Qantas is making a dismal spectacle of itself at the IATA conference at Singapore.
In this morning’s reports by invited and hosted media the group’s CEO, Alan Joyce, says he is not going to spend any more money on “the premium international operation until they (start) to return their cost of capital” (SMH) and will “reconsider new aircraft orders” (The Australian.)
In these reports he also signals a new communications strategy from Qantas to rubbish its own core brand, by describing Jetstar and the frequent flyer program as subsidising the full service operation.
This is a reversal of the realities of massive subsidies or transfers of assets from Qantas to Jetstar, which if these inputs were truthfully detailed, would show a very different situation in terms of the relative performances of the punitive Jetstar experience and the premium Qantas divisions.
There are also inconsistencies in what Joyce is reported to have said. While he claims to be reconsidering new orders and is not injecting new funds into the international Qantas division, he is still taking all of the undelivered A380 order, which if true means they are suddenly ‘free’.
These statements seem to belong to the same genre as those claiming the pilot union agreement for a 2.5 percent pay rise per annum over three years equals an unsustainable 26 percent cost impost. The only thing unsustainable about this is the arithmetic. The only way to get anywhere near 26 percent is to count recurring costs that are already present as a continuing cost of doing business, and have nothing to do with base pay.
This claim by management is about as credible as its submission to the Senate inquiry into pilot training and airline safety, in which Joyce failed to acknowledge that the reason why a Jetstar A320 nearly crashed at Melbourne Airport in 2007 was the result of improper changes to the approved flight manual procedure for flying a ‘go around’ and that he was the then CEO of that airline and responsible for the unsafe and deeply flawed decisions taken by the carrier.
The burning questions this morning are why Joyce would slam his own premium brand and verbal its pilots and engineers at the leading international forum for airline managements only hours after the Qantas share price out-plunged the general retreat on the ASX?
Why does he rubbish the premium product which has been his responsibility for two years? Why does he describe its engineering and pilot unions as ‘rogue’ when their actions to date are lawful and fully within the prescriptions of Fair Work Australia, and are a consequence of an inability of management to secure a timely resolution of expiring industrial agreements.
One of the obvious reasons why the Qantas premium product is in trouble is that it isn’t competitively premium, which is his responsibility, and has a route structure which is variously inefficient or impracticable for many of the travellers that have crossed over to Emirates and Singapore Airlines, which is also his responsibility.
The latest act of management genius is a low frequency, range challenged flight to Dalls Fort Worth in a jet that can’t do the distance reliably, adds extra stops along the route for some passengers, and occasionally deprives them of their checked luggage as well as offering them a cabin amenity inferior to that on Qantas A380s.
Qantas may get soft media in Australia, and a soft ride from those who are indulged with free entry to the Chairman’s Lounges. But Joyce is in a room in Singapore where has competitors can see right through him, and must wonder how much longer the airline will continue to provide them with easy pickings.