Thursday, 20 August 2015

So - what does all this Qantas Profit really mean?


Two or Three years ago, I and many others from Senator Nick Xenophon through to ex Qantas boss Geoff Dixon were bagging the performance of Alan Joyce. Damn it, they even had a plan to take over and oust him.

Joyce had his workforce including flight attendants, maintenance engineers, baggage handlers and pilots all gunning for him when he played hardball on wages, conditions, and even shut the whole airline down for a few days.

The Qantas service suffered. Disgruntled flight attendants have little motivation to provide good service. Customers fled to a revitalised competitor over at Virgin. They upgraded their product, while Qantas gave economy passengers cardboard snacks served in cardboard.

Service and route contraction
Qantas reduced its international services dramatically - some routes disappearing while others were 'handed' to Emirates, or their low service offshoot Jetstar. In the meantime - Virgin successfully transfored from low service opperator, and poached some Qantas business customers as well. Both airlines lost a lot of money. Qantas by providing two new domestic services for each one of Virgin's, and Virgin by expanding rapidly, investing in lounges, upgraded product, and I suspect staff training. In fact at one stage, Virgin's international service to the USA in business class beat Qantas hands down.

All this while - the benifits flowed through to the consumer. Fare prices plumetted due to competition, and choice improved. On the international front - we moved our allegiances to other international carriers - offering close to similar service, but usually at much reduced cost.

It felt like no-one was flying Qantas
I have not forked out for a direct Qantas international service for the last 5 years. I have chosen similar quality carriers at much reduced prices - sometimes half the price that Qantas charges. Occasionally travelling on Qantas metal, but having bought the fare at a vastly reduced rate via another One World or partner carrier. For example: Jet Airways to Delhi via Hong Kong business class, with the Sydney to Hong Kong leg on Qantas metal. I was happy to put up with the lesser earnings of status credits on Qantas, until my travel agent successfully requested that Qantas 'take over' that part of the booking, and I earnt status credits as if it was a Qantas purchased fare.

But I digress.

What does all this profit success mean for Qantas long term? 
I'm not entirely sure, but I think it means that Qantas stays in the game, instead of falling out of it.

For me, after price and service, its the hardware that matters. Although a faithful Jumbo devotee (love that Business Class upper deck), my first trip on an A380 was transformative. That low pressure used to make my head hurt on long-haul. Nothing dramatic, just a dull ache, and overwhelming crankyness by the end of the trip - and that was after the self medication with alcohol. With the A380 - none of that fatigue.

Qantas has the A380, and that has kept them in the game. With the addition of the 787 9's, that too will keep them in the game - just. At the moment - you can fly on Scoot to Singapore in a 787. On United to the USA on a 787. Even Air India operates 787's out of Australia. China Southern uses them between Guangzou and Sydney. Even Jetstar can get me to Denpasar, Honolulu or Phuket on a 787. Later this year, you can travel on ANA to Japan on a 787. In 2016 - Air Canada will be operating them between Vancover and Brisbane.

Joyce - stupid/brave?
So unlike with the A380 - Qantas is no leader in using these new higher pressure, higher cabin humidity, more fuel efficient planes. It is definitely a follower. And I think that might be where Joyce wants it to be. Still he might surprise us. He has been stupid/brave before.

And here's the promotional video for some light relief:

No comments:

Post a Comment