A stark reality was tucked away behind
Qantas chairwoman Margaret Jackson’s Canberra lecture on Wednesday – the Roo has a lot more cost cutting to achieve if it’s going
to be competitive.

Jackson said fuel
costs are now 30% of Qantas’ operating costs, up from 13% two
years. Jackson used that as an excuse to plea for continuing the Roo’s protection
(to the detriment of the overall tourism industry).

Another view would be that Qantas has a lot
more to do to reduce costs, with its management costs its least competitive
component.

Fuel makes up 39% of Singapore
Airlines’ costs. With both airlines
operating profitably, it’s arguable that the leaner SIA back office is what
makes all the difference. While Qantas has been playing “no decision yet” on
various further outsourcings and closures, the reality is in the figures.

The unfortunate part is that there’s a
question mark over the current Qantas management team’s ability to negotiate
significant productivity improvements with the union movement because of
skeletons still rattling around from the collapse of Ansett. From the union
side, there’s a lack of trust in what the Qantas top guns say – which leaves
Qantas with only its more confrontational style.

For example, some union types are still
asking if CEO Geoff Dixon led the Prime Minister to believe Qantas had
modelling that showed Ansett wouldn’t fail if the Government continued to do as
Qantas asked leading up to the Ansett crisis. The Ansett scars run deep.

There are interesting days ahead for all
airlines.

Get Crikey for $1 a week.

Lockdowns are over and BBQs are back! At last, we get to talk to people in real life. But conversation topics outside COVID are so thin on the ground.

Join Crikey and we’ll give you something to talk about. Get your first 12 weeks for $12 to get stories, analysis and BBQ stoppers you won’t see anywhere else.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
12 weeks for just $12.