You're all right - the QF cost base is too high to be competitive. It's worse than Ansett's was and it will be a long road down to a competitive level.
But remember,
VB's is creeping up all the time. QF has a massive International operation to off-set its domestic costs, and as long as it has good performance and growth Internationally QF will be able to survive a lot longer than most and in the meantime Dixon will focus on strategies outside of the commercial environment to a) cut costs and b) keep the opposition at bay. This guy has the handle "junkyard dog" for a very good reason.
The worry for you fella's and gals at
VB is that your costs are creeping up considerably given the massive growth that you have undertaken, which is way way outside of the original business plan. The first mistake in low-fare carriers is to forget your business plan - and they have. New computer systems, inefficient layers and layers of staffing in administration and management, and a stumbling, demented engineering structure in the management levels. An overstretched schedule, unproductive crew rosters, and now an international schedule is the final straw. One puff of wind and the house of cards will come tumbling down.
Before you all jump on me for being anti-
VB there is a very good example of what I am saying right here in Australia - Ansett. Costs got out of control, inefficient and ineffective management strategies, a defensive union, a sense of confusion, an airline more suited to tactical response than future strategy. All it took was a small airline entering into the market and destabilising yields and Ansett came down like a tonne of bricks and you know there was no stopping it once it was falling.
VB is right now in the same boat. Very successful in the status quo. No-one to challenge, a cosy duopoly and yields are better than originally planned. It will not take much to destabilise it.
Undoubtadly I will be attacked for this perception. Before you do, take one look at your management and the other signs I indicated above. Those of you that are ex-QF or ex-AN, or ex-another airline...do you feel that your management have avoided all of the issues that dogged you where you were?
Its just more of the same...