Qantas CEO, Geoff Dixon has taken time out from number crunching the
2003-2004 annual figures to read and sign a letter written by someone
inside the airline that replied to the Australian Financial Review’s
July 13 editorial that called “Airlines must fight it out” and adjust
to changing business environment.
And predictably it was a recitation of how unfair the world is, how
many unfair competitors there are with big government owners, and all
these people ganging up on poor little Qantas.
More special interesting moaning from the Qantas CEO, albeit with some
good points. But its a bit like man bites dog analogy for news
judgement in the media.
The fact is there have always been big and small government airlines
with significant government support. Even those bastions of free
enterprise, the big US carriers, are sucking on the government teats,
as Geoff rightly points out.
What has changed is that Qantas is no longer on the teat in Australia,
but sometimes gives the impression that it needs special protection to
Judge by these comments from Geoff’s letter in today’s AFR “Qantas has
been quite explicit in asking Australian governments to adopt a
balanced approach to liberalisation, with appropriate emphasis on
overcoming various constraints that we face, and to be aware we are not
competing on a level playing field”
“We have also asked that the government take care as it considers
requests for even greater access to the Australian market by foreign
Well, Geoff, what’s changed? Qantas had been pushing this line for
decades, both as a government-owned carrier and now privately owned.
The playing field in aviation has always been unbalanced from the time
it started because of government involvement, even in Australia when
Sir Reginald Ansett and then Sir Peter Abeles, at times, appeared to
run domestic aviation policy.
But when Geoff says in the letter “Aviation policy cannot be driven by
consumer interest alone” you see the real thrust of his point.
Consumers can get nicked, Qantas the company, shareholders and managers
with their bonus schemes and fat option deals (and a complacent board)
are all committed to achieving a ‘flat playing field’ and not to the
And when someone like James Packer is appointed to the board, its
another sign that the airline’s board is more interested in self
perpetuation and the same old tune. That they appoint as a director a
man whose family fortune depends on Government deals and licences, says
it all.Free enterprise as a notion seems to be very selective on the
Qantas board. But then this was a board that carried Bruvva John Ducker
for years, and Trevor Kennedy..
And yet, Qantas has been slow to respond to consumers in this country: witness the success so far of Virgin Blue.
Some former competitors, mentioned in Geoff’s letter, and current ones,
would argue that Qantas is not averse to throwing its weight around in
the market place to protect its interests. Whether that protects the
interest of consumers at times is debateable.
But the most galling thing about this letter full of special interest
pleading, is that in a month’s time Qantas is going to report a boomer
of a profit, possibly its best ever, with continuing strength in
international routes a big factor (especially to Europe and the US,
where there is little competition).
The real story for Qantas is an impressive one, but one Geoff and the
Board continually downplay. That since being sold off a decade ago,
Qantas has thrived in domestically and especially in the more
competitive international business.
For all the talk of big nasty foreign airlines with government support,
Qantas has skilfully played the percentages domestically and
internationally, cut costs, spent billions efficiently re-equipping and
then running the business for profit, not for the benefit of employees
and public servants.
Its most profitable international routes are protected by bi-laterals
and cosy inter government deals that ’tilt’ Geoff’s playing field
even more the way of him and Qantas. Witness the Joint Services
Agreement on the Australia London Kangaroo route with British
That excludes the most potent carrier in the region, Singapore
Airlines. But Geoff would argue Singapore has government support, but
that didn’t stop Singapore from losing $1 billion in New Zealand. And
it hasn’t stopped Geoff from venturing into Singapore’s backyard to
look at setting up a low cost airline based in Singapore.
There’s a big whiff of hypocrisy about all of this!
The past decade has shown that Qantas doesn’t need mollycoddling and
being serviced by favourable decisions from Canberra, led by the
“Minister for Qantas”, Transport Minister john Anderson.
It is a growing, hugely profitable business and a success story. But
its funny you hardly hear that story from Coward Street in Mascot near
Sydney airport, or the corporate offices in town.