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Jun 22, 2012

Qantas pleads for govt protection from the Joyce discount

Qantas' latest demand for protection is an old trick from an airline bereft of ideas.


Despite his Irish heritage, Alan Joyce is the consummate Australian businessman. No one better personifies the current tendency of many of our most prominent to blame all their problems on others — their employees, the government, their customers, evil foreigners — and to demand that governments do something about it.

The latest lesson from the Alan Joyce school of managerial excellence emerges today with Fairfax reports about Qantas lobbying parliamentarians to block Etihad’s investment in its rival Virgin, on the grounds that a cashed-up Virgin could, well… compete more effectively with Qantas.

According to the Fairfax report, Qantas is warning it could be forced to shut down. Yes, shut down — Qantas expects to make $600 million from its domestic operations this year, up $50 million on the previous year. Virgin’s entire half-year profit to December was $96 million.

At least the “shut down” threat is a variant on the traditional Qantas threat that if anyone was allowed to compete with it, it would be forced to close unprofitable regional routes, a claim that invariably alarmed rural and regional MPs and that underpinned years of aviation protectionism run by the federal Department of Transport, whose bureaucrats enjoyed multiple junkets a year (via the pointy end of the plane) to negotiate aviation rights that fiercely protected Australian consumers from the benefits of competition.

What’s happened over time is that competition has — in the funny way it tends to — exposed Qantas’ management, in the same way former monopolies invariably struggle to adjust to life after gouging. And, in particular, that of Alan Joyce. The Qantas share price now carries a substantial Joyce discount. This is the performance of Qantas shares since Joyce came on board (sorry) in November 2008, compared to the ASX 200, from the ASX site.

Under Joyce, Qantas began seriously underperforming in the market in late 2010 and the gap has only widened, albeit slowly, since then. Joyce’s main reaction was to declare war on his workforce, blame the Fair Work Act and promise grand offshore ventures that came to nought. Now, it appears, he has fallen back on the Qantas tradition of demanding protection from competition, at the direct expense of Australian consumers.

It’s the sign of a CEO and management team apparently bereft of ideas about how to respond to competitors, some of whom, yes, are government subsidised, but others of whom, like Virgin, have simply exploited Qantas’s own ineptitude.


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14 thoughts on “Qantas pleads for govt protection from the Joyce discount

  1. Delerious

    I blame the board and the Shareholders (other company CEO’s and board members) for not sacking Joyce and getting someone who can actually do the job.

  2. Allison

    Alan Joyce is evil. Blame the workers – start with the top sunshine and resign. You have ruined a good airline which once had a good reputation. GO BACK TO WHERE YOU CAME FROM.

  3. 81dvl

    Bernard; every time I hear this leprechaun leech say it, he says “Qaantis” and for some reason it’s annoying. He’s a sawn-off flying Sol Truhillo who sank the last outfit that employed him.

    Make no mistake – he is on a mission.

  4. geomac62

    Why would anyone have confidence in an airline that strands its customers without notice to score political and industry points ? I cannot believe it is illegal to have wildcat strikes yet legal to have wildcat shutdowns by companies .

  5. Gavin Moodie

    I agree with GEOMAC62 (nice avatar!) and for that reason haven’t flown Qantas since its grounding and lockout. Surely the Government wont block Etihad’s expansion of Virgin. Now I understand the reason for its expensive sponsorship of the stadium I still call Docklands.

  6. Two Bird Stone

    Don’t speak too soon about the “shut down regional route” threat! From theage.com.au: “Qantas says the first services to go would be marginal regional routes.”

    Qantas likes to stick with the traditions you see.

  7. Dogs breakfast

    Should have put a corresponding chart of how Virgin has been going compared to the sharemarket since John Borghetti was overlooked by Qantas to bring in Alan Joyce.

    Borghetti must be quietly chortling, and good luck to him. I fly very rarely, so can’t speak from experience, but whenever Qantas stuffs up it seems Borghetti is there to capitalise, and he seems way ahead of the game in making the international connections that appear to be so desperately required.

    In fact Qantas management and the Board, who for a very long time were considered to be among the best in Oz, now find themselves in a dogfight to take the title as most ineptly managed company.

    And if that is right that Qantas made $600m from domestic operations this year then that is a huge profit in such a small market, suggesting that there are still significant market problems domestically. Perhaps a deal between Etihad and Qantas may be bad for Qantas, but brilliant for the consumer.

  8. NQAussie

    I`m quite content to drop Qantas as our `supposed` National Airline and let
    Joyce do his best/worst. Stop propping up the poor man in his deluded dream
    of personal dominance.

  9. John Bennetts

    My last O/S trip (this year) was fantastic… well run, clean planes with delightful staff and no problems. Other internal flights were split between all available carriers, with nothing to separate them.

    Nope, the O/S legs were not Qantas. That was over $12k that they missed out on.

    “Qantas” used to be a promise.

    “Qantas” is now only a word, with mean, unscrupulous and arrogant connotations.

    Who cares any more?

  10. Bill Hilliger

    Qant-arse have avoided flying with them for years, in fact since the Virgin start up. Qantas is no longer the Australian national airline. Alan Joyce will probably see it of altogether.

  11. AR

    I continued flying Qantas even though Singapore, Thai & Malaysian were better value, often cheaper and friendlier right up until it started off-shoring maintenance. Not due to safety concerns as, initially, it was done by Singapore staff & facilities but when it moved further afield they lost me, mainly for the disregard of the national interest.
    The last time I heard the passengers on the journey home cheer on take-off & on landing was early 90s and by then it was more masochistic than nationalistic to fly when the food, service & smiles were better & cheaper elsewhere.
    Get rid of Joyce and wake up to what has lost & pissed away.

  12. Michael Lew

    The graph in this article does not properly display the relationship between the Qantas and ASX prices because their scales are not well matched. The Qantas scale covers a much larger fractional range. If the scales were matched then the underperformance of Qantas would be much more apparent.

  13. izatso?

    Another world beating Australian Operation run into the ground…. the shite wiil follow Sol to Mexico wif the Rake-Off .

  14. Singularity

    It speaks volumes that the man currently running Virgin cut his teeth in an international airline, run for many years as a government owned business (Qantas), surrounded by business people who clearly had a passion for the business of aviation. While Qantas is now run by a management team made of former Ansett, overseas low cost operations and in the case of the board, banking and mining executives. Hardly a recipe for success, the team almost looks like it was handpicked to be a failure in the full service network carrier game.


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