Qantas to Decline as Jetstar Soars
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On the rest of it, I haven't changed my mind; the market will decide the relative growth rates of QF and Jetstar; not any management bias for one over the other.
It is indisputable that JQ are a protected species in some respects and that this protection comes via the highest levels of QF Group management.
For example, JQ charge exhorbitant rates to Qantas Mainline for the use of a particular domestic bay in BNE - owned by Qantas. This is why one day we were not allowed to park a 767 on it even though it was vacant and we were waiting for a bay! Yet they get so many things for free from the "Qantas Group" (including occasional engineering labour). This sort of shennanigans also goes on in Darwin with certain ground support equipment. An engineer told me that JQ posess some of Qantas's own equipment which they got for nothing and lease it back to Qantas as required, invoice and all! Apparently it's just standard procedure, and raised eyebrows are dismissed with the wave of a hand.
In fact there has been all sorts of book-fudging going on since the beginning. A HNL manager quite some time ago told us he was ordered to bill Qantas, rather than Jetstar, for particular A330 support services from other companies. When he queried this as a bit unusual he was told in no uncertain terms to wind his neck in.
There is no doubt in my mind that we have some very senior chefs in the Qantas Group who are quite proficient at cooking the books. Just par for the course in modern corporate Australia, apparently. What is clear is that if you're a junior Qantas Manager, you don't question any of it.
Stuff.co.nz is speculating that Jet* will be announcing NZ domestic services shortly.
Story
Australia's Jetstar is tipped to announce plans within days to enter the New Zealand domestic airline market, sparking an all-out price war on the main trunk route.
Travel industry insiders expect the budget airline to reinstate some of the off-peak services between Auckland, Wellington and Christchurch that were abandoned by its parent airline, Qantas, last month.
Travel industry insiders expect the budget airline to reinstate some of the off-peak services between Auckland, Wellington and Christchurch that were abandoned by its parent airline, Qantas, last month.
It works both ways. QF charge exhorbitant rates to JQ for certain things too, but at the end of the day it all netts out in the QF Group profit figure. I guess it's like how with duty travel, they put you on the highest fare bracket to make the yield look good, but at the end of the day it's still paid for by the company.
Also, all A330 support is done by QF Engineering (I think on a power-by-the-hour arrangement), so it would make sense to charge QF Engineering for work done on them.
Also, all A330 support is done by QF Engineering (I think on a power-by-the-hour arrangement), so it would make sense to charge QF Engineering for work done on them.
Nunc est bibendum
QF charge exhorbitant rates to JQ for certain things too...
A colleague of mine put in a suggestion at one of the international terminals about how they could make an extra $100K per annum from customer airlines. His manager was very excited and asked how. Colleague informed him that they should be charging J* the same as they charged other customer airlines for an aircraft dispatch. The idea was quashed very quickly and consequently that segment of the business- customer airlines- wasn't producing the revenue it could have been otherwise. Looks bad for QF's numbers and J* get their maintenance significantly cheaper than they would have otherwise.
That time and effort for J* aircraft was being diverted from other possible customers which would have brought in greater revenue so a double whammy for QF.
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I think ebt is on the right track, and I think Keg has missed a point.
You would expect QF to charge JQ what it charges itself - cost.
You would expect QF to charge a customer cost plus something to generate some profit. Profit on which income tax is ultimately payable.
I'm no accounting type, but give QF/JQ credit for organising things to achieve the best, legal tax outcome for the Group.
FWIW cos I really don't understand things financial.
You would expect QF to charge JQ what it charges itself - cost.
You would expect QF to charge a customer cost plus something to generate some profit. Profit on which income tax is ultimately payable.
I'm no accounting type, but give QF/JQ credit for organising things to achieve the best, legal tax outcome for the Group.
FWIW cos I really don't understand things financial.
Nunc est bibendum
I think ebt is on the right track, and I think Keg has missed a point.
This happens so that the J* numbers look great and the QF numbers look ordinary.
Nunc est bibendum
Probably. Given that you think it wasn't right back then anQrka I'll be looking forward to you condemning it now. Or did you think it was OK back then and think that it should always continue?
So are you being inconsistent or do you actually support dodgy accounting? Your choice I guess.
So are you being inconsistent or do you actually support dodgy accounting? Your choice I guess.
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KEG,
My point is to show the inconsistency displayed by others. Do I support dodgy accounting? You bet. Its how big business works. EVERY big company uses some sort of creative book work / tax arrangement / offshore shelf company etc.
Jetstar is supported by QF for a reason. To force through labor rationalization that cannot be achieved on the bargaining table.
It will become more obvious when the 787 arrives operating out of NZ by a new Jetstar airline over there.
My point is to show the inconsistency displayed by others. Do I support dodgy accounting? You bet. Its how big business works. EVERY big company uses some sort of creative book work / tax arrangement / offshore shelf company etc.
Jetstar is supported by QF for a reason. To force through labor rationalization that cannot be achieved on the bargaining table.
It will become more obvious when the 787 arrives operating out of NZ by a new Jetstar airline over there.
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QF charges JQ less than cost.
JQ charges QF extortionist rates.
blah blah blah.
What a load of garbage.
Maybe some of you guys should write a book.
JQ and QF are about profit, pure and simple.
If you think you have proof of these accusations, then post it here. Not anecdotes but real hard evidence.
If not then you are holding nothing more than thin air.
JQ charges QF extortionist rates.
blah blah blah.
What a load of garbage.
Maybe some of you guys should write a book.
JQ and QF are about profit, pure and simple.
If you think you have proof of these accusations, then post it here. Not anecdotes but real hard evidence.
If not then you are holding nothing more than thin air.
Cross subsidies and creative accounting is part of big business, pretty much always has been always will be. For the market JQ must been seen to be making a profit, it cannot make a loss (I don't think that it does) as investors in QF would then be calling for it to be shut down and those voices would be louder the larger the loss or smaller the profit is.
JQ is designed to do a job, primarily strategic. In squeezing DJ in the middle of JQ and QF, it has done that very successfully, it is a worthwhile option even if it were to make a small loss or a steady but small profit, the overall gain is better for the group. However as mentioned above it is very unpalatable for the market for a section of a business to be seen to make a loss, or a non growing profit. So it benefits the group if JQ shows a small but growing profit, if it does it on its own then that is great (most likely the situation domestically) if it needs a little help it from the accountants to show that, then that has to be done from a group view.
So if that means that JQ get brand new A330s that will not need heavy maint ($$$$$) until they are transferred back to the mainline (hasn't happened due delays to 787) then so be it. This is how it has to be from the group perspective.
The problem and herein lies the rub, the secondary purpose, or lucky opportunity of JQ is seemingly industrial, and what gets to most employees of QF (red tail) is that JQ is perceived as the golden child that can do no wrong and seems to get preferred treatment. Whether that is new equipment at a time when QF equipment is ageing, or the amount of advertising. JQ is seen as being a shining light of the future of how things should be done. The perception of subsidisation real or imagined, has led in some ways to a disengagement of mainline staff which is extremely bad for the group because the reality is that mainline make most of profit. It is a fine balancing act for management and one that they have rarely if ever succeeded in. It is however an area that they must succeed in or the group suffers.
Could JQ survive without QF, most likely yes though it would not be without it challenges. Would QF survive without JQ, most likely yes and it would be not without its challenges. Are they stronger together most definitely. Will JQ ever overtake the QF? NO it has neither the size or the resources to.
As an example. Lots of mainline pilots fear that JQ would do the flying if they ever took industrial action. There is absolutely no chance of that happening. JQ probably has enough problem crewing its own aircraft let alone trying to crew 100 mainline aircraft, 450 JQ pilots trying to pick up the slack of 2500 QF pilots is plain laughable. But the perception within mainline pilot ranks exist.
JQ is designed to do a job, primarily strategic. In squeezing DJ in the middle of JQ and QF, it has done that very successfully, it is a worthwhile option even if it were to make a small loss or a steady but small profit, the overall gain is better for the group. However as mentioned above it is very unpalatable for the market for a section of a business to be seen to make a loss, or a non growing profit. So it benefits the group if JQ shows a small but growing profit, if it does it on its own then that is great (most likely the situation domestically) if it needs a little help it from the accountants to show that, then that has to be done from a group view.
So if that means that JQ get brand new A330s that will not need heavy maint ($$$$$) until they are transferred back to the mainline (hasn't happened due delays to 787) then so be it. This is how it has to be from the group perspective.
The problem and herein lies the rub, the secondary purpose, or lucky opportunity of JQ is seemingly industrial, and what gets to most employees of QF (red tail) is that JQ is perceived as the golden child that can do no wrong and seems to get preferred treatment. Whether that is new equipment at a time when QF equipment is ageing, or the amount of advertising. JQ is seen as being a shining light of the future of how things should be done. The perception of subsidisation real or imagined, has led in some ways to a disengagement of mainline staff which is extremely bad for the group because the reality is that mainline make most of profit. It is a fine balancing act for management and one that they have rarely if ever succeeded in. It is however an area that they must succeed in or the group suffers.
Could JQ survive without QF, most likely yes though it would not be without it challenges. Would QF survive without JQ, most likely yes and it would be not without its challenges. Are they stronger together most definitely. Will JQ ever overtake the QF? NO it has neither the size or the resources to.
As an example. Lots of mainline pilots fear that JQ would do the flying if they ever took industrial action. There is absolutely no chance of that happening. JQ probably has enough problem crewing its own aircraft let alone trying to crew 100 mainline aircraft, 450 JQ pilots trying to pick up the slack of 2500 QF pilots is plain laughable. But the perception within mainline pilot ranks exist.
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Jetconnect are gone from NZ domestic, with the QF brand replaced entirely by Jetstar by mid-year.
Also some changes to int'l services, with Beijing gone, MEL-PVG cut (but SYD up to daily), BNE-WLG gone, and India operated via Singapore.
Also some changes to int'l services, with Beijing gone, MEL-PVG cut (but SYD up to daily), BNE-WLG gone, and India operated via Singapore.
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Snafu.
Excellent post. It neatly captures just about every aspect of the the current situation with JQ.
The problem is that a small number of JQ pilots, mostly from the old impulse days, continue to actively look for ways to industrially screw the mainline pilots.
Doing this for no other reasons but spite is counter productive to everyone. QF pilots are not the enemies of the JQ pilot body.
The senior management of both airlineshave nothing but contempt for the operational staff in general and for the pilots specifically.
A very senior manager referring to Mainline pilots as 'pollution' is but one example.
The only answer is for all pilots involved to put aside their past predujices and egos and accept that the only way forward is for a common union. Given the inability or unwillingness of the feds to do anything these days this has to happen through AIPA.
A JQ division of AIPA would be autonomous in terms of contract negotiations but would have the resources of the parent organisation to call upon should it be needed. By legal definition QF pilots could not vote on the JQ EBA and vica versa.
Thats the answer. The australian and NZ pilot body has not shown industrial smarts on any issue for a long long time. Until it does the downward spiral will continue
Excellent post. It neatly captures just about every aspect of the the current situation with JQ.
The problem is that a small number of JQ pilots, mostly from the old impulse days, continue to actively look for ways to industrially screw the mainline pilots.
Doing this for no other reasons but spite is counter productive to everyone. QF pilots are not the enemies of the JQ pilot body.
The senior management of both airlineshave nothing but contempt for the operational staff in general and for the pilots specifically.
A very senior manager referring to Mainline pilots as 'pollution' is but one example.
The only answer is for all pilots involved to put aside their past predujices and egos and accept that the only way forward is for a common union. Given the inability or unwillingness of the feds to do anything these days this has to happen through AIPA.
A JQ division of AIPA would be autonomous in terms of contract negotiations but would have the resources of the parent organisation to call upon should it be needed. By legal definition QF pilots could not vote on the JQ EBA and vica versa.
Thats the answer. The australian and NZ pilot body has not shown industrial smarts on any issue for a long long time. Until it does the downward spiral will continue
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OK.....lets just say this once and for all....every part of the Qantas Group should be contracted at the current market rate for the services on offer. Wouldn't take long for each employee and business unit to compare what they now cost to the "world standard".
For example, JQ puts out a tender requirement for its ground handling and it picks the lowest price. The fact that QF can offer the lowest price because it is already in the business is a strength, not a weakness. That's one of the ways to fend off the competition, by charging additional services at marginal cost.
As far as pilots go, the pilot workforce group could be divided up into segments by seat, by type, by route etc and then put together a bid for the price at which they would do their job for say 3 years at a time. If theirs was the lowest price then they'd get the contract.
If the Qantas pilots wanted to they could bid for all the JQ flying and if they put together a competitive bid then they'd get it. Or conversely the JQ pilots could bid for the Qantas flying.
All figures could be published internally and there'd be no "cross-subsidies"....just costs and contracts.
In this new world there'd be no more arguments....just rule by the "going rate"
Or......some of you "Jetstar is sucking Qantas dry" group could go out into the real world for a bit and see that if it weren't for JQ the mothership would have gone the way of the battleship.....elegant, formidable, expensive and doomed
Best wishes
For example, JQ puts out a tender requirement for its ground handling and it picks the lowest price. The fact that QF can offer the lowest price because it is already in the business is a strength, not a weakness. That's one of the ways to fend off the competition, by charging additional services at marginal cost.
As far as pilots go, the pilot workforce group could be divided up into segments by seat, by type, by route etc and then put together a bid for the price at which they would do their job for say 3 years at a time. If theirs was the lowest price then they'd get the contract.
If the Qantas pilots wanted to they could bid for all the JQ flying and if they put together a competitive bid then they'd get it. Or conversely the JQ pilots could bid for the Qantas flying.
All figures could be published internally and there'd be no "cross-subsidies"....just costs and contracts.
In this new world there'd be no more arguments....just rule by the "going rate"
Or......some of you "Jetstar is sucking Qantas dry" group could go out into the real world for a bit and see that if it weren't for JQ the mothership would have gone the way of the battleship.....elegant, formidable, expensive and doomed
Best wishes
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You mean sucking the Kiwis dry?
Looks like it is bash the Kiwis time at Qantas again.
Qantas ‘invades’ NZ with Jetstar - Plane Talking
Qantas ‘invades’ NZ with Jetstar - Plane Talking
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every part of the Qantas Group should be contracted at the current market rate for the services on offer.
see that if it weren't for JQ the mothership would have gone the way of the battleship.....elegant, formidable, expensive and doomed