes between Australia and London, and enrich the competition.
But it hasn’t announced anything that will recruit new Australian customers, win back the lost legions, nor even keep those who have remained loyal.
This is woefully inadequate. How much longer, and at what cost, will this continue?
(Apologies for the repetition mods, but this article deserves viewing by as many people as possible.)