Hey Fonz. Reading back through my reply I fail to see where I said I knew more than the board. I simply said the Qantas board are in the know.

Oh thanks for that I didn't realised they F%^# up he flying stuff only

That's alright. It shows. Clown.

QFInsider....

I am often moved by your posts to revisit some basic concepts and pressure test them to see all is OK.

I'm not sure, to start off with , that in discussing airline industry affairs I'd necessarily be using Willie as a primary source. Issues of a) credibility and b) vested interests come to mind.

Bigger issue though. "Yields are everything'. Good point...yields have to at least cover all costs, including overheads and cost of capital....QED. But since the first passenger stepped aboard a Zeppelin or DC-2 or whatever, about the time my mum was a toddler, YIELDS HAVE BEEN STEADILY FALLING. Even First Class yields are nowhere near what they were once.Nowhere near. Cold hard fact of life. On the other hand its what you'd expect isn't it? On average, since the DC-2....and if I could find the figure I'd tell you but its somewhere....yields have fallen on average about the same amount p.a. as technology has lowered the cost of putting a seat in the air. Increased passenger numbers are the link between the two.

There is no world where you can, on a sustainable basis, ignore this reality. Management have to manage the mix of fares and segments and their varying elasticities and sensitivities and needs of course. A big job. Some carriers have tried, with success, to embed a Jetstar" type carrier within their own liveried aircraft and cost structure, shoe-horning all available price seekers into the Y class cabin. Insofar as this increases load factors it is good.If it means the same pax travelling at lower fares then it is bad. Some carriers have tried to start up low cost half-arms-length subsidiaries and it never worked. United's Shuttle and TEd for example. Disasters. Jetstar is simply an example where its worked, thus far, and workled well. Quarantines the yields on the high-cost legacy parent and allows aggressive expansion and competitive defence...for the whole group...in price sensitive markets....which are ever growing.

I like that you believe so hard in what once was. But since, at least in this country, TAA entered the market and announced that it would introduce Economy fares (up til then all fares had been First Class)....prices have been falling. TAA's slogan was "One price for all...the lowest" or something similar. That announced the end of the days of protected yields and proetected markets. The world you long for and so admirably believe in and cling to....HAS GONE.

I'd suggest to you that you really do start with a clean sheet of paper, bottle of red and a good computer and do some research. To start I commend to you the concept of "Suspension of Disbelief".....start by thinking about what the QF Group has done with JQ in something other than negative terms. Susepnd your current thoughts and ideas.....look at the facts. Arrive at that point later if you will....but don't start that way.

On it's own....unless extremely well funded....and possibly not even then....Jetstar might not have started or prospered. And by exactly the same logic, without JQ, the Qantas Group would by now have drowned, carried down to join Davy Jones (and Braniff, Sabena, Swissair, Alitalia, TWA, Panam, Eastern etc etc), by inflexibility, falling yields, legacy costs and equipment and falling market share.

For now...the fortuitous alignment of the planets is that together, the various components of the QF Group, add up to far more than the some of the parts. Maybe imperfectly handled, maybe some un-needed malice in various quarters, maybe some attitudes borne of history not of the future. But it works.

Get back to me when you've thought through this without your pre-conceived ideas.

Simply put,

show me an audited set of accounts. Let me see just how much is gifted from the parent. From maintenace to walkie talkies, Jetstar is a farce.
Oh forget it

Let's see who is still standing with externally audited accounts in 12 months.

Have just come home from an industry do & word is J* have contacted PARC/RAL to see if they place 320/330 crews off-shore

Sigh.....

QF Insider......As far as I know....Qantas Group accounts are audited. And as a listed company I presume Qantas abides by the reportng requirements of the ASX as well as the ASC, not to mention the analysis of the brokers and investment banks that guide investors.

If you are implying that there is fraud or shady accounting....take action.

Or....as I have recommended to you....study some facts and theory. There is no single method of the allocation of fixed costs within a major multi-faceted entity. How a group allocates its resources, is a function of its strategies.It sometimes lends itself to dissaggregation....sometimes not. For example if QF long-haul received a significant advantage because travellers used FF points earned on domestic and consistently travelled long-haul on business because of that lure, or read the Qantas inflight magazine often on domestic sectors so decided to travel long-haul on a holiday...does that mean that short-haul is subsidizing long-haul and therefore should be compensated?

Or let's say that a QF short-haul 737 crew cost 30% more than the "free-market" rate (i.e. the rate at which all positions if advertised would be filled by qualified applicants) because of legacy of non-competitive EBAs and having. Just as an example you understand. If that additional cost dampened short-haul growth in a way that impacted long-haul flow-on revenue and hence profit.....should short haul compensate long-haul?

"Structure follows Strategy"...."Concentrate resources at the decisive point".....these are the keys. The Group chooses how to allocate and fund its resources in order to meet its perception of competitive challenges, long and short term. It works, give or take, in a fairly unparalleled way.

If you can get your head around some of this stuff you'll be the better for it. If you are really as passionate as you seem...find yourself a study course in airline economics.....many folks have found that a few hours a day for a few years in that pursuit has opened their eyes and their career choices.

Venom has no place in business, bulletin boards or the cockpit. I commend that thought to you.

When I think of Dixon & the Jetstar experiment, it reminds me so much of Charles Ponzi.

In brief, a dud investment sold to those willing & hoping on its own success.

MC:8

I love the use of the term the "parent" company. As far as I'm concerned the parent group is the QANTAS group, of which Mainline, Jetstar, Sunstate and Eastern are all a part of. The point that mainline think that they are immune the trials of today shows a sense of being an illusionist.

The end is plain an simple. Unless the group can be adaptable as a whole Jetstar and mainline will both suffer. Market share will drop with capacity and OUR competitors will gain the footing they need to take a real chunk of our clients with them.

The Markets of Jetstar and Qantas are aimed at different clientèle. Jetstar is drawing a line in the sand, accepting a small loss while continuing to expand while mainline reduces capacity and still remains profitable because of their large business base. For those that feel Jetstar and QANTAS are competitors, they are only showing how naive they really are. We are on the same rubgy team, don't let management play it into any other direction. The flight crew at Jetstar are, for lack of a better term not the "Strike Breakers". We are only doing what mainline can not and by that maintain the Qantas groups market share.

The only people to suffer here is Virgin and I feel the Qantas group is in a very strategic position to squish the market share Virgin has.

The only venom has been the venom eminating from Dixon and co.

J* international was nothing more than an attempt to lever down working conditions for mainline employees. Its business case was shaky at best. The logic firmly supported by a Liberal workchoices IR environment that no longer exists. To validate its viability would necessitate comparing like with like.

As I cannot compare like with like and see just what price is paid by J* for the assets it is gifted/borrows/"buys" from mainline, the question remains.

At $140 a barrel, low yield and zero if any contribution margin, just what is the reason shareholders funds are poured into an entity that relied on low yield high volume patrons? The same patrons being the first to feel the changing of the economic cycle.

Sure group accounts are audited, but the contribution and apportioned cost of the J* entity is not. Dixon made a big show of segmenting the business units to facilitate "competitive pressure" allowing units to compete for capital. Let's just see how well J* competes when issues of transparency including transfer pricing are available for all to compare..Like with like

If Qantas could give a free wheelbarrow to an employee and in doing so fend off a competitive thrust by another carrier and in doing so saved the cost of many wheelbarrows....what would you say?...."No, that guy must pay full price for the wheelbarrow".......even if it costs the parent company a heap? No....and this is why you need to study and understand the very basics of competitive behaviour. You really do.

Don't use emotive thinking in these forums or at a bar, any more than you would...if you are a pilot...in the cockpit. As I said...and I'm not by far the only one....without Jetstar there might be now Qantas by now....and that may be equally true the other way around. That is what synergy means and as said much earlier...economies of scope. If you confuse synergistic and symbiotic mechanisms with parisitic behaviour then you are truly lost and I for one, as a QF shareholder, am glad you don't sit on QF's executive committee.

Genex,

I can't speak for every Qantas employee, but personally I wouldn't mind if Jetstar were receiving "free wheelbarrows" if the company would do us the service of calling a spade a spade. It gets a little tiring hearing geoffwit bang on about the legacy costs of QF when it is patently clear that we are subsidising the the JQ operation. :ugh:

Altocu

Sigh.....IT IS NOT A SUBSIDY anymore than saying that the passengers "subsidise" the extravagant payscales of legacy mainline pilots.

Anyway....I give up. If you guys are indeed pilots.....I worry about your situation awareness. But I no longer wonder why they use the word Legacy. It bleeds from you every sentence......good luck if you ever get your wishes and destroy with Jetstar the cutting edge of your employer's competitive capabilities. You'll need it when you follow so many other colleagues onto the unemployment lines.

Bye

Lets see. Is this a subsidy?

Parent company purchases sims over a number of years for a particular aircraft. One year, the airline that purchased the sims wants to train record numbers of crew on said sim. Unfortunately, because of the number of 'subsidiary' crews utilising said sims, the parent company is forced to send crews overseas. In doing this they accumulate accommodation, allowances and costs for sim time that are attributed to the parent company. Parent company's figures don't look too flash.

Why don't we send the subsidiary crew o/s instead? Unfortunately, the additional 'cost' of sending crews o/s can't be absorbed by the low yields of the subsidiary carrier. Their training figures don't show this o/s excursion and so their figures look excellent.

The seperate training subsidiary recently set up by the parent also looks excellent because their sims are fully utilised. PS: They too were 'gifted' the sims from the parent.

Ultimately the 'cost' to the entire group would be close to the same no matter who went o/s, the point is that the 'parents' figures look bad that year- and the employees of the parent airline are told that they have 'legacy' costs and are uncompetitive- whilst the subsidiary airline is held up as the saviour of the parent company.

So you may be right genex. It may not be a subsidy. However to believe in the last statement- that the subsidiary airline is the saviour and has great numbers- is as equally naive as the belief that QF would survive unchanged without the subsidiary.

Genex ........... sigh

What are you on??:ugh:
Get off the gear buddy:ok:

Perhaps instead of pontificating and ranting abouts ones own education and suggesting others find one - you could should look at the facts.
The group is segmented and told by GD (FOG) that we all have to compete for everything. It pushes us all to do it cheaper and to compete for things like 787s. Now its all well and good to say that we are on group but when we are competing for assets and are told its on a cost basis - then why should Jetstar be rewarded for being cheaper, when a substantial slice of their costs are mainline subsidised. So mainline are being double penalised. Its all a bit technical really - but a man (or woman) of your education could see this I'm sure.:ok:

Now if some of the Jetstar pilots were seconded off overseas for a while, that would mean that the Group wouldn't lose all these highly trained individuals. For some it would be a great couple of years flying overseas etc but obviously not great for everyone. I can't see any big changes to Jetstar in a negative way while GD is still at the helm.

I try not to pontificate and my education is, though robust, not something to drone on over. Broadmeadows Tech was a great place but hardly Harvard.

I have been simply trying to make the self-evident point (I did learn a few things in those long years since Tech) that transfer costs, allocation of fixed costs where there are joint products, variable intra-company cost of capital and the use of multiple brands to entrench Group strength are simple part of daily business life for the strategic planners in any diverse group, not just QF.

Years ago when the then Federal Airports Corporation there were endless debates in Canberra over the issue of pricing for access. QCs, PhDs, very senior public servants, competition gurus, consultants and airline honchos all argued over who was subsidising who when a Dash 8 was occupying a runway at KSA that a 747 would like to have used. Similarly, what should the usage price be for a Dash 8 operator who only wanted say 4000 ft of 100 ft wide low strength bitumen but was stuck with cost recovery for a 14,000 ft 16/34 RW at KSA. All complex issues. QFLink might argue that its not their fault that Sydney has such long RWs and they shouldn't have to pay for the bit they don't use.

Moving onward from that.....Lets say that the Qantas group decided there'd be no internal subsidies between its own aircraft using KSA. "Everyone should pay the same". Should there be an equal charge for a) each aircraft movement?, b) each available seat?, d) each occupied seat?, e) each hundred dollars of revenue?, f) each KG of total payload?, g) each 1000 kg of fuel used getting there?, h) each KG of Max Landing Weight?, i) each 1000 km that the aircraft has travelled on that journey?, j) combinations of the above....and the list goes on. Or should we just auction the slots to a "highest bidder" concept?

Do we give an advantage to the 737 and A320 because they do say 6 sectors a day and generate more revenue and passengers than a 747 in that day? Do we try and bias toward the aircraft that use less fuel per seat or the ones that make more profit? Do we put a surcharge on older, noisier, thirstier aircraft to encourage fleet upgrades.

If you happen to be the one person who can resolve all these (and more) questions to the satisfaction of every stakeholder then you'll have done well. Then...you might start thinking about how (or whether) Jetstar, Qantas Link, Qantas short haul and Qantas long haul cross-subsidise each other and if so is that necessarily a sub-optimal outcome for the whole airline? What is the ideal? How do you allocate the cost of joint products (such as the "A Qantas Group Airline" brand?

Fascinating stuff....not like flying but interesting.

Genex, you seem to be ignoring what Keg, Altocu, QFinsider and the like are peeved about. You can call it what you like; subsidising/reallocation of assets/transfer pricing, but whatever you call it the end result for mainline employees is the same. GD comes out telling all and sundry how cost effective J* and that QF Mainline is struggling against its legacy costs, which is not completely true. As Bula pointed out for the Qantas Group it’s because you have ex number of aircraft crewed at a considerable discount able to operate on otherwise unviable routes to the benefit of the group, but as a stand alone op paying market rates for third party supplied services in a deteriorating market that would be nothing but struggle street, as VB may be finding it. All the while GD distorts the reality to jurnos and the public because he’s using or trying to use J* to force lower pay and conditions across the whole Qantas group.

As to your comment on Qantas pilot pay, extravagant, I don’t think so. If you’re at the top you are well payed, but it takes years to get there and if you don’t fight for your rights pilots might as well start wearing blue singlets as that’s how we’ll be paid, as poorly as your average courier driver, teacher or nurse.

Working well in a softening market are we?

Add to Keg's comments the surplus A330 mainline crew whilst aircraft were transferred to J*

It happens with every new generation.

Educated with 'fascingating', new-fangled ideas, a select few of the generation x or y or z (or are we back at a yet?) set out to change the world.

Scorning those who've gone before them whilst fooling others with thick smoke and shiny mirrors disguised as words, the new kid on the block sees everything in terms of the new paragidm.

Made for interesting reading, for a brief moment during sleep cycles, until the ranting about how good the education was and how extremely interesting and oh so clever we all were as we pontificated on who pays how much.

Thank Christ I didn't waste my money on that scam, the Masters in Aviation.

Redundancies
 

So back on track again.

Are there any redundancies planned?

I have no special insight into the issue of redundancies. But as fuel heads north of US$150/bbl I imagine that somewhere in Sydney a small group of people with whiteboards and computers will be going through the group with a fine tooth-comb thinking of which bits will still pay their way with a stagnant world economy and the second horseman of the apocalypse, $200 fuel.

One imagines that aging aircraft, outdated work practices, non-core functions, under-used assets would be on the hit-list while all opportunities to increase revenue in these tough times would also be high on the agenda. Having a suite of capabilities from low yield to high, from short range to long, the Group is better suited than many to cope. I would be guessing that any pilot EBA being negotiated now would be a very different beast from one negotiated a few months back.

As those who might fear I speak from scripts prepared while studying for a Masters in Aviation or anything even remotely similar....sorry....my formal education in aviation related matters stopped at my ATPL, subjects completed long before there were the various "Generations" be they X, Y or Z.