Bye Bye Qantas Hello Jetstar

[crewmeal]

I can't believe this might happen.

Qantas to wind back overseas routes as Jetstar set to become Australia?s main international airline | News.com.au

The article doesn't mention the Kangaroo route to LHR. Does this mean QF pulling off the route? I hope not.

[busdriver007]

Bye Bye Qantas, Hello Virgin, Emirates, Cathay, Etihad, Air New Zealand because that is what will happen! Another Ansett I am afraid! It is called "Flogging a Dead Horse"

[RENURPP]

I disagree, its a good horse being trained ridden and managed by the slaughter house.

Change stables and you have a reasonable old nag.

[Air Ace]

How to avoid the equity provisions of the Qantas Sale Act - change your make up!

A Jetstar equity majority sell off would nicely finance the CEO and Chairman's retirement whilst making redundant all those highly paid and under worked Qantas staff.

LCC's are nothing new. Have a look around the world. We are one of the last countries to implement this. Nothing to do with Ansett.

QANTAS is what it is today, old school business model/ great airline still by far however the market it operates in, QANTAS can't compete against the LCC business model.

People today just want a seat and get to their destination on the domestic scene.
Just like the train and bus....Gone are the days where the upper middle class and above used the airline network. IT is now available for everyone.

If you are correct, I wonder how Air New Zealand, Singapore Airlines and the Middle East carriers make a profit as full service international airlines competing against LCCs and Qantas makes a profit domestically?

I guess they never read your book, eh wasathangi?

Or maybe they have more proactive, innovative management? Maybe not, only Qantas has the world's best airline management team!

[Air Ace]

Every Major you mentioned has a LCC branch/section. Also are located in HIGHER POPULATED AREAS AND SHORTER ROUTES TO OTHER HIGHLY POPULATED COUNTRIES

Gosh and crikey, how New Zealand must have grown since I was last there!

No need to lecture me old chap, I've been a successful senior executive and company director on a number of Boards over many years, understand my fiduciary obligations and have more than a passing familiarity with the Corporations Act 2001, including Sect 179.

[FYSTI]

Board of directors take on a massive risk to the point they can be sued and have their own personal assets frozen

But do they in reality? Please document directors of ASX companies who have actually been sued and had their assets confiscated/frozen in the last 10 years.


Here's a snippet of who got away: CENTRO

Stephen Cougle, the man who audited Centro's books in 2006-07, misclassifying $2.1 billion worth of debt, and is now partner at PricewaterhouseCoopers, has promised the corporate watchdog he will not do any auditing work for two and a half years.

Read more: Centro auditor agrees to suspension

As a company director, if you are going to make a $1.5 billion mistake in your accounts, make sure it's an honest one.
The Federal Court yesterday handed down its decision on penalties for members of the Centro board found to have breached the Corporations Act in relation to Centro's 2007 financial statements.
While there had been grumbling from the professional directors' league at the original decision, there was a wider view that directors must be held to account for checking the accuracy of accounts. Indeed, it is one of the fundamental tasks of a board member.
There is likely to be plenty of talk at dinner parties in Mosman and Toorak this weekend about the lightness of the penalties imposed yesterday - coupled with some sense of relief.
Only the company's then finance director, Romano Nenna, received disqualification orders (two years), while the chief executive, Andrew Scott, was given a fine of $30,000.

Read more: Centro directors escape without penalty - let's hope they learn to read accounts

We could then visit the James Hardies affair, and the directors who deliberately cheated the victims of a compensation fund & made false statements about it - small fines & minor disqualifications as directors. The list goes on.

There is a widespread gulf between the law statutes, "potential penalties" the reality at the sharp end of a prosecution. In just the same way Eddie Obied and his family will walk away with the best part of hundred million or so for massively corrupt behaviour. The talk is tough, the reality is likely to be a smack over the wrist with a wet feather duster. Sure they have to endure a period of the pain during public scrutiny, I will concede that.

So go away with your fanciful ideas that these people are ever likely to be held to account in any meaningful way that involves significant personal pain. Quite frankly, the law is a joke: THE MYTH OF THE RULE OF LAW

[gordonfvckingramsay]

Wasathangi, you are right about the majors having an LCC attached to them, astute observation indeed! But look again at your beloved QANTAS version of that model and you may find that QANTAS is becoming an LCC with a once great major attached.

Members of the board do swan around looking towards (early) retirement and their next bonus. They care not about the company they feast on, nor the people who make their little world go around.

I just wish the worst thing that could happen to me if I have a bad day at work is to have my assets frozen.

[27/09]

wasathangi

You are an angry little Pprunner.

Actually Air Ace make some valid points. Also as well as New Zealand having a population of less than 22 mill (4.5 mil in fact) Air New Zealand doesn't have an LCC arm either.I wonder what profit they announce later this month.

[Des Dimona]

Air NZ is a very different animal - It's been completely recapitalised through the years, the major one being the aftermath of the Ansett debacle, so it is not a legacy carrier in the true sense of the word.


The management also seems to have half a clue compared to the muppets in OZ.

[newsensation]

Time to close this thread and add another to my ignore list

[Mstr Caution]

Whats new is that the common non aerosexual's are getting a better deal=cheaper flights! Very simple!

And.......those cheap flights are resulting in massive business losses.

Air Asia X, Qantas Group, Virgin. All loosing money.

It's simply not sustainable.

The perfect utopia would be to lower ticket prices even further, stimulating the market and getting "more people to fly for less" (now where have I heard that before?)

However, the airlines would put themselves out of business in the process.

The JQ business is a "blocker move", it was suppose to saturate capacity at places like Sydney airport to ensure no other entity could fill those spare aircraft movements. JQ was suppose to utilise gate space at the old Ansett Terminal Sydney to ensure no other airline expanded (VOZ, Ozjet, Tiger) to fill that void.

However the desire to protect QF mainline from the growth of other carriers HAS lead to the Cannibalisation of Mainline routes.

Instead of JQ flying on non trunk routes to destinations other than those served by mainline, they had to reduce their costs or go out of business in the LCC market. The only way they could reduce costs was scale. The increase in JQ aircraft fleet and network to achieve economy of scale lead to the saturation of the market of the Orange & Silver tails.

This from Wikepedia regarding Starbucks strategy

A good comparison is the Starbucks brand. The company strove to have a Starbucks store on every street corner. Saturate the market.
Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics

Sound familiar with the JQ Australia & Asia Expansion?

[virginexcess]

It's the cost base, plain and simple.

NZ salaries are lower in dollar terms and lower again due to exchange rate.

Anyone that thinks that Qantas can ever compete on Quality and price. i.e charge a premium for the service, is denying reality, but that is what would be required to return international to profitability. It can't be done with the current cost base. In fact, it is my view Australia will never be able to compete again in the international market until there is a correction to the cost of labour in Australia. The only potential market is the US, as they arguably have similar first world problems as Australia, although they have just emerged from a period of massive restructure post 9/11 and GFC, so chances are we have higher costs than them as well.

What's left? Jetstar to Bali, Phuket, and Honolulu for the bucket and spade brigade. Sad but inevitable.

What will change it? Maybe if the Chinese and middle east carriers create a few smoking holes, then the travelling public may reconsider their options, but even then most people's safety focus lasts right up to the point they have to pay for it, then it's Chopsticks Air to London via a 36hr layover at Fukutoo for $1200 return, with comments about why Qantas is so expensive.

The question that needs to be answered is "is it possible to get the Australian public to pay a premium to travel on Australian carriers". The resounding evidence seems to suggest that the answer is no.

It is no accident that the demise of Qantas has coincided with the rise of Emirates, China Southern et al. Sure we could have gone down the protectionist route and not given those carriers access, but the few Australian jobs that would have saved pale into insignificance compared to the millions of tourists those carriers bring to Australia.

The ending to this story isn't being written by Joyce or Clifford it is being written by Global Economics.

[27/09]

Wasathangi

I am just stating the reality....ANZ is a different ball game all together.

which is quite different to what you posted here:

Every Major you mentioned has a LCC branch/section. Also are located in HIGHER POPULATED AREAS AND SHORTER ROUTES TO OTHER HIGHLY POPULATED COUNTRIES Not a country with only 22 million..Geez, should I go on

which was in reply to Air Ace:

If you are correct, I wonder how Air New Zealand, Singapore Airlines and the Middle East carriers make a profit as full service international airlines competing against LCCs and Qantas makes a profit domestically?

Virginexcess

Not doubt higher costs are part of the problem but as has been pointed out in other threads labour costs etc are very often a smoke screen. I know the motor car industry is different from aviation, however Germany has high labour costs and a motor car manufacturing industry that are doing quite well. I think Lufthansa are doing OK too.

If you want to deal with labours costs you also need to deal with the excessive salaries of CEO's etc.

Wasathangi

The LCC model works on short sectors of around three hours or less but longer than this it hasn't been a roaring success. I'm not sure it it the way of the future for long haul.

[FYSTI]

virginexcess, following your logic to its ultimate conclusion is that all standards of living would equilibrate to the lowest common denominator. However, wages & conditions of the average workers in those LCD countries are supressed via authoritarian regimes. You are right, we can't compete with the Chinese worker as in all likelihood his ability to bargain is much lower. Without authoritarian rule would wages be as low as they are in China & the middle east? What is the legality of a strike in the Middle East? It is not a free true market, but one operating under severe wage control.

Globalization is as much about exposing western labour to a wages market that is artificially suppressed. In effect, transmitting this authoritarian wage control system back to the west through the market mechanism. In return we get a few cheap trinkets.

[virginexcess]

FYSTI

All true, but they are philosophical arguments. Management have to deal with the marketplace.

[27/09]

Management also need to think smart, which very often they don't.

[FYSTI]

virginexcess, the way management have dealt with it has actually made the cure worse than the disease. The international Jetstar franchises have been an unmitigated disaster. This has crippled the group financially reducing the time left to adapt, resilience has been diminished.
Management are now having to do insane things like park new aircraft at great expense against the fence or sell them (no doubt at a discount). There are another 70+ new A320 airframes on order yet to be dealt with. Its not the wages that have destroyed QF, its been the failed management strategy.

[Mstr Caution]

Wages only make up less than 4% of the operating costs.

The foreign labour differential is the differential embedded within in that 4%.

AJ would have you believe that wages will make or break the airline.

Yes. Wages are a factor.

However failed strategies are THE major cause of the groups losses.

[Air Ace]

But do they in reality? Please document directors of ASX companies who have actually been sued and had their assets confiscated/frozen in the last 10 years.

About the last ones I recall were the poor b*ggars on the Board of the National Safety Council, Victoria Division, who paid the ultimate price for Freddo's foibles, but that was many years ago!!

Many of Australia's biggest swindlers get away Scot free! The rest of us carry fidelity insurance.

Anyone that thinks that Qantas can ever compete on Quality and price......

Please, not that old cherry again! Qantas gave away it's most profitable, near monopolistic air routes that did support it's cost base. Time and again proactive and innovate Boards address and overcome the alleged disadvantage of their Australian cost base. And other Boards throw up their hands and give up, the Australian car industry being one example. Honda build more cars in the USA than in any other country; BMW builds certain models only in the USA - I wonder how they manage with the high US cost base, versus China, Thailand or Vietnam?

With the mega millions being paid to Qantas elitist and out of touch executives and Board, I guess not unreasonably I expect far more initiative and innovation. If I were a Qantas major shareholder with no return on investment for many years, no dividend, no capital gain, that CEO and Board would be long gone.

At the end of the day.....LCC's are here to stay period! QANTAS is what it is period.

Congratulations. I think that is your first correct statement in this thread.

Qantas has a major competitor that is eroding the profitability of it's air routes - and that libidinous and lecherous competitor is Jetstar! A full service airline and an LCC can successfully share common ownership, but will fail if one is established only to destroy the other on common air routes.

In the mean time those long term, loyal Qantas clients who are prepared to pay for a full service airline - and that is a significant percentage of the Australian travelling public - are voting with their feet and patronising other quality carrier that offer the service they expect, which is something other than cattle train class.

I remember a little Irishman at Ansett many years ago that had probably exceeded his then maximum level of incompetence. He has certainly now progressed way, way beyond his maximum incompetence level!

Please don't get so bitter and twisted wasathangi, after all this is only the internet!

[Pearly White]

Apparently some of these new LCCs are SO cheap to run they can offer flights as cheaply as 50p in the UK.



Your link doesn't work Pearly, but I think you are referring to the Wasathangi Trio rendition of Jetst* the musical comedy?





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