Qantas shares remain stalled this morning
after yesterday’s dive on Geoff Dixon’s profit downgrade, but fuel prices aren’t the Roo’s only concern.

Certainly fuel is the main one and, as
Scott Rochfort hints in the Smage,
it will force further cost cutting that one way or another will mean reducing
what Qantas pays its people to fly its planes.
Rochfort is intriguing with a suggestion that Qantas might wet-lease
Jetstar Boeing 787s for a start – a way of effectively cutting its aircrew
costs. (We still think senior executive salaries should be benchmarked against
those at Emirates, Singapore and Cathay – for some strange reason management doesn’t agree.)

But there are other problems stemming from
the delays in Airbus delivering its A380s. Qantas has some old 747s that it’s
scheduled to flog and therefore hasn’t upgraded – business class remains a seat
rather than the flash Skybed.

It’s an unpleasant feeling to hold a
business class ticket for an overnight flight and find you’ve paid top dollar
for old stock – as I did recently on an overnight Cathay flight from Dubai to HK. Not
all of its planes have been upgraded yet either. Once customers become used to
the Skybed, the old seats become an annoyance.

So Qantas’s problem is what to do with
planes they’re running down given that the 380s might be 14 months late. The
international side of the game is all about the money to be made out of
business class – the last mob the airline wants to insult when its upgraded
product is a class act.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.


Peter Fray
Editor-in-chief of Crikey