"Qantas to cut flights and jobs"
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The counter argument to the "Qantas is being destroyed deliberately" argument is that the Board woud be locked up if they deliberately pursued such a strategy. It is against the law to deliberately destroy shareholder value.
As far a Buchanan saying mainline is unsustainable, it was very sustainable before he and his Orange cancer arrived on the scene. With high oil prices I would be much more concerned about his own bailiwick first.
As far a Buchanan saying mainline is unsustainable, it was very sustainable before he and his Orange cancer arrived on the scene. With high oil prices I would be much more concerned about his own bailiwick first.
Capt Kremin, I thought that too about the Qantas brand being deliberately destroyed, I thought that we just had awful management! But unfortunately the longer this goes on the more I seem to realise that this seems to be their aim.Why? simple.....the current management at Qantas surely couldn't be as inept as it is, there must be a plan. The board must have knowledge of a long term plan that we have no knowledge of.
Qantas domestic is a huge money spinner for the airline especially at the moment, but you NEVER hear Mr Joyce spruiking how good it is or patting the domestic troops on the back.You only ever hear how good J* is at helping the airline. Apparently the leisure market is struggling, wouldn't you stop capacity growth and save costs there too? No, thats not the Qantas management way, we need to expand it and blame everything on the Long Haul business.
I had to laugh at the BB email that Qantas pilots are trying to damage the J* brand that they had worked so hard at building. Simple..there would never have been a J* brand without Qantas mainline, they would never have had an instant network with instant passengers if it wasn't for Qantas mainline. BB did nothing to build an airline, he built it by taking patronage of the parent..simple. Some say Qantas would not have survived without J*, i don't agree anymore.I feel sick saying this but i feel this is the beginning of the end of Qantas as we know it...its not just the VB planes that will be rebranded soon. I always wondered what A320's would look like in Qantas colours.
Qantas domestic is a huge money spinner for the airline especially at the moment, but you NEVER hear Mr Joyce spruiking how good it is or patting the domestic troops on the back.You only ever hear how good J* is at helping the airline. Apparently the leisure market is struggling, wouldn't you stop capacity growth and save costs there too? No, thats not the Qantas management way, we need to expand it and blame everything on the Long Haul business.
I had to laugh at the BB email that Qantas pilots are trying to damage the J* brand that they had worked so hard at building. Simple..there would never have been a J* brand without Qantas mainline, they would never have had an instant network with instant passengers if it wasn't for Qantas mainline. BB did nothing to build an airline, he built it by taking patronage of the parent..simple. Some say Qantas would not have survived without J*, i don't agree anymore.I feel sick saying this but i feel this is the beginning of the end of Qantas as we know it...its not just the VB planes that will be rebranded soon. I always wondered what A320's would look like in Qantas colours.
Michael Pascoe has a much clearer insight of aviation than SC
Qantas isn't really tightening its seat belt April 7, 2011
There's been an amazing amount of bluff and bluster from Qantas CEO Alan Joyce over the past week. If you only read the headlines, you'd almost think Qantas was tightening its seat belt. It's not.
Putting 21 tired old 737s and a couple of near-ancient 767s up for sale makes for a good headline, but the real surprise is buried in the fine print: despite the well-publicised impact of natural and nuclear disasters, the oil price, fragile domestic tourism, currency damage to inbound travel and the annoying John Travolta flight safety video, Qantas is expanding its domestic and international capacity in the second half of this year by 8 and 7 per cent respectively.
That is not belt tightening. Alan Joyce might be fiddling with the buckle, but the belt is sitting loosely over a pair of comfort-fit pants with the hidden waist expander as the airline goes for a second helping of roast turkey. And if Boeing can ever get its 787 to stay airborne for longer than the Spruce Goose, Qantas is looking at dessert with a shovel.
In an industry more rational than aviation, you'd expect the current litany of woes to mean no capacity expansion, if not a contraction.
What's more, the 737 and 767s of pensionable age won't really be missed. They're only in the air thanks to being written down to nearly zero, meaning the return-on-capital-employed figure made up for the more expensive maintenance, higher fuel costs and the brand damage caused by reduced reliability, tired cabins and worse seats.
(Not untypical was the cushion on my Thursday evening Sydney-Brisbane run being pretty much gone, leaving an uncomfortable metal bar under the thighs – and that was business class. I would not have wanted to be paying for it. Ditto “business class” in the old 737s that are basically economy seats with the middle chair blocked off. These planes have become incompatible with the Qantas makeover.)
So what's really happening with the Flying Roo when the walk isn't matching the talk? Those given to conspiracy theories might have an eye on the growing industrial relations tensions, but I suspect a bigger bet is being made on prosperity being just around the corner. That's always quite a bet in the risky aviation business.
There are some interesting factors caught up in that gamble. The current oil price jump is not like the last demand-driven tightening. Those with a better understanding of these things reckon there's about a $15 “risk premium” in today's price – it's the speculation about potential supply disruption, rather than a fundamental change.
The thing about a risk premium price spike is that it happens quicker and isn't accompanied by the natural hedge Australia tends to get from a stronger dollar. Yes, the Aussie is around post-float highs, but as a major energy and commodities exporter, our currency's recent rise has not kept pace with the oil price. If it had, our dollar would be buying something more like $US1.10.
The flip side is that the risk premium can disappear as quickly as it arose. A sudden resolution of the Libyan war could send the oil speculators running for the doors, wiping most of that premium out. Want to bet an airline's profitability on Libyan battlefields? I guess that's why it's called a risk premium.
In the meantime, the speed of the oil price hike is hitting inelastic demand – meaning higher petrol prices are immediately felt in consumers' hip pockets. Leisure travel is one of the more discretionary items in the household budget and quickly cut when the consumer perceives their domestic budget has to be tightened.
Well, their domestic tourism budget is being tightened anyway. The latest Roy Morgan Research holiday-tracking survey recorded the lowest January quarter score (57 per cent) since 2006 for Australians intending to holiday in Australia for their next trip in the next 12 months, but the highest score (10 per cent) in five years for Australians intending to travel overseas for their next trip in the next 12 months.
If the oil price was demand rather than risk premium driven, it would be symptomatic of a healthier, stronger economy. Before the GFC smashed the party, oil prices were a great deal higher, but everyone was having such a good time dancing, they barely noticed. Right now, people are noticing.
In this climate then, it's very strange for the two Australian airline groups to be increasing capacity. Maybe running an airline is like being an average farmer: if you weren't given to some form of optimism, you couldn't undertake the daily triumph of hope over experience. Yet there are reasons for some optimism - or excuses, depending on your disposition.
Qantas' international problems and profitability or lack thereof are very well publicised by the management. What you don't hear so much about is how very nicely profitable QantasLink is – the domestic regional business is doing very well indeed, so let's not draw attention to it. Include Qantas's ambition to grab more of the resources charter business and regional Australia is serving the Roo well. As the resources boom picks up pace, it should serve it even better.
The big promise of the capex boom being spread around, as preached by the Reserve Bank and Treasury, plus the billions being pushed into our economy by the terms of trade still means continued growth in employment and wages. Eventually, more jobs for more people with more money means more spending. The consumer might be suffering some sticker shock about electricity and petrol today, but that tends to wear off in time and the discretionary spending returns. Remember that the RBA doesn't see a consumer strike, but a healthy abating of “the run-up in household leverage”. Healthier households become stronger ones – the unknown is how long it will be before they feel healthy enough to handle more indulgence.
And business is waiting for its share of the capex and resources billions. The smarter operators are already working on getting theirs, both in services growth and services to the services growth. And winning and servicing business still requires plenty of travel.
It's much harder to find a sunny side of the international inbound street given the acknowledged current problems. Volume hope is still a few years away when China is richer again and we experience the next new wave of tourism, if we're smart enough to win it and if our carriers are competitive. In the meantime, there are plenty of us going shopping overseas and needing to come home again. Qantas's challenge is to be the carrier of choice on the routes we want.
Right now though, there are bums on seats, but the bums aren't yielding much profit. It's a brave CEO then who keeps adding capacity, providing more seats – or all is not quite so gloomy in the Qantas crystal ball.
It'd be nice to think that the real test of how serious Qantas is about its belt tightening will be revealed in the annual report when we see what's happened to the pay packets of the CEO and CFO – but somehow such things seem immune to turbulence.
PS. And they've flicked Glenn A Baker's Reelin' in the Years nostalgia audio channel to the international entertainment menu. If they touch the ABC's Angela Catterns, there really will be trouble.
Michael Pascoe is a BusinessDay contributing editor (courtesy of SMH)
There's been an amazing amount of bluff and bluster from Qantas CEO Alan Joyce over the past week. If you only read the headlines, you'd almost think Qantas was tightening its seat belt. It's not.
Putting 21 tired old 737s and a couple of near-ancient 767s up for sale makes for a good headline, but the real surprise is buried in the fine print: despite the well-publicised impact of natural and nuclear disasters, the oil price, fragile domestic tourism, currency damage to inbound travel and the annoying John Travolta flight safety video, Qantas is expanding its domestic and international capacity in the second half of this year by 8 and 7 per cent respectively.
That is not belt tightening. Alan Joyce might be fiddling with the buckle, but the belt is sitting loosely over a pair of comfort-fit pants with the hidden waist expander as the airline goes for a second helping of roast turkey. And if Boeing can ever get its 787 to stay airborne for longer than the Spruce Goose, Qantas is looking at dessert with a shovel.
In an industry more rational than aviation, you'd expect the current litany of woes to mean no capacity expansion, if not a contraction.
What's more, the 737 and 767s of pensionable age won't really be missed. They're only in the air thanks to being written down to nearly zero, meaning the return-on-capital-employed figure made up for the more expensive maintenance, higher fuel costs and the brand damage caused by reduced reliability, tired cabins and worse seats.
(Not untypical was the cushion on my Thursday evening Sydney-Brisbane run being pretty much gone, leaving an uncomfortable metal bar under the thighs – and that was business class. I would not have wanted to be paying for it. Ditto “business class” in the old 737s that are basically economy seats with the middle chair blocked off. These planes have become incompatible with the Qantas makeover.)
So what's really happening with the Flying Roo when the walk isn't matching the talk? Those given to conspiracy theories might have an eye on the growing industrial relations tensions, but I suspect a bigger bet is being made on prosperity being just around the corner. That's always quite a bet in the risky aviation business.
There are some interesting factors caught up in that gamble. The current oil price jump is not like the last demand-driven tightening. Those with a better understanding of these things reckon there's about a $15 “risk premium” in today's price – it's the speculation about potential supply disruption, rather than a fundamental change.
The thing about a risk premium price spike is that it happens quicker and isn't accompanied by the natural hedge Australia tends to get from a stronger dollar. Yes, the Aussie is around post-float highs, but as a major energy and commodities exporter, our currency's recent rise has not kept pace with the oil price. If it had, our dollar would be buying something more like $US1.10.
The flip side is that the risk premium can disappear as quickly as it arose. A sudden resolution of the Libyan war could send the oil speculators running for the doors, wiping most of that premium out. Want to bet an airline's profitability on Libyan battlefields? I guess that's why it's called a risk premium.
In the meantime, the speed of the oil price hike is hitting inelastic demand – meaning higher petrol prices are immediately felt in consumers' hip pockets. Leisure travel is one of the more discretionary items in the household budget and quickly cut when the consumer perceives their domestic budget has to be tightened.
Well, their domestic tourism budget is being tightened anyway. The latest Roy Morgan Research holiday-tracking survey recorded the lowest January quarter score (57 per cent) since 2006 for Australians intending to holiday in Australia for their next trip in the next 12 months, but the highest score (10 per cent) in five years for Australians intending to travel overseas for their next trip in the next 12 months.
If the oil price was demand rather than risk premium driven, it would be symptomatic of a healthier, stronger economy. Before the GFC smashed the party, oil prices were a great deal higher, but everyone was having such a good time dancing, they barely noticed. Right now, people are noticing.
In this climate then, it's very strange for the two Australian airline groups to be increasing capacity. Maybe running an airline is like being an average farmer: if you weren't given to some form of optimism, you couldn't undertake the daily triumph of hope over experience. Yet there are reasons for some optimism - or excuses, depending on your disposition.
Qantas' international problems and profitability or lack thereof are very well publicised by the management. What you don't hear so much about is how very nicely profitable QantasLink is – the domestic regional business is doing very well indeed, so let's not draw attention to it. Include Qantas's ambition to grab more of the resources charter business and regional Australia is serving the Roo well. As the resources boom picks up pace, it should serve it even better.
The big promise of the capex boom being spread around, as preached by the Reserve Bank and Treasury, plus the billions being pushed into our economy by the terms of trade still means continued growth in employment and wages. Eventually, more jobs for more people with more money means more spending. The consumer might be suffering some sticker shock about electricity and petrol today, but that tends to wear off in time and the discretionary spending returns. Remember that the RBA doesn't see a consumer strike, but a healthy abating of “the run-up in household leverage”. Healthier households become stronger ones – the unknown is how long it will be before they feel healthy enough to handle more indulgence.
And business is waiting for its share of the capex and resources billions. The smarter operators are already working on getting theirs, both in services growth and services to the services growth. And winning and servicing business still requires plenty of travel.
It's much harder to find a sunny side of the international inbound street given the acknowledged current problems. Volume hope is still a few years away when China is richer again and we experience the next new wave of tourism, if we're smart enough to win it and if our carriers are competitive. In the meantime, there are plenty of us going shopping overseas and needing to come home again. Qantas's challenge is to be the carrier of choice on the routes we want.
Right now though, there are bums on seats, but the bums aren't yielding much profit. It's a brave CEO then who keeps adding capacity, providing more seats – or all is not quite so gloomy in the Qantas crystal ball.
It'd be nice to think that the real test of how serious Qantas is about its belt tightening will be revealed in the annual report when we see what's happened to the pay packets of the CEO and CFO – but somehow such things seem immune to turbulence.
PS. And they've flicked Glenn A Baker's Reelin' in the Years nostalgia audio channel to the international entertainment menu. If they touch the ABC's Angela Catterns, there really will be trouble.
Michael Pascoe is a BusinessDay contributing editor (courtesy of SMH)
Last edited by Going Boeing; 7th Apr 2011 at 12:20.
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I wouldn't have thought so Oldmate. Different ABN, different legal entity in which QF is only a shareholder!!
But that is the Agenda isn't it!!
But when it does happen I hope Joyce doesn't expect the government not to do a forensic post-mortem!! They are gonna be well pissed!!
Cheers
Kelpie
But that is the Agenda isn't it!!
But when it does happen I hope Joyce doesn't expect the government not to do a forensic post-mortem!! They are gonna be well pissed!!
Cheers
Kelpie
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going boeing
Thanks for that GB.
one of Pascoe's more intuitive pieces.
I'll have to remember those capacity numbers next time they come around trying to sell how poor they are.Sure things are not perfect ie Japan NZ eA380 blow up 787 delays.
But they are largely transient.
QF have been kicking ar$e in WA in fly in fly out business to the mines.Domestic seems to be going well despite gifting so much to JQ.
one of Pascoe's more intuitive pieces.
I'll have to remember those capacity numbers next time they come around trying to sell how poor they are.Sure things are not perfect ie Japan NZ eA380 blow up 787 delays.
But they are largely transient.
QF have been kicking ar$e in WA in fly in fly out business to the mines.Domestic seems to be going well despite gifting so much to JQ.
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oldmate & Kelpie, here's a bone to chew on...
(Senate )Report - Qantas Sale (Keep Jetstar Australian) Amendment Bill 2007 [PDF]
(I haven't had time to look at it yet myself, could provide some questions & answers)
Some International Air Service Agreements apply to both Qantas AND Jetstar IIRC, another avenue to investigate.
Does the Qantas Sale Act apply to Jetstar and other Qantas companies? ..... the full complement of Australian and international air service agreements. ...
(Senate )Report - Qantas Sale (Keep Jetstar Australian) Amendment Bill 2007 [PDF]
(I haven't had time to look at it yet myself, could provide some questions & answers)
Some International Air Service Agreements apply to both Qantas AND Jetstar IIRC, another avenue to investigate.
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BB
Looks like Senator Kerry O'Brien had the wool pulled over his and the committees eyes by the Qantas execs on that occasion.
I hope he has the attitude of 'once bitten twice shy' this time. Surely he will appreciate given the responses given in this latest hearing that the chickens have already come home to roost and without government intervention QANTAS will join the Ansetts of this world!!
The Kelpie
Looks like Senator Kerry O'Brien had the wool pulled over his and the committees eyes by the Qantas execs on that occasion.
I hope he has the attitude of 'once bitten twice shy' this time. Surely he will appreciate given the responses given in this latest hearing that the chickens have already come home to roost and without government intervention QANTAS will join the Ansetts of this world!!
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I think Qantas can escape from the charge of destroying shareholder value if it continues to transfer value within the company, to Jetstar.
I also think this is wrong, dead wrong, as a way of doing business, but I don't have any QAN stock anymore, and my family is only exposed to VBA, in terms of some shares and one job, which remains a worry.
Is there a chance they will try Fiji as another offshore Jetstar entity as suggested in Plane Talking?
Fiji and the off shoring of Qantas/Jetstar – Plane Talking
I also think this is wrong, dead wrong, as a way of doing business, but I don't have any QAN stock anymore, and my family is only exposed to VBA, in terms of some shares and one job, which remains a worry.
Is there a chance they will try Fiji as another offshore Jetstar entity as suggested in Plane Talking?
Fiji and the off shoring of Qantas/Jetstar – Plane Talking
King digs deep at Palm Beach
DISEMBARKED
Qantas's chief risk officer, Rob Kella, has quietly departed the Flying Roo's Mascot headquarters.
Kella headed for the departure lounge in February to ''pursue other interests'', but was not part of the undisclosed number of managers and support staff Qantas has recently decided to lay off.
Kella, who earned $1.58 million at Qantas last financial year, was among the airline's top-12 executive team. Several years ago he took on the added responsibility for safety during a management reshuffle.
Yesterday Qantas declined to say whether Kella would be replaced.
DISEMBARKED
Qantas's chief risk officer, Rob Kella, has quietly departed the Flying Roo's Mascot headquarters.
Kella headed for the departure lounge in February to ''pursue other interests'', but was not part of the undisclosed number of managers and support staff Qantas has recently decided to lay off.
Kella, who earned $1.58 million at Qantas last financial year, was among the airline's top-12 executive team. Several years ago he took on the added responsibility for safety during a management reshuffle.
Yesterday Qantas declined to say whether Kella would be replaced.
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Next City Rail CEO...??
What astounds me in this whole scenario is that RK has moved on .....fair enough.....probably a good move
BUT what about the $1.58m they paid him last year and the year before and the year before that.
If Qantas are "choosing" NOT to replace him then they have been pssing $1.58m up against the wall every year he has been here !!!!
What is he supposed to have delivered?
Are we now less Risky now?
The bunch of buffoons running this outfit make City Rail executives look like geniuses.
This combined with the Wirth-less upgrade this week..... pffft
BUT what about the $1.58m they paid him last year and the year before and the year before that.
If Qantas are "choosing" NOT to replace him then they have been pssing $1.58m up against the wall every year he has been here !!!!
What is he supposed to have delivered?
Are we now less Risky now?
The bunch of buffoons running this outfit make City Rail executives look like geniuses.
This combined with the Wirth-less upgrade this week..... pffft
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Qantas going the way of Ansett???
Approaching the terminal; Geoffrey Thomas Aviation Editor ; The flying kangaroo's global forays could be numbered
(The West Australian (Perth)) 16/04/2011
April 16, 2011 Saturday
First Edition
When Ansett collapsed under a mountain of debt in September 2001 an air hostess sobbed uncontrollably on Melbourne radio only able to utter the words, I never thought it would happen to us I never thought it would happen to us.
But it did and Qantas, many people now argue, is slowly but surely going the same way.
At the time of Ansett's demise then Qantas chief executive Geoff Dixon warned our future is not guaranteed and drew almost universal mockery.
Now, with the unions circling Qantas demanding job security among a log of claims, some fear that Qantas in its present structure is not equipped to face further global liberalisation just as Ansett, burdened with excess baggage from the Sir Peter Abeles era and inflexible unions, was not positioned to withstand the ill winds of domestic deregulation.
Peter Harbison, executive chairman of the Centre for Asia Pacific Aviation, has warned that Qantas' international operations faced oblivion if unions pressed ahead with their claim for guaranteed job security.
If they (Qantas international) cave in to the demands they will be wiped out and if they have a prolonged strike it will be gutted, Mr Harbison said.
Responding, Qantas chief executive Alan Joyce conceded that some of the demands on security would put us (Qantas international) out of business.
Qantas has strengths, such as the world's best domestic airline, but it also has weaknesses with fleet and union problems combined with being late to market with in-flight innovations.
It also faces the onslaught of low-cost carriers, domestically and internationally, and foreign premium airlines have more access to the market.
On international services Qantas is losing market share, down from 35 per cent in 2003 to 17.5 per cent in January, although some of that loss was because of unprofitable routes being transferred to its low-cost subsidiary Jetstar.
Low-cost airlines now bring more traffic to and from Australia.
During the global financial crisis, only strong profits from Qantas' frequent flyer program and Jetstar kept the airline group in the black.
Competition from overseas carriers is just one problem. Virgin Blue is about to relaunch as a premium airline on domestic routes next month, where Qantas has enjoyed a virtual monopoly on business travel.
And there is nothing to stop Singapore Airlines setting up a domestic operation in Australia.
The unions need to understand that some of their angst with the state of Qantas would be better directed at government, which has set in train the market dynamics that have left the airline under siege.
Qantas' problems are the same that have devastated many airlines around the world a largely regulated workforce, competition from government-subsidised airlines, carriers with lower labour costs, monopoly service providers such as airports and a fully or partially deregulated marketplace.
When appointed in 2008, Mr Joyce's mission was to get the group's businesses better matched to the market but he said at the time that there were very real challenges in all areas, particularly with the staff.
Qantas' industrial relations over the past few years have been more confrontational with devastating effects when engineers took everyday safety issues into the public arena.
When Mr Joyce took over he cut back middle management, eliminating 90 key positions and laying off another 500 middle managers.
Many say that the bureaucracy that he slashed had hindered Qantas by pouring cold water on market innovations such as seatback videos for economy passengers in 1995, premium economy in 1996 or planes such as the 777, the world's most economical and reliable twin-aisle aircraft.
Certainly, the airline has been let down badly by Boeing and Airbus on deliveries of the 787 and A380, which if on time would have enabled the earlier retirement of many older 767s and 747s.
Mr Dixon said in 2008 that nothing can really compensate for the delays. Our business would be totally different if they had been on time.
The problem for Mr Joyce is that as with Ansett, equipment and innovation decisions or lack thereof made in the past two decades are baggage weighing down the airline and not easy to change.
Domestically, there is no doubt that Qantas offers one of the world's best airline services, with its lowest fares often cheaper than low-cost airlines, once those airlines' seemingly endless and irritating add-ons are factored in.
Both the pilots and engineers have lobbied strongly for job security and no one denies the desirability of that goal, but in 1997 Sir Rod Eddington, then chief executive of Ansett, warned that there is no such thing in this industry any more.
There is now virtually no job security in any industry and the airline industry is the most volatile, the one most exposed to global labour markets and wage levels and the tide of liberalisation, which is more like a tsunami.
The conundrum for engineers is that the more they undermine the public's perception of Qantas' safety and maintenance standards, the more market share it loses and thus their job security becomes more and more tenuous.
For the pilots, some of whom earn close to $500,000, a different equation applies and they are in serious danger of pricing themselves out of a job.
The airline industry as it is today simply cannot sustain those salary levels.
Long gone are the days when Qantas could charge a premium for its safety record and now passengers constantly change airlines for $10 or less.
Some elements in the unions need to be more realistic and better appreciate the rapidly changing market dynamics and distortions. Qantas management's focus needs to be about getting on the front foot with innovation.
Following is no longer an option and Qantas must lead and build on what is one of the best reputations for safety.
To paraphrase Build it and he will come, Qantas management ought to Lead, and the staff will follow, as will the passengers and then the shareholders.
Put simply, Qantas needs to find reasons to make things happen, not why they cannot.
(The West Australian (Perth)) 16/04/2011
April 16, 2011 Saturday
First Edition
When Ansett collapsed under a mountain of debt in September 2001 an air hostess sobbed uncontrollably on Melbourne radio only able to utter the words, I never thought it would happen to us I never thought it would happen to us.
But it did and Qantas, many people now argue, is slowly but surely going the same way.
At the time of Ansett's demise then Qantas chief executive Geoff Dixon warned our future is not guaranteed and drew almost universal mockery.
Now, with the unions circling Qantas demanding job security among a log of claims, some fear that Qantas in its present structure is not equipped to face further global liberalisation just as Ansett, burdened with excess baggage from the Sir Peter Abeles era and inflexible unions, was not positioned to withstand the ill winds of domestic deregulation.
Peter Harbison, executive chairman of the Centre for Asia Pacific Aviation, has warned that Qantas' international operations faced oblivion if unions pressed ahead with their claim for guaranteed job security.
If they (Qantas international) cave in to the demands they will be wiped out and if they have a prolonged strike it will be gutted, Mr Harbison said.
Responding, Qantas chief executive Alan Joyce conceded that some of the demands on security would put us (Qantas international) out of business.
Qantas has strengths, such as the world's best domestic airline, but it also has weaknesses with fleet and union problems combined with being late to market with in-flight innovations.
It also faces the onslaught of low-cost carriers, domestically and internationally, and foreign premium airlines have more access to the market.
On international services Qantas is losing market share, down from 35 per cent in 2003 to 17.5 per cent in January, although some of that loss was because of unprofitable routes being transferred to its low-cost subsidiary Jetstar.
Low-cost airlines now bring more traffic to and from Australia.
During the global financial crisis, only strong profits from Qantas' frequent flyer program and Jetstar kept the airline group in the black.
Competition from overseas carriers is just one problem. Virgin Blue is about to relaunch as a premium airline on domestic routes next month, where Qantas has enjoyed a virtual monopoly on business travel.
And there is nothing to stop Singapore Airlines setting up a domestic operation in Australia.
The unions need to understand that some of their angst with the state of Qantas would be better directed at government, which has set in train the market dynamics that have left the airline under siege.
Qantas' problems are the same that have devastated many airlines around the world a largely regulated workforce, competition from government-subsidised airlines, carriers with lower labour costs, monopoly service providers such as airports and a fully or partially deregulated marketplace.
When appointed in 2008, Mr Joyce's mission was to get the group's businesses better matched to the market but he said at the time that there were very real challenges in all areas, particularly with the staff.
Qantas' industrial relations over the past few years have been more confrontational with devastating effects when engineers took everyday safety issues into the public arena.
When Mr Joyce took over he cut back middle management, eliminating 90 key positions and laying off another 500 middle managers.
Many say that the bureaucracy that he slashed had hindered Qantas by pouring cold water on market innovations such as seatback videos for economy passengers in 1995, premium economy in 1996 or planes such as the 777, the world's most economical and reliable twin-aisle aircraft.
Certainly, the airline has been let down badly by Boeing and Airbus on deliveries of the 787 and A380, which if on time would have enabled the earlier retirement of many older 767s and 747s.
Mr Dixon said in 2008 that nothing can really compensate for the delays. Our business would be totally different if they had been on time.
The problem for Mr Joyce is that as with Ansett, equipment and innovation decisions or lack thereof made in the past two decades are baggage weighing down the airline and not easy to change.
Domestically, there is no doubt that Qantas offers one of the world's best airline services, with its lowest fares often cheaper than low-cost airlines, once those airlines' seemingly endless and irritating add-ons are factored in.
Both the pilots and engineers have lobbied strongly for job security and no one denies the desirability of that goal, but in 1997 Sir Rod Eddington, then chief executive of Ansett, warned that there is no such thing in this industry any more.
There is now virtually no job security in any industry and the airline industry is the most volatile, the one most exposed to global labour markets and wage levels and the tide of liberalisation, which is more like a tsunami.
The conundrum for engineers is that the more they undermine the public's perception of Qantas' safety and maintenance standards, the more market share it loses and thus their job security becomes more and more tenuous.
For the pilots, some of whom earn close to $500,000, a different equation applies and they are in serious danger of pricing themselves out of a job.
The airline industry as it is today simply cannot sustain those salary levels.
Long gone are the days when Qantas could charge a premium for its safety record and now passengers constantly change airlines for $10 or less.
Some elements in the unions need to be more realistic and better appreciate the rapidly changing market dynamics and distortions. Qantas management's focus needs to be about getting on the front foot with innovation.
Following is no longer an option and Qantas must lead and build on what is one of the best reputations for safety.
To paraphrase Build it and he will come, Qantas management ought to Lead, and the staff will follow, as will the passengers and then the shareholders.
Put simply, Qantas needs to find reasons to make things happen, not why they cannot.
Join Date: Aug 2007
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For pharks sake I am sick and tired about hearing how much pilots are paid. Who cares if it is $500k which I sincerely doubt.
The guy in the LHS has about $200m worth of assets in his hands as well as 400 lives, so is anyone (beyond BB) really arguing we should pay them $67K after years and years of training and 3 mthly checks as to whether they are still up to the task.
Pity they dont do the same for Rat Execs.
In all this doom and gloom from AJ, I dont hear anything about changes to the Bonus system for execs at the Rat and all I hear is bleating, whingeing and how bad things are. Well fix that and stop pissing about with a icon.
Time for them to do their jobs and take a reality check that if they cannot do it, someone else is capable so they should leave.
The guy in the LHS has about $200m worth of assets in his hands as well as 400 lives, so is anyone (beyond BB) really arguing we should pay them $67K after years and years of training and 3 mthly checks as to whether they are still up to the task.
Pity they dont do the same for Rat Execs.
In all this doom and gloom from AJ, I dont hear anything about changes to the Bonus system for execs at the Rat and all I hear is bleating, whingeing and how bad things are. Well fix that and stop pissing about with a icon.
Time for them to do their jobs and take a reality check that if they cannot do it, someone else is capable so they should leave.
Join Date: May 2007
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For the pilots, some of whom earn close to $500,000
Both the pilots and engineers have lobbied strongly for job security and no one denies the desirability of that goal, but in 1997 Sir Rod Eddington, then chief executive of Ansett, warned that there is no such thing in this industry any more.
There is now virtually no job security in any industry and the airline industry is the most volatile, the one most exposed to global labour markets and wage levels and the tide of liberalisation, which is more like a tsunami. (my emphasis).
There is now virtually no job security in any industry and the airline industry is the most volatile, the one most exposed to global labour markets and wage levels and the tide of liberalisation, which is more like a tsunami. (my emphasis).
The ability to move without continually going back to square one is only going to became more & more essential if one is to have a career in aviation, rather than just a job. This is because movement between employers is becoming something that is forced upon more & more pilots, rather than being a matter of choice.
It is also fast becoming imperative to have something to fall back on before entering the aviation industry, because it is now highly likely that a pilot will need a skill outside of aviation at least once in his or her working life.
