Now that the great Qantas shareholder robbery has failed, the flying ‘roo is back in denial over minor matters like customer satisfaction and the end of the age of propellers.

Qantas CEO Geoff Dixon stunned the world’s major tourism wholesalers who met in Brisbane this week by attacking Virgin Blue’s impending introduction of small Embraer E-jets.

Instead he argued that its use of turbo-prop Q400s would “work amazingly well with about 20-30% lower costs against the potential of the Embraer which Virgin is bringing in.”

What the?

There isn’t even a third world or developing market left which hasn’t embraced the use of new fangled light weight jets versus turbo props for secondary regional routes.

Qantas has sunk several hundred million dollars into a long, thin misery tube called the Q400 (made by Canada’s Bombardier company) believing that it has some automatic call on a market segment that hasn’t been challenged by the speed or smoother altitudes available to jets since Ansett disgraced itself with a stuffy little jet, also from Bombardier, called the CRJ-200.

It is true that the Q400 uses less fuel than any jet over short distances.

But Qantas imposes the turbo-props on its regional monopoly over longer distances, even Canberra-Brisbane. Virgin Blue’s CEO, Brett Godfrey, says route number one for the E-jets will be Brisbane-Hobart, and we hear that Adelaide to Perth, and 16 other routes where not even Qantas would try to get away with a turbo-prop, will not be far behind.

Somehow, Qantas is missing the point of a multi-billion dollar attack on what were cash cow smaller town routes where people were supposed to tolerate longer journeys and hours wasted making connections on trips that will now be done non-stop.

An airline insider of note has written to Crikey blowing the cover on customer dissatisfaction with Qantas/Jetstar following the bagging it copped in the latest Choice survey.

The person says:

Qantas’ own research, conducted regularly by ANOP, and
which I have seen copies of, over the years, comes up with very similar results.

The simple fact is that if you work for any reasonably sized Australian organization, fly domestically quite a bit, then do some international flying, plus put any value in their Frequent Flyer scheme, then who else can you fly?

Add to this the incredibly tough deals that Qantas does with Corporates (excluding the two Chairman’s Club free memberships for the Chairman and CEO, plus a heap of Captains Club memberships for senior execs) that “punishes” them financially if they don’t reach certain revenue targets, and you have business that has to “walk in the door”; and all this in an
Australian domestic corporate business market worth between $5 and $6 billion!

That equates to a virtual monopoly of the Oz domestic market, plus the same on the Trans-Pacific, (an over 75% market share) given you have over 80% of their EBIT profits.

You’d think the ACCC would have a very close look at these “tied” domestic and international travel agreements, but the word from them (from a “deep throat” source) is that they are not game to take on Qantas; due to the support from “Dear Leader” in Canberra.

People who answered the Choice style surveys, and haven’t flown on anyone other than Qantas, do so for the above reasons, and therefore still rank them as quite okay, as they usually haven’t flown SIA, Cathay Pacific or Emirates and wouldn’t know how far ahead of Qantas they are.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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