Joyce ready for great leap at Qantas
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Joyce ready for great leap at Qantas
It is one of the most exclusive clubs in the land. Its doors are hidden from view and its members, who gain entry by invitation only, number politicians, corporate chieftains and celebrities.
The superbly appointed Qantas Chairman's Lounge at airports in Australian capital cities is more than just a venue for sipping Penfolds Bin 389 and nibbling hors d'oeuvres. It is a place to network and initiate deals far from the public glare.
So exclusive is the club that Qantas sends its state sales managers to deliver to new members in person a pack containing the location of the lounges, preferred dialling numbers entitling them to preferential treatment and the membership cards that welcome them in.
Yet not even these inner sanctums of quality are immune from the woes facing the aviation industry in its biggest downturn of the jet age - or the frantic attempts by the new Qantas management to slash costs.
''The Chairman's Lounge is all about networking, ego stroking and recognition,'' says a member, who recently took a call from a Qantas staffer politely inquiring about the extent of his recent travel. ''But they are now looking to cull the membership … because it's too expensive.''
The troubles highlight the huge job still ahead for Alan Joseph Joyce, the number-cruncher from Dublin who will have officially served a year as Qantas's chief executive next month.
Although sharemarkets have surged and talk of ''economic green shoots'' has risen in recent months, Qantas has yet to see a revenue rise despite offering its lowest fares in real terms. This fact ensures that Joyce's top priority will continue to be chipping away at costs. He has already pulled almost every lever possible: grounded aircraft, laid off up to 1750 workers, deferred delivery of new aircraft and tapped investors for $500 million.
The diminutive Irishman has to tread carefully to avoid alienating customers. In the case of the Chairman's Lounge his predecessor, Geoff Dixon, was well aware of the sway members held over large corporate and government travel accounts.
Like many newbies, Joyce has distanced the new management from the old. Dixon's coterie of executives - including strategy king Peter Gregg, operations boss John Borghetti, industrial relations chief Kevin Brown and one-time wunderkind Grant Fenn - are becoming distant memories at Qantas headquarters in Mascot, Sydney.
''Alan didn't have to do a lot to be better than those who went before,'' says the Nationals senator Barnaby Joyce, one of the fiercest critics of Dixon and his management team for their involvement in the botched $11 billion takeover bid for Qantas in 2007. ''With that as the base line, Alan Joyce is looking pretty good. What he is doing now is the reality of business - it's just the hard churn of the day-to-day management of the business.''
Joyce has installed almost a wholly new management team. One of the notable recruits is Lyell Strambi, a former Virgin Atlantic and Ansett executive who is now operations boss at Qantas. The two go way back: Strambi hired Joyce in the late 1990s from the Irish carrier Aer Lingus to work on route planning at Ansett.
Some industry insiders say Strambi's imprimatur on Qantas is already plain to see: an improvement in its on-time flight performance (although it follows a disastrous period last year when Qantas was embroiled in a stand-off with its engineers).
Joyce is also understood to rely heavily on David Epstein, a former chief of staff to Kevin Rudd, who was appointed to the new position of government and corporate affairs chief in November. Dixon was regularly seen in the halls of Parliament, but Joyce prefers to let the likes of Epstein manage the politicians. And retaining a healthy relationship with Canberra will be crucial.
The real test will come as Qantas fights over the coming months to keep its stranglehold on the Federal Government's $500 million annual travel budget - the biggest single account in Australia.
Then there's the wider market. Airlines have been pointing to a recent rise in passenger numbers as a sign of a tentative upturn. But the key figure is passenger revenue, which shows little sign of a substantive increase despite super-low fares. Steep discounts also mean passengers are bringing forward their trips, raising questions about demand next year.
''What is clear is that the market is a long way from getting back to where it was. Airlines are on a revenue diet at the moment,'' a former airline executive says.
''The fact Qantas has identified what needs to be done is different from doing it. The challenge has always been, 'How do you attack your costs without undermining your product?' Otherwise consumers will take their business elsewhere.''
The favoured child in the Qantas family remains Jetstar. The oft-raised argument is that Joyce, the former boss of Qantas's low-cost offshoot, is slowly ''Jetstarising'' the entire company.
Qantas's latest accounts may record Jetstar as the second-best contributor to the group's earnings, but many argue that the low-cost subsidiary is heavily subsidised by its parent.
Insiders also note that Joyce's underlings from Jetstar are quickly moving up the ladder at Qantas - John Gissing, for example, was Jetstar's former general manager of safety before he became the parent's executive manager of safety.
''Qantas is destroying its brand name,'' a former Qantas executive says. ''They are cross-subsidising Jetstar like you won't believe.''
The former executive argues that low-cost airlines are not feasible on routes of more than five hours because international travellers prefer full-service airlines for the long haul. He is also critical of such strategies as replacing Qantas flights with Jetstar on most flights between Australia and Japan.
''The low-fare market is the blue-singlet boys - the fellas going up [to Asia] for the buck's party and the silver hairs. It's the newly-weds and the nearly-deads,'' the former executive says. ''It's just a flying bus service, making its money from ancillary services.''
But Joyce refutes suggestions he is focused on ''Jetstarising'' Qantas and points to the investment in double-deck A380s, airport lounges, customer service and training.
'The business market will return, and when it does return you could easily see in a couple of years' time the bulk of our profitability being made through the Qantas brands again,'' Joyce says from his office on the top floor of Mascot HQ.
The international share of the Qantas mainline - the red-tailed aircraft - has fallen from about 42 per cent to less than 23 per cent since the airline was floated in 1993. And like all other airlines, Qantas is bleeding on the overseas routes. Low fares show no sign of ending soon because competition is ferocious, particularly on the key routes to Europe and the US.
Back home, it's a better story. But the Singapore Airlines-backed Tiger Airways is an irritant to Qantas and Virgin Blue and business traffic remains weak.
The worry for Qantas is that much of the business and first-class traffic will not return - at least not any time soon. Business people are not travelling anything like they did before the financial crisis, and if they fly at all they prefer economy class.
First- and business-class flyers comprise less than 10 per cent of a Qantas plane's total occupancy yet they contribute about 40 per cent of revenue.
However, Joyce is unperturbed. To doomsayers he responds: ''I think [the business market] does have a life, and after the end of every recession people have called the market as being dead and it's never been the case.''
The loss of market share on international routes means that Qantas must allocate its fixed costs over less flying, which forces up unit costs.
''It's making Qantas dearer and dearer relative to their competition,'' the former executive says.
''They are effectively saying to the unions, 'If you guys don't come up with a radical plan to lower unit costs, we will just melt Qantas on the vine and do it all on Jetstar'.
''Joyce has run out of options on the revenue side, so now what he is doing is cutting costs. There isn't anything else that can be done.''
Enter Conor McCarthy, a former chief operations officer for the no-frills Irish airline Ryanair, who is regarded as a genius at cutting allowances for technical and cabin crews. He helped turn Aer Lingus into a low-cost carrier by reducing wages.
Joyce is using McCarthy as a consultant on a range of matters. The Irishmen crossed paths at Aer Lingus, where McCarthy put Joyce to work on setting up a low-cost offshoot before they both departed in the same month of 1996 (Joyce to Ansett and McCarthy to Ryanair). McCarthy, now boss of PlaneConsult, also played a key role in helping Qantas draw up the blueprint for Jetstar in 2003.
''I know Conor very well,'' Joyce says. ''He is a great source of knowledge for us, so we use him occasionally for some consultancy activity … procurement strategy, development in the low-cost arena - very specialised activity.''
Insiders say one of the key targets for McCarthy will be Qantas mainline's cabin crew - the so-called ''Last of the Mohicans'' who have hung onto their penalty rates and other awards while new recruits have been hired on less lucrative awards.
Qantas also continues to have on its payroll Ian Oldmeadow, the former ACTU heavyweight whose firm Oldmeadow Consulting advises the airline on its industrial relations matters.
Yet some industry officials believe Joyce has lost a rare opportunity to tackle a massive restructure on the coat-tails of the worst of the global financial crisis. They argue the months immediately after the meltdown provided a rare chance to push for allowance cuts.
Making it harder to push for such change has been the largesse heaped on Qantas's former management team, notably the $3 million paid this year to Dixon as compensation for tax changes - it boosted his total payout to almost $11 million.
The largesse is especially galling for the airline staff who have faced successive management teams intent on suppressing wage rises and retrenching workers.
''There is a significant amount of unhappiness out there among staff,'' says the Australian Services Union's assistant national secretary, Linda White.
''Next time they start crying poor we won't get the Kleenex out. Qantas has had a history of rewarding the executives extremely generously.''
The dilemma is that further cost-cutting of any magnitude could spark damaging industrial action. Joyce has worked hard over the least year to improve relations with union officials, many of whom have breathed a sigh of relief after a testy relationship with Dixon. He has brought some aircraft maintenance work back to Australia and recently hired engineering apprentices.
Union officials say it is too early to cast judgment on Joyce. The first test of the relationship will come when a three-year enterprise bargaining agreement covering up to 10,000 workers - almost a third of Qantas's workforce - expires in the middle of next year.
''Joyce has never made it quite clear, but I dare say that like many of the low-cost people they don't want to deal with unions,'' says the secretary of the Pilots Association, Barry Jackson.
''Unless you put forward a business plan, I think he would rather ignore us. As a person he is more amenable, and he is certainly talking to staff. But as I say, actions speak louder than words. He will tolerate us.''
Keeping a firm hand on proceedings is Qantas's commanding chairman, Leigh Clifford, a former chief executive of Rio Tinto. The relationship between Clifford and Joyce is regarded as the inverse of that between Dixon and the former chairwoman Margaret Jackson.
''The more you look at it, you realise Joyce is under the chairman's thumb,'' an insider says.
Clifford's tough approach on industrial relations is well known - and he is believed to have given Joyce the all-clear to tackle the unions. ''Leigh is a miner and is typical of who runs airlines these days. He is very aware of the safety implications of any accident but he has a union-busting background,'' says Barry Jackson.
Qantas shareholders have become accustomed to turbulence since the $11 billion, Macquarie Group-backed bid failed in 2007, and following record high fuel prices, mid-air emergencies, damaging disputes with its heavily unionised workforce, and swine flu.
But those events have been dwarfed by the severe impact of the global financial crisis, which almost coincided with Joyce taking the reins at Qantas.
So far, institutional shareholders have given him credit for the way he has handled his first year.
''We have been reasonably positive about his term so far. It's been a very tough period for him and the company,'' says Rob Patterson, managing director of Argo Investments, which is one of Qantas's top 20 shareholders. ''It's a tough industry, and I guess in a relative sense they are one of the better players.''
Patterson will not be drawn on comparing Joyce to Dixon, but points out the latter was focused on operations, too, despite his reputation as a deal maker.
Joyce has repeatedly pointed to his focus on the operational side of Qantas. Deal-making can waste time that the management might otherwise spend on running the airline, he has said.
But he is not mute on the subject of pursuing acquisitions and closer tie-ups. ''We have the strength to do it,'' says Joyce.
''Our issue is that these are a lot harder to do than in any other industry. There is nothing on the radar screen for us. After going through it a few times you begin to realise you need all the planets to align to make it happen and it's a very difficult task for us to complete.''
The chief executive of Balanced Equity Management, Andrew Sisson, says Joyce has shown an ability to make tough calls in a difficult operating environment.
Sisson, whose firm is Qantas's second-biggest shareholder, says Joyce made the right decision to jettison the merger talks late last year with British Airways, which would have exposed the Australian airline to large pension liabilities. The planned $9 billion tie-up has been Qantas's biggest proposal since the botched private-equity raid two years ago.
Sisson likewise agrees with Joyce on the decision to dump plans for a partial float of Qantas's Frequent Flyer scheme, which was responsible for the airline staying in the black last financial year.
''When it comes to the big issues he has made calls which I think are right,'' Sisson says. ''My feeling is that they are better to try and get savings from alliance and code shares. Takeovers do increase the complexity.
''The BA deal would have made life a lot more complicated.''
Sisson rates Joyce very highly for his job over the past year, particularly given that Qantas has faced some of the toughest trading conditions in its history.
''The strategic decisions are right. He hasn't done anything startling but they have worked extremely hard on the operations. They are working on cutting costs meticulously and carefully, and saving the balance sheet - doing it at the right pace.''
Joyce's detractors at the start of his tenure were critical of him for a perceived lack of experience, especially given he was picked over old hands such as Peter Gregg and John Borghetti. He is still only 43.
''I never thought that was a legitimate criticism,'' says a former chief of British Airways, Sir Rod Eddington, who points to Joyce's time at Aer Lingus, Ansett and Jetstar.
''He is a very experienced aviation executive and he understands the industry extremely well … he has devoted his life to the industry.''
Eddington believes that Joyce has done a good job in very trying circumstances.
''It's been the most difficult 12 months in the history of the industry that has seen a significant number of airlines going to the wall,'' he says. ''Alan has had a real trial by fire given that he did take over at this very difficult time. The revenue position is not going to recover quickly. The top line for the airline is going to remain really challenging.''
Critics will argue that Eddington has always been a big supporter of the Irishman from Tallaght, an outer Dublin suburb. After all, Joyce worked under Eddington at Ansett and he recommended the Irishman to Dixon in the early noughties. At Ansett, Joyce had responsibility for the airline's route network and what aircraft the airline would use.
But even some of his competitors have a good word. John Sharp, deputy chairman of Regional Express and a former federal transport minister, says Joyce has taken the right approach considering the trying circumstances.
''My only concern with Alan is that he has got rid of the entire management team that was there under Geoff Dixon and there is no one with long-standing corporate experience at the company,'' Sharp says. ''The value of that shines through when you get difficult times like now.''
However concerning Qantas's performance might be, it needs to be considered alongside the dire state of many of the world's airlines. If anything, some argue the Australian carrier could emerge from this crisis as a stronger and larger airline.
''Alan will be in a good position versus Virgin Blue, which will not be able to take up the opportunities like Qantas will be able to,'' says Sharp. ''Qantas's debt is low and they still have cash in the bank … [while] Virgin Blue is losing tonnes of money and have locked themselves into routes that are going to take a long time to come good on them.''
Joyce is typically hesitant about calling any sustained upturn in the market.
''Certainly we think we have hit bottom and it looks like it is improving, but we are obviously making sure we are planning for a range of scenarios,'' he says.
''It was certainly a challenging year … but I think we've come through it better than any other airline in the world.''
And at least industry veterans can all agree on one thing: in the airline business you can always be guaranteed of another crisis around the corner.
The superbly appointed Qantas Chairman's Lounge at airports in Australian capital cities is more than just a venue for sipping Penfolds Bin 389 and nibbling hors d'oeuvres. It is a place to network and initiate deals far from the public glare.
So exclusive is the club that Qantas sends its state sales managers to deliver to new members in person a pack containing the location of the lounges, preferred dialling numbers entitling them to preferential treatment and the membership cards that welcome them in.
Yet not even these inner sanctums of quality are immune from the woes facing the aviation industry in its biggest downturn of the jet age - or the frantic attempts by the new Qantas management to slash costs.
''The Chairman's Lounge is all about networking, ego stroking and recognition,'' says a member, who recently took a call from a Qantas staffer politely inquiring about the extent of his recent travel. ''But they are now looking to cull the membership … because it's too expensive.''
The troubles highlight the huge job still ahead for Alan Joseph Joyce, the number-cruncher from Dublin who will have officially served a year as Qantas's chief executive next month.
Although sharemarkets have surged and talk of ''economic green shoots'' has risen in recent months, Qantas has yet to see a revenue rise despite offering its lowest fares in real terms. This fact ensures that Joyce's top priority will continue to be chipping away at costs. He has already pulled almost every lever possible: grounded aircraft, laid off up to 1750 workers, deferred delivery of new aircraft and tapped investors for $500 million.
The diminutive Irishman has to tread carefully to avoid alienating customers. In the case of the Chairman's Lounge his predecessor, Geoff Dixon, was well aware of the sway members held over large corporate and government travel accounts.
Like many newbies, Joyce has distanced the new management from the old. Dixon's coterie of executives - including strategy king Peter Gregg, operations boss John Borghetti, industrial relations chief Kevin Brown and one-time wunderkind Grant Fenn - are becoming distant memories at Qantas headquarters in Mascot, Sydney.
''Alan didn't have to do a lot to be better than those who went before,'' says the Nationals senator Barnaby Joyce, one of the fiercest critics of Dixon and his management team for their involvement in the botched $11 billion takeover bid for Qantas in 2007. ''With that as the base line, Alan Joyce is looking pretty good. What he is doing now is the reality of business - it's just the hard churn of the day-to-day management of the business.''
Joyce has installed almost a wholly new management team. One of the notable recruits is Lyell Strambi, a former Virgin Atlantic and Ansett executive who is now operations boss at Qantas. The two go way back: Strambi hired Joyce in the late 1990s from the Irish carrier Aer Lingus to work on route planning at Ansett.
Some industry insiders say Strambi's imprimatur on Qantas is already plain to see: an improvement in its on-time flight performance (although it follows a disastrous period last year when Qantas was embroiled in a stand-off with its engineers).
Joyce is also understood to rely heavily on David Epstein, a former chief of staff to Kevin Rudd, who was appointed to the new position of government and corporate affairs chief in November. Dixon was regularly seen in the halls of Parliament, but Joyce prefers to let the likes of Epstein manage the politicians. And retaining a healthy relationship with Canberra will be crucial.
The real test will come as Qantas fights over the coming months to keep its stranglehold on the Federal Government's $500 million annual travel budget - the biggest single account in Australia.
Then there's the wider market. Airlines have been pointing to a recent rise in passenger numbers as a sign of a tentative upturn. But the key figure is passenger revenue, which shows little sign of a substantive increase despite super-low fares. Steep discounts also mean passengers are bringing forward their trips, raising questions about demand next year.
''What is clear is that the market is a long way from getting back to where it was. Airlines are on a revenue diet at the moment,'' a former airline executive says.
''The fact Qantas has identified what needs to be done is different from doing it. The challenge has always been, 'How do you attack your costs without undermining your product?' Otherwise consumers will take their business elsewhere.''
The favoured child in the Qantas family remains Jetstar. The oft-raised argument is that Joyce, the former boss of Qantas's low-cost offshoot, is slowly ''Jetstarising'' the entire company.
Qantas's latest accounts may record Jetstar as the second-best contributor to the group's earnings, but many argue that the low-cost subsidiary is heavily subsidised by its parent.
Insiders also note that Joyce's underlings from Jetstar are quickly moving up the ladder at Qantas - John Gissing, for example, was Jetstar's former general manager of safety before he became the parent's executive manager of safety.
''Qantas is destroying its brand name,'' a former Qantas executive says. ''They are cross-subsidising Jetstar like you won't believe.''
The former executive argues that low-cost airlines are not feasible on routes of more than five hours because international travellers prefer full-service airlines for the long haul. He is also critical of such strategies as replacing Qantas flights with Jetstar on most flights between Australia and Japan.
''The low-fare market is the blue-singlet boys - the fellas going up [to Asia] for the buck's party and the silver hairs. It's the newly-weds and the nearly-deads,'' the former executive says. ''It's just a flying bus service, making its money from ancillary services.''
But Joyce refutes suggestions he is focused on ''Jetstarising'' Qantas and points to the investment in double-deck A380s, airport lounges, customer service and training.
'The business market will return, and when it does return you could easily see in a couple of years' time the bulk of our profitability being made through the Qantas brands again,'' Joyce says from his office on the top floor of Mascot HQ.
The international share of the Qantas mainline - the red-tailed aircraft - has fallen from about 42 per cent to less than 23 per cent since the airline was floated in 1993. And like all other airlines, Qantas is bleeding on the overseas routes. Low fares show no sign of ending soon because competition is ferocious, particularly on the key routes to Europe and the US.
Back home, it's a better story. But the Singapore Airlines-backed Tiger Airways is an irritant to Qantas and Virgin Blue and business traffic remains weak.
The worry for Qantas is that much of the business and first-class traffic will not return - at least not any time soon. Business people are not travelling anything like they did before the financial crisis, and if they fly at all they prefer economy class.
First- and business-class flyers comprise less than 10 per cent of a Qantas plane's total occupancy yet they contribute about 40 per cent of revenue.
However, Joyce is unperturbed. To doomsayers he responds: ''I think [the business market] does have a life, and after the end of every recession people have called the market as being dead and it's never been the case.''
The loss of market share on international routes means that Qantas must allocate its fixed costs over less flying, which forces up unit costs.
''It's making Qantas dearer and dearer relative to their competition,'' the former executive says.
''They are effectively saying to the unions, 'If you guys don't come up with a radical plan to lower unit costs, we will just melt Qantas on the vine and do it all on Jetstar'.
''Joyce has run out of options on the revenue side, so now what he is doing is cutting costs. There isn't anything else that can be done.''
Enter Conor McCarthy, a former chief operations officer for the no-frills Irish airline Ryanair, who is regarded as a genius at cutting allowances for technical and cabin crews. He helped turn Aer Lingus into a low-cost carrier by reducing wages.
Joyce is using McCarthy as a consultant on a range of matters. The Irishmen crossed paths at Aer Lingus, where McCarthy put Joyce to work on setting up a low-cost offshoot before they both departed in the same month of 1996 (Joyce to Ansett and McCarthy to Ryanair). McCarthy, now boss of PlaneConsult, also played a key role in helping Qantas draw up the blueprint for Jetstar in 2003.
''I know Conor very well,'' Joyce says. ''He is a great source of knowledge for us, so we use him occasionally for some consultancy activity … procurement strategy, development in the low-cost arena - very specialised activity.''
Insiders say one of the key targets for McCarthy will be Qantas mainline's cabin crew - the so-called ''Last of the Mohicans'' who have hung onto their penalty rates and other awards while new recruits have been hired on less lucrative awards.
Qantas also continues to have on its payroll Ian Oldmeadow, the former ACTU heavyweight whose firm Oldmeadow Consulting advises the airline on its industrial relations matters.
Yet some industry officials believe Joyce has lost a rare opportunity to tackle a massive restructure on the coat-tails of the worst of the global financial crisis. They argue the months immediately after the meltdown provided a rare chance to push for allowance cuts.
Making it harder to push for such change has been the largesse heaped on Qantas's former management team, notably the $3 million paid this year to Dixon as compensation for tax changes - it boosted his total payout to almost $11 million.
The largesse is especially galling for the airline staff who have faced successive management teams intent on suppressing wage rises and retrenching workers.
''There is a significant amount of unhappiness out there among staff,'' says the Australian Services Union's assistant national secretary, Linda White.
''Next time they start crying poor we won't get the Kleenex out. Qantas has had a history of rewarding the executives extremely generously.''
The dilemma is that further cost-cutting of any magnitude could spark damaging industrial action. Joyce has worked hard over the least year to improve relations with union officials, many of whom have breathed a sigh of relief after a testy relationship with Dixon. He has brought some aircraft maintenance work back to Australia and recently hired engineering apprentices.
Union officials say it is too early to cast judgment on Joyce. The first test of the relationship will come when a three-year enterprise bargaining agreement covering up to 10,000 workers - almost a third of Qantas's workforce - expires in the middle of next year.
''Joyce has never made it quite clear, but I dare say that like many of the low-cost people they don't want to deal with unions,'' says the secretary of the Pilots Association, Barry Jackson.
''Unless you put forward a business plan, I think he would rather ignore us. As a person he is more amenable, and he is certainly talking to staff. But as I say, actions speak louder than words. He will tolerate us.''
Keeping a firm hand on proceedings is Qantas's commanding chairman, Leigh Clifford, a former chief executive of Rio Tinto. The relationship between Clifford and Joyce is regarded as the inverse of that between Dixon and the former chairwoman Margaret Jackson.
''The more you look at it, you realise Joyce is under the chairman's thumb,'' an insider says.
Clifford's tough approach on industrial relations is well known - and he is believed to have given Joyce the all-clear to tackle the unions. ''Leigh is a miner and is typical of who runs airlines these days. He is very aware of the safety implications of any accident but he has a union-busting background,'' says Barry Jackson.
Qantas shareholders have become accustomed to turbulence since the $11 billion, Macquarie Group-backed bid failed in 2007, and following record high fuel prices, mid-air emergencies, damaging disputes with its heavily unionised workforce, and swine flu.
But those events have been dwarfed by the severe impact of the global financial crisis, which almost coincided with Joyce taking the reins at Qantas.
So far, institutional shareholders have given him credit for the way he has handled his first year.
''We have been reasonably positive about his term so far. It's been a very tough period for him and the company,'' says Rob Patterson, managing director of Argo Investments, which is one of Qantas's top 20 shareholders. ''It's a tough industry, and I guess in a relative sense they are one of the better players.''
Patterson will not be drawn on comparing Joyce to Dixon, but points out the latter was focused on operations, too, despite his reputation as a deal maker.
Joyce has repeatedly pointed to his focus on the operational side of Qantas. Deal-making can waste time that the management might otherwise spend on running the airline, he has said.
But he is not mute on the subject of pursuing acquisitions and closer tie-ups. ''We have the strength to do it,'' says Joyce.
''Our issue is that these are a lot harder to do than in any other industry. There is nothing on the radar screen for us. After going through it a few times you begin to realise you need all the planets to align to make it happen and it's a very difficult task for us to complete.''
The chief executive of Balanced Equity Management, Andrew Sisson, says Joyce has shown an ability to make tough calls in a difficult operating environment.
Sisson, whose firm is Qantas's second-biggest shareholder, says Joyce made the right decision to jettison the merger talks late last year with British Airways, which would have exposed the Australian airline to large pension liabilities. The planned $9 billion tie-up has been Qantas's biggest proposal since the botched private-equity raid two years ago.
Sisson likewise agrees with Joyce on the decision to dump plans for a partial float of Qantas's Frequent Flyer scheme, which was responsible for the airline staying in the black last financial year.
''When it comes to the big issues he has made calls which I think are right,'' Sisson says. ''My feeling is that they are better to try and get savings from alliance and code shares. Takeovers do increase the complexity.
''The BA deal would have made life a lot more complicated.''
Sisson rates Joyce very highly for his job over the past year, particularly given that Qantas has faced some of the toughest trading conditions in its history.
''The strategic decisions are right. He hasn't done anything startling but they have worked extremely hard on the operations. They are working on cutting costs meticulously and carefully, and saving the balance sheet - doing it at the right pace.''
Joyce's detractors at the start of his tenure were critical of him for a perceived lack of experience, especially given he was picked over old hands such as Peter Gregg and John Borghetti. He is still only 43.
''I never thought that was a legitimate criticism,'' says a former chief of British Airways, Sir Rod Eddington, who points to Joyce's time at Aer Lingus, Ansett and Jetstar.
''He is a very experienced aviation executive and he understands the industry extremely well … he has devoted his life to the industry.''
Eddington believes that Joyce has done a good job in very trying circumstances.
''It's been the most difficult 12 months in the history of the industry that has seen a significant number of airlines going to the wall,'' he says. ''Alan has had a real trial by fire given that he did take over at this very difficult time. The revenue position is not going to recover quickly. The top line for the airline is going to remain really challenging.''
Critics will argue that Eddington has always been a big supporter of the Irishman from Tallaght, an outer Dublin suburb. After all, Joyce worked under Eddington at Ansett and he recommended the Irishman to Dixon in the early noughties. At Ansett, Joyce had responsibility for the airline's route network and what aircraft the airline would use.
But even some of his competitors have a good word. John Sharp, deputy chairman of Regional Express and a former federal transport minister, says Joyce has taken the right approach considering the trying circumstances.
''My only concern with Alan is that he has got rid of the entire management team that was there under Geoff Dixon and there is no one with long-standing corporate experience at the company,'' Sharp says. ''The value of that shines through when you get difficult times like now.''
However concerning Qantas's performance might be, it needs to be considered alongside the dire state of many of the world's airlines. If anything, some argue the Australian carrier could emerge from this crisis as a stronger and larger airline.
''Alan will be in a good position versus Virgin Blue, which will not be able to take up the opportunities like Qantas will be able to,'' says Sharp. ''Qantas's debt is low and they still have cash in the bank … [while] Virgin Blue is losing tonnes of money and have locked themselves into routes that are going to take a long time to come good on them.''
Joyce is typically hesitant about calling any sustained upturn in the market.
''Certainly we think we have hit bottom and it looks like it is improving, but we are obviously making sure we are planning for a range of scenarios,'' he says.
''It was certainly a challenging year … but I think we've come through it better than any other airline in the world.''
And at least industry veterans can all agree on one thing: in the airline business you can always be guaranteed of another crisis around the corner.
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Some Real Facts
Cross Subsidising JetStar
Shrinking Network
Higher Unit Costs as a result
The wrong business model into Japan
Joyce under Clifford's Thumb
Oldmeadow still in place
An attack on allowances to come
Peachy.Just Peachy
Will the staff engagement survey results ever see the light of day?
Shrinking Network
Higher Unit Costs as a result
The wrong business model into Japan
Joyce under Clifford's Thumb
Oldmeadow still in place
An attack on allowances to come
Peachy.Just Peachy
Will the staff engagement survey results ever see the light of day?
Join Date: Oct 2004
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Joyce Does Not Run Qantas.
Joyce got the gig at QF because he was seen as compliant.
Clifford calls the shots and Oldmeadow runs IR
The board is more interested in FOC tickets for the family(Patricia Cross).
The brand has been trashed.The emotional connection Australians once had with Qantas has been severed.The network has shrunk to almost nothing.
Employees go to work and do the best they can with the meagre resources provided.
It will never return to its former glory.Its become a second tier airline at the southern end of the line.Under Joyce it will go further south...into oblivion
Clifford calls the shots and Oldmeadow runs IR
The board is more interested in FOC tickets for the family(Patricia Cross).
The brand has been trashed.The emotional connection Australians once had with Qantas has been severed.The network has shrunk to almost nothing.
Employees go to work and do the best they can with the meagre resources provided.
It will never return to its former glory.Its become a second tier airline at the southern end of the line.Under Joyce it will go further south...into oblivion
Join Date: Oct 2006
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Enter Conor McCarthy, a former chief operations officer for the no-frills Irish airline Ryanair, who is regarded as a genius at cutting allowances for technical and cabin crews. He helped turn Aer Lingus into a low-cost carrier by reducing wages.
......'HERE WE GO AGAIN. SAME OLD(meadow) SAME OLD.
When will these clowns try something else.....like running an airline rather than smashing those cretinous crews who have had it too good for too long?
......'HERE WE GO AGAIN. SAME OLD(meadow) SAME OLD.
When will these clowns try something else.....like running an airline rather than smashing those cretinous crews who have had it too good for too long?
Join Date: Jun 2007
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What about a different approach. Why not try to grow the pie rather than constantly cut costs to improve the bottom line.
Improve the product and take market share from competitors instead of racing to the bottom.
Improve the product and take market share from competitors instead of racing to the bottom.
Join Date: Jul 2006
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Not to mention doing something helpful for shareholders and the workforce, like reducing aircraft leasing costs by 40% by getting the regulators and engineers to approve and agree the use of aircraft commonly owned by affiliated legacy carriers.
But that's hard work. You have to actually reach agreement with people and stop pretending you can continue to remain viable by doing more with less. Much easier to trash the old and start anew.
But that's hard work. You have to actually reach agreement with people and stop pretending you can continue to remain viable by doing more with less. Much easier to trash the old and start anew.
Join Date: Dec 2002
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The real test will come as Qantas fights over the coming months to keep its stranglehold on the Federal Government's $500 million annual travel budget - the biggest single account in Australia
''They are effectively saying to the unions, 'If you guys don't come up with a radical plan to lower unit costs, we will just melt Qantas on the vine and do it all on Jetstar'.
Insiders say one of the key targets for McCarthy will be Qantas mainline's cabin crew - the so-called ''Last of the Mohicans'' who have hung onto their penalty rates and other awards while new recruits have been hired on less lucrative awards.
''There is a significant amount of unhappiness out there among staff,'' says the Australian Services Union's assistant national secretary, Linda White.
Join Date: Jun 2007
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As a mathematician, Joyce must realise that cost cutting is a finite thing but growth in revenue is pretty much infinite.
But I suppose revenue growth is harder to acheive and requires a longer timeline which may impact on short term incentives
But I suppose revenue growth is harder to acheive and requires a longer timeline which may impact on short term incentives
Exactly Tanky,
We left full fare pax behind in LHR last week and the word at Fatty's was that it has been happening for more than a few days.
Easy fix, put the bloody price up. Now we can actually make money - what a radical concept!
We left full fare pax behind in LHR last week and the word at Fatty's was that it has been happening for more than a few days.
Easy fix, put the bloody price up. Now we can actually make money - what a radical concept!
Join Date: Jun 2005
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Also heard at Fattys that one of those staff left behind tried to purchase a commercial fare but wasn't able to get on a QANTAS flight home from London for 10 days!!! Everything was full!!!
Join Date: Nov 2004
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As is pointed out
via staff travel the next 2 month will be very hard to use any subload ticket from Europa /US to Oz. there are about 20 staff stranded in Sin at the moment.
In early Aug the standby line was at 90 to get from LON-SY (via sing or HK)!
I think after 10 days they started to send them via LAX.
If the flights are that full surely it can’t hurt to raise the price a bit?
I think after 10 days they started to send them via LAX.
If the flights are that full surely it can’t hurt to raise the price a bit?
Join Date: Nov 2004
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Ergo
Reinstate the ad hoc cancellations and increase prices.With all the yield management software and geniuses running Qantas surely their forward planning should be a lot better than it is
Join Date: Jul 2008
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ticket prices and loads
Its very hard to get a flt at present and yes fares have been low.Try getting back from the usa of late.
I would guess that a large portion of the seats were sold when things looked very grim quite some months ago.
hard to put up fare on seats sold already.
Airline costs are reasonably fixed if fuel is hedged.
For example...
If you make a dollar profit per fare and then if you put your fare up by a dollar you double your profit.
Simplistic but it indicates how susceptible airline profits can be to seemingly small movements.It of course cuts both ways.
I would guess that a large portion of the seats were sold when things looked very grim quite some months ago.
hard to put up fare on seats sold already.
Airline costs are reasonably fixed if fuel is hedged.
For example...
If you make a dollar profit per fare and then if you put your fare up by a dollar you double your profit.
Simplistic but it indicates how susceptible airline profits can be to seemingly small movements.It of course cuts both ways.
Join Date: Oct 2003
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If they are leaving a few commercials behind every now and then, that sounds like perfect numbers of sold tickets.
Overselling is nothing new and those that are left behind usually agree to do so for some compensation and get to go 1 day later.
I doubt we would be that full if the tickets weren't cheap.
Staff that get stuck without backup tickets really don't have many people's sympathy.
Overselling is nothing new and those that are left behind usually agree to do so for some compensation and get to go 1 day later.
I doubt we would be that full if the tickets weren't cheap.
Staff that get stuck without backup tickets really don't have many people's sympathy.
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If they are leaving a few commercials behind every now and then, that sounds like perfect numbers of sold tickets.
The customers that are left behind remember and tell others....
Overselling is nothing new
those that are left behind usually agree to do so for some compensation and get to go 1 day later
Staff that get stuck without backup tickets really don't have many people's sympathy.
Join Date: Apr 2002
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I don't often agree with what Twiggs says, but her comment about back up tickets is spot on.
I went to Phuket for a 6 day break and before I left there was 100 seats on QF2 BKKSYD the day I wanted to return. On my last night the coup happaned and those seats had disappeared by the time the check ins had opened. The Aust govt had issued statements telling people to come home if possible, and QF and BA facilitated this, thus 100 seats gone.
I was lucky as I had bought Zed fares on TG/EK and I got on TG. There was a group of FA's who were also there for their days off who got stuck in BKK as they didn't bother with back up tickets. The TG flight I went on had empty seats.
I don't go anywhere without back up tickets and knowing various different options of getting home if needed.
I went to Phuket for a 6 day break and before I left there was 100 seats on QF2 BKKSYD the day I wanted to return. On my last night the coup happaned and those seats had disappeared by the time the check ins had opened. The Aust govt had issued statements telling people to come home if possible, and QF and BA facilitated this, thus 100 seats gone.
I was lucky as I had bought Zed fares on TG/EK and I got on TG. There was a group of FA's who were also there for their days off who got stuck in BKK as they didn't bother with back up tickets. The TG flight I went on had empty seats.
I don't go anywhere without back up tickets and knowing various different options of getting home if needed.