Qantas should look to the US airline sector, say academics specialising in aviation, as it seeks to turnaround its international division and get back in the black.
Qantas today posted a $245 million loss, it’s first loss since being privatised in 1995, and cancelled a multi-billion dollar order for Boeing 787 Dreamliners as it faces volatile global conditions, fuel prices and exchange rates.
“The only region in the world where full-service carriers are holding their own is the US market, which has been through dramatic consolidation,” said Ian Douglas, senior lecturer in Aviation Management at UNSW.
“That’s the only place where airlines are now looking like delivering a return on capital.”
Dr Douglas said Qantas is in an awkward position as it continues to compete on international routes with state-owned airlines that have owners who are willing to forgo profit or any return on capital, in order to grow.
“I think the strategy they’ve adopted is the best they can do for the circumstances they’re in,” Dr Douglas said.
But Greg Bamber, Professor in the Department of Management at Monash University, said Qantas needs to rebuild the relationship with its workforce in order to ensure it can successfully compete.
“In a service sector like aviation, the future is with providing excellent customer service, and to do that depends on having good relationships with the owners, managers and the people who work in it.”
Professor Bamber said the long-term battles Qantas has been engaged in with its pilots, baggage handlers and engineers, have detracted from those relationships.
“I guess Alan Joyce waiving a couple of million dollars of his bonus is one symbolic way of trying to heal those wounds, but it was amazing the bonus was there to be waived given the results are so poor.”
Professor Bamber has in the past pointed to America’s Southwest Airlines as an example of one airline achieving high levels of employee and aircraft productivity.
The cancellation of the order for new planes also may not be a wise move, said Professor Bamber.
“Part of the reason Qantas has been losing money is it’s running a geriatric fleet of 747s, and the Dreamliners are more fuel efficient.”
But Dr Douglas said while older airliners burn a little more fuel “I don’t think delaying the purchase of the 787s is going to kill the Qantas business.”
John Coochey
Mr
I think the central problem with Qantas is that it is expensive and offers appallingly bad service. I only fly on it when there is no other option for example to South Africa and even then I declined the offer of a trip to Botswana because I would have had to fly Qantas. Incidentally that is the most expensive trip per k in the world because it is a duopoly with SA airways. In the past Qantas has had a great deal of protection first via AITA which restricted competition and later via restricted landing rights with Q selling off its surplus to Singapore. That protectio n has now declined but word has not got through to Qantas staff who think they can still work on a cost plus basis.
Joseph Bernard
Director
wonder how much of this loss can be directly attributed to management's decision to shutdown the airline for three days last year in it's action against the union?
from an asset management perspective, Downtime costs are particularly costly and this type of event affects the business in many different ways like:
- Operational on costs incurred whether the planes fly or not,
Read more- Additional costs of having Planes grounded,
- Additional costs of rescheduling a world wide operation…
David Healy
Retired
Greg has a point when he refers to Qantas "running a geriatric fleet of 747s."
In 2010, we flew MEL-LAX premium economy in a V Australia 777. On the return leg, V Australia had an aircraft issue and put us on a Qantas 747.
The 747's seats were smaller, less comfortable and had FAR less legroom than the 777's seats. My seat adjuster was broken. When the passenger in front of my wife had his seat fully reclined, she could hardly get out. She is not a big woman, and was sitting on the aisle!
When we bought our fares, Qantas was half again the price of V Australia. Qantas is trading on its reputation. While I'd never say never, I tend to agree with John's observation about flying with them only when there is no other option.
Dan Fashaw
Brain Surgeon
The reason airlines in America are so successful is because they pay their pilots $17,000-$20,0000 a year, with experienced pilots not doing much better.
Hardly a model to lead Australia.
John Coochey
Mr
I think you may be exaggerating a little there, I did some research and it is a little tricky because of allowances but Continental pays up to $200000 for first pilots Qantas can be more than double that. The very low figures you quote are for regional cargo airlines where aircrew are payed in hours so they can get their hours up with a hope of getting onto a major airline. I was talking to people with multy engine commercial ratings a few years ago and they were getting $55 an hour when they were flying, a bit more than a truck driver. Our hosties are the highest paid in the world and the most monolingual. Do a Google on what BA pays British recruited staff and then look at Virgin Atlantic because if I published the rates you would not believe how low they are.
tim lecky
teacher
Emulating the American airlines would be a disaster and an aberration to the flying kangaroo. If anything Qantas should be looking to its Asian neighbours for tips, where reliability, customer service and affordability are all consistently upheld. Qantas's prices are still stuck in its heyday, making the decision to fly one of its a competitors an easy one. I haven't flown Qantas for over a decade because of this reason. Alan Joyce needs to go, the shareholders and stakeholders need to send him packing. He's done nothing for the company. If he goes, the Qantas faithful will be back on board and everyone can enjoy their flight.
Gerard Dean
Managing Director
Can Qantas learn from the US?
I will tell you a story. Last year I was sitting in a long forgotten US domestic carrier's Airbus A320. We were lined up on the tarmac at Los Angeles airport. The pilot announced
"Lady's and gentlemen. if you look out to your right you and watch the Qantas plane. It is an Airbus A380, this planes big brother."
If anyone EVER says we can learn from the US airline industry, it is obvious that they have never flown in the US. I am sure that every time I fly into Dallas, the entire staff have just been hired, none of whom have seen an aircraft before, let alone worked in an airport.
Gerard Dean
John Coochey
Mr
I am not quite sure what your point was but was the A380 pilot drunk or was it the one where the second officer and the pilot had a public argument about programming the computer? A couple of years ago I wanted to advance my flight from SA by ten days. Qantas refused to do this for reasons I cannot fathom because they had space on every day and the longer you have to sell a seat the more chance you have, it did not know I had access to a computer program which allowed me to know their vacancies. Eventually I rang what I believe was a call center on the weekend and pretended I wanted to uplift a complete rugby team the next day, they said they had space so I said therefore they should have no problems moving myself and my wife. We got the flights but lost our future custom.