The pressure for change at the top of the Qantas group is building to levels where the chairman Leigh Clifford and the CEO Alan Joyce will be either be quickly removed or embroiled in a bitter struggle to retain control.
The pressure has little to do with union strike action, there hasn’t been any, nor the constant Qantas whingeing about competitors. These are just diversionary sideshows.
It is about two years without shareholder dividends, the bad mouthing of Qantas full-service, long-haul flights by the management team responsible for them, doubts about the real viability of Jetstar, and amateur hour stunts such as supposedly convenient flights to Dallas-Fort Worth that stuff business travellers into a second-rate cabin, leave them without luggage and clean clothes because of payload restrictions, and add hours to flights that could have been done via Los Angeles.
Qantas oneworld partner Cathay Pacific had a very quietly spoken message for Clifford and Joyce yesterday when its new CEO John Slosar was in town.
And that was, work in your space, not ours. Asked about Qantas’s get-out-of-jail plans to miraculously solve its inadequacies and the burden of being an Australian icon by setting up off-shore entities in Asia, Slosar referred to the issues with government and authority relationships and the need, in the obvious context of its own success in China, to nurture generations of relationship building to get where it wanted to be.
The Dallas debacle has made Qantas an object of mirth among other long-haul carriers because it involved using a jet that is patently incapable of flying the distance reliably non-stop in both directions from Australia with everyone’s luggage on board.
It is this contempt in Qantas for technical advice and customer expectations that has led it into errors in fleet and route planning from which there is no quick escape, as well as more fundamental safety-related errors. This was apparent in Alan Joyce’s time as the founding CEO of Jetstar when he was responsible for a decision to change the A320 approved flight manual procedure for a go-around, a mistake that saw one of its jets carrying about 140 people come close to crashing in fog at Melbourne airport in 2007, after which the carrier was found by the ATSB to have failed to keep traceable records or to have conducted a mandatory safety management system analysis before making changes it has not to this day explained to anyone.
Safety, however, may not be front of mind in investor perceptions. Declining market share, lack of dividends, and an inability to manage labour relations before they result in court approval of protected industrial action at a time chosen by the unions are all hallmarks of management failure.
Telling Australians that Qantas needs to be less Australian to be successful is not a winning message. Every Qantas management since the company was listed on the stock exchange in 1995 has emphasised the value of it brand, which is inextricably bound up with being Australian.
But the only new guidance for a market looking for prompt remedial action at Qantas has been a vague concession that a study into a new Asia-based carrier is under consideration with no further details to be announced before the end of the year.
Joyce and Clifford have weeks if not days to come up with answers, rather than year’s end.