Right on cue:
Qantas paints grave picture of global arm Date: September 10 2012
Qantas Airways says its international operations are in ‘‘terminal decline’’ and unable to go it alone, given the disadvantages of geography, high cost base and fierce competition.
The airline told the Australian Competition and Consumer Commission (ACCC) its proposed 10-year partnership with Dubai-headquartered Emirates was an urgent strategic imperative.
Qantas and Emirates today lodged their application with the ACCC to approve the alliance.In their submission, they said the tie-up would improve the international competitiveness of a key Australian business and iconic brand, Qantas.
‘‘A strong and efficient Qantas is in the long-term national interest,’’ the submission said. ‘‘The proposed conduct is essential to underwrite the sustainability of Qantas international and to continue to provide substantial benefits to Australia and Australians.’’
Last Thursday, Qantas chief executive Alan Joyce and Emirates president Tim Clark unveiled plans for an extensive codesharing arrangement, reciprocal frequent-flyer benefits and joint marketing, pricing and coordination on certain routes.
The alliance was regarded as a key plank to turn around Qantas’s struggling international operations, which Mr Joyce said lost $216 million in 2010-11 and $450 million in 2011-12.
‘‘The growing magnitude of losses cannot continue,’’ the submission said. ‘‘The proposed conduct will arrest the terminal decline of the international operation of Qantas.
‘‘It is clear that it is no longer possible for Qantas international to sustainably ‘go it alone’ as an international network carrier.’’
The submission said Qantas did not have the ability to compete effectively with ‘‘mid-point carriers’’ based in Asia or the Middle East, given their geographic and economic advantages.
Meanwhile, Emirates operates a number of flights between Australia and New Zealand and that the two airlines offered to formally commit to maintain capacity across the Tasman.
‘‘The commitment only relates to total trans-Tasman capacity, rather than specific city pair routes,’’ the submission said.
Qantas closed up two cents at $1.28.
Qantas Paints Grim Picture
Yet, in Mr Joyce said this in Feb 2012:
Senate Transcript
Originally Posted by Alan Joyce
Senator XENOPHON: In terms of the Qantas Sale Act and the whole issue of subsidiaries—and Mr Johnson referred to this on the last occasion—there is nothing in the Qantas Sale Act that would prevent international routes being flown by Jetstar, for instance, and Qantas becoming a largely domestic carrier. There is nothing in the act that would prohibit that.
Mr Joyce :
There is no prohibition in the act against all of our international routes being replaced by Emirates or United one day. The market will dictate who flies internationally and who will survive. I will tell you our intentions. I hope that someday Jetstar can be very big, because that would be great for Australia and the group, because these aircraft would be flying all over Asia. We want Qantas to be in the same position. I want to turn around the international business so that Qantas can have the same growth opportunities that Jetstar has. I absolutely believe that you cannot lock into legislation restrictions on Qantas to somehow ensure that Qantas stays in the race, because it will not happen.
If you put those restrictions in place, Senator, all you will be ensuring is the absolute demise of Qantas. It has to be commercial, it has to be flexible and it has to adapt. That is the only way you can ensure what you are saying never happens and it is not our intention. We absolutely want to scrape around to be flying to every continent around the world, but we have to have a commercial entity.