Just appeared on ABC, re QANTAS, trust and reputation
Grounding eroding Qantas' reputation
By business editor Peter Ryan – analysis
Updated October 30, 2011 11:02:47
PHOTO: Qantas' reputation was built up over decades and could be lost in just one day.
(Mick Tsikas: AAP)
Alan Joyce's decision to ground the entire Qantas fleet is already costing the airline tens of millions of dollars but the reputational and brand damage is much greater.
Trust, certainty and confidence in Qantas has been eroded on all levels and the only unified support appears to be from the Qantas board which signed off on the extraordinary action yesterday morning.
The dramatic escalation prompted anger from Transport Minister Anthony Albanese about a lack of consultation before the grounding was announced, fuelling the perception that the decision was premeditated.
But the depth of the crisis was summed up by Prime Minister Julia Gillard who said the new flashpoint had "implications for the national economy".
"Implications" could well be an understatement by a Prime Minister remaining calm under immense pressure.
AUDIO: Alan Joyce speaks with business editor Peter Ryan (AM)
On its own, the prospect of Qantas in accelerating revenue decline has the potential to slice into economic growth at a time when state and territory economies are operating at multiple speeds.
But consider the potential impact on tourism (already struggling from a high Australian dollar), and the reluctance of visitors and travelling Australians to consider Qantas as a reliable carrier.
Qantas says domestic travellers are switching to competitors like Virgin Australia, accounting for a 20 per cent decline in revenue.
Virgin has jumped on the escalation, ensuring it does not waste a crisis.
The impact, however, could go much deeper.
Consider the hotel bookings being cancelled or rescheduled. Will this add uncertainty for casual or part time staff who rely on hospitality for their livelihoods?
Retailers and cafes based at major Qantas terminals had plenty of bumped customers late yesterday.
But the demand for lattes, muffins and toasted sandwiches is about to disappear with flights grounded and booked passengers told not to turn up.
Taxis, car hire, buses – even the supervisor at the taxi rank – will see the reason for operating at Qantas terminals disappearing.
The list goes on.
Then there is increasing scrutiny of Mr Joyce's $5 million pay deal approved by shareholders on Friday.
Even with a 71 per cent increase, Mr Joyce is a discount chief executive compared the $10 million his successor Geoff Dixon received in his final year.
But taking a significant pay increase while asking unions to compromise and to trade in traditional terms and conditions is raising the cynicism stakes with the government and general community.
Qantas, until now, was an iconic global brand known for safety, reliability, and above all trust.
But as the saying goes, a reputation is built up over decades and lost in a day.
That day has arrived and regardless of any breakthrough, Qantas for many is now just another airline trying to survive in a globalised world.