Qantas/Domestic: "Line In The Sand" Has Appeared

[Wirraway]

Dow Jones
Thursday August 21, 11:16 AM AEST

Qantas/Domestic: "Line In The Sand" Has Appeared

SYDNEY (Dow Jones)--Qantas Airways Ltd. (A.QAN) said Thursday it will protect its domestic market share of about 65% to 70%.

Chief executive Geoff Dixon confirmed at a media briefing that the "line in the sand" was very near as Virgin Blue increases its competitive position.

"We are very close to it," he said, adding "give or take two to three percentage points".

"We believe anything between 65% and 70% is what Qantas must defend, and we are going to defend it," Dixon said.

He also said the company must improve profitability from its domestic operations, which contributed A$165.7 million to earnings before interest and tax in the year ended June 30, 2003. This contribution fell from A$298.2 million, with the company citing increased competition as one factor.

Pretax earnings from international operations rose to A$221.6 million from A$202.8 million a year earlier.

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SYDNEY (Dow Jones)--Qantas Airways Ltd. chief executive Geoff Dixon said Thursday that the Australian flag carrier is well advanced with plans to launch its own low-cost domestic operation.

Dixon said the company's board considered the proposal this week, with some further discussions needed before a final decision is made.

Qantas has about 70% of the domestic market, but in recent years has seen its market share attacked by no-frills carrier Virgin Blue, a joint venture between Richard Branson's Virgin Group and Australian transport company Patrick Corp.

Dixon said the Qantas operation will have separate management and be conducted on a standalone basis.

"We are not in the business of starting airlines unless we can make money," he told reporters.

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[go_dj]

Hmmm, yet another new QF airline, maybe this new low-cost
could be named QANTAS FRESH

[Dale Harris]

I guess divide and conquer has finally found a home at QF........

[hoss]

Qantas Fresh, so thats what QF stands for:p . It all makes sense now:)

[Johhny Utah]

Perhaps they could call it something 'catchy' and cool like 'Qantas Green & Gold'.
Geoff Dixon could turn up at every new destination dressed in some sort of kooky but not necessarily obviously related costume & have the media fawn all over him as if they'd never seen an aircraft, let alone a flashily painted jet, before.
Then they could slash the going rates for any employees who want to sign on - but it wouldn't matter because the company was so 'with-it' & 'in-touch', and it didn't really matter if staff were getting paid well as long as they were having fun & being an integral part of the new & exciting 'team'.
And at the end of the day, it was all o.k because the company wasn't doing it to make money, but mainly just to give the average battler a leg up & cut down the tall poppies...
:rolleyes:

[Wirraway]

Fri "The Australian"

Qantas plan for no-frills air battle
By Steve Creedy
August 22, 2003

QANTAS has plans for a new low-cost domestic airline, signalling an airfare war with no-frills rival Virgin Blue and dramatic changes in working conditions for many of its employees.

Qantas chief executive Geoff Dixon unveiled the proposed discount airline yesterday as the carrier announced plans to replace 3300 full-time jobs with casual and part-time workers. Qantas is emerging from the worst year in aviation history to report a $343.5 million after-tax profit.

The new airline is to be aimed primarily at increasing Qantas's profits on leisure routes, but it will also allow the Flying Kangaroo to negotiate new workplace deals without the inefficiencies Mr Dixon believes inhibit the mainline operation.

It is the latest development in a massive restructuring that already has the carrier at loggerheads with unions.

The profit news came with a blunt warning that Virgin had reached a "line in the sand" where Qantas would defend its market share.

"We believe that around about 65 to 70 per cent (market share) is what Qantas must defend and we're going to defend it," Mr Dixon said.

But Virgin, in welcoming any competition from a new Qantas offshoot, said it had heard the threats before.

"Ultimately, it is the public who will decide which airline they support," spokesman David Huttner said.

Qantas has been quietly investigating the possibility of a no-frills airline for about five months, but a team headed by senior executive Alan Joyce has now been given the job of taking it to the next stage.

A final decision on whether the project will proceed is due in November.

Mr Dixon was coy about details, but said the new airline would operate independently of Qantas, even though it would be a wholly owned subsidiary.

"We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it," he said.

Mr Dixon said it would not be aimed at Virgin Blue and would differ "quite substantially" from other low-cost operations.

Mr Dixon said further reductions in the workforce would be achieved through natural attrition.

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Fri "Sydney Morning Herald"

Qantas plots no-frills war with Virgin
By Scott Rochfort
August 22, 2003

Australians can look forward to a second no-frills airline, after Qantas yesterday flagged plans to launch a budget domestic carrier of its own, in an attempt to slash costs and head off Virgin Blue's increasing share of the domestic aviation market.

Echoing the recent trend of North American and European airlines in launching their own low-cost carriers to counter increased competition, Qantas's chief executive, Geoff Dixon, said: "We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it."

With Virgin Blue already declaring its intention to capture 50 per cent of the domestic market, it is estimated the airline has already lifted its share from 20 per cent to more than 30 per cent over the past year.

Before the collapse of Ansett in September 2001, Virgin controlled about 7 per cent of the market. While providing little detail on the proposed make-up of the airline, Mr Dixon said the Flying Kangaroo had to "get closer to what is the latest phenomena".

In the US, it is estimated that over one-quarter of short-haul passengers now fly on budget carriers, as opposed to 20 per cent a year ago, while in Europe the figure is put at 15 per cent.

"I think in some markets it will be more difficult to sustain a full-market carrier. We don't believe that's the case in Australia but we currently have to make adjustments," Mr Dixon said.

With Qantas reporting a half-year loss of $9 million yesterday - its first since being privatised in 1995 - the airline denied news of the proposed low-cost airline was a warning shot to Qantas's largely unionised workforce of 33,900.

But with Qantas already signalling plans to slash $1 billion in costs (half from its labour force) over the next two years, Mr Dixon said the airline had "to get rid of some of the inefficiencies that have been in place over the past eight years".

He said Qantas wanted to increase the percentage of part-time, casual and contracted workers from 15 per cent to 25 per cent - its wage bill having totalled $3 billion last financial year.

Qantas said the final decision on whether to launch the yet-to-be-named airline would be made in November.

Despite recent speculation that Qantas would swing its low-cost international subsidiary, Australian Airlines, onto domestic routes, Mr Dixon said: "It will have a totally separate management that will be allowed to run it as it should be run, as a genuine low-cost carrier."

Mr Dixon said it would be up to the new airline to establish union deals of its own. Australian Airlines' staff of about 300 are not covered by the union agreements that protect their Qantas counterparts.

With services from Sydney, Melbourne, the Gold Coast and Cairns to eight ports in Singapore, Indonesia and Japan, Australian Airlines also plans to increase its fleet from four 767-300s to eight by July next year.

And in a bid to lower operating costs on trans-Tasman flights, Qantas's low-cost Wellington-based subsidiary, Jet Connect, is expected to take up about 25 per cent of the capacity of Qantas's flights to and from New Zealand from next week.

Virgin Blue's head of strategy, David Huttner, said: "Certainly it's flattering that after a few years ago, when they didn't think we'd survive, they are now trying to imitate us."

Since being launched by Sir Richard Branson in 2000 with a fleet of two Boeing 737-800s, Virgin took delivery of its 31st aircraft on Tuesday, and expects to have a fleet of 40 by July next year.

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Fri "Sydney Morning Herald"

Dixon aims high with low-cost push
By Elizabeth Knight
August 22, 2003

There are more than 1000 executive or non-union staff inside Qantas, hundreds of whom already have been trained in a vast range of jobs - from check-in staff to baggage handlers and flight attendants. And it won't be long before the rest become multi-skilled.

The unions have tagged Geoff Dixon the Chris Corrigan of the airline industry. Where Corrigan's Lang Corp secretly trained a team of waterfront workers in the Middle East to break the back of the Australian Waterfront Union, Dixon is undertaking similar tactics at Qantas - albeit in a less confrontationist way.

He is putting in place contingency staff to ensure that unlawful stoppages don't cripple the airline service.

And he scored a major victory earlier this week when the airline won the right to use 40 to 50 managers to bridge the gap when baggage handlers went on strike.

Dixon, needless to say, doesn't want to fight with any of the 14 unions representing Qantas staff, but he is a street fighterand is prepared to take some of them on. He has already cut 2300 full-time equivalent positions over the past six months but still has productivity problems and is acutely aware that the low-cost Virgin Blue, now with 30 per cent domestic market share, has taken far more ground than he bargained on.

Dixon knows he is seriously disadvantaged on the cost front because Virgin has a vastly superior cost base - not the least of which is lower labour costs. Which is why he is now talking about starting up a low-cost airline.

There are several ways to skin this cat. The contingency workforce is one; a low-cost airline is another.

A third is to take some of the operating functions offshore to cheap labour regions. Already Qantas's revenue accounting is being done in Mexico.

Dixon makes much of the fact that the new airline is not being created to get at Virgin Blue. But this conclusion is hard to escape.

The plan is to use between 15 and 40 aircraft in this yet-to-be-named budget airline which could potentially give it a market share of 25 per cent.

It would be much more of a virtual airline, with a business model that presumes almost all bookings are made online and union enterprise agreements that would be vastly different to those that exist with the main airline service.

Sure, a portion of this would be cannibalisation of Qantas's existing domestic service but it would also cut to the heart of Virgin. It makes perfect sense for Qantas to split itself in two. It's financially rational for the more costly full service Qantas to transfer its low-paying (low-yielding) customers.

The high-cost main airline can cope with the high-yield business market and inbound tourist market and some of the more profitable leisure routes.

But the low-yield leisure market is a mismatch with the high-cost full service airline.

There is a type of customer - primarily the business customer - that will always use a full service airline because of regular scheduling, lounges, and to a lesser extent a business class.

But those that don't require this are not prepared to pay for it, and to retain load factors these seats need to be discounted to combat the threat of Virgin. Cutting the cake three ways makes loads of sense if Qantas is getting two pieces.

The introduction of a new budget carrier may stimulate demand but to what extent?

The reality is that in the current two-airline market Qantas will lose more to Virgin, which can still make a reasonable profit out of low-fare-paying passengers.

Qantas says it's given away as much market share to Virgin as it will allow. The fact that it has not begun a market share fightback is recognition that it will lose more than it gains.

The revelation of the budget airline is also an implicit threat to any would-be entrant to the Australian domestic market. Qantas can get its new product to the market more quickly than anyone else because it has a spare air operator's certificate, thanks to buying out the failed Impulse.

For anyone else, getting this certificate would take nine months or more.

Of course, there are large risks associated with starting a third airline here. The history of aviation in Australia is littered with carcasses of failed airlines, from Compass Mark I and II to Impulse and Ansett.

Duopolies work well enough as long as neither player gets greedy. How three would work in a market where two share ownership is untested.

But perhaps not for much longer.

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[Wirraway]

Fri "Australian Financial Review"

Budget airline to take on Virgin Blue
Aug 22
Jane Boyle

Qantas's new no-frills carrier will provide a fighting brand to offer cut-price fares on routes where the airline needs to defend its turf against Virgin Blue or any aspiring entrants.

Qantas is targeting a cost base for the new carrier similar to, or lower than, Virgin Blue's.

It will compete alongside the main Qantas brand. And while it has been labelled a "leisure" airline, it won't be confined to leisure traffic routes. It will also be used on prime corporate routes like Sydney-Melbourne, where there is demand for bargain fares.

Qantas gave scant detail on the proposal. But as a clue to the potential scale of the operation, leisure traffic accounts for about 25 per cent of Qantas's domestic business, which equates to a fleet of about 33 aircraft. The new carrier is likely to operate Boeing 737s, as does Virgin Blue.

Qantas's aim is to establish the airline under more flexible and less costly industrial agreements.

But it needs to navigate carefully around industrial relations laws, which require that if a company sets up a new service provider to replace an existing service, existing terms and conditions are transferred to the new company. To avoid this, Qantas is positioning the new carrier as a growth vehicle.

A plan for the new carrier will be put to the board as early as October. It could take about six months to bring to market.

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[Xeptu]

The first thing you have to understand is that there is no such thing as a low cost carrier in Australia and quite frankly there never will be.

The QF solution has already been decided in the board room and is well under way. Dixon's razor gang will be going to work on the International side of the company to cut costs, wages and conditions while the Domestic side will simply be replaced. It will come in the form of something like Australian Airlines with it's own AOC and corporate structure, this gets around the legal argument of "Continuation of Business" issues. Once this company has reached a position of equal strength to QF Domestic, then QF will simply dissolve Qantas Domestic. The same way as it's dealing with NJS Qantaslink.

What will be left, is a more efficient Qantas Airways with a leaner cost structure, wages and conditions and a completely different "Virgin" style company in the domestic market.

What can you do!

You need to stop this so called low cost carrier from getting up, the way to do that is ensure you deny it access to your services and infrastructure from the mainline company. If you dont, you have already lost.

I'm surprised the question hasnt been asked, where does this magical 70% of the domestic market that needs to be defended come from. Since they never had it prior to the Ansett collapse and only have it now by default. Why then should the employee have to suddenly pay to defend this market.

[oicur12]

xeptu,

it doesnt have to be low cost - just lower cost (than QF mainline).

[ur2]

MMMMMMMMMMMMM Wonder if this will effect the proposed VB float :{

[VB_Capt]

Looks like there could some more jobs in Australia comingup. It's doubtfull that guys would leave QF mainline to go thee, but there could be an opening for us guys at slightly higher rates than now. Or maybe even the same rates but with a better company.
interesting days (daze) in Oz aviation on the horizons

[Xeptu]

No! I very much doubt that this will effect the Virgin float. In fact it will most likely assist the float and make it stronger. If QF's answer to the Virgin threat is to produce an Airline with the same cost structure and more importantly "service" then they have just given away the remaining 30% of the market that they are trying to defend.

In reality they already know this. QF never really wanted the domestic market. It was imposed upon them when the Government compelled them to merge. 200 Aussie dollars for a five hour sector, why would you bother.
The only remaining element of importance to the domestic market is the on carriage. It would be worth keeping the Cityflyer service between the main Capital Cities only, mainly for the business market wholly within the QF camp.

[Kaptin M]

It's doubtfull that guys would leave QF mainline to go thee
In spite of the wonderful spelling, VB_Capt (not!), I doubt that "the guys in QF mailine" are going to have a choice. What possible reason would QANTAS have for running 2 B737 operations simultaneously - 1 on a "low cost" basis, and the other on a $$ basis that was the REASON for creating the former??!!!

Those 737 salaries - the same ones responsible for sending Ansett down the tube, the legacy of the Hawke, Abeles, Murdoch fiasco - are about to become as extinct as the scabs who worked for East-West, IPEC, TAA and Ansett, of which VB_Capt (not!) regrets not joining. :{ (Actually we wish you had too VB-C :hmm: )

[qfpaypacket]

Sorry to disappoint all you guys who would love to see us fall, but Qantas mainline pilots will be crewing the new low-cost operation. Memorendum of understanding already been signed off. We are not that expensive after all.

[Xeptu]

Memorandum of Understanding!!!

Very different to a workplace agreement and in twelve months time it wont matter, you'll accept what ever they want to give you.

But more the point, what about the rest of your Company, Cabin Crew, Checkin, Ground Handling etc. What about them or are you only interested in yourselves. Understand! there will be no secondments.

[Ralph the Bong]

It is expected that QF Pilots would crew this low cost operater. The precendent was already established with Australian Airlines. qfpaypacket, only the sick and deranged would want to see you chaps fall. The question is, how will the conditions for crews differ from that at mainline. Will you have to pay for your own endorsement? If salaries are not cut to VB/JetConnet levels, would this be seen as failing to full grasp to low cost consept. Just out of interset, what are the differences in conditions between QF and AA? As for AN B737 salaries sending AN broke, this is a furphy, KM. I t was never Pilot salaries that sent AN broke. It was a host of other reasons. As for "scabs becoming extinct", most these days are gainfully employed in aviation worldwide. The industry has failed to 'reject them' as you predicted some time ago.

[Wirraway]

Transcript
Business Breakfast ABC
22/08/2003
Emma Alberici

GEOFF DIXON, CEO, QANTAS: Our labour costs are probably too high, but most of our costs are too high for the efficiencies needed in this type of business.

But we'll work very closely with our people and it's mainly to take out some of the - what we call 'custom and practice', things that have built up over years, but are not in any enterprise bargaining agreement, but just become the norm.

EMMA ALBERICI: What sorts of things?

GEOFF DIXON: Oh, well, it's rostering, it's things like people have taken - instead of taking lunch, they say they work for their lunch but they'll leave a half hour early, but, the truth is, perhaps not a lot of work's done during lunch and they don't probably leave a half hour early and they may well have overtime in that period.

So there's many things like that that have just been built up and they're in all the individual businesses and it goes back - this is a strategy.

We go back to what we're going to do about breaking up our businesses.

It will enable each business unit to better locate and work and change some of these practices.

We already have 15 per cent of our people either casual or part-time or contractors.

We intend to try and get that around about 20-25 per cent, but the great majority of the Qantas employees will be well-remunerated as full-time employees.

We just need the flexibility.

This is not an attempt to make Qantas 100 per cent part-time or casual work.

Not at all.

EMMA ALBERICI: You'll be moving more jobs offshore?

GEOFF DIXON: It's something that we must always consider, but I'd like to put this in context.

Qantas is company that has around about 95, 96 per cent of its people working in Australia.

But we are a global company - more so than probably most other Australian companies - and we compete against companies that have lower operating costs for a variety of reasons.

If we can source suitable activities offshore that are much better than we can do in Australia, we'd be silly not to do it.

EMMA ALBERICI: This low-cost carrier that you're going to start, how much of that is a reaction to the impact of Virgin Blue on Qantas?

GEOFF DIXON: No, it's not a reaction to the impact of Virgin Blue on Qantas.

It's a reaction to what's happened in the market in Australia and what's happened in the markets around the world.

There's a growth in that very low-end leisure market.

We believe it's not being filled at the moment and we would open this airline - if we do - to compete in that particular market.

But we, like everybody else, as I think I've said before, probably we're more efficient than most full-service airlines, but you do need a lower cost base and a different type of operation to go for what I'd call the real low-yielding leisure operations.

Qantas just can't compete in that sort of market.

No traditional airlines can.

And that's what we're going to do if we start this airline.

EMMA ALBERICI: When you say 'leisure' market, what do you mean?

GEOFF DIXON: I mean leisure.

I mean people who are just visiting friends and relatives, people who want to go on holidays, but who really want to go even cheaper - they don't want to go business class, they don't want to go on a full-service airline.

EMMA ALBERICI: Virgin Blue-style?

GEOFF DIXON: No, Virgin Blue's probably a little bit of above that.

This may be even below that - Virgin Blue's catering for that market, so are we a bit, but we find it very difficult to cater for that market.

But no, this is not about Virgin Blue, but it is about growth in the Australian market and the position.

And we don't even know if the position's there yet.

EMMA ALBERICI: Isn't there a risk that this new low low-cost carrier might indeed cannibalise existing Qantas sales?

GEOFF DIXON: There's risk in everything you do in this business and whether there be cannibalisation or not is things we're working on right now.

But that's not our intention.

Our intention, as I said today, is to ensure that Qantas - the mainline Qantas internationally and domestically - has a very very good product, full-service product and is able to cater for corporate business market, plus what I'd call a high-yielding leisure market, which is out there.

We are finding it very very difficult and we don't compete in that market because we can't afford to compete in that market.

Another vehicle probably could.

EMMA ALBERICI: And I suppose businesses that are always looking at their bottom line might also be quite attracted to a low-cost alternative?

GEOFF DIXON: They may be, but I don't think low-cost alternatives provide what a lot of business people need.

I mean, as you know, they have a much shorter pitch between the seats, you've got less room.

It's more difficult to get from A to B.

They don't have any of the services such as food, if you want food.

But certainly lounges, frequent flyer programs, network - Qantas is a network carrier.

We provide - we can put people all around Australia on any given day.

We carry - we have 5,000 flights a week.

I mean, it's a very, very big operation.

This is a whole different operation.

EMMA ALBERICI: Singapore is looking to fly to LA from Australia.

Would you support that?

GEOFF DIXON: No, we don't.

A matter of fact, we don't think it's right.

And we don't think there's an equivalent trade-off for Qantas in such an arrangement.

And we think it would be not beneficial to Australia because I think Qantas certainly is very beneficial to Australia and it's a very competitive route at any rate.

United is coming back in quite a big way and you've got to have some routes that remain profitable.

I mean, there is no equivalent that Singapore can give us.

--------------------------------------------------------------------------------

Please note: Transcripts on this website are created by an independent transcription service. The ABC does not warrant the accuracy of the transcripts.
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PM- ABC (Transcript)

Qantas plans to launch new budget airline PM - Friday, 22 August , 2003 18:30:00
Reporter: Stephen Long

MARK COLVIN: The domestic cut-price airline war in Australia is on in earnest – the war of words, that is. Qantas grabbed this morning's front pages with its plan to launch a new domestic airline aimed at the budget traveller.

But this evening its competitor Virgin Blue says the idea just won't fly. Virgin Blue's head of strategy David Huttner says that, based on overseas experience, the budget carrier would be more of a threat to Qantas than to the Virgin Blue.

And he's told PM that Virgin Blue's legal advice is that Qantas could face serious legal problems if it uses the budget carrier as a sneaky way to cut labour costs.

David Huttner spoke to our finance correspondent Stephen Long.

DAVID HUTTNER: In one way we could say it's flattering because after three years they've finally realising that maybe we not only survived, but actually got it right. But I think it would be very, very hard for them to do it. They'd literally have to fire thousands of people as a mainline airline and then start a new airline at the same time, because they'll just shrink down what they have today.

STEPHEN LONG: Qantas is saying that's not their intention, they actually see this as a different market.

DAVID HUTTNER: It is definitely a different market, but it takes away from the market they already have. On a Qantas plane today there is a whole mix of people, just like on Virgin Blue, there are business flyers, government travellers and people who are flying to visit their friends and relatives or going on holiday.

If who take half those people out and put them on another aircraft, another airline, you ultimately are going to impact upon your core business and it's going to tremendously damage your core business.

STEPHEN LONG: Are you suggesting then that Qantas would simply cannibalise its own market if it was to launch this low cost budget airline?

DAVID HUTTNER: I think they lose an efficiency of scale. If you suggest that an aeroplane only has business people on board, or only leisure travellers on board, you can't separate it that way. It is the mix of all those people together that makes an airline successful.

STEPHEN LONG: Now, Geoff Dixon, the Qantas Chief Executive, has denied this – but there has been widespread speculation that the reason Qantas is considering this is that they want to have a new airline that they can establish essentially as a greenfields operation, get new enterprise agreements with lower labour costs, less demarcations, more flexibility.

Do you think that there is substance to that view?

DAVID HUTTNER: I think it reflects… I don't know if you would call it transmission of business in terms of moving things over from one airline to another, but you have to ask yourself, can you blame all your problems on your people, which seems to be what Mr Dixon is doing.

STEPHEN LONG: So you're suggesting when you mention the transmission of business issue, that there actually could be legal impediments under industrial relations law to the kinds of questions that have been raised about establishing a low cost carrier with lower pay rates?

DAVID HUTTNER: Some of the experts we have spoken to already about this have already suggested that will be one of the issues that they face. We're not sure which market they are going to grow. We've already brought in a lot of the stimulation from low fares, so to do what they're going to do is going to raise a number of questions.

STEPHEN LONG: Some people may suspect that Virgin Blue is talking down the prospects of this new budget carrier from Qantas doing well because you're worried about competition.

DAVID HUTTNER: I think they're welcome to go for it, but I think they only need to talk to their largest shareholder, British Airways, about what happened when BA tried to do the same thing.

They ended up not hurting EasyJet or Ryanair, they ended up damaging British Airways and that's why they sold it off in the end, that was Go. United tried the same thing, Continental tried the same thing. You don't see these airlines really in better shape today because they tried to be all things to all people by creating a sub brand at a different end of the market.

MARK COLVIN: Virgin Blue's Head of Strategy David Huttner with Stephen Long, our Finance Correspondent.

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[bitter balance]

QF must be wondering why they have paid many $$$ in legal fees and IR. They could have just asked David Huttner and VB.

[VB_Capt]

Can somebody help me please? Isn't saying 'not' after something to indixcate a negative, pre pubescent girls talk? It seems like the kaptain may have had a nip & tuck and surgery to knock offd as many years as it takes to get him back to pre puberty. And for info Kap, the errords that appear to be spel;ling, are in fact typos. This is a new keyboard and quite differtent from the oldone. In the short time I have been visuiting here, I notice a very silly trend in your posts. If you don't agree, you attack the individual on any trivial matter such as spelling which isn't in fact spelling errorsat all. Perhaps your time would be bettwer spent cultivating some common sense, the least common of all the senses.

[Ralph the Bong]

As in to say "It's REALLY cool to say "not". "NOT!!".:p (With Mike Myers moving his fingers at the appropriate places..)( I know wghat tu sayuing VBN Cap. Its rela hard to tyupe when ya poissed too..):ok: I do agree, there is an overwelming propensity to play the man and not rationally debate what has been said. As my year 12 English teacher said: "To argue the Man's creditials and not the Man's assertions is not the basis for clear thinking and rational debate. Do this in your exam and you will fail". But lets face it, if you disagree with some people. then YOU ARE A SCAB!! Not only that but everything (as a scab) that you have said and done in you life is WRONG. And you are probably(being a scab) a child molester. And: a drug dealer/Tax cheat/ Draft dodger/ wife beater/unsafe, incapable Pilot./worshiper of false idols.. Not only that, BUT A GODDAMN F@#$%^&G SCAB! (Bang fist on bar then ash ciggy into ashtray. Kapt. M, Amos 2 and Sub-sonic MB sitting around bar nod sage-like at their drinks and say somthing like "Right" or "Bloody Oath" or somthing real cool .NOT!!. Ha HaHaHaHa). Now EWhere's mt F!@#$%^ corkscrew and smokes..Hey get back under the covers,baby. I'm turning off the computer and coming ta bed.:E

[Wirraway]

Geoff Dixon interview "Business Sunday" (Transcript)

QANTAS FLYING HIGH
24 August 2003
Helen McCombie

"We will do what we need to do to ensure that Qantas provides a very high level of service … and we will protect that status, and we will protect it against what I would call unlawful union activity."


Under the circumstances, Qantas had a better-than-expected result: to lose only $9 million in the second half of the year when the airline industry was hit by terrorism, war, sluggish economies and SARS was a tribute to the way management and employees worked to lessen the blows.

The dividends remain unchanged, but shareholders were told of hopes of better things to come this year.

And the airline's management, led by CEO Geoff Dixon, is pressing ahead with restructuring the Qantas business, along with a drive to lower operating costs.

Geoff Dixon explains to Helen McCombie.

GEOFF DIXON, CEO, QANTAS: I mean this is not all one way, and I’m the first to admit it. We get more for our fares than Virgin do because we offer more but they have a terrific base, they are now setting the parameters basically domestically, it makes it very, very hard for us to compete when someone has 25 or 30 per cent cost base on you. It was given to them by the same unions who negotiate and what to negotiate higher costs for ourselves. What we are saying is we need more productivity. We are not necessarily coming after wage levels.

HELEN McCOMBIE: You seem to be on the brink of industrial war, just how far are you prepared to go? You said you have never put the airline on the ground, would you go that far?

GEOFF DIXON: Well I think that is a hypothetical and I’m not sure we are on the verge of industrial war, I’ve had long discussions with Greg Combet. I’m quite sure we can work this through. We are not asking for very much. We already have 15 per cent of our people who are either contract workers, casual workers, part timers and they are people who want to do that sort of work, there is nothing wrong with that work. We are saying without any redundancies, through attrition we’d like to get that up between to 20 to 25 percent, that’s about another 1500 to 3000 who may be on those conditions. That will help us, it is not the only thing we need, we need a lot of changes to our labour relationships, we also need changes to other parts of the airline. It is a constant change to run this business.

HELEN McCOMBIE: But the unions are making a lot of noise, so it sounds like they might be prepared to ground the airline. It must be one of the scenarios.

GEOFF DIXON: Well you were saying I was making a lot of noise, well I think we are both making a lot of noise because Qantas’ strategies or reliefs at the moment are that you come through the front door, you don’t hide things away, you come up and say suddenly one day this is going to happen. We always say certainly I do. This is what we need, this is what we are going to do, I’ve said to the unions, you can have a look at our books, you can see what we need to be more productive, work with us, we will get there. I don’t believe there will be war but I can assure you we will stand our ground on these things because we have got no options and that makes it a lot easier. If you have no options but to stand your ground, because we need a certain cost structure to be able to compete both domestically and internationally, it does make it easier to make those decisions.

HELEN McCOMBIE: You’ve been compared to Chris Corrigan, can you guarantee that you won’t adopt Chris Corrigan-like tactics?

GEOFF DIXON: Well I don’t know what Corrigan-like in quote tactics are. Chris Corrigan runs a tremendous business, he is a very, very successful businessman, I don’t set out to have Qantas emulate the tactics of Chris Corrigan. We will do what we need to do to ensure that Qantas provides a very high level of service, continues to be one of the more successful airlines in the world, continues to be a very, very important company for Australia and we will protect that status, and we will protect it against what I would call unlawful union activity.

HELEN McCOMBIE: But this is a big fight and if you were going to get those costs down you’d have to win?

GEOFF DIXON: Well if you say it is a fight I hope it is not a fight. I haven’t given up on this will not be achieved through consensus and through working with the union movement. Look, you can go on about rhetoric and all the rest of it, I haven’t given up on that. But if we can’t do that we will have to achieve certain savings lawfully well within the rights of Qantas one way or another, and we will not back down on it, but we understand that this will be for some people – not for many but for some people – difficult. But at the end of the day Qantas will be much more viable, there will be a lot more secure jobs, we will see growth and Australia will be a lot more better off as will Qantas for it.

HELEN McCOMBIE: You could be facing a full on dispute though, and you’d be prepared to wear the damage to the brand?

GEOFF DIXON: Well, does it damage the brand, I don’t know. I do know something about marketing. I would have thought that if Qantas has to have a dispute, and I don’t believe that is absolutely necessary, but if it does or if we are in confrontation with people we can come out of this with our brand in tact, because I think we are correct in this. We need to have a much more productive airline. We cannot just continue to make, what, $500 million before tax and people say what a terrific result, the unions say, it is not a terrific result.

HELEN McCOMBIE: And this is part of what the new leisure airline is all about, a new industrial relations structure?

GEOFF DIXON: Nothing at all. Well it will be new industrial relations structure, it has nothing to do with how Qantas is going. We believe we must, and we announced yesterday more investment in both our international and our major domestic product, we have seen – and we watch this market very, very carefully – a developing low yield leisure market in Australia. We haven’t decided to go for it, the board has said have a look at it, we’ll go back October/November. If it really works maybe we I will push the button, if it doesn’t work we won’t push the button, this is about a market segment coming up. Qantas has done this before, we’ve put things in to markets where we believe there is an opportunity. It is no more than that but it is obviously it will be a full, full low cost airline. We’re not going to set one up at the legacy costs we’ve got now.

HELEN McCOMBIE: If you decide this is a goer, the pay rates would be lower than those paid to current Qantas employees and non-union?

GEOFF DIXON: Well it has nothing to do with Qantas staff, it would be unionised as far as I’m concerned. I would hope we could sit down with the unions. It will have a cost structure that must be commensurate with the fares it is going to get in the market, which would be low yield and the product it is going to offer. This is a tried and tested way, we’ve got something similar in Qantas now in Impulse, you’ve got Virgin Blue, you’ve got South West, you’ve got Easy Jet, you got all the airlines around the world that are the low cost, short haul ones, that are becoming successful, have these sorts of costs structures.

HELEN McCOMBIE: It wouldn’t be confined to leisure routes?

GEOFF DIXON: Once again as I keep saying to you, they will come back to us, we’ve got a very, very high level team with outside help working on this, this is an idea that may well have wings as they say, but the work has got to be done.

HELEN McCOMBIE: Would you rule out Sydney-Melbourne?

GEOFF DIXON: No I won’t rule out anything, I mean why would I. I’m not doing this, someone has got to report to me on it. The ideas come from us but let people do the work and they are dong the work and we rule out nothing. I mean to say, we are allowed to. This is a – we are an airline, we are in the airline business. We’re seeing a segment of the market that may not be fully served or may be growing to the extent and certainly at this end of the market Qantas with this current cost structure can’t compete very successfully in it, we will compete and we’re in every sector of the market but that makes it very difficult. You saw, we didn’t, our figures domestically have to improve.

HELEN McCOMBIE: And Sydney-Melbourne is leisure route isn’t it?

GEOFF DIXON: Sydney-Melbourne is a business route and a leisure route and an inbound route. I mean it is everything, it is a very, very well served route at the moment. Of course we have 32 return services a day. I think Virgin probably has about 17.

HELEN McCOMBIE: It would be part of the overall strategy of pegging Virgin Blue back?

GEOFF DIXON: Nothing to do with pegging Virgin Blue back really, and it is not. I mean people may not believe that I mean we compete peg Virgin Blue back if we want to, I mean Qantas is a big company. Virgin Blue has grown and why wouldn’t it have grown, I mean, Ansett disappeared. We didn’t have the Ansett market, we didn’t pick it up. We picked up a lot of business, Virgin Blue was still the only other one left standing and they picked up the business. The market has settled down to about 70/30, I believe it will settle down to something between 65/70, 30/35, and someone, be it us or someone else will come in. You know that, the market will grow over the next few years, the bottom end of the market, someone will come in as a low cost carrier. Our view is we should look to see whether that someone is us.

HELEN McCOMBIE: And if this goes ahead you’d become Australia’s third airline and would keep Singapore out?

GEOFF DIXON: I have nothing to do with Singapore and I don’t believe they are ever coming, at any rate. I mean it is not an easy job to come into a country like Australia and set up a third full service airline. I’ve never believed they were coming, they are a great airline don’t get me wrong, and they fly to every Australian city, they’ve got a great network but I’ve never believed they were coming. This is not about keeping anybody else out but I might add if there is a space, yes we would like to fill it.

============================================
Pic: 737-800s Qantas VH-VXE and Virgin Blue VH-VOV

http://jetphotos.net/viewphoto.php?id=119861

Photo: Wirraway
============================================

[cunninglinguist]

OK, I'll bite..........Geoff says they will maintain ( ???????????) a high level of service, and someone else says that the pilots will be paid the same, and they are going to be operating 737s..........so where are the huge savings coming from again ?? , guess it must be those bluddy ground staff ( sorry, I'm a bit slow )

and wots old Dave been smoking? , he just does'nt want to admit that Ansetts demise was VBs meteoric rise to fame, no, " we just did it right ":yuk:

[rammel]

I too can not see where the large cost savings will be coming from. From what I have seen of AO (and I could be wrong) the only people employed by them are suits and FA's. All of the ground handling, load control, maintenence and customer service are done by QF.

If it is a lower cost base airline the only bit of cost which seems may be lower is the FA's, as I could not see any exec's crossing over to work for less.

So if this new start up is going to be crewed by QF crew it will probably have everything else done by the QF mainline as per AO.

Or perhaps it is a lower cost base because most of the main staffing costs are borne by QF as it is a contractor to AO.

[Xeptu]

You still dont get it eh!

There will be no Qantas main line. Australian Airlines will be the Qantas Domestic Subsidary Airline and for those mainline employees who are in the queue last will get left out in the cold.

The crews won't be getting paid what they do in mainline, at least not for very long and there will be no secondments because there wont be anything to go back too.

P.S Who will be the last in the queue, the most senior ones, the most expensive ones, the ones with the industrial clout, the ones they dont want.

Are the lights coming on yet!!!!

[vortsa]

Qantas has already been there, a period where it had a low cost domestic carrier ( IMPULSE ). It wasn't too concerned when they linked the awards of most unions to mirror those in the big Q. If they were really serious about bringing down cost they missed a perfect opportunity, or is this another example of the mismanagement that continues to surface amongst their wise corporate achievers.

[WaldoPepper]

So what about Impulse ? Qantas purchased them as a so called "low cost carrier". Are they not low enough ? They already fly jets, and for less than the 737 mainline guys. So why don't they give the new jobs to Impulse ?

If Impulse were offered 737's, for no extra money, i'm sure they'd take it, as would any other of their regionals (except that the turbo prop guys can't fly things that fast).

Maybe the plan is to expand the NZ Jetconnect operation and fly internally as well as across the Tasman.

[Keg]

I wonder if Greg Combet has worked out the solution yet to Geoff Dixon permanently giving QFs unions a hard go? It is pretty simple. You raise DJs wages to the same rate as QFs. Surely it'd be easier for them to negotiate up to QFs wages and conditions (and more popular with the DJ troops too!) than it'd be to get the QF troops to swallow the cut in pay and conditions!

Or am I missing the point?!?!? If everyone is upset about QFs pay going down, why don't we work on DJs going UP!!!! That stuffs the 'competition' idea right up!

[ftrplt]

Rammel, there are significant savings in rostering and work practices with the QF crew seconded to AO


AO will remain focussed on 'International leisure travel', it will not become the low cost domestic.

[Gnadenburg]

Keg

Great bit of advice.

Don't budget on the current QF 747 Captain's wage in your financial planning. Sure you've earnt it, the right of passage, you deserve it.......

A friend gave me the same advice before leaving AN a year before the collapse.

Unsettling at the time but prophetic.

Not suggesting a dramatic AN style demise but beware of a security mindset amongst the mob.

There will be a third airline of some sort. Out of left field and the Virgin wages aren't that bad considering the Australain lifestyle.

[VB_Capt]

Keg, I hate being the one to poiunt it out, but you do have it wroing. Bringing VB salaries up to QF doesnt solve Dixon`s problem of wanting more profit. It merely reduces VBs profit. Or am I missing something?

[boofta]

Pardon my ignorance, but.
Why does AA the low cost subsidiary charge almost twice the
price for the same sector. Look at SYD-HKG on the net and its
cheaper on mainline QF.
I don't think this low cost airline can survive with this sort
of sharp practice. Low cost budget airlines normally charge
less than full service airlines. Perhaps QF management don't
live in the real world. Whatever the real reason for creating
AA, it certainly is not acting like a budget operation.
Perhaps it was set up for industrial reasons?
No, that would be conspiracy theory, but perhaps the next
budget airline will actually sell cheaper tickets, or maybe the
lower low cost subsidiary after the next one.

[Suffering Sucataash]

VB_Capt,

Try this.....................

We get your wages up to Qantas levels and VB has to raise airfares to cover increase. This also allows QF higher airfares and hey presto dear old Mr Dixon has his increased profits.

:D

If you believe VB are around for anything but profit your dreaming, "Making The AirFair" is just a marketing tool. Go for the money.......thats what its all about when the bills come in.