MERGED: Alan's still not happy......
Unless QFdom fixes its cost base it will shrink to oblivion, just like QFint
As Borghetti says, Pilot wages are within 5% and closing (that is about $0.15 a ticket).
Imagine if at the same time they put 787s into QF. Ordered 737max/A320neo? The cost base could quite easily be BELOW Virgin. Joyce said that with an A330/B737 fleet domestic, the cost base is within 5%, so it is not hard to see that more efficient aircraft would bring that cost base down substantially further.
But QF management choose not to put these aircraft into domestic. They choose to invest in jetstar which has proven to not offer the same potential returns. They put new equipment to enable LOWER prices - how can that possibly lead to increased profitability when the market is saturated? Prices are so low that anybody who wants to fly, can fly, and reducing prices anymore will not add sufficient volume to increase profits.
It is the old Hyundai v Mercedes argument. Offer a quality product, highly regarded and prestigious with the latest innovations and efficient production; and you can charge a substantial premium with high profitability (do you think if Hyundai slashed prices 20% that it would have any effect on Mercedes sales? It would not even boost Hyundai's sales enough to cover the loss). There is an alternative to volume based sales, QF management just can't see it. Borghetti sees it loud and clear.
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From todays Fin Review
Can Qantas chief executive Alan Joyce really survive another year? At every turn, he has been outmanoeuvred by John Borghetti at upstart rival Virgin Australia. In his five years at the helm of the airline, Joyce has touted several Asian strategies, none of which worked. He stubbornly wrote off the Gulf as a hub right up until the moment he got into bed with Emirates. And it seems that was no panacea as he heads towards a massive 2013-14 loss. He steadfastly clings to his 65 per cent “line in the sand” market share target, even when it drives down Qantas yields, and then accuses Virgin of capacity dumping.
But most tiresome have been the desperately manufactured diversions from his own underperformance. One day he’s begging for a Canberra bailout, the next he’s running full-page ads telling customers everything’s peachy. Huh? Competition regulator Rod Sims (aka the Viscount of Vaucluse) has been investigating Qantas since August for potential misuse of its market power (at least when he’s not distracted by the bottleshop wars in Lindisfarne, Tasmania).
Yet Joyce’s saving grace may be the obstinacy of his chairman, Big Leigh Clifford. He doesn’t seem too ruffled by the recent tumult – on the day Standard & Poor’s downgraded the airline to junk status, he was playing 36 holes of golf at Royal Melbourne. *Outstanding.
But most tiresome have been the desperately manufactured diversions from his own underperformance. One day he’s begging for a Canberra bailout, the next he’s running full-page ads telling customers everything’s peachy. Huh? Competition regulator Rod Sims (aka the Viscount of Vaucluse) has been investigating Qantas since August for potential misuse of its market power (at least when he’s not distracted by the bottleshop wars in Lindisfarne, Tasmania).
Yet Joyce’s saving grace may be the obstinacy of his chairman, Big Leigh Clifford. He doesn’t seem too ruffled by the recent tumult – on the day Standard & Poor’s downgraded the airline to junk status, he was playing 36 holes of golf at Royal Melbourne. *Outstanding.
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Pilot wages within 5%...........absolute total bollocks!
A virgin longhaul 777 FO is on around $156k a year, my mates who are 400 or 380 FO's earn a hell of a lot more than that and I mean a lot more!
A virgin longhaul 777 FO is on around $156k a year, my mates who are 400 or 380 FO's earn a hell of a lot more than that and I mean a lot more!
Pilot wages within 5%...........absolute total bollocks!
A virgin longhaul 777 FO is on around $156k a year, my mates who are 400 or 380 FO's earn a hell of a lot more than that and I mean a lot more!
A virgin longhaul 777 FO is on around $156k a year, my mates who are 400 or 380 FO's earn a hell of a lot more than that and I mean a lot more!
So is Borghetti lying:
VIRGIN Australia chief executive John Borghetti has rejected claims the airline's pilots, engineers and ground crew are paid substantially less than those at Qantas Airways.
Mr Borghetti says there was a 5 per cent difference between the salary of a Boeing 737 pilot flying a Virgin Australia aircraft and an identical pilot flying the same aircraft for Qantas.
The difference was similar for ground staff, while aircraft engineers at Virgin were paid more than those at Qantas, Mr Borghetti said.
"We don't pay our pilots half of the Qantas rates," Mr Borghetti said after an Australia-Israel Chamber of Commerce lunch in Sydney today.
"We do pay our people well. Quite frankly, if we didn't and we only paid them half the price do you think they'd stay?"
Qantas, currently in enterprise bargaining negotiations with ground crew, pilots and engineers, has previously claimed unions representing those workers had accepted new workplace agreements with Virgin that had lower wages and conditions than what Qantas was offering.
"The TWU (Transport Workers Union) has negotiated a new deal with Virgin which is 12 per cent lower than Qantas rates," Qantas group executive government and corporate affairs Olivia Wirth said on October 6.
Mr Borghetti said Virgin moved quickly to add capacity, rebook passengers and keep Australians flying when Qantas decided to ground its fleet over the weekend as part of an industrial dispute with unions.
The Virgin boss said the airline carried about 30,000 disrupted passengers and had a several hundred per cent increase in foot traffic through its airport lounges, exposing the airline's offering to many who normally flew Qantas.
"We've never seen such volumes," Mr Borghetti said.
"We hoping that a lot of those customers will come and visit us again."
He added that the federal government was "nothing but really supportive" of Virgin's efforts, particularly with relaxing curfews at airports or allowing pilots on its Pacific Blue fleet to operate on domestic routes.
Separately, Mr Borghetti said the airline would finish refitting the interiors of its Boeing 737 fleet by the end of the year.
This would allow Virgin to extend its business class offering to the so-called golden triangle between Brisbane, Melbourne and Sydney from January 18, 2012.
Currently, these seats are available on east-west flights to Perth from Brisbane, Melbourne and Sydney.
The Melbourne-Sydney route was the fourth-busiest city pair in the world and one that was crying out for more competition for corporate travellers, Mr Borghetti said.
The airline said at its full year results presentation in August that 13 per cent of its revenue now came from corporate customers, with the aim to grow the figure to 20 per cent over the next two years.
"I'm very happy with the way it's heading," Mr Borghetti said.
Virgin closed steady at 37 cents.
Mr Borghetti says there was a 5 per cent difference between the salary of a Boeing 737 pilot flying a Virgin Australia aircraft and an identical pilot flying the same aircraft for Qantas.
The difference was similar for ground staff, while aircraft engineers at Virgin were paid more than those at Qantas, Mr Borghetti said.
"We don't pay our pilots half of the Qantas rates," Mr Borghetti said after an Australia-Israel Chamber of Commerce lunch in Sydney today.
"We do pay our people well. Quite frankly, if we didn't and we only paid them half the price do you think they'd stay?"
Qantas, currently in enterprise bargaining negotiations with ground crew, pilots and engineers, has previously claimed unions representing those workers had accepted new workplace agreements with Virgin that had lower wages and conditions than what Qantas was offering.
"The TWU (Transport Workers Union) has negotiated a new deal with Virgin which is 12 per cent lower than Qantas rates," Qantas group executive government and corporate affairs Olivia Wirth said on October 6.
Mr Borghetti said Virgin moved quickly to add capacity, rebook passengers and keep Australians flying when Qantas decided to ground its fleet over the weekend as part of an industrial dispute with unions.
The Virgin boss said the airline carried about 30,000 disrupted passengers and had a several hundred per cent increase in foot traffic through its airport lounges, exposing the airline's offering to many who normally flew Qantas.
"We've never seen such volumes," Mr Borghetti said.
"We hoping that a lot of those customers will come and visit us again."
He added that the federal government was "nothing but really supportive" of Virgin's efforts, particularly with relaxing curfews at airports or allowing pilots on its Pacific Blue fleet to operate on domestic routes.
Separately, Mr Borghetti said the airline would finish refitting the interiors of its Boeing 737 fleet by the end of the year.
This would allow Virgin to extend its business class offering to the so-called golden triangle between Brisbane, Melbourne and Sydney from January 18, 2012.
Currently, these seats are available on east-west flights to Perth from Brisbane, Melbourne and Sydney.
The Melbourne-Sydney route was the fourth-busiest city pair in the world and one that was crying out for more competition for corporate travellers, Mr Borghetti said.
The airline said at its full year results presentation in August that 13 per cent of its revenue now came from corporate customers, with the aim to grow the figure to 20 per cent over the next two years.
"I'm very happy with the way it's heading," Mr Borghetti said.
Virgin closed steady at 37 cents.
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Originally Posted by The The
It is the old Hyundai v Mercedes argument. Offer a quality product, highly regarded and prestigious with the latest innovations and efficient production; and you can charge a substantial premium with high profitability (do you think if Hyundai slashed prices 20% that it would have any effect on Mercedes sales? It would not even boost Hyundai's sales enough to cover the loss). There is an alternative to volume based sales, QF management just can't see it. Borghetti sees it loud and clear.
Whereas a Merc or Hyundai is a choice for a maximum of a few people comprising a regular unit (the family) the aircraft has to cater for a much wider audience. If you believe otherwise then consider why everyone isn't flying in private jets.
Qantas leverages the preference to fly with them by providing a higher end product. But there is a much harder marketplace to contend with than the old Qantas-Ansett duopoly. QF has to get much smarter in everyday business practices in order to get their cost base to a point where people are prepared to pay the premium to cover the additional costs. And bear in mind that also means competing with Singapore Airlines and Emirates.
The answer does not lie in the wages of individual staff. It lies in the total number of staff and equivalents.
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Totally agree Ampclamp.
I would suggest there is well over $200M per annum of easily realisable savings to be had (IMHO).
There also needs to be a review of paygrades in management. When some junior managers earn well over $100K then there is a fundamental disconnect between salary and value.
I would suggest there is well over $200M per annum of easily realisable savings to be had (IMHO).
There also needs to be a review of paygrades in management. When some junior managers earn well over $100K then there is a fundamental disconnect between salary and value.
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The evidence is against people paying more to fly, in fact the entire LCC movement is based on the fact people want to pay as little as possible. To go back to the duopoly days you'd be looking at $600 Syd-Mel type stuff as your regular fare. That's just not going to happen.
The 51/49 market share need not return exactly to the $600 Mel to Syd days but adding just $10 a ticket will not drive any substantial number of customers away. The Qantas Group carried $50Mill pax last year. $10 a ticket would add $500Mill to their bottom line. We need sustainable airfares and it will only take a small increase to get there.
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Originally Posted by fedsec
Romulus I know you are very focused on cost cutting but I think you are completely dismissing the Merc/Hyundai argument. Please don't.
And cost cutting is just one tool, and usually the last I choose. But what we are talking about is efficiency, not cost cutting. For instance, if you could add 45 aircraft without adding extra staff (or at least any significant numbers) then you're delivering enhanced efficiency. You build a capacity growth plan and all those overheads are dispersed over larger numbers.
But hey, feel free to keep making those assumptions.
Originally Posted by fedsec
The 51/49 market share need not return exactly to the $600 Mel to Syd days but adding just $10 a ticket will not drive any substantial number of customers away. The Qantas Group carried $50Mill pax last year. $10 a ticket would add $500Mill to their bottom line. We need sustainable airfares and it will only take a small increase to get there.
Just put prices up.
Yep, that's how easy it is...
Yep, it is that simple.
I've proved i time and again. You do NOT lose business by putting prices up 10%.
I dont think it's the solution for QF, or relevant to the argument that gross/criminal incompetence throughout management levels at QF have destroyed the place over 10+ years, but having a good product is most certainly not affected by a 10% price hike.
Jetstar is another matter entirely. But even there you have masters of the $1 fare SYD-DPS (+ $20 muffin, $30 management incompetence levy and $125 oxygen fee).
Make no mistake, unless this bunch of lunatics partying with our cherished airline are removed immediately no price hike will make any difference at all, but once the place is operated properly that is exactly the type of strategy that should be used - and even trumpeted from the rooftops....
I've proved i time and again. You do NOT lose business by putting prices up 10%.
I dont think it's the solution for QF, or relevant to the argument that gross/criminal incompetence throughout management levels at QF have destroyed the place over 10+ years, but having a good product is most certainly not affected by a 10% price hike.
Jetstar is another matter entirely. But even there you have masters of the $1 fare SYD-DPS (+ $20 muffin, $30 management incompetence levy and $125 oxygen fee).
Make no mistake, unless this bunch of lunatics partying with our cherished airline are removed immediately no price hike will make any difference at all, but once the place is operated properly that is exactly the type of strategy that should be used - and even trumpeted from the rooftops....
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Feel free to actually argue why not, it's a bit difficult to debate a faith based argument. I've given a fairly clear reason why Merc/Hyundai is not appropriate, if you want to go with the God, i.e. just believe, argument then we're not going to get anywhere.
Nothing of the sort. The premium product in this case is available
only to a few, the rest of us travel down the back. Unless of course you are suggesting that economy travellers would pay a "substantial premium" for economy travel. Which actual behaviour suggests many won't.
only to a few, the rest of us travel down the back. Unless of course you are suggesting that economy travellers would pay a "substantial premium" for economy travel. Which actual behaviour suggests many won't.
Of course neither of us are privy to the actual fare prices but I think it safe to make a couple of assumptions here as I show you some further figures. I assume Qantas are charging a little more than Jetstar and PAL on the same routes. If people didn't want to pay a tad more, why do you get figures like this -
Qantas Sept loads to/from Manila - 75.3% versus PAL 63.3%
Qantas Sept loads to/from Japan - 83.5% versus Jetstar 67.1%
I say that people are prepared to pay a little more. What evidence do you hold that supports your argument that people won't?
As for your focus on efficiencies I would have to agree. I've always said that Jetstar, Qantas and Qlnik Engineers should be working from the one smoko room helping each other during quiet times. They'd use one combined set of tooling, one management/support structure and eventually one wage agreement. Unfortunately Qantas think it more important to make sure these guys aren't allowed to talk to each other. I tell you the place is being run by fools.
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blah blah blah
if they thought they could charge another $10 they would. just not the expense of the 65% thing
mr luxon said it best with this little backhander recently
if they thought they could charge another $10 they would. just not the expense of the 65% thing
mr luxon said it best with this little backhander recently
Far from the picture painted by Qantas, Mr Luxon said Air NZ was a listed company that acted commercially and rationally at all times
As for your focus on efficiencies I would have to agree. I've always said that Jetstar, Qantas and Qlnik Engineers should be working from the one smoko room helping each other during quiet times. They'd use one combined set of tooling, one management/support structure and eventually one wage agreement.
Let's start by getting rid of the two of the three CEOs the two COOs and the three Chief Pilots and the HOFO. That would save millions. They don't do anything and cost a fortune.
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Troo Believer.
Or......Management indicates they are carrying surplus pilots. However lots of mates I know can't take any annual leave. Too busy flying whilst the office dwellers are on leave.
Or......Management indicates they are carrying surplus pilots. However lots of mates I know can't take any annual leave. Too busy flying whilst the office dwellers are on leave.
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Have you noticed the airline imploding whilst all the managers are away on leave?
Still running nicely, I wonder why?
Still running nicely, I wonder why?
Then the Managers return and try to justify their positions.
Ever thought that things run so well because of the clever and careful managers, wherever they may sit? Don't try to tell me that OTP and everything else is more functional on week-ends and during holiday periods. Quite often when the sh!t hits the fans in 'out of hours' time, the phones from the workers to the managers run hot.