Qantas has finally told the ASX what everyone with a finger on the pulse has known for some time, that its proposed premium airline based in Malaysia is dead.

The statement leaves open the possibility of a Resurrected Q occurring somewhere else in Asia, although sources in Singapore were quick to say this was never a serious proposition from late September last year.

The cost of this proposed scheme includes cutting back on flights to London, and the reputation of a chorus line of tame analysts who failed to ask even the most fundamental questions as to how it could be that a Malaysian flag carrier, minority owned by Qantas, could be seriously claimed to be the key to funnelling enough profits back to Qantas to allow it to reinvest in the full-service long-haul brand the current management keeps reducing in scope.

It was very plainly the wrong plan, in the wrong city (Kuala Lumpur) and with the wrong partners (Malaysia Airlines and Air Asia, which is the natural rival to its Jetstar franchise in Asia).

The statements made in support of this scheme were ludicrous. According to Qantas Group CEO Alan Joyce in media interviews last year, the project would feature sleeper seats bigger than those in its A380s, but in a single-aisle A320s and also include a premium economy for sale over route stages that technically could never have been much longer than six hours.

The venture, which was somehow going to be controlled by Qantas, yet enjoy the flag carrier privileges of Singapore, Malaysia, China, or somewhere in Asia, was going to march in and take premium business of the likes of Singapore Airlines or Cathay Pacific.

There was also increasing confusion as to exactly what Qantas was proposing. The plan seemed to flicker back and forth between being a single-aisle A320 carrier (which would include some of 110 orders or purchase options Qantas placed for more A320s) to an A330 carrier, and by the time Joyce announced a sad set of figures for the first half-year results, was also a plan in which he said Qantas intended to spend as little as possible on new jets.

The first rule of doing business in Asia — keep quiet until you actually have something real to talk about — was broken, as were the usual courtesies of not announcing your intention to take someone’s long-established home market in the banner headlines accorded to the concept in the Australian media.

It has been a sorry spectacle, creating a textbook case of how not to do business in Asia, and one that is truly astonishing given the access Qantas has enjoyed for decades to wise and experienced counsel in relation to business and governmental relations with the Asia economies.

All the while the farce has been under way, the market share of Qantas on international routes has been shrinking, all while its management has been whingeing about the unfairness of competitors who actually fly faster to more places that either Australians want to fly to, or from which more visitor and business travellers want to come to Australia.

In this period the cost advantage to Qantas of a soaring Australian dollar, which has not be unavailable to any of its competitors, has been ignored or downplayed.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey