I flew my 250th Qantas flight, last week, from Sydney to Melbourne, Australia. It was also my 860th flight of my life! Five weeks of my life spent inside Qantas planes travelling the equivalent of 16 times around the world! As you can see from the map below, the Australian flag carrier has taken me to five continents.
What is interesting is how many of the Qantas routes I have flown on have now vanished: Harare to Perth, Bangkok to London, Sydney to San Francisco, Christchurch to Melbourne, and Auckland to Los Angeles are all gone.
I have dedicated a few posts now to the future of Qantas. Right now, the future of the international operations are under the spotlight. Last Tuesday (June 5, 2012), Qantas announced it expects a profit of between $50 million and $100 million for 2011-2012, a 90 per cent drop from the $552 million it achieved the previous year. The Qantas share price went into freefall this week, dropping below $1 a share for the first time ever. A billion dollars was wiped off the market value of Qantas. Qantas shares were worth $1.90 one year ago and $5.91 in October 2007.
For the first time, questions have been publicly raised about the tenure of CEO Alan Joyce. Joyce has had several plans for the International Division. One has been the shifting of unprofitable services over to discount subsidiary Jetstar. Then came the shifting of some international services to Qantas domestic services or New Zealand based Jetconnect, both of which have a lower cost base largely because of lower wages paid to staff. Another, was the employment of non Australian cabin crew at much lower wages. Last year’s brain wave was the formation of an international airline division based in Asia -this has flopped so far. This was accompanied by major cuts to Qantas international services. Now Qantas has been split into a Frequent Flyer, domestic and international division with their own management structures.
None of these have focussed on some key issues:
- Over the last few decades, Qantas has gone from having a majority of the international passengers to and from Australia to less than a fifth
- 25 per cent of European bound customers in the last six months have shifted from flying through an Asian to flying through a Middle Eastern hub – this is the Emirates, Etihad and Qatar Airlines effect
- There is a strong perception that Qantas customer service is inferior. My experience is that they still have great service but their service has declined.
- There have been significant questions by the public about Qantas safety which have not been adequately addressed
- Qantas international staff are very unhappy with their management- this does not help with service
- Many Qantas frequent flyers feel alienated by the airline- especially management attitudes.
- Qantas planes are getting very old- especially when compared to Singapore Airlines, Air Asia and the middle eastern carriers. Qantas is in the midst of a re-fit
- Qantas routes have not been evolving fast enough. For example, Qantas has no Middle East presence. As previously stated, I think Emirates is the most logical tie up there- especially as Virgin Australia has Etihad as partner.
- Qantas are also too Sydney focussed with most international flights out of Brisbane, Melbourne or Adelaide requiring a change in Sydney
After this week’s news the pressure is well and truly on Joyce to turn the international division around – fast. The pressure will be on new Qantas International CEO Simon Hickey. Their time is running out. There are four choices:
- Sell all or part of Qantas International (British Airways IAG Group or Emirates seem most likely candidates). Whether the government will allow some modification of the Qantas sale act which limits foreign ownership of Qantas remains to be seen.
- Develop a comprehensive partnership- Emirates or Singapore seem the two most likely candidates
- Shut it down – this would impact negatively the highly profitable Frequent Flyer program and the domestic feed
- Start fixing it – this should have happened already