The political dimension of the Qantas restructuring had a high-noon blast-off in Canberra today when members of all parties held a press conference with key Qantas unions officials.
The winner in terms of colourful rhetoric was independent MP Bob Katter, who ridiculed Qantas board members as “not very bright people” and called for the use of superannuation funds to buy back the carrier, but Senator Nick Xenophon raised the issue Qantas seems most anxious to avoid, calling for a forensic auditing of its accounts to explain the losses the airline claims are being made by its international full-service operations.
Xenophon said something “wasn’t right” about Qantas claims that Qantas international was a basket case while Jetstar was going ‘gangbusters’.
His concerns have been mentioned by other political figures recently who say Qantas has lobbied them that Jetstar would go broke if management didn’t get its way in shifting its efforts offshore.
Xenophon has already flagged proposed legislation to compel any airline operating domestic sectors to pay flight crew, according to Australian terms and conditions, a bill that if passed would block any attempt by Qantas to rotate labour employed by its existing and planned Asia-based franchises through its Australian operations to cut costs.
There are already signals in Canberra that several Senators are prepared to support a new inquiry into the Qantas-Asia strategies, the effectiveness of the Qantas Sale Act, and other matters arising from the Qantas international restructuring announced yesterday by the group’s CEO Alan Joyce.
Earlier this year Jetstar sources revealed plans to address the “seasonality” of demand across its Asia franchises by having a labour pool that would be sent around the hemisphere as required and paid according to the conditions applying in the country in which they were engaged.
This interchangeability of Jetstar Australia crews with those trained and paid in Singapore or Vietnam or Thailand had “gut the Qantas cost base in Australia” written all over it.
Jetstar’s international division already has Australian-registered A330s, based in Singapore and crewed according to Singapore labour rules, which fly to and from Melbourne and Auckland to provide Qantas group connections at Changi rather than use Australian based labour.
However, the introduction of such arrangements to purely domestic flights would reduce many Qantas group services to peripheral deployments of Asian-based staff. Or so the plan implied.
The political dimensions of the Qantas restructuring proposals are complex.
Joyce says he is committed to building a profitable operation for its full-service international services, but has announced plans to get there by downsizing the network to the extent that many Qantas passengers will no longer complete their journeys on Qantas jets but get handed over to “alliance partners” at an intermediate gateway where Qantas will not only drop the passenger but a share of the fare.
This stroke of genius is supposed to win customers from carriers such as Emirates, Singapore Airlines or Cathay Pacific, which already fly them without a change of airline to dozens of destinations Qantas management insists are unviable.
The restructuring announcement said nothing about modernising the Qantas long-haul fleet, other than the downsizing of London flights to allow the scrapping of four aged 747-400s. Qantas does not have any announced plan to augment its A380 fleet, now capped at 12 until at least 2019, with a jet such as the 777-300ER, which its competitors use to great advantage in winning away its customers to routes that do not need the giant Airbus. Qantas pointedly made no reference to the long-delayed Boeing 787 Dreamliner, for which it has 50 orders stuck somewhere in the never-never land of that jet’s future, if it really has one.
Instead, the emphasis is on a huge new fleet of A320s, a single-aisle jet that is great for flights such as Sydney-Melbourne, but woefully unattractive for luxury sectors in Asia such as those Qantas says it will contest with this jet when it launches an as yet unnamed premium carrier based in Kuala Lumpur, Singapore, Hong Kong or Shanghai depending on which joint venture partner it gets to sign up.
Could Qantas screw up its fleet choices again? The answer so far as a new premium carrier is “Yes”. Instead of painting “Spirit of Australia” on the side, it may as well put up “Kill Me”.