QANTAS MANAGEMENT LOSING SIGHT OF REALITY.
And so we have another chapter in the ongoing Qantas saga this time with Qantas CEO Alan Joyce announcing another $200m plus loss, the axing of 5000 jobs across the board, the removal of about 50 aircraft out of the Qantas fleet and an alleged restructure of future aircraft purchasing and replacement plans. And so time has come to have a look at what is fact and what is fiction.
Fact 1 is that across the board, Qantas is mostly losing money via its attempt to slot Jetstar into the Asian market with literally millions having been sunk into Jetstar ventures throughout Asia, ventures that have largely failed in overall terms. One of those ventures has a number of new Airbus A320-200s sitting idle at Toulouse in France because Jetstar can’t get approval to get the venture operational. Other Asian ventures have also had very marginal operational results adding to the bottom like losses. Qantas management via Jetstar adventures simply lost sight of the fact that Jetstar was set up as an Australian budget airline serving the Australian budget market be that domestically or to and from internationally. That initial intention is no longer the case with domestically Jetstar competing with Qantas services as well as competing with Virgin. Jetstar having lost sight of Australian priorities eventually resulted in Jetstar Asian ventures simply being badly timed and very badly executed thus costing the Qantas Group many millions. A case of bad management.
Fact 2. It is true that in overall terms, Qantas staff are paid higher wages than Virgin staff mainly due to totally different histories and totally different operational methods and an overall wage-freeze as proposed is therefore a viable proposition to make. With 5000 now being made redundant questions remain in the areas of operational efficiency, aircraft maintenance and aircraft safety. Above all, with staff morale likely to suffer, the all-important customer satisfaction may well be questionable.
Fact 3. It is true that Qantas is losing international market-share. The main reasons for that are that the international market has been liberalised in terms of more customer choice being available to international travelers and the simple fact is that when airlines such as Qantas fail to deliver on customer service and value for money aspects, travelers simply go elsewhere and internationally, Qantas has become the airline of last resort.
Fact 4. In terms of fleet management and fleet acquisition, Qantas made some fundamental errors that will have major consequences for years yet to come. There are major gaps in the fleet structure and fleet allocation system that are having a major impact in profitability. I shall deal with the fleet issue on an aircraft type by aircraft type basis.
Fact 5. There is the screaming above the rooftops about Qantas being our ‘National Airlines’. Fact is that in the aviation world today there is no such beast as a ‘national airline’ . Examples are Iberia, now owned by British Airways, the KLM-Air France combination, Austrian Airlines and Swiss Airlines, now owned by Lufthansa and the merging of a substantial number of airlines in the US. Examples of airlines that failed to heed the warning signs are Sabena, Olympic, Varig and numerous others. To me, Qantas these days is just another airline and not a very good one at that.
Fact 6. The Qantas Sales Act is being blamed for Qantas doing badly. Fact is that there is nothing stopping Qantas from acquiring partners for Jetstar or any of its non-core Qantas ventures. Should Government decide to remove part of the Qantas Sales Act to short-term effect would be zero as no-one in their right mind would want to invest in Qantas as it is and with the current management still in place. I would certain be opposed to Government putting any money into Qantas or provided loan-guarantees.
Fact 7. Went Ansett went under it was Qantas screaming from the roof-tops that Ansett should not be bailed-out. The same should apply this time. The fact is also that Ansett’s demise benefitted Qantas great and saw the initial then tentative steps of Virgin.
Fact 8. To me, the current Qantas management and board are a disaster waiting to happen. There is too much on how to make money, not enough management and board aviation expertise and not enough focus on satisfying customer demand expectations. I certainly would like the current management and board go and I would would also like to see a management expert advisory panel (unpaid, expenses only) being set up.
Fact 8. While Jetstar was set=up to operate as a budget carrier. it no longer seems to operate that way. It is just crazy to have Jetstar and Qantas services leaving an airport for the same destination both at the same time.
So lets now have a closer look at the Qantas / QantasLink / Jetstar fleet and pick the eyes out of it.
Bombardier DHC8-Q200 , DHC8-Q300 (Qantaslink) These aircraft are serving the company well. They are used for smaller capacity regional services as well as services to / from places such as Lord Howe Island. They are now out of production.
Bombardier DHC8-Q400 ( Qantaslink ) Qantas operates a substantial number of these and they are use for regional Qantaslink services around various parts of Australia. Very good aircraft for the purpose although some airlines have had problems with them. Still in production.
Boeing B717-200 ( Qantaslink )The 717 was essentially a glorified and souped up version of the long-since-gone DC9. Initially with Compass Airlines, then Jetstar and now Qantaslink the aircraft has become unsuitable for what it is used for. Either too big or too small for regional purposes, suspect reliability factor and much too heavy on fuel.
Boeing B737-800. The 737-800 is the current mainstay of Qantas domestically. There are very reliable and provided they are looked after they provide good service. They are also used for some international services to and from New Zealand. Although they are used and capable for such purposes they are not recommended for the longer distance routes. Too tight and uncomfortable.
Boeing 767-300ER, Qantas will be speeding up their retirement to save money. The real reason is that these aircraft are just about out of cycles and hours and should have been replaced years ago. They are reliable even today but at 460 knots, at FL350 they are a bit like driving a truck.
Boeing B747-400. Like the 767, these 747s are now getting old in the tooth and most of them will be retired sooner than planned with the most recent upgrades of these aircraft being retired the last.
Boeing B747-400ER Qantas has a small number of these. Initially aimed at the Australia-San Francisco-Los Angeles routes, these aircraft currently serve Dallas / Fort Worth as well as Santiago While these few aircraft will last a few years yet, Qantas has not planned for a longer-term replacement for these, another error of judgement by management.
Airbus A330-200 The A330-200 is essentially a longer range aircraft but they are use for shorter range services as well. Jetstar and Qantas both use them domestically and internationally. The Jetstar A330s will be replace by Boeing B787-8s and Qantas will use the A330-200 for domestic routes. The 200 series will replace the 767 in Qantas service.
Airbus A330-300 These aircraft are mainly used on regional international routes.
Airbus A380-800 These large aircraft are used for the Australia-US and the Australia-London Heathrow routes. They are also used on Australia-Hong Kong. Qantas is delaying further deliveries of these which really is a bit on nonsense as they were the next number of aircraft were not due for another couple of years in any case. More smoke and mirrors.
Boeing B787-8 ( Jetstar ) These are are current being delivered to Jetstar and they will replace the Qantas-bound A330-200s. They are long-range and very fuel efficient
Airbus A320-200 ( Jetstar ) These aircraft are the mainstay of Jetstar. Very reliable and it now seems obvious that the Qantas Group may have ordered too many of them. Perhaps the order can be changed as fill the Qantas long-range gap that should have been filled by the B777-300 but never was. The A350-900 would be a candidate.
Airbus A321-200 ( Jetstar ) Jetstar operates a number of these. they are basically a slightly larger version of the A320.
So there it is, the Qantas Group fleet, lots of gaps, no imagination and certainly nothing in terms of looking at rapidly advancing technology.
In total, yes, Qantas is a mess and the package proposed by Alan Joyce and his Board essentially are a delaying tactic with much more challenging times ahead for the airline both in operational as well as aircraft terms. As far as I am concerned, for Joyce and his Board, time has run out, time they went.
And like it or not.
My name is Henk Luf.
That’s the way it is.