How lucky can Qantas be, or alternatively, how poorly advised has it been in recent times?
First it escaped from the Airline Partners Australia private equity bid that was a dead set disaster from the start only through one of the buyers missing a deadline, and now its infatuation with a merger with British Airways late last year has been shown up as the aviation equivalent of buying the Sydney Harbour Bridge.
Why did it ever consider it? If the British flag carrier can’t survive without begging its staff to work for up to one month free what on earth was Qantas thinking at the time?
BA is paying many prices for ingrained incompetency. It couldn’t even manage a new terminal project at London Heathrow without perpetrating the third major screw up of passenger handling at the developed world’s worst airport in three years. It had to truck lost baggage to Italy to burn it in an incinerator because it couldn’t afford to match the victims of the T5 opening with their possessions.
The airline has made a near fetish out of reducing its exposure to discount economy fares by emphasising premium products. Well, there is no premium product market like their once was left across the North Atlantic, it is unlikely to come back as business travellers learn to fly for less, and its lack of exposure to the cut-and-thrust of discount flying has left the legions of inexperienced teenagers that seem to run things at BA these days looking so flat footed they probably couldn’t hold a job at a Kentucky Fried Chicken franchise.
Which points to an interesting comment made by Sir Richard Branson soon after the GFC tore the UK retail banking sector to shreds. He warned that there would be surprising and prominent airline failures. Everyone wondered if he was talking about Virgin Atlantic. Not so. He seems to have been talking about British Airways, among others.
And Virgin Atlantic is profitable, so profitable that even its 49% owner Singapore Airlines seems to be happy with it.
There is some writing on the wall for the airline merger mania pushers in all of this. Consolidation in the airline sector may be driven more by market failure than mergers.
4 Comments
Asking their staff to work for a month for nothing is outrageous cheek – the least they could do is offer them equity in place of salary for the month. At least then they’ll see some of the upside if the wheels manage to stay on.
BA has been a basket case for years, and it has taken the GFC to bring it all out. Perhaps this is the time for Richard Branson to step up and launch a takeover bid.
Guess this latest plea (following several summers of baggage non-delivery discontent) means yet another summer where it’s best not to trust BA with checked baggage…
Lufthansa just announced they will make a loss this year, Singapore CEO takes 20% pay cut, Cathay loses $1.1 billion. Virgin makes a profit…anyone that believes that hasn’t done their homework ! BA been a basket case for years..hardly…one of the worlds most profitable airlines maybe !
As for Qantas their profits seem to be dwindling by the second…Delta and Virgin now on the Pacific…BA might be taking drastic long overdue action but what they emerge as will put them in a much better position. This is just the beginning for the industry – good luck all !!