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Maybe Qantas have got it right

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Maybe Qantas have got it right

Old 24th Oct 2004, 22:00
  #1 (permalink)  
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Maybe Qantas have got it right

So what's so wrong about what Qantas is doing here? Put simply they are seeking out efficiencies in an industry that is undergoing some of the largest fundamental changes in it's history. Isn't that what you would expect them to do? What's the alternative? Does Qantas simply ignore the fact that every other airlines in the region are reducing their cost base substantially? Should they ignore the fact that many Asian airlines are undergoing rapid expansion? Should they put their head in the sand and ignore the fact that eventually Australia will have to catch up with the rest of the world and adopt a more liberal open skies policy?

The fact is that eventually Qantas will be competing head to head with many lean and mean Asian airlines. If they don't keep up they will perish, sounds alarmist I know but no one ever thought AN would fold. Trust me it can happen and it can happen fast.
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Old 25th Oct 2004, 00:02
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COST CUTTING

Qantas has been increasing productivity and reducing its cost base ever since the late 80s...its nothing new.But there comes a time when the cuts go too deep and the product suffers...Thats whats happening now.Its gone too far and is having an impact on the customers:not enough crew on an aircraft to effectively deliver a third rate product,aircraft breakdowns(international on time departure rates down to 82%)The Inflight Entertainment System now fails 11% of the time.The list goes on.
Why doesn`t Dixon base all Cabin Crew overseas and have just enough to cover the doors and be done with it.But then could he still call Australia home,would it still be the Spirit of Australia?There are enormous advantages to be had in basing Qantas Corporate Headquarters in a place like Singapore.Be assured the only thing stopping that is the Qantas Sale Act.It is all about Dixon`s bonuses.....morale is at an all time low,reflected in all levels of frontline service.As far as Dixon is concerned Cabin Crew are nothing more than a necessary evil to be villified and held up for public ridicule
QF made an EBIT profit of $900 million last financial year.How much profit is enough??Why not have a clearout sale,sell everything and have a one off profit of $18 billion and a dividend of $11.Leave it to Emirates and Singapore Airlines to service the Australian Market.As Dixon has said the sentimental days of having a national carrier are over.
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Old 25th Oct 2004, 03:57
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QF made an EBIT profit of $900 million last financial year.How much profit is enough??
Interesting to have a close look at the details of that one. Revenue was actually down slightly from the previous year - the record profit was thus entirely due to cost cutting. Which is all very well, but hardly sustainable in the long term.

Most of us are only too happy to be efficient, but the constant pennypinching and 'times are tough' mantra don't sit all that well when the directors are claiming they need another 66% in the pot.
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Old 25th Oct 2004, 06:09
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There is nothing wrong with seeking efficiencies. There is nothing wrong with cost cutting. Its all in the way you do it.

There is nothing wrong with having a vision of where you want your company to be in five, ten and twenty years either, in fact I recommend it. Your vision statement should be no more than half a page and use two or three syllable words. No management double speak. Everyone in the company should know what the vision statement is and be asked to subscribe to the vision.

Where is Qantas's vision statement? Where is their mission statement? Where is their rationale for Asian expansion in no more than one A4 page? Where is their risk managment assessment for their Asian expansion? All I hear is managment double speak.

My criticism of Qantas is aimed at Board level. Where is there evidence of good corporate governance? I don't think there is any.

As for new "lean and mean" airlines operating in a different environment, thats B.S. anyone can look "lean and mean" until their fleet starts to require major maintenance and they find that all the functions they outsourced are now costing more than providing them themsleves. As for the different environment thats BS too. Sure their will be Asian expansion - but Asians are not going to give their markets to foriegners like Qantas.

Sure Qantas headquarters can move to Singapore or Alaska for that matter, so what?

The real question is what is Qantas's competitive advantage over other airlines??? What makes it different from any other airline? What is going to make it better than any other airline?? How is this "being better" translate into above average shareholder returns?

These are the critical questions. You need to under stand the answers very well and build them into your vision or you will fail.

My guess is that Dixons focus is on cost cutting for one of two reasons. Either he is a cost cutting fanatic like the guys who ran Email Ltd. into the ground, or he has an ulterior motive - a vision of a new Qantas which he knows that the staff will not share, yet, or perhaps never.

As for the ulterior motive, one way of creating massive business change quickly is to break it. As in the saying "If it aint broke don't fix it". You break things big time then you automatically get a mandate for massive change. The idea is also often cited as the "freeze, unfreeze, then freeze again" principle. If a company suffers massive trauma, then for a time , usually months or perhaps a year or so, you can change anything you like and no one will protest. least of all the fortunate few employees who are left.

If as I suspect, the JP Morgan shareholding is held by one or two high net worth Australian businessmen, who are bent on remaking Qantas the quick and dirty way, all Dixons chest thumping and disdain for his staff and short term revenue effects would make sense.

To put it another way if Kerry Packer had bought into Qantas, I'd guess he would want to keep it very quiet to stop the share price from going up, at least until he and his partners had "got set".

The automatic business strategy that would flow out of such a remaking of Qantas would be to minimise costs and use every possible lever to allow Qantas to maintain the monopoly position in Australian aviation markets it currently enjoys. Owning media outlets makes this a great strategy - one monopoly position effectively supports other monopoly positions.

After all the goal of business is to make high returns and the way to do this is drive out competition, build barriers to entry as high as you can to stop new competitors and sail as close to the trade practices act as you can.

Last edited by Sunfish; 25th Oct 2004 at 07:48.
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Old 25th Oct 2004, 07:31
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Sunfish


Best post I have seen on this forum for ages.


I think you have absolutely hit the nail on the head.
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Old 25th Oct 2004, 09:29
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Agreed - although I'd have to say I'm a bit of a cynic when it comes to mission and vision statements. They always struck me as one of those 'emperor's new clothes' phenomena which sprouted like mushrooms in the early '90s - they didn't make any useful difference to how well things got done, they just annoyed the [email protected] out of grumpy people like me. Most are either anthem-quality statements of the blindingly obvious, or meaningless management-speak waffle.

To put it another way, if you don't know what you're supposed to be doing or where you're going with it, you've got problems that no mission or vision statement is going to fix.
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Old 25th Oct 2004, 12:13
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I agree with you. It takes time and effort to work out where you think you want to be going. It takes time and effort to work out how to say it.

The usefullness of such statements is in the next part of management - driving decisions to the lowest level possible. The best tool for that is a vision and mission statement that allows people to ask "Is what I propose to do consistent with our goals/mission/vision?" If it is then do it. If it isn;t then ask or reanalyse. It ain't rocket science.

In the 70's the Qantas FA's seemed to be empowered (that word again) to do whatever they needed to do to make passengers feel at ease. I saw it first hand and it made me feel proud of our national airline. Not any more.

The sound of an Australian voice from the flight deck (wether QF or any Asian airline) was a signal to unwind and relax. I still remember landing in an MAS 737 at Penang in a storm, with an Australian pilot. We learned later that the preceding flight had not been so lucky.

To me, Qantas is Australian Pilots, FA's and engineers. The rest can go f*ck themselves. If it ain't Australian, it ain't Qantas.
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Old 25th Oct 2004, 18:08
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As far as mission and vision statements go, or even a simple direction to steer, Geoff Dixon probably has them. But he's not going to share it with anyone.

In the 70's the Qantas FA's seemed to be empowered (that word again) to do whatever they needed to do to make passengers feel at ease. I saw it first hand and it made me feel proud of our national airline. Not any more.
A very, very true statement, sunfish. You have cut to the heart of the issue. Trouble is, I don't think that GD could give a sh1t.
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Old 25th Oct 2004, 23:11
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Sunfish

The rest can go f*ck themselves
My , what a good grasp of CEOspeak you have.
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Old 25th Oct 2004, 23:25
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It would also double as the QF "Mission Statement", perhaps?

Kind regards,

TheNightOwl.
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Old 26th Oct 2004, 01:49
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I agree wholeheartedly with Sunfish.

My Utopian view would be that despite GD's hardline rhetoric, (which I view as bravado overlaying what are perhaps necessary efficiency measures) the government of the day would not allow the national carrier to suffer at the least, go under at worst. Keating, despite his significant faults, had it right with the Qantas Sale Act, but it is a sentiment that needs to be parlayed into something bigger that will give the shareholders, mostly Australians that probably invest in the airline due to some kind of national pride, a sense of security. I'm sure they wouldn't wish to profit on the back of the loss of a national icon. GD speaks with the indifference of a burgeoning Gecko.

As an investment strategy, I couldn't see someone of the calibre of a Packer backing an airline - margin's far too low. Unions always cause trouble and as has been seen, the problems world market forces can create are not insignificant.

If the FA's are the first to be affected by these efficiency measures, what can the tech crew expect?

L G Cooper
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Old 26th Oct 2004, 07:28
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Why don't you go away and play with your flight simulator Hanoi? You have nothing useful to contribute.
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Old 26th Oct 2004, 08:05
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Sunfish, I did't think Hanoi was having a go at you...thought his coment quite clever actually. Think back to CEO's like David Elliot...
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Old 26th Oct 2004, 08:15
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Hey Sunfish,
You do make some good points (mind you you're bound to - you seem to have an opinion on everything), but before you start mouthing off at folks it might pay you to remember that, by your own recent admission, you've just completed your GFPT.

A proud achievement I'm sure, but not too far removed from FS 2004.

Silence can be golden. Try it sometime.
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Old 26th Oct 2004, 22:33
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Flyingins, if you care to look at Hanoi's posts over time, they are few and far between and always derogatory to whoever he picks as his target.

I most certainly agree that I am a total neophyte when it comes to flying, and Yes I do have strong opinions on the few things in this world I know anything about.

The points I have made regarding Qantas's strategy would be made by any class in corporate strategy at any reasonable business school. They are not unique nor particularly insightful.
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Old 27th Oct 2004, 00:20
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QANTAS Crossroads

Perhaps if QANTAS is having such a difficult time trying to compete with cut price Asian Airlines ... whilst still keeping faith with its owners. shareholders and true believers ... it should explore alternative directions.

Why not a full service airline, providing exceptional customer service provided by Australians, DECENT LEGROOM, operating under the most stringent training, maintenance and operational safety standards ... at an appropriate price.

Sure, many people will still go for the cheap Airlines, but many will spend the extra bucks to hear the comforting Aussie voice as you step aboard at LAX, knowing that you have a fairly high chance of safely and comfortably getting back to OZ.

That re-assurance might become an even greater selling point as the budget Airlines possibly reach unacceptable safety levels due to the pressures to cut corners.

QANTAS is at a crossroads ... I believe it has to either consolidate its (somewhat shaky) position as the SAFE and FRIENDLY Airline of choice ... or join the cut price throng and be swallowed up in the pack.
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Old 27th Oct 2004, 01:49
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Peuce, unfortunately the (mis) managers at Qantas wouldn't even think of an airline like you suggest. They don't have the vision or intelligence to do anything other than cut 'n' slash in order to boost their own earnings.
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Old 27th Oct 2004, 02:55
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If Kerry Packer had decided he wanted an airline, everyone there would be working for a whole lot less.

Remember when he advertised the position of Chief pilot on the DC-8 out of Sydney (within the past 10 years)? the pay was $55k............................for the Chief pilot!!!!!!!!!!
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Old 27th Oct 2004, 03:09
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Two broad lines of operation emerging.

Firstly, the obvious one the relentless slash and burn mentality of GOD the Dame and CFO Gregg.

In GOD's case this is completely in keeping with his alpha male agressive and emotional personality. His obvious and public contempt for his staff in the media is just plain embarassing most of the time.


He also appears mud-proof, as far as the media goes. There has been no mention in the press of the now infamous 'secretary' incident and his daughter being charged twice in 12 months with DUI. The first incident occasioning death for a passenger travelling with her.

Then again this may have everything to do with the 'corporate breifing weekend' put on for both news and fairfax journo's in Queenstown each winter......

Secondly (and this is the bit I can't work out) is the ill thought out plunge into the Asian regional aviation market. As many have pointed out on other threads, Asia and Singapore in particular have been a bloodbath for countless western businesses over the last 20yrs. Cast your minds back to prior to the last Asian financial crisis and you will see what I mean.
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Old 27th Oct 2004, 03:38
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Sunfish, you're such a wet blanket to heated, rumour-filled, written conversation.

Part of the appeal of PPRuNe is for a bunch of us here yobbos to get worked up writing that everyone else is wrong, particularly Qantas. If you start convincing us that they're doing things right, how are we going to get our knickers in a knot and do the elaborate dummy spit now?

Oh! I forgot...what's Dick Smith up to these days?

and John Anderson...

and Virgin...

and AOPA...

and the Kiwis...

and...
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