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American Airlines CEO: Qantas not a "premium" airline
Interesting observations from the CEO of AA :
American Airlines CEO: Qantas not a "premium" airline - Flights | hotels | frequent flyer | business class - Australian Business Traveller |
Well, thats embarrassing for Joyce and Buchanan.
Seriously, these two are absolute amateurs. They need to go. |
I would not have thought that any CEO of a US carrier is in a position to tell what is a premium carrier. Perhaps AA's CEO should clean up his own ailrine before he casts aspersions on others. :=
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Yes, yes, yes!
Sitting in US headquarters, Gerard Arpey has to be wondering what Qantas' CEO Alan Joyce is up to with Jetstar. From the perspective of the US airline industry, low-cost carriers affiliated with legacy airlines just don't work. Delta Air Lines attempted a low-cost move with Song, moving 48 of its Boeing 757 planes into a subsidiary with a low-cost model to try to compete with new airlines like JetBlue. Song only lasted three years, from 2003 to 2006. Ken B, sorry mate, I really don't agree with you, why do you want to protect people at Q who are happy to sack hard working people at a stroke of a pen? Sometimes it is best to say nothing. Your comments show disrespect to fellow Australians on here who are worried whether they will have a job or not after the 24th August. This simple fact doesn't seem to to bother you at all.:mad: |
American Airlines CEO: Qantas not a "premium" airline By John Walton Filed under: qantas, American Airlines, USA, United States, Gerard Arpey http://www.ausbt.com.au/photos/view/...s-plans-pd.jpg Frequent travellers to the USA will be interested to hear what American Airlines CEO Gerard Arpey has to say about his airline's plans to fly to Australia, remarkably critical thoughts about Qantas, and plans to replace the upgraded aircraft currently flying from Los Angeles LAX to New York's JFK. Arpey, speaking to Executive Road Warrior, let slip several important pieces of information for Australian business travellers. American thinking about flights to Australia It's fairly clear to industry observers that Boeing has given American some cheap deals on 777s to make up for the delays to the 787 Dreamliner program. Gerard Arpey, American Airlines CEO, is hedging his bets in doing business with Qantas. Arpey dropped some serious hints that American has aspirations for the very lucrative trans-Pacific route in the interview, saying: "we did just apply for the Joint Business Agreement with Qantas and they started flying into and out of DFW, which is great for both of us. We may want to put our ducks in Australia with the Qantas guys, but [the 777-300ER] certainly could do that route." (Australian Business Traveller first reported that American's new 777-300ER aircraft had the capacity for Los Angeles-Sydney flights in January.) When talking about delivery dates for the 777-300ER, Arpey was very clear about the timeline: "All 8 are set for 2012 and 2013." And there could be more to come: "We still have seven 777-200 deliveries for 2013 through 2016 that are on the books. Now, whether those might be changed to 300s, I don’t know," Arpey hedged. American could even be planning a Qantas-busting new first class product on flights to Australia. When asked about whether the existing American Flagship Suite first class seat will be put on the 777-300ER, Arpey said: "We haven’t decided for sure how we’re going to configure that [aircraft]." Since that Qantas has eschewed the 777-300ER and is using its 747-400ER planes -- which have diverted twice to refuel just this week -- instead, is American losing patience with Qantas' trans-Pacific problems? Qantas: not on American's radar? To make matters worse for Qantas, American doesn't see the Red Roo as a key part of "the best network for premium traffic", despite applying for a trans-Pacific joint venture with Qantas. Arpey specifically mentioned British Airways, Iberia, Japan Airlines and Cathay Pacific as part of that premium traffic network, but there was no sign of Qantas in his thinking. Qantas has been hoping that extra connections through American's mega-hub in Dallas would be a better deal than flights to San Francisco. The airlines' membership of the oneworld alliance doesn't necessarily signify a meeting of minds between the two airlines either. Hong Kong-based Cathay Pacific and Qantas have famously not seen eye to eye in recent memory, with Qantas' decision to skip Cathay's Hong Kong base (the natural oneworld stopover location for Kangaroo Route flights to Europe) in favour of the existing Qantas-British Airways joint venture via Singapore. Given that Qantas is currently sending its longest-range Boeing 747s on a route they don't really have the range for (given that they had to divert for fuel twice this week alone, has Qantas picked the wrong dance partner for the Airline Tango? Is Jetstar making matters worse? Sitting in US headquarters, Gerard Arpey has to be wondering what Qantas' CEO Alan Joyce is up to with Jetstar. From the perspective of the US airline industry, low-cost carriers affiliated with legacy airlines just don't work. Delta Air Lines attempted a low-cost move with Song, moving 48 of its Boeing 757 planes into a subsidiary with a low-cost model to try to compete with new airlines like JetBlue. Song only lasted three years, from 2003 to 2006. Similarly, United Airlines tried a low-cost subsidiary called Ted between 2004 and 2009. It failed, and its nearly 60 Airbus planes were folded back into the United fleet. What lesson has the US airline industry learned from that? Low-cost subsidiaries don't work. Are Arpey and American Airlines management looking aghast at Qantas' plans to turn Jetstar into "Qantas Lite"? New aircraft: what does it mean for Australian connections? Australians will be affected by the aircraft purchase as older planes are replaced with newer ones. The first set to go are clearly the old McDonnell-Douglas MD-80 fleet, which are ancient in aircraft terms. But Arpey also mentions retiring the Boeing 767-200 domestic fleet. Those are the planes that American flies between New York JFK and Los Angeles or San Francisco with better seats and service as part of its "Flagship" transcontinental service. American clearly hasn't made its mind up on the planes that will replace the 767-200s. "We’re not saying that we’re going to fly a bunch of 737s or Airbus A321s on the transcons. We’re just saying it opens some new possibilities for those aircraft," Arpey says, cagily, especially when probed on whether American's much-delayed Boeing 787 fleet will be deployed on those flights. The big picture All these points beg the question: where is the Qantas/American Airlines venture going? We're always interested to hear your thoughts on the matter. Share your views with other readers in the comment box below, or join the conversation on Twitter with the hashtag #qfaa -- and don't forget to @mention us in your Tweets: @AusBT. |
why do you want to protect people at Q who are happy to sack hard working people at a stroke of a pen. disrespect to fellow Australians |
AJ and BB i think the cupboard door is finally coming open and guess what as the staff have been telling you its empty. Having said that the Qantas premium product especialy on the 380 is a cut above anything AA can offer.
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Ouch...... There's the sting in the tail, a glowing report from our Northern allies. What an embarrassment. Its time like this you wonder whether the managers are like that little runt puppy dog that gets kicked and abused but always comes back for more. Next move will be to show QF/JQ the door at One World, but thats ok because AJ and BB and LC know better than anyone else in the industry.
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Woah guys, the title of the article is more than a little misleading. Arpey never actually said that Qantas was not a premium airline, he just didn't mention them while talking about the other oneworld carriers. That little omission has been taken by the author to the extreme methinks.
I could imagine AA wanting to expand its network to fly to Australia, and in the joint venture arrangement with QF both partners win. For AA, they have an advantage in that they can pick up US gov't traffic between Australia and the US due to their weird rules, while QF will simply add their code to an AA operated service and also potentially get upside on their domestic network. |
I think you will find that US govt employees can travel on Qantas as it is a code share with an AA flight number, however i stand to be corrected.
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My God. Have you flown on American? I've flow all classes and they are light years behind and the end-to-end flying experience - shocking.
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American, United :yuk: Far better on SWA for the same or less $$.
Nothing Premium over there. |
For the first time in my posting history, I have to agree with Ken. While the criticisms of the current QF management are spot on, I have flown on AA, and they have a LONG way to go in my book. reminds me of "pot calling kettle....."
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Why has the AA CEO's 'alleged statement' come as such a supposed shock ? It is completely true, QF became a crappy two-bit service a few years back. They offer nothing special and certainly nothing above or beyond what their crappy counterparts in the USA offer, that's for sure.
QF, AA, doesn't matter, neither put so much as a dent into what Singapore Airlines offers. Actually AJ really suits the role he has at QF - he is experienced at running half-arsed ****e service airlines, and that certainly is what QF has become. It was embarressing last month, I got better service in Asia on Garuda domestic than I received from QF domestic in AUS. That tells you something. |
With you Porch......Maybe Pan Am or TWA had a great product, way back when....
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Maybe Pan Am or TWA had a great product, way back when although it turned out Aprey didn't say it, a spokesperson did. Some one got their wires crossed, can happen with PR departments and/or journalists sometimes. :rolleyes: porch monkey Ken B, hindsight is a wonderful thing, , I agree with you after I read my post again, (written with a hot head) I do recall flying AA last year JFK/LHR and saying to myself these guys are worse than the last time. It's been a long week for me. Please accept my apologies. . |
AA have operated to Aust on 2 previous occasions. In the 70's with a B707 and in the late 80's/early 90's with the DC10. Both services stopped in HNL.
With the upcoming Trans Pacific route changes by VA and DL I guess AA are watching the market closely, especially if the UA B744 services are replaced by B777-200LR's. |
American carriers may have a service that is crappier (is there such a word?) than Qantas. But that does not mean that AA is wrong with their comments. In fact, they are likely quite correct, and to suggest that just because his service is crappier than ours, that he therefore must shut up is typically arrogant of QF management.
I've said it before, and I'll keep saying it until the cows come home. Joyce and Buchanan are pathetic amateurs and need to go. |
“From the perspective of the US airline industry, low-cost carriers affiliated with legacy airlines just don't work.”
This may be true but does not mean that Jetstar will go the same way as its American cousins. Jetstar is a separate business from QF. Overheads and labor costs are totally different to QF. Song, Ted, Metrojet and others in the US suffered as a result of operating within the parent business. None were stand-alone airlines that could negotiate truly competitive labor rates like Jetstar has. And of course, all 3 of the above examples were operated by airlines that employed chapter 11 rulings to achieve the drastically reduced labor costs they were seeking, thus obviating the need for the sibling carrier anyway. “Nothing Premium over there.” Make a bet. Have you ever flown Alaska or Virgin America? Much better than QF domestic. |
Oicur,
If you truely believe Jetstar is an operation that is not operating within the Q group, standing on their own two legs, turning a profit on its own, I would be of the opinion that, on this matter, you do not know one brown matter from the other. Labour costs, with respect to pilots wages are a very very small part of the big picture. The reduced labour costs present in Jetstar are due, in my opinion, to immature, short sighted and selfish individuals thinking short term and only of themselves, taking a ****ty package, because they've always wanted to fly a big shiney jet, damn everyone else, including the industry awards so hardly earned. Whilst I can understand what AIPA is trying to do with the "Qantas pilots flying Qantas flights, or equal pay", "these" other pilots might find themselves on the same level of pay as the rest of us, without ever having to grow stones and stand up for themselves, makes me feel ill just thinking about the benefits these people could have from our hard work. |
Of course Jetstar benefits from being within the QF group, I don’t recall suggesting that this was not the case. However, Jetstar, unlike its US cousins mentioned above, is kept considerably more at arms length and as a result does not see the cost migration from QF to the same degree as happened at Song, for example.
“Labour costs, with respect to pilots wages are a very very small part of the big picture.” Labor costs are one of the few costs an airline can control and the largest expense incurred by an airline. Pilot costs are one of the most significant. Labor costs are sometimes the only way in which an airline can differentiate itself from another airline competing for a finite inflow of capital. The business will NOT support the difference in labor costs between Jetstar and QF if it does not need to. The fact that Jetstar can attract crew to fill its cockpits on Jetstar terms of employment signals acceptance of a change in the expectation of the labor market. Cutting pilot salaries alone will probably not change the course of QF’s future a great deal, but if a business can achieve the same result on lower wages, then why wouldn’t it? Note: I am not a manager. I do not work for Qantas or Jetstar and never will. I love money and the toys it brings. I wish every pilot at QF the very best. But I am aware that my labor is being sold on a changing market that is becoming increasingly more competitive and it is important to balance my greed against the price an airline is willing to pay for my services. |
Jetstar is a separate business from QF. Overheads and labor costs are totally different to QF. Take the MOU for transfer of pilots from Qantas to Jetstar for example. A Qantas pilot transfers to Jetstar for a fixed term of three years, whilst on that leave of absence that pilots "accumulation" of years of service for the purpose of long service leave is "frozen" at Qantas. After the three years fixed term, if the pilot returns to Qantas the 3 years is credited towards the length of service for long service leave at Qantas. Net result, no financial cost to Jetstar for long service leave obligations. No wonder the J* business model is an amazing success. MC |
there is a huge difference in the way the job is done at qf compared to newer carriers - salary aside. the unions prevent so much efficient operation at qf. remember when the engineers at qf were still doing multiman pushbacks while jq 717' were using the new single person remote tug. this happens throughout an airline like qf - its no wonder a new airline is started on a clean sheet of paper. job building is the bane of old world airlines.
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Zapatas.
The I infrastructure let's the mainline brand down. One example is the amount of NIGS around the network that don't work (thank airports for that) Add wide body aircraft & non standard wing tip clearances requiring a marshaller & two wing tip walkers. Rather than fix or replace the NIGS the company will continually blame it's labour as inefficient. |
AA have operated to Aust on 2 previous occasions. In the 70's with a B707 http://farm3.static.flickr.com/2660/...220cf336_o.jpg http://farm3.static.flickr.com/2795/...f2a63263_o.jpg |
However, Jetstar, unlike its US cousins mentioned above, is kept considerably more at arms length and as a result does not see the cost migration from QF to the same degree as happened at Song, for example. Remember when it's good PR Jetstar's an independent airline, when Jetstar break down/screwup/nearly kill everyone it's a 'QANTAS group airline'. |
Just go onto The Australians website today and read the article by Peter Beattie. It makes our airlines look positively regal! AA indeed, you would have to drag me kicking and screaming onto most of the airlines in the USA. I worked there for nine months after THAT year, jeeeeesus.
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Labor costs are one of the few costs an airline can control and the largest expense incurred by an airline. Pilot costs are one of the most significant. What it really boils down to is that even if you worked on the best case scenario for the company, lets say they can offshore and outsource and somehow reduce pilots wages/increase productivity to realise a 25% saving, it would actually mean 25% of 15% of 25% which equals a massive (not) saving of 0.9%. So chuck away 90 years of piloting experience and destroy the publics faith in a fairly fundamental part of the Qantas brand by offshoring and lowering standards for what: 0.9%. Has anyone on the board actually looked at the numbers? The very real risk of destroying the reputation of your most highly respected employees is that you will destroy or at least seriously damage your brand at the same time, lowering standards will also increase the risks of very expensive accidents and incidents, this has been proven time and time again. Look at any crash comic over the last 10 years and the steady increase (as a % of accidents) of perfectly serviceable planes with all the EGPWS, and GPS and Moving Maps and Glass Cockpits etc just crashing for no real reason is starting to get quite obvious to all but the bean counters. Planes taking of and crashing due to disorientation, Insanely unstable approaches continued ending in tragedies, Go Arounds attempted after reverse thrust pulled, Stalls and stickshakers are regular, some resulting in massive prangs other saved by the grace of god (but not the pilot), F%$Ked up go arounds, the list just goes on and on and on. I'm not talking about complicated swiss cheese accidents that might involve some other factors (there but for the grace of god go I type stuff), I'm talking about basic GA type accidents in jets. FOR 0.9% They need their head read. :ugh: :ugh: They need to be stopped! |
Excellent post speedy:
I'm talking about basic GA type accidents in jets Loss of control has overtaken CFIT as the number one accident cause IIRC & the accident rate has not declined over the last 10 years. Fundamental stick & rudder manipulative skills are now beyond an increasing minority of crews in RPT jet operations. The push by operators to lower the bar will only see this increase over time, and with it the a corresponding increase in these type of accidents. |
Your whole argument mate revolves around this comment:
lets say they can offshore and outsource and somehow reduce pilots wages What ability does Qantas presently have that would let them offshore pilot jobs. They cant employ cheap ass workers from asia to fly Australian registered planes? Only oz licenced pilots can fly oz registered planes so why the threat of these apparently highly dangerous imports that keep crashing every week. It aint legal. |
Just being a devils advocate...why would the planed have to be registered in Oz?
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They cant employ cheap ass workers from asia to fly Australian registered planes? They need Australians so there is no pesky problems with work visa's or licences, you are absolutely correct. They are then free to employ the lowest experienced AU crew they can, or already have in debt bondage through the cadet system. |
I had to LOL when I read that, I flew Brussels-San-Francisco-Las-Vegas-Chicago-Brussels just 2 weeks ago with AA and they should rename it ghetto airlines. They are light years behind compared to Air France or BA and I don't even want to compare with others (SA, Emirates). The seats were full with stains, it was like someone vomitted all over the interior.
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Speedy,
“it would actually mean 25% of 15% of 25% which equals a massive (not) saving of 0.9%.” Wow, interesting math’s. But for the sake of argument, lets use your 0.9% cost savings. Are you aware that this would be an annual saving to the business of about 40m. Do you think this is insignificant? What does 40m per annum more buy QF that can’t be provided by a cockpit crew on market rates? But lets assume that the sky caves in and QF achieves the labor cost savings they are seeking by basing crews “offshore”. As pointed out by BB, these crews must be Australian’s holding Australian licenses flying VH registered aircraft. So why does this constitute “chucking away 90 years of piloting experience”. Why do you assume that the pilots employed in these bases wont bring with them “90 years of experience” too. Just because they don’t wear a QF uniform doesn’t mean they are new to the game. “lowering standards will also increase the risks of very expensive accidents and incidents….” Again, what makes you think standards will be lower in these bases? All Australian licensed pilot’s work to a standard defined by the Australian regulator. If this does not apply to “offshored” crew then you have a regulation issue. I suggest you lobby your local member to correct this. “Just being a devils advocate...why would the planed have to be registered in Oz?” Does QF have the facility on their AOC for non oz registered aircraft? |
Not a professor of maths obviously.
My main point is that a 25% saving in pilot costs is totally ridiculous, in order to achieve that you would have a fight which would literally rip the airline apart, so the savings would be eclipsed by the Billions of dollars worth of brand damage and many millions in lost revenue. If every 1% change in Load Factor is about $200 Million can you be sure that a fight with your pilots is not going to turn away a few %? Very expensive, risky and stupid, particularly if they only get marginal savings which is much more likely then 25% don't you think? Why do they bother? This is not a fight worth having, I'm certain of it. Regarding offshoring, if Qantas sets up a new airline in Asia it will have its own AOC in the country where it is based, which means the aircraft will be registered there which means that the pilots will be licensed and based there. What is the point otherwise? What Asian country is going to let a new airline set up but be licensed controlled and registered in a foreign jurisdiction? Qantasia will start doing Asian flying but soon after they will "Compete for capital" with mainline and we all know what that means, all new equipment to Asia and soon they fly into Australia and take over almost all international flying, just like Jetconnect did on the tasman. Is Jetconnect on an Aussie AOC? Are the planes registered in OZ? Are the pilots Aussie? No, No and Not many. But you ask why would the standards be lower? Do you not get it? This airline will be no more attractive then any dodgy asian airline looking for cheap pilots. No Australian base means they would not be a magnet for Aussie pilots, in fact the reverse, if they do this they will be seen as the Tighta#$e Pr&^ks that they are. Anyone with any clue will be going to Emirates or Cathay over Qantasia. But the most important thing here is that Qantasia will be a disaster because it will be seen for what it is, a cynical offshoring of Qantas. It will have no brand credibility in Asia and, worse, it will destroy the brand in Australia which means that the cash cow domestic business is stuffed. Does the board work for Virgin Australia? |
“…it will have its own AOC in the country where it is based, which means the aircraft will be registered there which means that the pilots will be licensed and based there.”
Correct. It may even carry the Qantas brand but it will not be Qantas. It will be a locally based business. I assume you are an employee of Qantas Airways Limited? An employee of Qantas has no ownership over the Qantas BRAND any more than the UAW have ownership of the GM brand in China. “Is Jetconnect on an Aussie AOC? Are the planes registered in OZ? Are the pilots Aussie?” No, because Jetconnect is a New Zealand based company carrying the Qantas brand. It does not belong to the employees of Qantas Airways Limited. My comments regarding the off shoring of Australian licensed crews operating VH registered aircraft refers only to Qantas Airways Limited. The fear mongering perpetuated by employees such as you that QAL can employ cheap Asian pilots is totally unsubstantiated and cannot occur under current legislation. But of course an Asian based business would not have oversight provided by the Australian regulator much like Asian based airlines presently operating into Australia don’t. The decline in international market share that Qantas has suffered indicates that the customers are comfortable with this. “This airline will be no more attractive then any dodgy asian airline looking for cheap pilots.” What an offensive and ignorant statement. Are all airlines based in Asia “dodgy”? Can you list them all? “No Australian base means they would not be a magnet for Aussie pilots” Dear oh heavens. They surely wont survive then. |
Offensive? - perhaps
Ignorant? - probably not Dodgy? - you bet! How many jet hull losses in Asia last 20 years?:= Wait for the adverts to come out, I bet they don't have 10000hrs+ for command and 3000-5000+ for F/O.:ugh: |
Not a professor of comprehension either.
On one hand you say: ... these crews must be Australian’s holding Australian licenses flying VH registered aircraft. ... what makes you think standards will be lower in these bases? All Australian licensed pilot’s work to a standard defined by the Australian regulator. If this does not apply to “offshored” crew then you have a regulation issue. I suggest you lobby your local member to correct this. In your next post you agree that the airline would NOT be Australian totally contradicting your previous post: Correct. It may even carry the Qantas brand but it will not be Qantas. It will be a locally based business. What an offensive and ignorant statement. Are all airlines based in Asia “dodgy”? Can you list them all? But you have no comment on the basic premise and most important point of my post, this is what the board must start thinking seriously about: But the most important thing here is that Qantasia will be a disaster because it will be seen for what it is, a cynical offshoring of Qantas. It will have no brand credibility in Asia and, worse, it will destroy the brand in Australia which means that the cash cow domestic business is stuffed. |
Speedy, you don’t seem to understand that we are debating two possible scenarios. Your argument skips between the two because you have are blinkered by fear mongering.
QAL, the airline you probably work for, can base crews in Singapore if they chose. They can probably even offer different employment conditions. But they must be Australian license holders. They must be employable in Australia. QAL CANNOT operate their current mainline fleet crewed by Vietnamese licensed Cambodians based in Singapore. If you believe this will occur then I have a big red bridge in San Francisco I want to sell you. And so again I ask, in the above example, what makes you think the standards in Singapore will be lower than the standards in Sydney. QAL flight training standards will still apply and oversight will still be provided by the Australian regulator. CX could be used as a comparison. They may employ Australians to fly aircraft based in Australia as a cost saving measure but they can’t escape the cutting edge oversight provided by Hong Kong CAD. They still work for CX and they must qualify for a Hong Kong work visa. Now, lets shift gears and talk about QF starting up a separate airline in Asia under the QF brand. This will most likely occur and was almost ready to go ahead in the form of Adam Air in Indonesia. It will be a separate business, with ownership determined by local law according to which country it is located in. Unlike the first example, QF will be free to employ anyone they chose to fly these aircraft on whatever terms the market dictates. This is the scenario that I suspect you “fear” because you will not be involved. With both examples I have outlined, your industrial action is pointless. QAL cannot bypass you and employ foreign crew to fly the aircraft you presently operate. This cant happen. Conversely, if QF launch another QF branded but foreign-based business, you have no legal right to demand employment by this airline and any such claim will be rapidly dismissed in court. The employees of QF do not own the brand. You have a right to enforce the terms of your employment with QAL but nothing more. “But the most important thing here is that Qantasia will be a disaster because it will be seen for what it is, a cynical offshoring of Qantas. It will have no brand credibility in Asia and, worse, it will destroy the brand in Australia which means that the cash cow domestic business is stuffed.” This may be true but it doesn’t relate in anyway to your proposed industrial action. The QF board isn’t really interested in salaried workers providing their opinion as to how successful the airlines long-term strategy will be. |
This will most likely occur and was almost ready to go ahead in the form of Adam Air in Indonesia. It will be a separate business, with ownership determined by local law according to which country it is located in. This may be true but it doesn’t relate in anyway to your proposed industrial action. The QF board isn’t really interested in salaried workers providing their opinion as to how successful the airlines long-term strategy will be. |
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