AUGUST 24th - QANTAS

[ALAEA Fed Sec]

FIFA think Australia is part of Asia.

[Captain Gidday]

Do you think of yourself as Asian, Fed Sec?
Maybe if Australia is Asian, we could base the new Asian airline [not to be confused with Qantas] in Sydney then?

[dragon man]

Someone remined me last night that in the vote of long haul pilots in the late eighties to allow age exstension from 58 to 60 there was an agreement with Qantas that if any retrenchments were needed of pilots that all the over 58s would have to go first. Can anyone confirm this for me? If correct then id say there will be no retrenchments from long haul ranks.

[DrPepz]

How does one define "Asia"? More than half of Russia is in Asia. Is Armenia in Asia despite being Christian? Is the Philippines Asia because it's Catholic? With Japan being so face conscious and hierarchical are they "Asian"? (After all didn't they coin the "Greater East Asia Co-Prosperity Sphere")

Indonesia is a multi-party democracy which would be familiar with the West but Westerners can't easily deal in that country. Singapore is an effective one-party state (a concept alien to the West) but has Western standards of living and Western companies have little problems dealing there. What is Asia and what is not Asia?

The fact is nearly all Asian countries view their neighbours as rivals. There are so many cultures, subcultures, religions and nuances between each country, city, province etc, you can't just define it as one single homogeneous continent.

And Japan? Nobody outside Japan knows how to deal with that country, I'm glad that Jetstar thinks they do, and I eagerly look forward to BB's book on "How I managed to break into the Japanese market"

Which Asian countries are truly friends with each other and actually like each other? Why did Singapore get Australia and New Zealand into the ASEAN meets and made both countries' presence a regular affair?

One other lesson to learn from Asia is it is an impossibly tough continent to do business in. The two easiest places to do business in are SIN and HKG, but they are tiny city-states. Also because of the comparative ease of doing business in both cities, Western MNCs tend to pile money there, making them extremely expensive to do business in.

Oh and I can't stand it when people keep talking about Asia's exploding middle class. The simple fact is the vast majority of the population is still poor. Even if you doubled their income overnight they won't be taking 2 additional plane trips a year. The USA, despite their problems - the bottom 25% of the population can still afford to buy a plane ticket. The bottom 25% of India and China are probably wondering how to finance their next meal.

A senior executive of a large bank in Singapore once said that if Singapore's credit card minimum income (of S$30,000 income from work per year) was applied to India, less than 20 million Indians would qualify for a credit card. This is less than double the combined populations of Singapore and HK.

Wow - the number of Indians who can claim income of S$30,000 per year from work is less than the entire population of Australia! Or 1.6% of the population spread across Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Pune, Calcutta..........

Of course the middle class in Asia is growing and companies should take advantage of it. However so many companies (not just Western ones, but also Singaporean ones from experience) go into INdia and China, fail, then wonder why the 1.5b Chinese and 1.2b Indians couldn't keep them afloat.

[AlphaLord]

Thread Drift~Asian Definition

Asia is a geographic region.
When including Australia its(sometimes) called Australasia
Perhaps Oceania would be a better region of inclusion
All this is nonsense really.
There are probably more Asians (or of Asian descent)in Australian than there are in Singapore.
Is it really that important ?
Trivia drift~ The thread topic is......?

[Worrals in the wilds]

However so many companies ... go into India and China, fail, then wonder why the 1.5b Chinese and 1.2b Indians couldn't keep them afloat.

I can't speak for China but in my limited experience Indians buy Indian stuff, watch Indian movies and support Indian products. The average dude driving a tuk tuk has a very fuzzy concept of the world outside India and doesn't fly anyway, but even posh Indians are quite insular. They make Yanks look worldly. Posh Indians also expect 150% quality service, because that's what they're used to at home where there are four waiters for every diner. I can't see Qantas being able to achieve that with a LCC when they currently can't even manage reasonable service with a premium carrier.

It's really difficult to do business across cultures. It's not impossible, but the Jetstar Pacific debacle in Vietnam doesn't inspire confidence. Babes in the Rainforest seems more like it.

[TIMA9X]

AlphaLord

Trivia drift~ The thread topic is......?

Yes & No, I see your point, but it is all relevant considering AJ announced (reconfirmed yesterday 24th) he was making 1000 Aussies redundant from an 90 year old well established airline to venture off to Asia, somewhere, and start a new Australian airline V4, which may or may not carry the name Qantas.

I think what DrPepz is saying, even the Asians have trouble dealing with Asians but AJ thinks it's all going to be OK.. He may come a cropper making this decision. Meanwhile, 1000 Australians and their families become displaced, probably many of them (with great talent which took years to develop) forced out of the industry forever. Is that not a waste of fine Australian talent, again? If Qantas gets away with this, there will be an avalanche of off-shoring in other sectors suddenly, dragging our country down to the levels the UK is in now.

It's not a new thing, and it's all been done before, remember what happened to BA & Go Fly 10 years ago, no off-shoring was involved then, but it never got that far, Rod Eddington stopped it and sold off GO Fly before it destroyed BA .

Big call LC & AJ, but I suppose lemmings never learn.

[Ka.Boom]

Clifford The Omnipotent

If you have ever seen Leigh Clifford talking to a subordinate you will understand who and what he is.A more arrogant intellectual elitist you will never meet.
This is why Qantas is going the off shore route.Clifford also believes that those who failed with their LCC simply didn't know what they were doing.
He is about to prove that he will triumph where others bit the dust.
After all he is the smartest guy in the room....just ask him

[JDI]

Senator Xenophon Speach!!!

Xenophon speech
For those who haven't seen it, Senator Xenophon's speech of 23rd Aug is reproduced below.

Senator XENOPHON (South Australia) (19:37): I rise to speak tonight on an issue that is close to the hearts of many Australians, and that is the future of our national carrier, Qantas. At 90, Qantas is the world's oldest continuously running airline. It is an iconic Australian company. Its story is woven into the story of Australia and Australians have long taken pride in the service and safety standards provided by our national carrier. Who didn't feel a little proud when Dustin Hoffman uttered the immortal line in Rain Man, 'Qantas never crashed'?

While it is true that Qantas never crashes, the sad reality is that Qantas is being deliberately trashed by management in the pursuit of short-term profits and at the expense of its workers and passengers. For a long time, Qantas management has been pushing the line that Qantas international is losing money and that Jetstar is profitable. Tonight, it is imperative to expose those claims for the misinformation they are. The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden. In a moment, I will provide detailed allegations of cost-shifting that I have sourced from within the Qantas Group, and when you know the facts you quickly see a pattern. When there is a cost to be paid, Qantas pays it, and when there is a profit to be made, Jetstar makes it.

But first we need to ask ourselves: why? Why would management want Qantas to look unprofitable? Why would they want to hide the cost of a competing brand within their group, namely Jetstar, in amongst the costs faced by Qantas?

To understand that, you need to go back to the days when Qantas was being privatised. When Qantas was privatised the Qantas Sale Act 1992 imposed a number of conditions, which in turn created a number of problems for any management group that wanted to flog off parts of the business. Basically, Qantas has to maintain its principal place of operations here in Australia, but that does not stop management selling any subsidiaries, which brings us to Jetstar.

Qantas has systematically built up the low-cost carrier at the expense of the parent company. I have been provided with a significant number of examples where costs which should have been billed back to Jetstar have in fact been paid for by Qantas. These are practices that I believe Qantas and Jetstar management need to explain. For example, when Jetstar took over the Cairns-Darwin-Singapore route, replacing Qantas flights, a deal was struck that required Qantas to provide Jetstar with $6 million a year in revenue. Why? Why would one part of the business give up a profitable route like that and then be asked to pay for the privilege? Then there are other subsidies when it comes to freight. On every sector Jetstar operates an A330, Qantas pays $6,200 to $6,400 for freight space regardless of actual uplift. When you do the calculations, this turns out to be a small fortune. Based on 82 departures a week, that is nearly half-a-million dollars a week or $25˝ million a year.

Then there are the arrangements within the airport gates. In Melbourne, for example, my information from inside the Qantas group is that Jetstar does not pay for any gates, but instead Qantas domestic is charged for the gates. My question for Qantas management is simple: are these arrangements replicated right around Australia and why is Qantas paying Jetstar's bills? Why does Qantas lease five check-in counters at Sydney Terminal 2, only to let Jetstar use one for free? It has been reported to me that there are other areas where Jetstar's costs magically become Qantas's costs. For example, Jetstar does not have a treasury department and has only one person in government affairs. I am told Qantas's legal department also does free work for Jetstar.

Then there is the area of disruption handling where flights are cancelled and people need to be rebooked. Here, insiders tell me, Qantas handles all rebookings and the traffic is all one way. It is extremely rare for a Qantas passenger to be rebooked on a Jetstar flight, but Jetstar passengers are regularly rebooked onto Qantas flights. I am informed that Jetstar never pays Qantas for the cost of those rebooked passengers and yet Jetstar gets to keep the revenue from the original bookings. This, I am told, is worth millions of dollars every year. So Jetstar gets the profit while Qantas bears the costs of carriage. It has also been reported to me that when Qantas provides an aircraft to Jetstar to cover an unserviceable plane, Jetstar does not pay for the use of this plane.

Yet another example relates to the Qantas Club. Jetstar passengers can and do use the Qantas Club but Jetstar does not pay for the cost of any of this. So is Qantas really losing money? Or is it profitable but simply losing money on paper because it is carrying so many costs incurred by Jetstar? We have been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas international is losing money but, given the inside information I have just detailed, I would argue those claims need to be reassessed.

Indeed, given these extensive allegations of hidden costs, it would be foolish to take management's word that Qantas international is losing money. So why would Qantas want to make it look like Qantas international is losing money? Remember the failed 2007 private equity bid by the Allco Finance Group. It was rejected by shareholders, and thank goodness it was, for I am told that what we are seeing now is effectively a strategy of private equity sell-off by stealth.

Here is how it works. You have to keep Qantas flying to avoid breaching the Qantas Sale Act but that does not stop you from moving assets out of Qantas and putting them into an airline that you own but that is not controlled by the Qantas Sale Act. Then you work the figures to make it appear as though the international arm of Qantas is losing money. You use this to justify the slashing of jobs, maintenance standards and employment of foreign crews and, ultimately, the creation of an entirely new airlines to be based in Asia and which will not be called Qantas. The end result? Technically Qantas would still exist but it would end up a shell of its former self and the Qantas Group would end up with all these subsidiaries it can base overseas using poorly paid foreign crews with engineering and safety standards that do not match Australian standards. In time, if the Qantas Group wants to make a buck, they can flog these subsidiaries off for a tidy profit. Qantas management could pay the National Boys Choir and the Australian Girls Choir to run to the desert and sing about still calling Australia home, but people would not buy it. It is not just about feeling good about our national carrier—in times of trouble our national carrier plays a key strategic role. In an international emergency, in a time of war, a national carrier is required to freight resources and people around the country and around the world. Qantas also operates Qantas Defence Services, which conducts work for the RAAF. If Qantas is allowed to wither, who will meet these strategic needs?

I pay tribute to the 35,000 employees of the Qantas Group. At the forefront of the fight against the strategy of Qantas management have been the Qantas pilots, to whom millions of Australians have literally entrusted their lives. The Australian and International Pilots Association sees Qantas management strategy as a race to the bottom when it comes to service and safety. On 8 November last year, QF32 experienced a serious malfunction with the explosion of an engine on an A380 aircraft. In the wrong hands, that plane could have crashed. But it did not, in large part because the Qantas flight crew had been trained to exemplary world-class standards and knew how to cope with such a terrifying reality. I am deeply concerned that what is being pursued may well cause training levels to fall and that as a result safety standards in the Qantas Group may fall as well. AIPA pilots and the licensed aircraft engineers are not fighting for themselves; they are fighting for the Australian public. That is why I am deeply concerned about any action Qantas management may be considering taking against pilots who speak out in the public interest.

A lot of claims have been made about the financial state of Qantas international but given the information I have presented tonight, which has come from within the Qantas Group, I believe these claims by management are crying out for further serious forensic investigation. Qantas should not be allowed to face death by a thousand cuts—job cuts, route cuts, quality cuts, engineering cuts, wage cuts. None of this is acceptable and it must all be resisted for the sake of the pilots, the crews, the passengers and ultimately the future of our national carrier.

[Tankengine]

Dragon Man,
I think you are correct in your memory, I voted NO in that vote.
However discrimination laws I understand may mean the clause was meaningless.

[QAN_Shareholder]

Xenophon Speech

Senator XENOPHON (South Australia) (19:37): I rise to speak tonight on an issue that is close to the hearts of many Australians, and that is the future of our national carrier, Qantas. At 90, Qantas is the world's oldest continuously running airline. It is an iconic Australian company. Its story is woven into the story of Australia and Australians have long taken pride in the service and safety standards provided by our national carrier. Who didn't feel a little proud when Dustin Hoffman uttered the immortal line in Rain Man, 'Qantas never crashed'?

While it is true that Qantas never crashes, the sad reality is that Qantas is being deliberately trashed by management in the pursuit of short-term profits and at the expense of its workers and passengers. For a long time, Qantas management has been pushing the line that Qantas international is losing money and that Jetstar is profitable. Tonight, it is imperative to expose those claims for the misinformation they are. The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden. In a moment, I will provide detailed allegations of cost-shifting that I have sourced from within the Qantas Group, and when you know the facts you quickly see a pattern. When there is a cost to be paid, Qantas pays it, and when there is a profit to be made, Jetstar makes it.

But first we need to ask ourselves: why? Why would management want Qantas to look unprofitable? Why would they want to hide the cost of a competing brand within their group, namely Jetstar, in amongst the costs faced by Qantas?

To understand that, you need to go back to the days when Qantas was being privatised. When Qantas was privatised the Qantas Sale Act 1992 imposed a number of conditions, which in turn created a number of problems for any management group that wanted to flog off parts of the business. Basically, Qantas has to maintain its principal place of operations here in Australia, but that does not stop management selling any subsidiaries, which brings us to Jetstar.

This is beyond delusional, to paraphrase this argument:

Qantas international is hugely profitable, and there is a queue of foreigners desperate to buy it, but they can't because of the Qantas Sale Act. So management want to shift it all offshore so then it isn't covered by the act and it can be sold.

In reality the part of Qantas that is attractive to any foreign airline would be the domestic business and frequent flyer, and it is kind of difficult to shift the domestic business offshore.

[The The]

This is beyond delusional, to paraphrase this argument:

Qantas international is hugely profitable, and there is a queue of foreigners desperate to buy it, but they can't because of the Qantas Sale Act. So management want to shift it all offshore so then it isn't covered by the act and it can be sold.

Bollocks QAN_shareholder.

Where does he say Qantas International is hugely profitable? I think he says they shift profit around.

Where does he say there is a list of foreigners desperate to buy? I think he says the reason they shift profit around is to bypass the Act, enabling the pursuit of short term gains by "pumping and dumping" segments of the business.

I'll agree with you on one thing, QF domestic and FF, is where the real money ends up. But both rely significantly on QF international. J* aint worth $hit.

[packrat]

Who is Delusional?

"This is beyond delusional, to paraphrase this argument:

Qantas international is hugely profitable, and there is a queue of foreigners desperate to buy it, but they can't because of the Qantas Sale Act. So management want to shift it all offshore so then it isn't covered by the act and it can be sold.

In reality the part of Qantas that is attractive to any foreign airline would be the domestic business and frequent flyer, and it is kind of difficult to shift the domestic business offshore. "
This whole business about off shoring is about driving down wages and conditions.To justify offshoring mainline is shown to be unprofitable.But forensic accounting suggests otherwise since mainline as an entity is not defined in accounts.Further Jetstars costs are being apportioned to mainline pushing down profitabiltiy.
Air New Zealand suffers from the same competition and the same end of line status that beleaguers Qantas~they prosper why can't Qantas?

[ohallen]

The major difference between ANZ and QF are management and what motivates them.

QF is a good case where incentives rule the decision making process.

This whole episode is shameful and the constant talking down of the brand deceptive.

The Senator should be congratulated for his integrity and consistency in trying to expose the whole QF deceptions.

[ampclamp]

The August 24th big news was announced early ONLY because they did not want a doubling of profit announced on the same day as cutting 1000 skilled jobs. Psst, we remember

[Dixons Millions]

QAN Shareholder

Hey, just come out. Tell us, why don't you. Like a swinging Leprechaun, happy with his lot in life, announce, "I am screwing you...!". Do you really believe the BS he and your cohorts espouse to this intelligent bunch of people here, and the wider public, will work? It won't. But if AJ, LC, GD, PG, Singo and all the other "in house" buddies do win this battle, not only will 30,000+ lose their jobs, but you will too QAN...but I guess you won't care. Stupid me...pocket your millions and go screw the next Icon.... Whom of the above are you, DH?

[Centaurus]

but the Jetstar Pacific debacle in Vietnam doesn't inspire confidence

There have been several instances on Pprune where Jetstar Pacific gets a rubbishing. Yet nothing specific apart from people saying it is a disaster. With Virgin Australia (according to the media), having lost millions yet no rubbishing there. What seems to be the problem with Jetstar Pacific?

[600ft-lb]

What seems to be the problem with Jetstar Pacific?

Glad you asked.

None of these words are by myself, its all been reported in the media so here goes.

http://english.vietnamnet.vn/en/trav...-director.html

In order to keep periodic engine maintenance and implement the plan to charter and purchase more aircraft, Jetstar Pacific (JPA) needs some 55-60 million dollars. JPA commits to pay all the debts to Vinapco prior to July 31, said Le Song Lai, General Director of JPA, who is also the Deputy General Director of the powerful State Investment Capital Corporation (SCIC) which specializes in making investment in enterprises with state’s capital.

http://english.vietnamnet.vn/en/busi...rief-11-7.html

The Vietnam Air Petrol Company (Vinapco) has accepted Jetstar Pacific’s gradual payments for overdue fuel bills as the low-cost carrier has tried to pay some of the VND173 billion (around US$8.4 million) it owed the locally-dominant jet fuel supplier.

Vinapco general director Tran Huu Phuc told the Daily on the phone on Thursday the country’s second largest airline had transferred more than VND40 billion (some US$1.94 million) to the company and promised to clear the arrears this month.

As Jetstar Pacific has not paid off the debt, Vinapco forces the airline to prepay more than VND3 billion (over US$145,000) for the jet fuel it needs every day for its aircraft to perform around 40 daily flights on domestic routes.

then theres the issue of illegal LAME sackings

Parliament of Australia: Senate: Committees: Rural Affairs and Transport Committee: Pilot training and airline safety including consideration of the Transport Safety Investigation Amendment (Incident Reports) Bill 2010: Submissions Received

submission 49 - page 7-8 and attachments 4, 5 and 6 for the background on airworthiness issues at J*V and illegal LAME sackings.

oh and going way back

The two Qantas executives found themselves at the centre of the diplomatic storm in Vietnam after Jetstar Pacific lost $US31 million on fuel-hedging contracts in 2008. The names of Marsilli and Freeman - as the chief operating officer and chief financial officer - were on the contracts.
Airlines regularly enter hedging contracts to stabilise the volatile cost of jet fuel. But Vietnam is a country that is only slowly opening the door to capitalism and where the loss of money at a state-owned enterprise - even a relatively small amount - can be a capital offence.
Throughout most of their ordeal, Marsilli and Freeman had no idea when they would be free to go or whether they would be held personally responsible for the losses at Jetstar Pacific. Although interpreters were provided, they did not have access to lawyers at some interviews.
Qantas says the ''commercial package'' referred to by DFAT was a heads of agreement, which gave a ''commercial framework governing the expectations'' of the two shareholders and their continuing involvement in Jetstar Pacific. It will not reveal further details because they are ''commercial-in-confidence''.

One of the cables deemed ''commercial in confidence'' - dated June 4, 2010 - details an email conversation about a letter received from the SCIC. That same day Australia's ambassador to Vietnam, Allaster Cox, met Vietnam's Finance Minister, Vu Van Ninh. The SCIC answers to Vietnam's Finance Minister.
Less than three weeks later, Qantas and the SCIC, the majority shareholder in Jetstar Pacific, reached the agreement on the ''commercial package'' that would help lift the travel restrictions on the Australian pair.
Then, on June 29 last year, a ''confidential'' DFAT cable shows Marsilli and Freeman fronted a meeting before a two-star general, Tran Trung Dung, and a colonel, both from Vietnam's feared secret police.
''Having concluded their assistance with the investigation, the two Australians were advised by the Vietnamese authorities … that they were free to depart,'' states a DFAT document on June 30, 2010.

I hope you're still not wondering why Qantas has announced ZERO extra aircraft for this Vietnam operation.

Watch them languish with 2 A320s and 4 B734's.

Welcome to Asia, Qantas!

[my oleo is extended]

One of the cables deemed ''commercial in confidence'' - dated June 4, 2010 - details an email conversation about a letter received from the SCIC. That same day Australia's ambassador to Vietnam, Allaster Cox, met Vietnam's Finance Minister, Vu Van Ninh. The SCIC answers to Vietnam's Finance Minister.
Less than three weeks later, Qantas and the SCIC, the majority shareholder in Jetstar Pacific, reached the agreement on the ''commercial package'' that would help lift the travel restrictions on the Australian pair.
Then, on June 29 last year, a ''confidential'' DFAT cable shows Marsilli and Freeman fronted a meeting before a two-star general, Tran Trung Dung, and a colonel, both from Vietnam's feared secret police.
''Having concluded their assistance with the investigation, the two Australians were advised by the Vietnamese authorities … that they were free to depart,'' states a DFAT document on June 30, 2010.

And this is just a taste of what Asia has to offer Westerners who dont play by their rules, remember, Vietnam plays softly compared with China and Singapore.....Good luck Leprechaun, you need all you can get.

[fdr]

Looks like it, smells like it.... better not stand in it...!

So then we open up the 2011 Qantas Return to the ASX....

"what was in there?"

"steak!"

"and I gave it to Jetstar!"


"Nooooooooo.... !"