The end of Qantas is now predictable - the name will be sold at bargain rates to a private bidder after the company is bankrupted and delisted.
What is finally going to kill it is a series of decisions that destroy brand value, most of which is psychological.
1. No one wants to be associated with losers, and that is exactly what Qantas is under Joyce and its current Board. That Qantas is a loser, run by losers and not very nice losers at that, is now the common perception of Australians.
2. Qantas employees were part of its marketing edge. Not only were the ones that I know exellent ambassadors for the airline, so were their friends and relations. This translated into a marketing force of perhaps 100,000 people. One father commented to me last night that he thinks his Son has probably lost his job. One pilot friend thinks he is probably safe and I have yet to hear from a Third.
3. The Qantas business strategy, even if it was coherent, which it isn't, has been poorly articulated to the general public and perhaps equallly as importantly to the shareholders.
4. I am also hearing, second hand, that Qantas maintenace standards are falling, but still perfectly legal, in that the fixing of defects is deferred for as long as legally possible (deferrals going Two weeks then to Six months, and the flat refusal to even call a defect a defect as in "it always does that"). I was also advised that CASA has no possibility of understanding, let alone surveying and regulating, the Qantas maintenance system. If this is ever substantiated then the QF reputation will take another knock.
That is about the limit of my branding knowledge. What concerns me is Ray Krocs famous quote: “If my competition was drowning, I’d shove a fire hose down their throat,” Qantas competitors are smart and I hope this is exactly what they do. THe States of Victoria and South Australia are feeling particularly unloved by Qantas at the moment (The golden triangle? please!) and it wouldn't take much to rip some more market share out of Qantas in those states.
Now lets get on with the business case:
1. For a start, nobody believes that Jetstar is profitable without massive cross subsidy from the main line. furthermore, a simple walk through the Brisbane terminal, and probably others, shows that Jetstar is cannibalising mainline seats, furthermore, as our recession bites, price conscious business travellers will choose Jetstar, exacerbating the problem.
2. The entire Jetstar Asian strategy is a complete failure. The investment of both time and money cannot and will not be recovered.
3. The delusions of grandeur in ordering the A380 and 100 A320 will destroy the airline capital base if they haven't already. All those aircraft are going to have to be leased, hopefully at some positive rate of return.
4. The schedules associated with the tie up with Emirates are, I'm told, less than ideal. Furthermore I do not wish to change airlines, I want either continuity or a relaxing stop over in Singapore, KL, HK or similar. Qantas can no longer provide me with an "end to end" experience. I'm also told but cannot confirm that Queenslands Sunshine Coast has lost well heeled Japanese Tourists because they refuse to fly Jetstar to Maroochy.
5. The internal "group" structure is a narcissists paradise as it creates a plethora of multiple managmenet positions, this leads automatically to infighting, massive expense, poor decision making at all levels and sub optimisation of the various parts of the airline.
6. Blaming everything on the cost of pilots, cabin crew and engineers? This is both revolting, untrue and in any case solveable in the medium term anyway.
If it was me, this is what I would have announced yesterday:
A. A loss.
B. The abandonment of the entire Jetstar experiment, domestically and internationally and the outline of a transition plan to roll all of it into mainline. Parts of that will include fleet rationalisation, workforce rationalisation including a hellish and difficult renegotiatoin of all EBA's.
C. An end to outsourcing and offshoring as the costs associated cannot be controlled. I would announce a bidding competitoin with State governments for purpose built state of the art maintenance and overhaul facilities outside the high cost Sydney basin for the rationalised fleet.
D. A rationalisation of the entire Qantas management structure and the end of the "group" structure. The intent is to cut out as many levels as possible and flatten the organisation.
Not only that, it reduces the opportunities for infighting and sub optimisation. HR policies would be rejigged to ensure internal promotion where possible and for hands on coal face expereince to be mandatory for any candidate.
E. The removal of all but essential Qantas staff from high cost city offices and their relocation to the cheapest possible office or converted warehouse space as close as possible to airports - they need to be close to the action.
F. Like AIr New Zealand, a continuing program to simplify the airline and remove as much costly complexity as is humanly possible.
G. Announvcing that from now on and except when strictly necessary, all staff duty travel including ALL executive travel (no exception) will be in the lowest level of economy. This is called "eating youir own dog food". Any available first and business class seats are to be offered as upgrades to economy passengers - we might even use them as a door prize.
H. Rescheduling the network to provide seamless Qantas direct flights from all state capitals to major world cities. Perhaps using the B787 to annihalate the Sydney centric "hub and spoke" model.
I. A remarketing campaign branding Qantas as a boutique Australian airline experience modelled on the Air New Zealand strategy.
J. A restructure of the Qantas Board.