Tomorrow when Qantas reports its full year results to June 30, we can expect more misleading rhetoric about how its international operations are mercilessly rendered uneconomic by competition from state run carriers and the ruinous pay claims of its employees, despite the best efforts of the world’s most overpaid airline executives.
But have a look at what the ‘new Spirit of Australia’ is doing to its flagship route to London, where it has traffic slots for up to four return A380 services daily.
Sydney-London on Qantas after the restructuring takes effect
Sydney-London before restructuring
The thinner red line on the top graphic is all that is left of the Qantas presence between Sydney-London, an A380 via Singapore, while Melbourne customers also get an A380 via Singapore to themselves.
The green squares are the gifting by Qantas to British Airways of the flights it could have operated, to provide its Australian service all the way to and from London, no matter whether via Singapore, Bangkok or Hong Kong.
But Qantas now expects those who are trying to support an Australian carrier to fly British Airways to deal with the overflow, its generosity with your loyalty so great that BA has had to upgrade its capacity from Boeing 777-200ERs for larger Boeing 747-400s, meaning the green squares representing those flights will be carrying far more seats previously provided on Qantas jets.
And unless the frequent flyer conditions are changed, anyone who is sold those BA operated flights using a BA rather than QF flight number will get less points on most economy fares than on Qantas. Unless you have joined the 82% of overseas travellers who have given up on Qantas in favor of competing airlines.
What is happening to Qantas is not about unfair competition, or the ‘outrageous’ pay demands of its staff, it is about the woefully dismal direction of the long haul carrier by a management and board that are infatuated with numbers games and the spread of the Jetstar franchise, and the abundant opportunities to flaunt the Qantas Sale Act because neither the government nor the opposition intends to do anything other than wring their hands and keep troughing it in the Chairmans Lounges.
While Qantas heads off to Asia to put full size sleeper seats in shorter range single aisle A320s in a new premium carrier (what on earth is Joyce thinking) it is running down its long haul operations in order to participate in an Asian market defended by obviously weak and unpopular and defenceless brands like Singapore Airlines and Cathay Pacific who will give up their markets overnight and make Qantas shareholders so fabulously rich that dividends will be reinstated.
For Qantas to trade on its Australian identity in these circumstances is obscenely misleading. The rationale offered for giving away half the London market is that it retires four aged 747s. Which have no real value except for scrap. That’s millions upon millions of dollars of future revenue hosed into the wind.
It won’t go to British Airways, but to the likes of Emirates, Singapore Airlines and Cathay Pacific because, as the market has shown for more than a decade of declining Qantas participation, consumers aren’t that silly. The “I still call Australia home” message has lost its credibility. It no longer tugs the heart strings. It is a sham, just like the Qantas trans Tasman flights that are painted up as Qantas but flown by a New Zealand entity that Qantas claims for tax purposes is an independently managed Kiwi company which it isn’t game to call for what it is.
There is no doubt that Jetstar makes sense as a business investment, even though consumers in Australia might have noticed it is anything but cheap these days, and that the best deals are still found on Qantas domestic services.
But the seeming self hatred of Qantas for the costs of excellence, and its unwillingness to build the long haul carrier in favor of adopting a defeatist approach to fleet, schedule and product, is a tragedy for this country.
31 Comments
Ben, an excellent summary of the current Qantas management debacle and your comment that “neither the government nor the opposition intends to do anything other than wring their hands and keep troughing it in the Chairmans Lounges” is right on the money.
Is this anything new? To Sydney centric writers, maybe, but when the JSA started, were there any complaints when the Perth to London and Brisbane to London QF services were operated by BA? Yes, Perth and Brisbane based travellers were not able to fly Qantas to London, even when the bought Qantas tickets – this was in the late 90s.
The Qantas slots at LHR are loaned to BA, and will come back when it makes sense for Qantas to operate their own flights again. It looks like the routing through Bangkok and Hong Kong are not the ones that work for Qantas or for BA.
“The Qantas slots at LHR are loaned to BA, and will come back when it makes sense for Qantas to operate their own flights again. It looks like the routing through Bangkok and Hong Kong are not the ones that work for Qantas or for BA.”
……..I beg to differ. Particularly with the load factors that QF are currently enjoying on these routes.
And only a company with management as inept as those currently running Qantas, would withdraw services to London imediately prior to the London Olympic games. Surely a surge in demand to be taken advantage of there over lead up to and period following the 2012 games?
No, this is all about Killing QF mainline to further the ideologically driven poor cousin Jetstar and bust some unions in the process. And no polliticians in this country seem to have the guts to stand up and enforce the Qantas sale act.
The Race to the bottom continues…….
The return of the great Emprire route! Meet the mother country airline halfway and then fly home and brag about what a great international airline they are!
What other exciting developments should we anticipate, Ben? Fly to the US but connect to American Airlines in Hawaii instead?
The disappointments continue. As I tweeted last week QF1 has now changed to the Singapore flight, no surprise there. But an Aussie wanting to leave Heathrow in the morning and get back to Singapore on the next morning CANNOT Fly QANTAS. Similarly if I want to get to Sydney or Brisbane the same day I CANNOT.
alangirvan01, sir or madam. I fly out of BNE because Qld cant be bothered to build and A380 stand at the Int Airport. And Alex, QF under this Management will never decide to go back to BKK in mine or my kids lifetime.
This whole process started a few years ago. As I have said to AusBT SQ,EK, Virgin are lauging
Reckon they should get the very clever whoever who chooses the Qantas movies to run the whole damn airline. We took them to LA recently, and that was fine, but I doubt they’ll get my gig to go the Olympics.
A by-product of Qan’ restructure, perhaps unforeseen, seems to be a familiar marketing strategy: restrict a product (oil, bananas) or service or create a limited version, so that consumers will be grateful for, and appreciate, what’s left or on offer, ie. increase value by decreasing supply.
2012 Olympics: eagerly awaiting the logo. Can’t imagine team members being too happy having to change ‘airlines’ mid-way over.
Maybe park a serviceable 747 at Changi as backup…?
This is the finishing touch!!
QF23 SYD1335-BKK1855 744 D connect to BA010 0020+1BKK-0630+1LHR 744 D
BA009 LHR2200 – BKK1515+1 744 D connect to QF24 BKK2055-SYD1000+1 744 D
These are the new schedules for the QF/BA connection in Bangkok. Each way the connection time is over 5 hours!!! What premium customer is going to be interested in that? SQ, EK, TG etc all know that anything over a 2 hour connection time is unacceptable. This is going from the current situation of a same plane re-fuel of about 90 minutes.
KeithSmith: You can take SQ which leaves Heathrow at 11am in winter and arrives in Singapore just after 7am the next morning.
For the first time in history, Qantas will have less capacity into Heathrow than SIA. And wasn’t it not too long ago that people were saying they would start PVG-LHR?
It is about time a forensic analysis was ordered of Qantas books. The duplicitous games that are being played here must have the potential to put some people behind bars.
This Management feels that its customers are more than happy to stay with Qantas and will stuff them around with the most ridiculous timetable and connections to Europe. I would now rather fly Emirates /Singapore to the UK with better connection than they have. Also beware when you book premium Economy as there is a great difference between Qantas & BA. They have brainwashed themselves with the propaganda that they spew out in the media. To have up to 5 Hour connection times in HKG/BKK forget that! The real reason its bleeding is that they have let the standard of the airline run down with Old dirty planes 767/747 operating on International flights. I was on a flight recently it had 4 cabin crew working the economy cabin (255 passengers). The entertainment system broke down and this was not the first time. They keep going on about the Marc Newson award wining seat……from what 10 yrs ago, this hard uncomfortable slanted seat was not worth a business class fare. And finally they go and cxld the last A380 aircraft to again buy NEW planes for jetstar and the New Asian Airline… How about spending money on the MAIN BUSINESS and have a route structure that people want to fly!!
If ever you need more evidence that QANTAS management is intent on getting rid of the airline and make it uncompetitive go look at the web booking for a flights to Brisbane out of Newcastle.. QANTAS runs DASH aircraft out of NEwcastle compared to the Jetstar A320 but look at the price QF 2420 one way to Brisbane $585-00 Who would pay this kind of money for a flight in a Dash there are 3 flight a a day and most of them for this Thursday are in the vicinty of $500 +
Compare that to the afternoon Where QANTAS at 3-50 pm price is either 355 or $530 compared to Jetstar leaving 40 minutes later and arriving at the same time as the QANTAS flight there price is only $157-00 . Be nice if someone could explain how QANTAS can ask for $ 500 + for a flight in a Dash beats me
Seems to me nothing new here. The only real disappointment is the moving of the midday Heathrow Flight as that means no evening arrivals into Australia with few options Emirates have one but is too late for connections. I am not sure BA have their new connecting timetable sorted yet. The two vacant london slots will go to Shanghai when Europe allows it and possibly KL if MAS One World allow it. Shanghai is problematic as the QANTAS sale act is the sticking point there. The oppostion here to networks and alliances seems to beggar belief; and note the Union et al have been invited to inspect the books, to try to hose down the conspiracy theories
I’m wagering that Joyce will stay at Qantas until he’s removed because his chances of getting a top-level position with another airline must surely be non-existent by this time. With all the ongoing drama surrounding Qantas at present – restructuring, pilots, engineers, foreign crews, aging fleet, etc. – more than conspicuous by its absence is even the slightest indication from Qantas senior management of a causal relationship between their decisions & the airline’s problems. I suspect it’s much more likely I’ll be upgraded from Economy to First on my next overseas flight.
What else would one expect from a board that is top heavy in people with finance and accounting experience but little experience in the operational aspects of an airline. What do they know about the freedoms of the air, which aircraft are best for which routes, etc etc, they are looking purely at cost base!! Nothing personal, but what relevant expertise does Peter Cosgrove bring to the decisions on how to grow QANTAS?
Do they really think they’ll get a fair go in an Asian country where the governments prop up the national carriers – they won’t welcome competition with open arms.
Let’s hope the institutional investors get behind the unions and retail shareholders for the resolutions of no confidence in Alan Joyce, Leigh Clifford and the rest of the board
Ben,
I see you have mentioned the Qantas/Jetconnect issue once again, yet you seem to play down the Virgin/Pacific Blue relationship, which as far as I can tell is almost identical.
I hear that Virgin wants to position itself as a ‘more Australian’ airline than Qantas but how will this work with Pacific Blue, especially considering they will be renamed Virgin Australia but still operate with NZ crew working under NZ pay and conditions? What makes their situation any different than Jetconnect?
Lets hope the no confidence vote gets up and we can get a management team that are serious about growing Qantas and not focused on goring a subsidiary that they will be able to sell off.
No chance of Joyce being removed. The board (and investors) will give him some time to see if his vision works out (with Qantas shares already in the toilet, they don’t have a lot to lose).
If he didn’t come up with a reasonable strategy a few days ago, he would have been hosed though…
Be interesting to see what the Qantas results are tomorrow….market seems to be predicting good news. Share price is up 8% today (on an increase of only 2% from the All ords). With a Beta of 1.4, qantas shares should of only increased by 2.8%…
Propaganda,
The last time, of many, that I drew attention to the similarities between the Virgin Australia alliances and those of Qantas was yesterday in covering the ACCC statement on the QF/AA JBA.
The main differences between the two groups IMO is that the former is growing its international territory while Qantas is contracting, and the former has a clearly stated policy of bringing as many jobs back to Australia as is practicable (hint, think Pacific Blue) while the latter has a policy of offshoring jobs, including rotating sweated labor through Australian skies on tours of duty as part of a Jetstar franchise hiring entity that reallocates human resources according to seasonal demand at the terms and conditions that apply in the country of origin.
Working on my own, I have little opportunity to stop work to drag up past links, and a proper user search function for content on this blog is top of my list of desired improvements. BTW I’m studying a document of some interest for publication later this evening.
May have been mentioned elsewhere but another issue with this decision is BA’s crappy planes. Most of them are decades old 747s. My parents are due to come to Aus next year. I was just saying to them yesterday that Premium Economy on an A380 return trip would be ideal. Who’s to say now that whatever they booked would end up being what they fly on? It’s a joke. I hope a forensic analysis is ordered on Qantas’ books, or at the very least an increase in parliamentary interest following tomorrow’s announcements.
Ben,
I appreciate your response, I had a feeling you might have some inside knowledge and your hint regarding JB’s plans for PB is quite illuminating. It’s quite surprising as many crew on either side of the Tasman are unaware of any potential changes to the current relationship between Virgin and Pacific Blue.
Irrespective of the matter of alliances, it confounds me why Jetconnect got media interest and the Virgin/Pacific blue relationship did not. The situations were almost identical, both are wholly owned by their parent airline, both employ crew on NZ pay and conditions, both have NZ registered aircraft painted in similar livery to their parent with crew wearing identical uniforms (excluding name badges) and both were being sold as flights on their parent airlines websites with only small print stating they were being operated by their subsidiaries. Most of their passengers were calling Pacific Blue, Virgin anyway and were unaware of the difference.
If JB is planning on changing this, then I hope that the outcome will be a positive one for Virgin as well as the New Zealand operation. Despite the good natured ribbing we give our friends across the ditch I’d hate to see any of them out of work just to make Virgin ‘more Australian’ for PR reasons and to get one up on Qantas.
Guess we’ll just have to wait and see. Hopefully this “document” will shed some light?
Propaganda,
So far as I can tell, the Air NZ/Virgin Australia trans Tasman alliance and the equity NZ holds in VBA sets up the jobs in NZ based PB becoming Air NZ jobs, and the PB brand will as already announced become part of the main branding by year’s end now that Singapore Airlines has lifted its embargo on applying the Virgin Australian brand to international single aisle operations to the likes of the Cook Islands, Bali and Vanuatu. If the NZ deal works as intended the total New Zealand jobs will grow anyhow.
Then again, nothing ever works out as expected in this game?
@Propaganda
A big difference would be that virgin called the nz operation pacific blue and did not try and pretend it was something it wasn’t . If Qantas was fair dinkum Jetconnect would be on the tail and the uniforms
Having the freedom to nominate a preferred carrier I am now on the horns of a dilemma because my main travelling work colleague has decided to jump ship, primarily over the lie-flat bed upgrades on a Singapore-United tie-in.
I suspect like many other people privileged to fly J, I will be running down my investment, emotional and otherwise (FF points) and moving.
The scent of ‘we don’t want your business’ is strong. DFW was the beginning. Dropping SFO, which if we are honest was proceeded by dropping YVR.. Then the loss of CDG and Rome, and now even LHR is gone. Ok, the latter can be seen as a net positive since T5 is workable.
Its time for pragmatism. Not emotion, but strict cost:benefit. Does a Q which basically drops you into another carrier at SIN make sense? Maybe its better to nominate Cathay and fly Q metal opportunistically? I don’t know any more..
-G
interesting,
That big difference will soon cease to exist. Pacific Blue are due to change to their marketing and livery to the Virgin Australia brand.
Apart from the name, the situations are almost identical and to quote Shakespeare “What’s in a name? that which we call a rose, By any other name would smell as sweet”.
Many fingers are pointed at Qantas and their relationship with Jetconnect but seem to ignore Virgin Australia and Pacific Blue.
It may not be Shakespeare – but two wrongs do not make a right.
Once Singapore Airline flights earn Velocity Points I’m likely to switch my allegiance for domestic flights. Virgin needs to negotiate improved international lounge access to steal the deal.
If cattle class cabin service in an aging QF 747 long haul is bad enough, BA cattle class service is the stuff of nightmares. Who’d fly QF/BA and end up transferring in LHR to get to Europe when you can go SQ, CA or other airlines straight to their European destination with one stop?
Surely the whole point of buying the A380s (at considerable expense), was to undercut the competition on the “Kangaroo route” and Sydney-LA ?
The A380 costs about 20% less unit cost per passenger (excluding interest and depreciation) than the latest 747. So Qantas and Singapore could basically slaughter the opposition – provided they run them at maximum loading and runtime, otherwise older planes can undercut them (as there are no interest payments on paid for planes. Depreciation is a non-cash expense).
You also don’t mention reliability ; than ancient BA 747s are prone to breakdown.