Qantas/Domestic: "Line In The Sand" Has Appeared
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Qantas/Domestic: "Line In The Sand" Has Appeared
Dow Jones
Thursday August 21, 11:16 AM AEST
Qantas/Domestic: "Line In The Sand" Has Appeared
SYDNEY (Dow Jones)--Qantas Airways Ltd. (A.QAN) said Thursday it will protect its domestic market share of about 65% to 70%.
Chief executive Geoff Dixon confirmed at a media briefing that the "line in the sand" was very near as Virgin Blue increases its competitive position.
"We are very close to it," he said, adding "give or take two to three percentage points".
"We believe anything between 65% and 70% is what Qantas must defend, and we are going to defend it," Dixon said.
He also said the company must improve profitability from its domestic operations, which contributed A$165.7 million to earnings before interest and tax in the year ended June 30, 2003. This contribution fell from A$298.2 million, with the company citing increased competition as one factor.
Pretax earnings from international operations rose to A$221.6 million from A$202.8 million a year earlier.
==========================================
SYDNEY (Dow Jones)--Qantas Airways Ltd. chief executive Geoff Dixon said Thursday that the Australian flag carrier is well advanced with plans to launch its own low-cost domestic operation.
Dixon said the company's board considered the proposal this week, with some further discussions needed before a final decision is made.
Qantas has about 70% of the domestic market, but in recent years has seen its market share attacked by no-frills carrier Virgin Blue, a joint venture between Richard Branson's Virgin Group and Australian transport company Patrick Corp.
Dixon said the Qantas operation will have separate management and be conducted on a standalone basis.
"We are not in the business of starting airlines unless we can make money," he told reporters.
=========================================
Thursday August 21, 11:16 AM AEST
Qantas/Domestic: "Line In The Sand" Has Appeared
SYDNEY (Dow Jones)--Qantas Airways Ltd. (A.QAN) said Thursday it will protect its domestic market share of about 65% to 70%.
Chief executive Geoff Dixon confirmed at a media briefing that the "line in the sand" was very near as Virgin Blue increases its competitive position.
"We are very close to it," he said, adding "give or take two to three percentage points".
"We believe anything between 65% and 70% is what Qantas must defend, and we are going to defend it," Dixon said.
He also said the company must improve profitability from its domestic operations, which contributed A$165.7 million to earnings before interest and tax in the year ended June 30, 2003. This contribution fell from A$298.2 million, with the company citing increased competition as one factor.
Pretax earnings from international operations rose to A$221.6 million from A$202.8 million a year earlier.
==========================================
SYDNEY (Dow Jones)--Qantas Airways Ltd. chief executive Geoff Dixon said Thursday that the Australian flag carrier is well advanced with plans to launch its own low-cost domestic operation.
Dixon said the company's board considered the proposal this week, with some further discussions needed before a final decision is made.
Qantas has about 70% of the domestic market, but in recent years has seen its market share attacked by no-frills carrier Virgin Blue, a joint venture between Richard Branson's Virgin Group and Australian transport company Patrick Corp.
Dixon said the Qantas operation will have separate management and be conducted on a standalone basis.
"We are not in the business of starting airlines unless we can make money," he told reporters.
=========================================
Last edited by Wirraway; 21st Aug 2003 at 11:40.
Perhaps they could call it something 'catchy' and cool like 'Qantas Green & Gold'.
Geoff Dixon could turn up at every new destination dressed in some sort of kooky but not necessarily obviously related costume & have the media fawn all over him as if they'd never seen an aircraft, let alone a flashily painted jet, before.
Then they could slash the going rates for any employees who want to sign on - but it wouldn't matter because the company was so 'with-it' & 'in-touch', and it didn't really matter if staff were getting paid well as long as they were having fun & being an integral part of the new & exciting 'team'.
And at the end of the day, it was all o.k because the company wasn't doing it to make money, but mainly just to give the average battler a leg up & cut down the tall poppies...
Geoff Dixon could turn up at every new destination dressed in some sort of kooky but not necessarily obviously related costume & have the media fawn all over him as if they'd never seen an aircraft, let alone a flashily painted jet, before.
Then they could slash the going rates for any employees who want to sign on - but it wouldn't matter because the company was so 'with-it' & 'in-touch', and it didn't really matter if staff were getting paid well as long as they were having fun & being an integral part of the new & exciting 'team'.
And at the end of the day, it was all o.k because the company wasn't doing it to make money, but mainly just to give the average battler a leg up & cut down the tall poppies...
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Fri "The Australian"
Qantas plan for no-frills air battle
By Steve Creedy
August 22, 2003
QANTAS has plans for a new low-cost domestic airline, signalling an airfare war with no-frills rival Virgin Blue and dramatic changes in working conditions for many of its employees.
Qantas chief executive Geoff Dixon unveiled the proposed discount airline yesterday as the carrier announced plans to replace 3300 full-time jobs with casual and part-time workers. Qantas is emerging from the worst year in aviation history to report a $343.5 million after-tax profit.
The new airline is to be aimed primarily at increasing Qantas's profits on leisure routes, but it will also allow the Flying Kangaroo to negotiate new workplace deals without the inefficiencies Mr Dixon believes inhibit the mainline operation.
It is the latest development in a massive restructuring that already has the carrier at loggerheads with unions.
The profit news came with a blunt warning that Virgin had reached a "line in the sand" where Qantas would defend its market share.
"We believe that around about 65 to 70 per cent (market share) is what Qantas must defend and we're going to defend it," Mr Dixon said.
But Virgin, in welcoming any competition from a new Qantas offshoot, said it had heard the threats before.
"Ultimately, it is the public who will decide which airline they support," spokesman David Huttner said.
Qantas has been quietly investigating the possibility of a no-frills airline for about five months, but a team headed by senior executive Alan Joyce has now been given the job of taking it to the next stage.
A final decision on whether the project will proceed is due in November.
Mr Dixon was coy about details, but said the new airline would operate independently of Qantas, even though it would be a wholly owned subsidiary.
"We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it," he said.
Mr Dixon said it would not be aimed at Virgin Blue and would differ "quite substantially" from other low-cost operations.
Mr Dixon said further reductions in the workforce would be achieved through natural attrition.
===========================================
Fri "Sydney Morning Herald"
Qantas plots no-frills war with Virgin
By Scott Rochfort
August 22, 2003
Australians can look forward to a second no-frills airline, after Qantas yesterday flagged plans to launch a budget domestic carrier of its own, in an attempt to slash costs and head off Virgin Blue's increasing share of the domestic aviation market.
Echoing the recent trend of North American and European airlines in launching their own low-cost carriers to counter increased competition, Qantas's chief executive, Geoff Dixon, said: "We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it."
With Virgin Blue already declaring its intention to capture 50 per cent of the domestic market, it is estimated the airline has already lifted its share from 20 per cent to more than 30 per cent over the past year.
Before the collapse of Ansett in September 2001, Virgin controlled about 7 per cent of the market. While providing little detail on the proposed make-up of the airline, Mr Dixon said the Flying Kangaroo had to "get closer to what is the latest phenomena".
In the US, it is estimated that over one-quarter of short-haul passengers now fly on budget carriers, as opposed to 20 per cent a year ago, while in Europe the figure is put at 15 per cent.
"I think in some markets it will be more difficult to sustain a full-market carrier. We don't believe that's the case in Australia but we currently have to make adjustments," Mr Dixon said.
With Qantas reporting a half-year loss of $9 million yesterday - its first since being privatised in 1995 - the airline denied news of the proposed low-cost airline was a warning shot to Qantas's largely unionised workforce of 33,900.
But with Qantas already signalling plans to slash $1 billion in costs (half from its labour force) over the next two years, Mr Dixon said the airline had "to get rid of some of the inefficiencies that have been in place over the past eight years".
He said Qantas wanted to increase the percentage of part-time, casual and contracted workers from 15 per cent to 25 per cent - its wage bill having totalled $3 billion last financial year.
Qantas said the final decision on whether to launch the yet-to-be-named airline would be made in November.
Despite recent speculation that Qantas would swing its low-cost international subsidiary, Australian Airlines, onto domestic routes, Mr Dixon said: "It will have a totally separate management that will be allowed to run it as it should be run, as a genuine low-cost carrier."
Mr Dixon said it would be up to the new airline to establish union deals of its own. Australian Airlines' staff of about 300 are not covered by the union agreements that protect their Qantas counterparts.
With services from Sydney, Melbourne, the Gold Coast and Cairns to eight ports in Singapore, Indonesia and Japan, Australian Airlines also plans to increase its fleet from four 767-300s to eight by July next year.
And in a bid to lower operating costs on trans-Tasman flights, Qantas's low-cost Wellington-based subsidiary, Jet Connect, is expected to take up about 25 per cent of the capacity of Qantas's flights to and from New Zealand from next week.
Virgin Blue's head of strategy, David Huttner, said: "Certainly it's flattering that after a few years ago, when they didn't think we'd survive, they are now trying to imitate us."
Since being launched by Sir Richard Branson in 2000 with a fleet of two Boeing 737-800s, Virgin took delivery of its 31st aircraft on Tuesday, and expects to have a fleet of 40 by July next year.
=============================================
Fri "Sydney Morning Herald"
Dixon aims high with low-cost push
By Elizabeth Knight
August 22, 2003
There are more than 1000 executive or non-union staff inside Qantas, hundreds of whom already have been trained in a vast range of jobs - from check-in staff to baggage handlers and flight attendants. And it won't be long before the rest become multi-skilled.
The unions have tagged Geoff Dixon the Chris Corrigan of the airline industry. Where Corrigan's Lang Corp secretly trained a team of waterfront workers in the Middle East to break the back of the Australian Waterfront Union, Dixon is undertaking similar tactics at Qantas - albeit in a less confrontationist way.
He is putting in place contingency staff to ensure that unlawful stoppages don't cripple the airline service.
And he scored a major victory earlier this week when the airline won the right to use 40 to 50 managers to bridge the gap when baggage handlers went on strike.
Dixon, needless to say, doesn't want to fight with any of the 14 unions representing Qantas staff, but he is a street fighterand is prepared to take some of them on. He has already cut 2300 full-time equivalent positions over the past six months but still has productivity problems and is acutely aware that the low-cost Virgin Blue, now with 30 per cent domestic market share, has taken far more ground than he bargained on.
Dixon knows he is seriously disadvantaged on the cost front because Virgin has a vastly superior cost base - not the least of which is lower labour costs. Which is why he is now talking about starting up a low-cost airline.
There are several ways to skin this cat. The contingency workforce is one; a low-cost airline is another.
A third is to take some of the operating functions offshore to cheap labour regions. Already Qantas's revenue accounting is being done in Mexico.
Dixon makes much of the fact that the new airline is not being created to get at Virgin Blue. But this conclusion is hard to escape.
The plan is to use between 15 and 40 aircraft in this yet-to-be-named budget airline which could potentially give it a market share of 25 per cent.
It would be much more of a virtual airline, with a business model that presumes almost all bookings are made online and union enterprise agreements that would be vastly different to those that exist with the main airline service.
Sure, a portion of this would be cannibalisation of Qantas's existing domestic service but it would also cut to the heart of Virgin. It makes perfect sense for Qantas to split itself in two. It's financially rational for the more costly full service Qantas to transfer its low-paying (low-yielding) customers.
The high-cost main airline can cope with the high-yield business market and inbound tourist market and some of the more profitable leisure routes.
But the low-yield leisure market is a mismatch with the high-cost full service airline.
There is a type of customer - primarily the business customer - that will always use a full service airline because of regular scheduling, lounges, and to a lesser extent a business class.
But those that don't require this are not prepared to pay for it, and to retain load factors these seats need to be discounted to combat the threat of Virgin. Cutting the cake three ways makes loads of sense if Qantas is getting two pieces.
The introduction of a new budget carrier may stimulate demand but to what extent?
The reality is that in the current two-airline market Qantas will lose more to Virgin, which can still make a reasonable profit out of low-fare-paying passengers.
Qantas says it's given away as much market share to Virgin as it will allow. The fact that it has not begun a market share fightback is recognition that it will lose more than it gains.
The revelation of the budget airline is also an implicit threat to any would-be entrant to the Australian domestic market. Qantas can get its new product to the market more quickly than anyone else because it has a spare air operator's certificate, thanks to buying out the failed Impulse.
For anyone else, getting this certificate would take nine months or more.
Of course, there are large risks associated with starting a third airline here. The history of aviation in Australia is littered with carcasses of failed airlines, from Compass Mark I and II to Impulse and Ansett.
Duopolies work well enough as long as neither player gets greedy. How three would work in a market where two share ownership is untested.
But perhaps not for much longer.
=======================================
Qantas plan for no-frills air battle
By Steve Creedy
August 22, 2003
QANTAS has plans for a new low-cost domestic airline, signalling an airfare war with no-frills rival Virgin Blue and dramatic changes in working conditions for many of its employees.
Qantas chief executive Geoff Dixon unveiled the proposed discount airline yesterday as the carrier announced plans to replace 3300 full-time jobs with casual and part-time workers. Qantas is emerging from the worst year in aviation history to report a $343.5 million after-tax profit.
The new airline is to be aimed primarily at increasing Qantas's profits on leisure routes, but it will also allow the Flying Kangaroo to negotiate new workplace deals without the inefficiencies Mr Dixon believes inhibit the mainline operation.
It is the latest development in a massive restructuring that already has the carrier at loggerheads with unions.
The profit news came with a blunt warning that Virgin had reached a "line in the sand" where Qantas would defend its market share.
"We believe that around about 65 to 70 per cent (market share) is what Qantas must defend and we're going to defend it," Mr Dixon said.
But Virgin, in welcoming any competition from a new Qantas offshoot, said it had heard the threats before.
"Ultimately, it is the public who will decide which airline they support," spokesman David Huttner said.
Qantas has been quietly investigating the possibility of a no-frills airline for about five months, but a team headed by senior executive Alan Joyce has now been given the job of taking it to the next stage.
A final decision on whether the project will proceed is due in November.
Mr Dixon was coy about details, but said the new airline would operate independently of Qantas, even though it would be a wholly owned subsidiary.
"We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it," he said.
Mr Dixon said it would not be aimed at Virgin Blue and would differ "quite substantially" from other low-cost operations.
Mr Dixon said further reductions in the workforce would be achieved through natural attrition.
===========================================
Fri "Sydney Morning Herald"
Qantas plots no-frills war with Virgin
By Scott Rochfort
August 22, 2003
Australians can look forward to a second no-frills airline, after Qantas yesterday flagged plans to launch a budget domestic carrier of its own, in an attempt to slash costs and head off Virgin Blue's increasing share of the domestic aviation market.
Echoing the recent trend of North American and European airlines in launching their own low-cost carriers to counter increased competition, Qantas's chief executive, Geoff Dixon, said: "We believe there's probably emerging in Australia a position for a low-cost leisure carrier and we think we'd probably be a very, very good group to do it."
With Virgin Blue already declaring its intention to capture 50 per cent of the domestic market, it is estimated the airline has already lifted its share from 20 per cent to more than 30 per cent over the past year.
Before the collapse of Ansett in September 2001, Virgin controlled about 7 per cent of the market. While providing little detail on the proposed make-up of the airline, Mr Dixon said the Flying Kangaroo had to "get closer to what is the latest phenomena".
In the US, it is estimated that over one-quarter of short-haul passengers now fly on budget carriers, as opposed to 20 per cent a year ago, while in Europe the figure is put at 15 per cent.
"I think in some markets it will be more difficult to sustain a full-market carrier. We don't believe that's the case in Australia but we currently have to make adjustments," Mr Dixon said.
With Qantas reporting a half-year loss of $9 million yesterday - its first since being privatised in 1995 - the airline denied news of the proposed low-cost airline was a warning shot to Qantas's largely unionised workforce of 33,900.
But with Qantas already signalling plans to slash $1 billion in costs (half from its labour force) over the next two years, Mr Dixon said the airline had "to get rid of some of the inefficiencies that have been in place over the past eight years".
He said Qantas wanted to increase the percentage of part-time, casual and contracted workers from 15 per cent to 25 per cent - its wage bill having totalled $3 billion last financial year.
Qantas said the final decision on whether to launch the yet-to-be-named airline would be made in November.
Despite recent speculation that Qantas would swing its low-cost international subsidiary, Australian Airlines, onto domestic routes, Mr Dixon said: "It will have a totally separate management that will be allowed to run it as it should be run, as a genuine low-cost carrier."
Mr Dixon said it would be up to the new airline to establish union deals of its own. Australian Airlines' staff of about 300 are not covered by the union agreements that protect their Qantas counterparts.
With services from Sydney, Melbourne, the Gold Coast and Cairns to eight ports in Singapore, Indonesia and Japan, Australian Airlines also plans to increase its fleet from four 767-300s to eight by July next year.
And in a bid to lower operating costs on trans-Tasman flights, Qantas's low-cost Wellington-based subsidiary, Jet Connect, is expected to take up about 25 per cent of the capacity of Qantas's flights to and from New Zealand from next week.
Virgin Blue's head of strategy, David Huttner, said: "Certainly it's flattering that after a few years ago, when they didn't think we'd survive, they are now trying to imitate us."
Since being launched by Sir Richard Branson in 2000 with a fleet of two Boeing 737-800s, Virgin took delivery of its 31st aircraft on Tuesday, and expects to have a fleet of 40 by July next year.
=============================================
Fri "Sydney Morning Herald"
Dixon aims high with low-cost push
By Elizabeth Knight
August 22, 2003
There are more than 1000 executive or non-union staff inside Qantas, hundreds of whom already have been trained in a vast range of jobs - from check-in staff to baggage handlers and flight attendants. And it won't be long before the rest become multi-skilled.
The unions have tagged Geoff Dixon the Chris Corrigan of the airline industry. Where Corrigan's Lang Corp secretly trained a team of waterfront workers in the Middle East to break the back of the Australian Waterfront Union, Dixon is undertaking similar tactics at Qantas - albeit in a less confrontationist way.
He is putting in place contingency staff to ensure that unlawful stoppages don't cripple the airline service.
And he scored a major victory earlier this week when the airline won the right to use 40 to 50 managers to bridge the gap when baggage handlers went on strike.
Dixon, needless to say, doesn't want to fight with any of the 14 unions representing Qantas staff, but he is a street fighterand is prepared to take some of them on. He has already cut 2300 full-time equivalent positions over the past six months but still has productivity problems and is acutely aware that the low-cost Virgin Blue, now with 30 per cent domestic market share, has taken far more ground than he bargained on.
Dixon knows he is seriously disadvantaged on the cost front because Virgin has a vastly superior cost base - not the least of which is lower labour costs. Which is why he is now talking about starting up a low-cost airline.
There are several ways to skin this cat. The contingency workforce is one; a low-cost airline is another.
A third is to take some of the operating functions offshore to cheap labour regions. Already Qantas's revenue accounting is being done in Mexico.
Dixon makes much of the fact that the new airline is not being created to get at Virgin Blue. But this conclusion is hard to escape.
The plan is to use between 15 and 40 aircraft in this yet-to-be-named budget airline which could potentially give it a market share of 25 per cent.
It would be much more of a virtual airline, with a business model that presumes almost all bookings are made online and union enterprise agreements that would be vastly different to those that exist with the main airline service.
Sure, a portion of this would be cannibalisation of Qantas's existing domestic service but it would also cut to the heart of Virgin. It makes perfect sense for Qantas to split itself in two. It's financially rational for the more costly full service Qantas to transfer its low-paying (low-yielding) customers.
The high-cost main airline can cope with the high-yield business market and inbound tourist market and some of the more profitable leisure routes.
But the low-yield leisure market is a mismatch with the high-cost full service airline.
There is a type of customer - primarily the business customer - that will always use a full service airline because of regular scheduling, lounges, and to a lesser extent a business class.
But those that don't require this are not prepared to pay for it, and to retain load factors these seats need to be discounted to combat the threat of Virgin. Cutting the cake three ways makes loads of sense if Qantas is getting two pieces.
The introduction of a new budget carrier may stimulate demand but to what extent?
The reality is that in the current two-airline market Qantas will lose more to Virgin, which can still make a reasonable profit out of low-fare-paying passengers.
Qantas says it's given away as much market share to Virgin as it will allow. The fact that it has not begun a market share fightback is recognition that it will lose more than it gains.
The revelation of the budget airline is also an implicit threat to any would-be entrant to the Australian domestic market. Qantas can get its new product to the market more quickly than anyone else because it has a spare air operator's certificate, thanks to buying out the failed Impulse.
For anyone else, getting this certificate would take nine months or more.
Of course, there are large risks associated with starting a third airline here. The history of aviation in Australia is littered with carcasses of failed airlines, from Compass Mark I and II to Impulse and Ansett.
Duopolies work well enough as long as neither player gets greedy. How three would work in a market where two share ownership is untested.
But perhaps not for much longer.
=======================================
Last edited by Wirraway; 22nd Aug 2003 at 01:51.
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Fri "Australian Financial Review"
Budget airline to take on Virgin Blue
Aug 22
Jane Boyle
Qantas's new no-frills carrier will provide a fighting brand to offer cut-price fares on routes where the airline needs to defend its turf against Virgin Blue or any aspiring entrants.
Qantas is targeting a cost base for the new carrier similar to, or lower than, Virgin Blue's.
It will compete alongside the main Qantas brand. And while it has been labelled a "leisure" airline, it won't be confined to leisure traffic routes. It will also be used on prime corporate routes like Sydney-Melbourne, where there is demand for bargain fares.
Qantas gave scant detail on the proposal. But as a clue to the potential scale of the operation, leisure traffic accounts for about 25 per cent of Qantas's domestic business, which equates to a fleet of about 33 aircraft. The new carrier is likely to operate Boeing 737s, as does Virgin Blue.
Qantas's aim is to establish the airline under more flexible and less costly industrial agreements.
But it needs to navigate carefully around industrial relations laws, which require that if a company sets up a new service provider to replace an existing service, existing terms and conditions are transferred to the new company. To avoid this, Qantas is positioning the new carrier as a growth vehicle.
A plan for the new carrier will be put to the board as early as October. It could take about six months to bring to market.
=========================================
Budget airline to take on Virgin Blue
Aug 22
Jane Boyle
Qantas's new no-frills carrier will provide a fighting brand to offer cut-price fares on routes where the airline needs to defend its turf against Virgin Blue or any aspiring entrants.
Qantas is targeting a cost base for the new carrier similar to, or lower than, Virgin Blue's.
It will compete alongside the main Qantas brand. And while it has been labelled a "leisure" airline, it won't be confined to leisure traffic routes. It will also be used on prime corporate routes like Sydney-Melbourne, where there is demand for bargain fares.
Qantas gave scant detail on the proposal. But as a clue to the potential scale of the operation, leisure traffic accounts for about 25 per cent of Qantas's domestic business, which equates to a fleet of about 33 aircraft. The new carrier is likely to operate Boeing 737s, as does Virgin Blue.
Qantas's aim is to establish the airline under more flexible and less costly industrial agreements.
But it needs to navigate carefully around industrial relations laws, which require that if a company sets up a new service provider to replace an existing service, existing terms and conditions are transferred to the new company. To avoid this, Qantas is positioning the new carrier as a growth vehicle.
A plan for the new carrier will be put to the board as early as October. It could take about six months to bring to market.
=========================================
The first thing you have to understand is that there is no such thing as a low cost carrier in Australia and quite frankly there never will be.
The QF solution has already been decided in the board room and is well under way. Dixon's razor gang will be going to work on the International side of the company to cut costs, wages and conditions while the Domestic side will simply be replaced. It will come in the form of something like Australian Airlines with it's own AOC and corporate structure, this gets around the legal argument of "Continuation of Business" issues. Once this company has reached a position of equal strength to QF Domestic, then QF will simply dissolve Qantas Domestic. The same way as it's dealing with NJS Qantaslink.
What will be left, is a more efficient Qantas Airways with a leaner cost structure, wages and conditions and a completely different "Virgin" style company in the domestic market.
What can you do!
You need to stop this so called low cost carrier from getting up, the way to do that is ensure you deny it access to your services and infrastructure from the mainline company. If you dont, you have already lost.
I'm surprised the question hasnt been asked, where does this magical 70% of the domestic market that needs to be defended come from. Since they never had it prior to the Ansett collapse and only have it now by default. Why then should the employee have to suddenly pay to defend this market.
The QF solution has already been decided in the board room and is well under way. Dixon's razor gang will be going to work on the International side of the company to cut costs, wages and conditions while the Domestic side will simply be replaced. It will come in the form of something like Australian Airlines with it's own AOC and corporate structure, this gets around the legal argument of "Continuation of Business" issues. Once this company has reached a position of equal strength to QF Domestic, then QF will simply dissolve Qantas Domestic. The same way as it's dealing with NJS Qantaslink.
What will be left, is a more efficient Qantas Airways with a leaner cost structure, wages and conditions and a completely different "Virgin" style company in the domestic market.
What can you do!
You need to stop this so called low cost carrier from getting up, the way to do that is ensure you deny it access to your services and infrastructure from the mainline company. If you dont, you have already lost.
I'm surprised the question hasnt been asked, where does this magical 70% of the domestic market that needs to be defended come from. Since they never had it prior to the Ansett collapse and only have it now by default. Why then should the employee have to suddenly pay to defend this market.
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Looks like there could some more jobs in Australia comingup. It's doubtfull that guys would leave QF mainline to go thee, but there could be an opening for us guys at slightly higher rates than now. Or maybe even the same rates but with a better company.
interesting days (daze) in Oz aviation on the horizons
interesting days (daze) in Oz aviation on the horizons
No! I very much doubt that this will effect the Virgin float. In fact it will most likely assist the float and make it stronger. If QF's answer to the Virgin threat is to produce an Airline with the same cost structure and more importantly "service" then they have just given away the remaining 30% of the market that they are trying to defend.
In reality they already know this. QF never really wanted the domestic market. It was imposed upon them when the Government compelled them to merge. 200 Aussie dollars for a five hour sector, why would you bother.
The only remaining element of importance to the domestic market is the on carriage. It would be worth keeping the Cityflyer service between the main Capital Cities only, mainly for the business market wholly within the QF camp.
In reality they already know this. QF never really wanted the domestic market. It was imposed upon them when the Government compelled them to merge. 200 Aussie dollars for a five hour sector, why would you bother.
The only remaining element of importance to the domestic market is the on carriage. It would be worth keeping the Cityflyer service between the main Capital Cities only, mainly for the business market wholly within the QF camp.
Moderate, Modest & Mild.
It's doubtfull that guys would leave QF mainline to go thee
In spite of the wonderful spelling, VB_Capt (not!), I doubt that "the guys in QF mailine" are going to have a choice. What possible reason would QANTAS have for running 2 B737 operations simultaneously - 1 on a "low cost" basis, and the other on a $$ basis that was the REASON for creating the former??!!!
Those 737 salaries - the same ones responsible for sending Ansett down the tube, the legacy of the Hawke, Abeles, Murdoch fiasco - are about to become as extinct as the scabs who worked for East-West, IPEC, TAA and Ansett, of which VB_Capt (not!) regrets not joining.
(Actually we wish you had too VB-C 
)
In spite of the wonderful spelling, VB_Capt (not!), I doubt that "the guys in QF mailine" are going to have a choice. What possible reason would QANTAS have for running 2 B737 operations simultaneously - 1 on a "low cost" basis, and the other on a $$ basis that was the REASON for creating the former??!!!
Those 737 salaries - the same ones responsible for sending Ansett down the tube, the legacy of the Hawke, Abeles, Murdoch fiasco - are about to become as extinct as the scabs who worked for East-West, IPEC, TAA and Ansett, of which VB_Capt (not!) regrets not joining.
(Actually we wish you had too VB-C )
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Sorry to disappoint all you guys who would love to see us fall, but Qantas mainline pilots will be crewing the new low-cost operation. Memorendum of understanding already been signed off. We are not that expensive after all.
Memorandum of Understanding!!!
Very different to a workplace agreement and in twelve months time it wont matter, you'll accept what ever they want to give you.
But more the point, what about the rest of your Company, Cabin Crew, Checkin, Ground Handling etc. What about them or are you only interested in yourselves. Understand! there will be no secondments.
Very different to a workplace agreement and in twelve months time it wont matter, you'll accept what ever they want to give you.
But more the point, what about the rest of your Company, Cabin Crew, Checkin, Ground Handling etc. What about them or are you only interested in yourselves. Understand! there will be no secondments.
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It is expected that QF Pilots would crew this low cost operater. The precendent was already established with Australian Airlines. qfpaypacket, only the sick and deranged would want to see you chaps fall. The question is, how will the conditions for crews differ from that at mainline. Will you have to pay for your own endorsement? If salaries are not cut to VB/JetConnet levels, would this be seen as failing to full grasp to low cost consept. Just out of interset, what are the differences in conditions between QF and AA? As for AN B737 salaries sending AN broke, this is a furphy, KM. I t was never Pilot salaries that sent AN broke. It was a host of other reasons. As for "scabs becoming extinct", most these days are gainfully employed in aviation worldwide. The industry has failed to 'reject them' as you predicted some time ago.
Last edited by Ralph the Bong; 23rd Aug 2003 at 13:25.
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Transcript
Business Breakfast ABC
22/08/2003
Emma Alberici
GEOFF DIXON, CEO, QANTAS: Our labour costs are probably too high, but most of our costs are too high for the efficiencies needed in this type of business.
But we'll work very closely with our people and it's mainly to take out some of the - what we call 'custom and practice', things that have built up over years, but are not in any enterprise bargaining agreement, but just become the norm.
EMMA ALBERICI: What sorts of things?
GEOFF DIXON: Oh, well, it's rostering, it's things like people have taken - instead of taking lunch, they say they work for their lunch but they'll leave a half hour early, but, the truth is, perhaps not a lot of work's done during lunch and they don't probably leave a half hour early and they may well have overtime in that period.
So there's many things like that that have just been built up and they're in all the individual businesses and it goes back - this is a strategy.
We go back to what we're going to do about breaking up our businesses.
It will enable each business unit to better locate and work and change some of these practices.
We already have 15 per cent of our people either casual or part-time or contractors.
We intend to try and get that around about 20-25 per cent, but the great majority of the Qantas employees will be well-remunerated as full-time employees.
We just need the flexibility.
This is not an attempt to make Qantas 100 per cent part-time or casual work.
Not at all.
EMMA ALBERICI: You'll be moving more jobs offshore?
GEOFF DIXON: It's something that we must always consider, but I'd like to put this in context.
Qantas is company that has around about 95, 96 per cent of its people working in Australia.
But we are a global company - more so than probably most other Australian companies - and we compete against companies that have lower operating costs for a variety of reasons.
If we can source suitable activities offshore that are much better than we can do in Australia, we'd be silly not to do it.
EMMA ALBERICI: This low-cost carrier that you're going to start, how much of that is a reaction to the impact of Virgin Blue on Qantas?
GEOFF DIXON: No, it's not a reaction to the impact of Virgin Blue on Qantas.
It's a reaction to what's happened in the market in Australia and what's happened in the markets around the world.
There's a growth in that very low-end leisure market.
We believe it's not being filled at the moment and we would open this airline - if we do - to compete in that particular market.
But we, like everybody else, as I think I've said before, probably we're more efficient than most full-service airlines, but you do need a lower cost base and a different type of operation to go for what I'd call the real low-yielding leisure operations.
Qantas just can't compete in that sort of market.
No traditional airlines can.
And that's what we're going to do if we start this airline.
EMMA ALBERICI: When you say 'leisure' market, what do you mean?
GEOFF DIXON: I mean leisure.
I mean people who are just visiting friends and relatives, people who want to go on holidays, but who really want to go even cheaper - they don't want to go business class, they don't want to go on a full-service airline.
EMMA ALBERICI: Virgin Blue-style?
GEOFF DIXON: No, Virgin Blue's probably a little bit of above that.
This may be even below that - Virgin Blue's catering for that market, so are we a bit, but we find it very difficult to cater for that market.
But no, this is not about Virgin Blue, but it is about growth in the Australian market and the position.
And we don't even know if the position's there yet.
EMMA ALBERICI: Isn't there a risk that this new low low-cost carrier might indeed cannibalise existing Qantas sales?
GEOFF DIXON: There's risk in everything you do in this business and whether there be cannibalisation or not is things we're working on right now.
But that's not our intention.
Our intention, as I said today, is to ensure that Qantas - the mainline Qantas internationally and domestically - has a very very good product, full-service product and is able to cater for corporate business market, plus what I'd call a high-yielding leisure market, which is out there.
We are finding it very very difficult and we don't compete in that market because we can't afford to compete in that market.
Another vehicle probably could.
EMMA ALBERICI: And I suppose businesses that are always looking at their bottom line might also be quite attracted to a low-cost alternative?
GEOFF DIXON: They may be, but I don't think low-cost alternatives provide what a lot of business people need.
I mean, as you know, they have a much shorter pitch between the seats, you've got less room.
It's more difficult to get from A to B.
They don't have any of the services such as food, if you want food.
But certainly lounges, frequent flyer programs, network - Qantas is a network carrier.
We provide - we can put people all around Australia on any given day.
We carry - we have 5,000 flights a week.
I mean, it's a very, very big operation.
This is a whole different operation.
EMMA ALBERICI: Singapore is looking to fly to LA from Australia.
Would you support that?
GEOFF DIXON: No, we don't.
A matter of fact, we don't think it's right.
And we don't think there's an equivalent trade-off for Qantas in such an arrangement.
And we think it would be not beneficial to Australia because I think Qantas certainly is very beneficial to Australia and it's a very competitive route at any rate.
United is coming back in quite a big way and you've got to have some routes that remain profitable.
I mean, there is no equivalent that Singapore can give us.
--------------------------------------------------------------------------------
Please note: Transcripts on this website are created by an independent transcription service. The ABC does not warrant the accuracy of the transcripts.
=============================================
PM- ABC (Transcript)
Qantas plans to launch new budget airline PM - Friday, 22 August , 2003 18:30:00
Reporter: Stephen Long
MARK COLVIN: The domestic cut-price airline war in Australia is on in earnest – the war of words, that is. Qantas grabbed this morning's front pages with its plan to launch a new domestic airline aimed at the budget traveller.
But this evening its competitor Virgin Blue says the idea just won't fly. Virgin Blue's head of strategy David Huttner says that, based on overseas experience, the budget carrier would be more of a threat to Qantas than to the Virgin Blue.
And he's told PM that Virgin Blue's legal advice is that Qantas could face serious legal problems if it uses the budget carrier as a sneaky way to cut labour costs.
David Huttner spoke to our finance correspondent Stephen Long.
DAVID HUTTNER: In one way we could say it's flattering because after three years they've finally realising that maybe we not only survived, but actually got it right. But I think it would be very, very hard for them to do it. They'd literally have to fire thousands of people as a mainline airline and then start a new airline at the same time, because they'll just shrink down what they have today.
STEPHEN LONG: Qantas is saying that's not their intention, they actually see this as a different market.
DAVID HUTTNER: It is definitely a different market, but it takes away from the market they already have. On a Qantas plane today there is a whole mix of people, just like on Virgin Blue, there are business flyers, government travellers and people who are flying to visit their friends and relatives or going on holiday.
If who take half those people out and put them on another aircraft, another airline, you ultimately are going to impact upon your core business and it's going to tremendously damage your core business.
STEPHEN LONG: Are you suggesting then that Qantas would simply cannibalise its own market if it was to launch this low cost budget airline?
DAVID HUTTNER: I think they lose an efficiency of scale. If you suggest that an aeroplane only has business people on board, or only leisure travellers on board, you can't separate it that way. It is the mix of all those people together that makes an airline successful.
STEPHEN LONG: Now, Geoff Dixon, the Qantas Chief Executive, has denied this – but there has been widespread speculation that the reason Qantas is considering this is that they want to have a new airline that they can establish essentially as a greenfields operation, get new enterprise agreements with lower labour costs, less demarcations, more flexibility.
Do you think that there is substance to that view?
DAVID HUTTNER: I think it reflects… I don't know if you would call it transmission of business in terms of moving things over from one airline to another, but you have to ask yourself, can you blame all your problems on your people, which seems to be what Mr Dixon is doing.
STEPHEN LONG: So you're suggesting when you mention the transmission of business issue, that there actually could be legal impediments under industrial relations law to the kinds of questions that have been raised about establishing a low cost carrier with lower pay rates?
DAVID HUTTNER: Some of the experts we have spoken to already about this have already suggested that will be one of the issues that they face. We're not sure which market they are going to grow. We've already brought in a lot of the stimulation from low fares, so to do what they're going to do is going to raise a number of questions.
STEPHEN LONG: Some people may suspect that Virgin Blue is talking down the prospects of this new budget carrier from Qantas doing well because you're worried about competition.
DAVID HUTTNER: I think they're welcome to go for it, but I think they only need to talk to their largest shareholder, British Airways, about what happened when BA tried to do the same thing.
They ended up not hurting EasyJet or Ryanair, they ended up damaging British Airways and that's why they sold it off in the end, that was Go. United tried the same thing, Continental tried the same thing. You don't see these airlines really in better shape today because they tried to be all things to all people by creating a sub brand at a different end of the market.
MARK COLVIN: Virgin Blue's Head of Strategy David Huttner with Stephen Long, our Finance Correspondent.
===========================================
Business Breakfast ABC
22/08/2003
Emma Alberici
GEOFF DIXON, CEO, QANTAS: Our labour costs are probably too high, but most of our costs are too high for the efficiencies needed in this type of business.
But we'll work very closely with our people and it's mainly to take out some of the - what we call 'custom and practice', things that have built up over years, but are not in any enterprise bargaining agreement, but just become the norm.
EMMA ALBERICI: What sorts of things?
GEOFF DIXON: Oh, well, it's rostering, it's things like people have taken - instead of taking lunch, they say they work for their lunch but they'll leave a half hour early, but, the truth is, perhaps not a lot of work's done during lunch and they don't probably leave a half hour early and they may well have overtime in that period.
So there's many things like that that have just been built up and they're in all the individual businesses and it goes back - this is a strategy.
We go back to what we're going to do about breaking up our businesses.
It will enable each business unit to better locate and work and change some of these practices.
We already have 15 per cent of our people either casual or part-time or contractors.
We intend to try and get that around about 20-25 per cent, but the great majority of the Qantas employees will be well-remunerated as full-time employees.
We just need the flexibility.
This is not an attempt to make Qantas 100 per cent part-time or casual work.
Not at all.
EMMA ALBERICI: You'll be moving more jobs offshore?
GEOFF DIXON: It's something that we must always consider, but I'd like to put this in context.
Qantas is company that has around about 95, 96 per cent of its people working in Australia.
But we are a global company - more so than probably most other Australian companies - and we compete against companies that have lower operating costs for a variety of reasons.
If we can source suitable activities offshore that are much better than we can do in Australia, we'd be silly not to do it.
EMMA ALBERICI: This low-cost carrier that you're going to start, how much of that is a reaction to the impact of Virgin Blue on Qantas?
GEOFF DIXON: No, it's not a reaction to the impact of Virgin Blue on Qantas.
It's a reaction to what's happened in the market in Australia and what's happened in the markets around the world.
There's a growth in that very low-end leisure market.
We believe it's not being filled at the moment and we would open this airline - if we do - to compete in that particular market.
But we, like everybody else, as I think I've said before, probably we're more efficient than most full-service airlines, but you do need a lower cost base and a different type of operation to go for what I'd call the real low-yielding leisure operations.
Qantas just can't compete in that sort of market.
No traditional airlines can.
And that's what we're going to do if we start this airline.
EMMA ALBERICI: When you say 'leisure' market, what do you mean?
GEOFF DIXON: I mean leisure.
I mean people who are just visiting friends and relatives, people who want to go on holidays, but who really want to go even cheaper - they don't want to go business class, they don't want to go on a full-service airline.
EMMA ALBERICI: Virgin Blue-style?
GEOFF DIXON: No, Virgin Blue's probably a little bit of above that.
This may be even below that - Virgin Blue's catering for that market, so are we a bit, but we find it very difficult to cater for that market.
But no, this is not about Virgin Blue, but it is about growth in the Australian market and the position.
And we don't even know if the position's there yet.
EMMA ALBERICI: Isn't there a risk that this new low low-cost carrier might indeed cannibalise existing Qantas sales?
GEOFF DIXON: There's risk in everything you do in this business and whether there be cannibalisation or not is things we're working on right now.
But that's not our intention.
Our intention, as I said today, is to ensure that Qantas - the mainline Qantas internationally and domestically - has a very very good product, full-service product and is able to cater for corporate business market, plus what I'd call a high-yielding leisure market, which is out there.
We are finding it very very difficult and we don't compete in that market because we can't afford to compete in that market.
Another vehicle probably could.
EMMA ALBERICI: And I suppose businesses that are always looking at their bottom line might also be quite attracted to a low-cost alternative?
GEOFF DIXON: They may be, but I don't think low-cost alternatives provide what a lot of business people need.
I mean, as you know, they have a much shorter pitch between the seats, you've got less room.
It's more difficult to get from A to B.
They don't have any of the services such as food, if you want food.
But certainly lounges, frequent flyer programs, network - Qantas is a network carrier.
We provide - we can put people all around Australia on any given day.
We carry - we have 5,000 flights a week.
I mean, it's a very, very big operation.
This is a whole different operation.
EMMA ALBERICI: Singapore is looking to fly to LA from Australia.
Would you support that?
GEOFF DIXON: No, we don't.
A matter of fact, we don't think it's right.
And we don't think there's an equivalent trade-off for Qantas in such an arrangement.
And we think it would be not beneficial to Australia because I think Qantas certainly is very beneficial to Australia and it's a very competitive route at any rate.
United is coming back in quite a big way and you've got to have some routes that remain profitable.
I mean, there is no equivalent that Singapore can give us.
--------------------------------------------------------------------------------
Please note: Transcripts on this website are created by an independent transcription service. The ABC does not warrant the accuracy of the transcripts.
=============================================
PM- ABC (Transcript)
Qantas plans to launch new budget airline PM - Friday, 22 August , 2003 18:30:00
Reporter: Stephen Long
MARK COLVIN: The domestic cut-price airline war in Australia is on in earnest – the war of words, that is. Qantas grabbed this morning's front pages with its plan to launch a new domestic airline aimed at the budget traveller.
But this evening its competitor Virgin Blue says the idea just won't fly. Virgin Blue's head of strategy David Huttner says that, based on overseas experience, the budget carrier would be more of a threat to Qantas than to the Virgin Blue.
And he's told PM that Virgin Blue's legal advice is that Qantas could face serious legal problems if it uses the budget carrier as a sneaky way to cut labour costs.
David Huttner spoke to our finance correspondent Stephen Long.
DAVID HUTTNER: In one way we could say it's flattering because after three years they've finally realising that maybe we not only survived, but actually got it right. But I think it would be very, very hard for them to do it. They'd literally have to fire thousands of people as a mainline airline and then start a new airline at the same time, because they'll just shrink down what they have today.
STEPHEN LONG: Qantas is saying that's not their intention, they actually see this as a different market.
DAVID HUTTNER: It is definitely a different market, but it takes away from the market they already have. On a Qantas plane today there is a whole mix of people, just like on Virgin Blue, there are business flyers, government travellers and people who are flying to visit their friends and relatives or going on holiday.
If who take half those people out and put them on another aircraft, another airline, you ultimately are going to impact upon your core business and it's going to tremendously damage your core business.
STEPHEN LONG: Are you suggesting then that Qantas would simply cannibalise its own market if it was to launch this low cost budget airline?
DAVID HUTTNER: I think they lose an efficiency of scale. If you suggest that an aeroplane only has business people on board, or only leisure travellers on board, you can't separate it that way. It is the mix of all those people together that makes an airline successful.
STEPHEN LONG: Now, Geoff Dixon, the Qantas Chief Executive, has denied this – but there has been widespread speculation that the reason Qantas is considering this is that they want to have a new airline that they can establish essentially as a greenfields operation, get new enterprise agreements with lower labour costs, less demarcations, more flexibility.
Do you think that there is substance to that view?
DAVID HUTTNER: I think it reflects… I don't know if you would call it transmission of business in terms of moving things over from one airline to another, but you have to ask yourself, can you blame all your problems on your people, which seems to be what Mr Dixon is doing.
STEPHEN LONG: So you're suggesting when you mention the transmission of business issue, that there actually could be legal impediments under industrial relations law to the kinds of questions that have been raised about establishing a low cost carrier with lower pay rates?
DAVID HUTTNER: Some of the experts we have spoken to already about this have already suggested that will be one of the issues that they face. We're not sure which market they are going to grow. We've already brought in a lot of the stimulation from low fares, so to do what they're going to do is going to raise a number of questions.
STEPHEN LONG: Some people may suspect that Virgin Blue is talking down the prospects of this new budget carrier from Qantas doing well because you're worried about competition.
DAVID HUTTNER: I think they're welcome to go for it, but I think they only need to talk to their largest shareholder, British Airways, about what happened when BA tried to do the same thing.
They ended up not hurting EasyJet or Ryanair, they ended up damaging British Airways and that's why they sold it off in the end, that was Go. United tried the same thing, Continental tried the same thing. You don't see these airlines really in better shape today because they tried to be all things to all people by creating a sub brand at a different end of the market.
MARK COLVIN: Virgin Blue's Head of Strategy David Huttner with Stephen Long, our Finance Correspondent.
===========================================
Last edited by Wirraway; 23rd Aug 2003 at 20:45.
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Can somebody help me please? Isn't saying 'not' after something to indixcate a negative, pre pubescent girls talk? It seems like the kaptain may have had a nip & tuck and surgery to knock offd as many years as it takes to get him back to pre puberty. And for info Kap, the errords that appear to be spel;ling, are in fact typos. This is a new keyboard and quite differtent from the oldone. In the short time I have been visuiting here, I notice a very silly trend in your posts. If you don't agree, you attack the individual on any trivial matter such as spelling which isn't in fact spelling errorsat all. Perhaps your time would be bettwer spent cultivating some common sense, the least common of all the senses.
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As in to say "It's REALLY cool to say "not". "NOT!!".
(With Mike Myers moving his fingers at the appropriate places..)( I know wghat tu sayuing VBN Cap. Its rela hard to tyupe when ya poissed too..)
I do agree, there is an overwelming propensity to play the man and not rationally debate what has been said. As my year 12 English teacher said: "To argue the Man's creditials and not the Man's assertions is not the basis for clear thinking and rational debate. Do this in your exam and you will fail". But lets face it, if you disagree with some people. then YOU ARE A SCAB!! Not only that but everything (as a scab) that you have said and done in you life is WRONG. And you are probably(being a scab) a child molester. And: a drug dealer/Tax cheat/ Draft dodger/ wife beater/unsafe, incapable Pilot./worshiper of false idols.. Not only that, BUT A GODDAMN F@#$%^&G SCAB! (Bang fist on bar then ash ciggy into ashtray. Kapt. M, Amos 2 and Sub-sonic MB sitting around bar nod sage-like at their drinks and say somthing like "Right" or "Bloody Oath" or somthing real cool .NOT!!. Ha HaHaHaHa). Now EWhere's mt F!@#$%^ corkscrew and smokes..Hey get back under the covers,baby. I'm turning off the computer and coming ta bed.
(With Mike Myers moving his fingers at the appropriate places..)( I know wghat tu sayuing VBN Cap. Its rela hard to tyupe when ya poissed too..) I do agree, there is an overwelming propensity to play the man and not rationally debate what has been said. As my year 12 English teacher said: "To argue the Man's creditials and not the Man's assertions is not the basis for clear thinking and rational debate. Do this in your exam and you will fail". But lets face it, if you disagree with some people. then YOU ARE A SCAB!! Not only that but everything (as a scab) that you have said and done in you life is WRONG. And you are probably(being a scab) a child molester. And: a drug dealer/Tax cheat/ Draft dodger/ wife beater/unsafe, incapable Pilot./worshiper of false idols.. Not only that, BUT A GODDAMN F@#$%^&G SCAB! (Bang fist on bar then ash ciggy into ashtray. Kapt. M, Amos 2 and Sub-sonic MB sitting around bar nod sage-like at their drinks and say somthing like "Right" or "Bloody Oath" or somthing real cool .NOT!!. Ha HaHaHaHa). Now EWhere's mt F!@#$%^ corkscrew and smokes..Hey get back under the covers,baby. I'm turning off the computer and coming ta bed.
Last edited by Ralph the Bong; 24th Aug 2003 at 01:23.