sparklehorse12
Topic Author
Posts: 512
Joined: Fri Feb 02, 2007 12:19 pm

Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 3:14 am

I am consistently dismayed by the behaviour of and public snipping at Virgin Australia by Qantas execs. http://www.brisbanetimes.com.au/busi...p-virgin-wings-20120313-1uyef.html

I think anyone in the industry knew that as soon as VA announced the changes to the ownership structure that Qantas were going to play the card they always play which is have a public hissy fit and claim how "unfair" it is for Qantas...diddems!!!

The truth of the matter is that the Qantas sale act is outdated. In effect Australians expect QF to be a national carrier and behave like one yet the government do not support Qantas financially like other so called "national carriers". When Qantas behave in the interests of shareholders they are criticised by unions and joe average in suburban Australian as being un-Australian. This is not to say that QF have not been the beneficiary of government support on a commercial level. It is well known 500 million of tax payers money used by public servants for travel generally goes on QF and various other favours. Qantas shareholders, particularly institutional ones, are rightly sick and tired of the QF sale act and I think it is time it goes. The only reason this debate could get traction is due to Virgin Australia outsmarting QF and now, they cry foul at VA, cry foul at the QF sale act!!!!!!!!!!!!!!!

The amount of energy, money and rapant consultant spend that will be wasted on blabbering about Virgin could be better spent worrying about the string of utter mediocrity and disasters that have been the story of QF in the past 6 -9 months. JQ Pacific, MH - QF JV are two examples. QF have no where to turn to find a partner because they are too difficult to work with, I know first hand! The MH blow up is a classic examples of Qantas having no knowledge of cultural awareness. I know the script....it just repeats. Qantas send in the bafoon headed cowboys to bust heads "we know how it is done and you will do as WE want"..."like it or lump it"..well, MH clearly told them to stick it up their shirt....

QF quit sulking and get down to developing a legitimate strategy to deal with your butts getting kicked by VA!!!!!
Airlines Flown : QF,NW,AA, CX, AC, MH, SQ, DJ, NZ, TG, PG,US, FJ, J8, AN, DD, JQ
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 3:27 am

Quoting sparklehorse12 (Thread starter):
The truth of the matter is that the Qantas sale act is outdated.

I think that is the point that Qantas is making and I think it is a perfectly reasonable position.

mariner
aeternum nauta
 
sparklehorse12
Topic Author
Posts: 512
Joined: Fri Feb 02, 2007 12:19 pm

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 3:40 am

Mariner

Yes, however, they are attacking Virgin for it.....
Airlines Flown : QF,NW,AA, CX, AC, MH, SQ, DJ, NZ, TG, PG,US, FJ, J8, AN, DD, JQ
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 3:44 am

Quoting sparklehorse12 (Reply 2):
Yes, however, they are attacking Virgin for it.....

I think that's fair. Virgin is proposing to circumvent Australia's airline ownership laws - it's entirely legal, but surely not the intention of the legislators. Or I hope it wasn't.

But if what Virgin is proposing is upheld, then Qantas should have the same freedom and not be restricted by an act that only applies to it and to no other airline.

mariner
aeternum nauta
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 4:18 am

Quoting sparklehorse12 (Thread starter):
I am consistently dismayed by the behaviour of and public snipping at Virgin Australia by Qantas execs.

Aw poor little Virgin under attack from the big, bad, flying Kangaroo. Poor Richard Branson, he's not renoun for having a whinge in public is he?

Quoting sparklehorse12 (Thread starter):
QF quit sulking and get down to developing a legitimate strategy to deal with your butts getting kicked by VA!!!!!

If you look at QF's domestic performance there is absolutely no justification for your statement. Sure, some Corporates have gone VA's way, but both VA and QF are still expanding capacity and are following the same script in relation to chasing mining $$$'s. Meanwhile QF's overall market share is still at 60%.

Virgin is the least of the Qantas problems.

Quoting mariner (Reply 3):
Virgin is proposing to circumvent Australia's airline ownership laws - it's entirely legal, but surely not the intention of the legislators. Or I hope it wasn't.

To clarify, what Virgin is doing is the same as what Ansett did. That is split off the domestic business and make sure the International part is ringfenced by having at least 51% Australian ownership. Ansett accomplished that by having an outside group of Australian Institutions hold 51% of Ansett International. Virgin, to date, has articulated no such plans so all Qantas is doing is asking the IASC to clarify the new entities ownership structure and how exactly Virgin will make sure the 49% foreign holding isn't breached before air rights are transferred into the new entity. That's a fair and reasonable thing for Virgin to do.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 4:36 am

Quoting sydscott (Reply 4):
Virgin, to date, has articulated no such plans so all Qantas is doing is asking the IASC to clarify the new entities ownership structure and how exactly Virgin will make sure the 49% foreign holding isn't breached before air rights are transferred into the new entity.

Virgin has certainly articulated a plan to split domestic and overseas operations which can - or could if you prefer - change the domestic/overseas ownership structure:

http://www.smh.com.au/business/qanta...p-virgin-wings-20120313-1uyef.html

"QANTAS has demanded a review of Virgin Australia's radical shake-up of its ownership structure, which will open the way for more foreign investors and airlines to snap up stakes in its domestic business.

Less than three weeks before Virgin completes the restructure, Qantas has called for a ''comprehensive, public review'' into the changes to ensure its rival's international operations - to be split into a separate entity - meet the rules needed for it to retain rights to fly overseas routes as a designated Australian carrier"


As I sad, it is entirely legal, but I think the Qantas position is entirely reasonable.

mariner
aeternum nauta
 
TruemanQLD
Posts: 1346
Joined: Sat Feb 24, 2007 1:09 pm

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 4:45 am

While I realise I am usually taking QF side on most arguments on this board (as some would well know), I do, once again agree. I don't think this is DJ's fault, so much the laws regarding it. Why should QF be subject to any different laws than DJ? or TT for that matter. I do not agree with the law that domestic carriers can be 100% foreign owned, but thats another matter. QF should be subject to exactly the same laws as DJ. end of story as far as I am concerned.

Also, this whole notion that keeps getting plastered on the forums is that DJ has suddenly became a larger airline than QF and is beating QF in every aspect. I think QF real concern is not DJ, but SQ/EK/EY/TG and other airlines like that. DJ has a very small international presence with no plans to expand with their own metal and their domestic market share is no where near QF's.
 
qf002
Posts: 3079
Joined: Tue Jul 05, 2011 11:14 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 5:29 am

Quoting sparklehorse12 (Reply 2):
Yes, however, they are attacking Virgin for it.....

I don't think that it's fair to say QF are attacking Virgin over this... They are calling for a "comprehensive, public review".

QF isn't attacking anyone -- it's attacking the QF Sales Act. And so it should, in this situation.

IMO, the Australian Government either has to allow QF to operate completely independently of the Government (ie abolish the Sales Act), or they have to take some responsibility for the company and it's situation. In the past, the Government has adopted a fairly protectionist policy with regards to QF (ie Pacific rights restrictions and so on), and that was fair given the constraints QF faces in doing business.

If those protectionist measures are now removed (which I think is the right thing to do), then so should the restrictions surrounding QF. They have to be able to compete on a fair playing field to every other player.
 
AngMoh
Posts: 739
Joined: Fri Nov 04, 2011 5:03 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 5:34 am

Quoting TruemanQLD (Reply 6):
While I realise I am usually taking QF side on most arguments on this board (as some would well know), I do, once again agree. I don't think this is DJ's fault, so much the laws regarding it. Why should QF be subject to any different laws than DJ? or TT for that matter. I do not agree with the law that domestic carriers can be 100% foreign owned, but thats another matter. QF should be subject to exactly the same laws as DJ. end of story as far as I am concerned.

While one one hand the QF Sale Act causes restrictions, it also had indirect benefits. I don't think SQ would have been refused SYD-LAX flights if it was DJ protesting. Also, QF would have been 100% owned by BA a long time ago without that act.
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 5:34 am

Quoting mariner (Reply 5):
Virgin has certainly articulated a plan to split domestic and overseas operations which can - or could if you prefer - change the domestic/overseas ownership structure:

You mis-understand what I was saying. Virgin has not yet said how the are going to gaurantee the 51% Australian shareholding. Ansett had 51% big Insto's on board. Who does Virgin have and how do the plan to ensure the 51% is alwas complied with? They haven't stated any of that and what Qantas, and we agree reasonably, is asking for are details on how they plan to do this.
 
TruemanQLD
Posts: 1346
Joined: Sat Feb 24, 2007 1:09 pm

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 5:46 am

Quoting AngMoh (Reply 8):
While one one hand the QF Sale Act causes restrictions, it also had indirect benefits. I don't think SQ would have been refused SYD-LAX flights if it was DJ protesting. Also, QF would have been 100% owned by BA a long time ago without that act.

Sure, I don't doubt that it has its benefits, but so does it have its drawbacks. QF evidently sees that the drawbacks outweigh the benefits.
 
qf002
Posts: 3079
Joined: Tue Jul 05, 2011 11:14 am

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 5:53 am

Quoting TruemanQLD (Reply 10):
Sure, I don't doubt that it has its benefits, but so does it have its drawbacks. QF evidently sees that the drawbacks outweigh the benefits.

+ Many of the benefits have also been eroded significantly in recent years. Eg the SQ across the Pacific example -- SQ might not be flying the route, but VA/DL now are instead... The tie-up with SA to JNB could be another example -- this is now being shut down as well...
 
sparklehorse12
Topic Author
Posts: 512
Joined: Fri Feb 02, 2007 12:19 pm

RE: Qantas The " Corporate Sook" Of Australia

Wed Mar 14, 2012 11:27 pm

Sydscott - It is not a case of poor little DJ being beat up by the big bad kangaroo as you call it. I did not make this allegation. If you reread my post rather than fire-off half cocked you would realise that I am suggesting the Qantas Sale Act is utterly stupid and not fair for QF or institutional investors.

One other point I am making is that QF should get their own house in order before trying to put a spoiler move on DJ who are actually making QF look like a bunch of school yard kids playing "lets run an airline". Having a government relations team laboring over a submission to attempt to block capacity reallocation to Indonesia is an utter waste of time! This is corporate sulking at it's worst and demonstrates clearly that DJ are wining this "dog fight"....they have been hopelessly outmanouvered on many many fronts.

Lets look at the facts of why they are getting their butts comprehensively kicked. The alliances DJ have put together while still in their infancy are a strategic masterpiece compared to the bungled MH OW sponsoring by QF, JQ disaster in Vietnam, Fleet Grounding, "RED Q" implosion, network cut backs, loss of corporate market share. Given your position as continual QF apologist I am sure you will come back saying all these things were "beyond QF control"....

There are still issues with JQ Japan that are yet to roost....

By the way..Richard Branson is a million miles from DJ in influence. I acknowledge he is a large shareholder and holds two board positions but he is not even in the picture.....
Airlines Flown : QF,NW,AA, CX, AC, MH, SQ, DJ, NZ, TG, PG,US, FJ, J8, AN, DD, JQ
 
Gemuser
Posts: 4301
Joined: Mon Nov 24, 2003 12:07 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 12:25 am

Quoting AngMoh (Reply 8):
Also, QF would have been 100% owned by BA a long time ago without that act.

Well that's your opinion, and that's fine, but I must disagree. IMHO you are ignoring the history of Australia/UK relations since 1942 (the Fall of Singapore, ironically enough!). It would NEVER have happened, politically, economically or socially. QF would have imploded first. In fact you could argue that it was more likely that QF would own 100% of BA and that would have faced exactly the same problems from the other direction.

Gemuser
DC23468910;B72172273373G73873H74374475275376377L77W;A319 320321332333343;BAe146;C402;DHC6;F27;L188;MD80MD85
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 12:48 am

Quoting sparklehorse12 (Reply 12):
It is not a case of poor little DJ being beat up by the big bad kangaroo as you call it. I did not make this allegation. If you reread my post rather than fire-off half cocked

I even quoted it in my post for you. You said it.

Quoting sparklehorse12 (Reply 12):
One other point I am making is that QF should get their own house in order before trying to put a spoiler move on DJ who are actually making QF look like a bunch of school yard kids playing "lets run an airline".

I'd have thought culling jobs, cutting routes and locking out your workers to bring an end to the industrial disputes was QF trying to get its house in order. (Whether or not we agree that they're doing it the right way is another matter)

Quoting sparklehorse12 (Reply 12):
Having a government relations team laboring over a submission to attempt to block capacity reallocation to Indonesia is an utter waste of time!

Ultimately the Virgin bid will be successful. All the QF submission will do is force Virgin to reveal publicly how its now International Airline Company will maintain its 51% Australian Shareholding which it is required to have under the Air Navigation Acts. I'd have though the IASC would also need to consider this as part of a capacity allocation in order to ensure the airline receiving the capacity can legally use it.

Quoting sparklehorse12 (Reply 12):
This is corporate sulking at it's worst and demonstrates clearly that DJ are wining this "dog fight"....they have been hopelessly outmanouvered on many many fronts.

Which dogfight are Virgin winning again? Are they winning the re-structure dogfight that QF legally can't participate in? Are they winning the dogfight to Indonesia where they compete against Jetstar and not QF?

Quoting sparklehorse12 (Reply 12):
bungled MH OW sponsoring by QF

The establishment of Jetstar Asia gives OW options in Southeast Asia. And although QF is the sponsor, without other airlines in the grouping backing them MH wouldn't be admitted anyway. THe advantages of QF and MH allying with each other are too great an opportunity to pass up even if you do have to work with Tony Fernandes.

Quoting sparklehorse12 (Reply 12):
JQ disaster in Vietnam

Vietnam has been a difficult market for JQ from the outset and was probably a little too ambitious. However with the shareholding issues now settled and with Vietnam Airlines now using JQ Vietnam like Qantas uses JQ here, you will see the brand moving forward. Hell it may even bring Vietnam Airlines and QF closer together. Again, that would be a good thing since QF already codeshares on their services.

Quoting sparklehorse12 (Reply 12):
Fleet Grounding

There were probably better ways but Industrial disputes have to be brought to an end one way or another and the unions should have played their cards better. I mean you don't go out and pick a fight with a Company whose Chairman smashed the mining unions in his previous position and expect to come out of it without a black eye.

Quoting sparklehorse12 (Reply 12):
"RED Q" implosion

That was always pie in the sky rubbish. They should focus on Jetstar expansion in Asia.

Quoting sparklehorse12 (Reply 12):
network cut backs

We all knew QF was not performing well on HKG-LHR and on SIN-BOM. The surprise was that they lasted as long as they did. But a re-focus on SIN and premium A380 services to LHR while building services with LAN @ SCL and AA @ DFW will hopefully arrest the slide. Along with the new 744 interiors QF is at least exectuing a though through plan even if we disagree with it.

Quoting sparklehorse12 (Reply 12):
loss of corporate market share

When you start off with 100% of something there is only 1 way it's going to go!
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 2:18 am

Quoting Sydscott (Reply 14):
There were probably better ways but Industrial disputes have to be brought to an end one way or another and the unions should have played their cards better.

I'll defend that action by Alan Joyce until the cows come home, and it did exactly what it set out to do - brought some industrial peace.

But we agree on the way the unions played it.  

mariner
aeternum nauta
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 3:49 am

Quoting mariner (Reply 15):
I'll defend that action by Alan Joyce until the cows come home, and it did exactly what it set out to do - brought some industrial peace.

Mariner, I'm also a supporter of it in that I believe such a showdown has been inevitable at QF for years. The buck had been passed from Geoff Dixon to Alan Joyce and AJ finally just said enough was enough, the answer to your demands is no.

The only group I feel sorry for are the pilots because their form of industrial action, while annoying, was hardly disruptive. I think their Union Leaders, more than any others, played their cards wrong and got the strategy wrong. If they had stopped their industrial action when a showdown became inevitable with the other 2 unions, the pilots could have re-started it now and kept it going until the short haul pilots EBA comes up this year. With both pilot groups in negotiations the Unions would have had a much stronger hand to play in negotiations.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 4:08 am

Quoting sparklehorse12 (Reply 12):
Lets look at the facts of why they are getting their butts comprehensively kicked. The alliances DJ have put together while still in their infancy are a strategic masterpiece compared to the bungled MH OW sponsoring by QF, JQ disaster in Vietnam, Fleet Grounding, "RED Q" implosion, network cut backs, loss of corporate market share.

I think it is nonsense to compare Virgin Australia - international - with Qantas. How many overseas routes does Virgin Australia actually fly? Are you content to fly with other airlines every time you book on Virgin, which is, internationally, almost a virtual airline? That doesn't do much for Australian air crews.

To what extent is Virgin been exposed to the brutal competition by the Middle Eastern and Asia carriers?

Quoting Sydscott (Reply 16):
The only group I feel sorry for are the pilots because their form of industrial action, while annoying, was hardly disruptive. I think their Union Leaders, more than any others, played their cards wrong and got the strategy wrong. If they had stopped their industrial action when a showdown became inevitable with the other 2 unions, the pilots could have re-started it now and kept it going until the short haul pilots EBA comes up this year. With both pilot groups in negotiations the Unions would have had a much stronger hand to play in negotiations.

I agree that the pilot action was not disruptive but generally I felt that reason had been thrown out of the window and cumulative effect applied.

As old union man myself (who once took his union to court) I was appalled at how badly I thought the (non-pilot) unions played it, coming on like over-muscled apes. I felt that we had lurched back in time a few decades.

mariner
aeternum nauta
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 5:40 am

Quoting mariner (Reply 17):
I agree that the pilot action was not disruptive but generally I felt that reason had been thrown out of the window and cumulative effect applied.

Agreed. I think the Unions assumed that they still had James Strong or Geoff Dixon in the chair who both rolled over to Union demands. With a Chairman like Leigh Clifford behind him, there was no way Alan Joyce was going to cave into anything QF Management thought was unreasonable.

The Unions were spoiling for a fight, the got one and then they complained about "Management activism" in Industrial relations. As if the Company has no rights to answer its disruptive workforce in industrial disputes!
 
Independence76
Posts: 401
Joined: Thu Jul 19, 2007 9:59 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 6:32 am

The problem with Qantas is not just stuck in Australia nor exclusive to only the company.


The union issues are a given and multiple airlines are having this issue regardless of location, competitors, and culture, so I see no need to explore on this issue. We see it's something that needs to be fixed and it's too precise of a problem to generalize about it.

The alliance strategy has been too reliant and comfortable (along with many Oneworld carriers). With the downfall of Ansett Australia in 2001, Star Alliance no longer had a hold on the market. Air New Zealand joined two years earlier and reserved from room for competition, but Qantas was a giant in comparison. The trend I've seen across most Oneworld carriers is making strides through simplicity and ease, but most of the carriers have seemingly gotten careless both financially and product-wise. Qantas, in this case, allowed previously no-name airlines (such as Emirates and Etihad) to gain their geographical foothold and take control of a market which was previously a "wet financial dream" for them. Compare Qantas' economy product to that of Emirates and it's a no-brainer. Qantas appeared to ignore the warning signs and got comfortable with their QF-BA connections. The bizarre conflict between them and CX is more of a mystery than anything.

It's clear that Qantas and some international partners are in deep trouble - AA is in bankruptcy, Malev is dead, Mexicana drowned after one year, and Kingfisher will likely not live to see the year 2013. Each of these airlines (besides Kingfisher) appear to have been too conservative on their financial plans and route structures. AA has had the same old seats and cabins since 2000, Malev did not act fast enough in relation to their government support and competitive services, and Mexicana jumped into "celebratory" long-haul operations with odd equipment and cancelled their international flights within a year. It's clear from this perspective that the cavalier attitudes amongst the members (including Qantas) has resulted in the inability to step back and look at the evolution of the markets they held dominantly for years. Japan Airlines also went into bankruptcy, but the recovery has been swift and their fleet has gone back to efficient and modern basics (while keeping their service competitive). Cathay Pacific recently released some numbers of a reduction in profits, but nothing to panic about. CX has been, in my opinion, a driving example of service the rest of the alliance should have noticed. Profitability, 5-star status, a strong route system, updated cabins and fleets, and finally a keen eye for airlines in the region and their movements to compete - the latter is what I'm claiming to be the issue with nearly all Oneworld carriers.

To support my argument, MH is joining Oneworld next year (under financial trouble) and QF wanted to join in on the fun. It clearly went downhill fast (although the reason for this is not fully explained at this point). Instead of making a sincere effort to compete on the Trans-Asian routes, they were already jumping in bed with yet another future member of the club. One could argue that this alone would be a sincere effort to regain a hold on such routes, but seeing how the negotiations went would potentially suggest a different story on the matter. Qantas needs a new strategy and now it seems they have only themselves to solve the problem. Hopefully we can see a passionate, independent business model be introduced here.


Virgin Australia is successful because Virgin was able to get a good look on the market before they jumped into it. For years, Virgin Blue and all other associated carriers carved out a sufficient amount of marketshare while also watching how the Australian/New Zealand aviation industry evolved. When they time was right, they introduced long-haul operations with a proven long-distance and high-density aircraft - the 77W. The observation of the market and partnerships allowed them to see how to make friends properly. Someone above mentioned Virgin beating out Qantas in the Indonesian market - which proves my point. The union structure of Virgin Australia also allows them to compete without as much of a hassle as Qantas, but I don't see how that's important to this discussion.

I personally believe that if Qantas took the chance to order the 77W and 77L for Pacific (and some Asian) operations, they would have seen increased profitability. Compare a 77W's economics to a slightly larger (and therefore more passengers) 747-400/ER. You have two less engines, only a few less seats, and increased distance capabilities. Many argue that "it's too late" or "that ship has sailed" on the potential for ordering these aircraft and I personally don't see how it will realistically happen at this point. However, those who insisted that the 777 would compliment Qantas' fleet excellently have been proven right. Virgin jumped on the idea and now they're a newcomer making a profit.


Alan Joyce is not the man for the job. A CEO who gives his paycheck a (noticeable) boost in times of financial difficulty shows the signs of lack of interest, a desire for undeserved innocence, and most likely greed. It has made the union unhappy and destroys the trust of the shareholders which he spent months building up. His treatment and failure of the MH negotiations, to me, is a warning sign that these familiar alliances practices will not work under his management. The solution/person best for the job, however, is anybody's guess (as is with any other airline with inadequate corporate employees).


In conclusion, I believe the market is fair. Competition has gained a foothold where Qantas has turned a blind eye and the consequences are obvious to aviation enthusiasts and the people of Australia. Virgin observed the evolution of the aviation market before jumping into it and their success is noticeable. Qantas has relied too much on their alliance practices and now they're falling behind and trying to find ways to get back in the game. The way I see it, it's only going to be harder with Joyce at the end of the table.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 7:13 am

Quoting Independence76 (Reply 19):
Virgin Australia is successful because Virgin was able to get a good look on the market before they jumped into it.

Um - Virgin (Blue or Australia) owes much of its initial success to the collapse of Ansett - nothing to do with "getting a good look at the market."

As to its present success, certainly it was profitable in the last six months of 2011 - well done:

http://www.marketwatch.com/story/vir...ofit-amid-qantas-strike-2012-02-23

"Virgin Australia doubles profit amid Qantas strike"

It did have the Qantas strikes to help it along, of course, and the first six months of 2011 were a very different story:

http://www.smh.com.au/business/earni...s-eyes-rebound-20110825-1jazb.html

"Virgin Australia has slumped to a $68 million annual loss due to the effects of natural disasters, higher fuel prices and a meltdown of its reservation system late last year."

So - on balance - (calendar) 2011 was a loss for Virgin Australia. Qantas was profitable for the full (calendar) year, so how are you defining success?

And I'll say again - Virgin Australia has very little international exposure.

Quoting Independence76 (Reply 19):
Alan Joyce is not the man for the job.

He's one of the very few Australian airline managers to have fought the unions and won.

Quoting Independence76 (Reply 19):
It has made the union unhappy and destroys the trust of the shareholders which he spent months building up.

The unions were "unhappy" long before that.

mariner
aeternum nauta
 
Independence76
Posts: 401
Joined: Thu Jul 19, 2007 9:59 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 7:37 am

Quoting mariner (Reply 20):
Um - Virgin (Blue or Australia) owes much of its initial success to the collapse of Ansett - nothing to do with "getting a good look at the market."

As to its present success, certainly it was profitable in the last six months of 2011 - well done:

http://www.marketwatch.com/story/vir...ofit-amid-qantas-strike-2012-02-23

"Virgin Australia doubles profit amid Qantas strike"

It did have the Qantas strikes to help it along, of course, and the first six months of 2011 were a very different story:

http://www.smh.com.au/business/earni...s-eyes-rebound-20110825-1jazb.html

"Virgin Australia has slumped to a $68 million annual loss due to the effects of natural disasters, higher fuel prices and a meltdown of its reservation system late last year."

So - on balance - (calendar) 2011 was a loss for Virgin Australia. Qantas was profitable for the full (calendar) year, so how are you defining success?

And I'll say again - Virgin Australia has very little international exposure.

I'm mainly defining success based on marketshare + profits gained. While the numbers in 2011 were not too impressive, I think the link's information does come in my defense to a degree. The article states:

"Apart from having to contend with higher jet-fuel prices, the airline had $50 million ripped from its earnings by disruption caused by the Queensland floods and cyclone, $15 million due to the earthquake in New Zealand and $7 million from the ash cloud in June."

The year before was much better and indeed profitable. Natural disasters in this case (along with the reservation system blunder) took major tolls. It's difficult to argue that their organization "does not work" when natural events change their financial structure in such a way.

I don't think it's too soon or irrational to believe their 77W's are better at making more money than Qantas' 747-400/ER's. Virgin may not have immediate international exposure, but I think it's rational to assume it's growing. They are now under one brand in AU/NZ and it will be easier to make a name for themselves as time goes on.

Quoting mariner (Reply 20):
He's one of the very few Australian airline managers to have fought the unions and won.

Yes, but they had to be locked out for a number of days before something was officially done. He succeeded, but he had to put the airline through hell to get it. Thankfully, it's seemingly sorted out now.

Quoting mariner (Reply 20):
The unions were "unhappy" long before that.

The first part of my sentence was not directly associated with the last part. I'm clearly aware of the union troubles of the past. Mere misunderstanding.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 7:54 am

Quoting Independence76 (Reply 21):
I'm mainly defining success based on marketshare + profits gained. While the numbers in 2011 were not too impressive, I think the link's information does come in my defense to a degree. The article states:

"Apart from having to contend with higher jet-fuel prices, the airline had $50 million ripped from its earnings by disruption caused by the Queensland floods and cyclone, $15 million due to the earthquake in New Zealand and $7 million from the ash cloud in June."

Indeed. And Qantas had many (all?) of the same problems. I guess you know how much money Qantas made in that same period?

Quoting Independence76 (Reply 21):
I don't think it's too soon or irrational to believe their 77W's are better at making more money than Qantas' 747-400/ER's. Virgin may not have immediate international exposure, but I think it's rational to assume it's growing.

We can all wish - hope - dream - but I am not aware that Virgin Australia has any unfulfilled orders for any 777's.

Quoting Independence76 (Reply 21):
Yes, but they had to be locked out for a number of days before something was officially done. He succeeded, but he had to put the airline through hell to get it. Thankfully, it's seemingly sorted out now.

As the British SAS troops say - "who dares wins". Mr. Joyce dared - and he won.

It has yet to be seen if Mr, Joyce has a grand vision for Qantas. Equally, it is yet to be seen if CEO Borghetti has a grand vision for an international Virgin Australia.

mariner

[Edited 2012-03-15 01:13:11]
aeternum nauta
 
bill142
Posts: 7853
Joined: Wed Aug 04, 2004 1:50 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 9:14 am

Corporate sook of Australia? That's bit rich, clearly no ones read any news featuring Clive Palmer lately.
 
sparklehorse12
Topic Author
Posts: 512
Joined: Fri Feb 02, 2007 12:19 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 11:22 am

Quoting mariner (Reply 17):
I think it is nonsense to compare Virgin Australia - international - with Qantas. How many overseas routes does Virgin Australia actually fly? Are you content to fly with other airlines every time you book on Virgin, which is, internationally, almost a virtual airline? That doesn't do much for Australian air crews.

To what extent is Virgin been exposed to the brutal competition by the Middle Eastern and Asia carriers?

Nonsense??? There is no comparison to be had. Borghetti had the vision and the desire to develop a way to build an extensive network through alliances. How many failed alliances have QF had in recent times??? MH and BA come to mind. QF had the opportunity to work with EY and CX but everyone knows QF are to hard to work with. They had the opportunity and squandered it...

Syd Scott - Honestly. If Red Q was "pie in the sky" why was there an entire team of ex big 4 management consultants working with Lesley Grant on the project?? It was a massive failure and to resign it to "pie in the sky" is an indication that you find it hard to admit that QF have made some school boy errors. SE Asia is a grave yard of Australian businesses going up there with all guns blazing and failing...Fosters had the same issue in Vietnam....

On another point too, aviation in the corporate market is a zero sum game so you rightly point out that when you start high it is there to be lost. However, you underestimate the power of indumency in the corporate travel market and I can tell you DJ sales team are useless, it is Borghetti that is doing all the heavy lifting. So an entire QF sales team against one guy. I know you will scoff at this suggestion but I have a better idea than you would...
Airlines Flown : QF,NW,AA, CX, AC, MH, SQ, DJ, NZ, TG, PG,US, FJ, J8, AN, DD, JQ
 
TN486
Posts: 381
Joined: Mon Jul 28, 2008 11:08 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 11:58 am

Quoting Sydscott (Reply 16):
The only group I feel sorry for are the pilots because their form of industrial action, while annoying, was hardly disruptive. I think their Union Leaders, more than any others, played their cards wrong and got the strategy wrong

It would appear they have not learnt anything in the last 30 years.

Quoting Sydscott (Reply 16):
Mariner, I'm also a supporter of it in that I believe such a showdown has been inevitable at QF for years. The buck had been passed from Geoff Dixon to Alan Joyce and AJ finally just said enough was enough, the answer to your demands is no
Quoting Sydscott (Reply 18):
Agreed. I think the Unions assumed that they still had James Strong or Geoff Dixon in the chair who both rolled over to Union demands. With a Chairman like Leigh Clifford behind him, there was no way Alan Joyce was going to cave into anything QF Management thought was unreasonable

Amen to both.

off topic I know, but when you have a leading union heavyweight (!!) advising customers not to book QF because "we are going to slowly bleed them to death", its like waving a red rag to a bull.

QF "company sooks" Nah, arrogant maybe, but not sooks.
remember the t shirt "I own an airline"on the front - "qantas" on the back
 
tayser
Posts: 397
Joined: Sat Mar 29, 2008 10:49 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 12:03 pm

Quoting Bill142 (Reply 23):
Corporate sook of Australia? That's bit rich, clearly no ones read any news featuring Clive Palmer lately.

HAHAH!! and LOL @ the thread title!

Quoting Independence76 (Reply 19):
The problem with Qantas is not just stuck in Australia nor exclusive to only the company.........

very good summary - one point I'd like to point out however: VA haven't received or ordered anymore 77Ws - they actually cancelled a few orders and instead are getting 330s - for AU trans-cons and hopefully one-way AU-Asia flights. Pre-Borghetti days they ordered the 77W, and as soon as he got in, things changed. Starting MEL-JNB-MEL was admirable by them (Pre-B) but as is the case when you want to go continent hopping to South America or [Southern] Africa in the southern hemisphere: twin engine aircraft are the wrong type (under the current CASA regime).
 
Independence76
Posts: 401
Joined: Thu Jul 19, 2007 9:59 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 6:17 pm

Quoting mariner (Reply 22):
Indeed. And Qantas had many (all?) of the same problems. I guess you know how much money Qantas made in that same period?

The article stated it in the afterward. You already mentioned that Virgin does not have the international exposure Qantas does - which is likely a major factor. I also heard nothing of a "Qantas system meltdown," so that would definitely be a hit Virgin got and not them. Qantas has a much more elaborate route structure, meaning they have more places to make money than their competitor.

Quoting mariner (Reply 22):
We can all wish - hope - dream - but I am not aware that Virgin Australia has any unfulfilled orders for any 777's.

I said the international exposure is growing, not their fleet of 77W's. They only have 5 in the fleet with none on order.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 6:44 pm

Quoting Independence76 (Reply 27):
The article stated it in the afterward. You already mentioned that Virgin does not have the international exposure Qantas does - which is likely a major factor.

A major factor in what?

The international arm of Qantas was said to be losing money last year, so the profits mostly came from domestic, Jetstar and - maybe - a couple of plum international routes. Just like Virgin, only more money.

Quoting Independence76 (Reply 27):
I said the international exposure is growing, not their fleet of 77W's. They only have 5 in the fleet with none on order.

As "tayser" noted, Virgin canned JNB and I'd note that it canned all intra-NZ flying. Both moves may have been financially sensible, but are scarcely "international growth."

Presently, the international exposure of Virgin is growing through flying on other airlines, the alliances. That's fine if you're a travel agent, perhaps, but useless for me - I like to pick my own airlines.

I have positive feelings towards Virgin Australia, I like to fly 'em, and I think the creation of Polynesian Blue (Virgin Samoa) was an extremely important move for the small island nations. I'd like to see more of that.

And the alliances may be the way to go - I would be surprised if Australia can support two full service airlines with complex international route maps.

But I have extremely positive feelings towards Qantas, too, I like flying 'em, and I loathe this presently fashionable concept of a blood sport between the two.

I am sorry to see that blood sport extended to here.

mariner

[Edited 2012-03-15 11:52:42]
aeternum nauta
 
Independence76
Posts: 401
Joined: Thu Jul 19, 2007 9:59 pm

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 7:49 pm

Quoting mariner (Reply 28):
A major factor in what?

The international arm of Qantas was said to be losing money last year, so the profits mostly came from domestic, Jetstar and - maybe - a couple of plum international routes. Just like Virgin, only more money.

Some certain routes have gained some financial footing that would not be immediately expected (SYD-DFW-BNE-SYD). I'm not entirely sure why they dumped SFO and I'm still a little confused by this. However, DFW has gone from x5 a week in May to x6 a week in January and now they are moving towards an announced daily service in May/June.

I'm not going to go into speculation or exploration on this route any longer due to relevancy reasons, but I consider it one of the outreach points that Virgin doesn't have that Qantas was not affected by. Qantas' Pacific routes seem to be more or less profitable, while anything west of Singapore appears to be a money drain (publicly, at least).

Quoting mariner (Reply 28):
And the alliances may be the way to go - I would be surprised if Australia can support two full service airlines with complex international route maps.

But I have extremely positive feelings towards Qantas, too, I like flying 'em, and I loathe this presently fashionable concept of a blood sport between the two.

I am sorry to see that blood sport extended to here.

If alliances are the way to go, I would do something in between QF and CX....however difficult it may be. CX has a reasonable amount of routes to Australia and an association with QF just seems logical.

If Virgin wants to grow in Australia, a real alliance would certainly help. Air Asia/Air Asia X is close by and would provide a lot of Asian routes that Virgin Australia doesn't have. Connections in the US with Virgin America would also allow them to put their foot in the door between QF and AA (although, the contrast between AA's and VX's frequency is noticeable).

Like I said before, I believe the market, in all due respect, is a fair one. I don't see any precise reasons why Qantas should be eying Virgin's reorganization at such an obsessive level, but there are some arguments stated in this topic which are of good judgement in QF's favor.

I am a supporter and fan of Oneworld myself and I watch the members very closely from an enthusiast's perspective, so I do myself have some feelings for this issue. However, the number of things I have to criticize has seemingly tripled in the past 2 years. It would appear the alliance is falling apart and not too much is being done about it.

I do have compassion for Qantas, but I also hope Virgin finds ways to compete that will push Qantas to be better than ever.
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 8:15 pm

Quoting Independence76 (Reply 29):
If alliances are the way to go, I would do something in between QF and CX....however difficult it may be. CX has a reasonable amount of routes to Australia and an association with QF just seems logical.

They may be the way to go for Virgin - as I said I think it is possible that Australia cannot sustain two airlines with complex international route maps and look what happened to Ansett.

Quoting Independence76 (Reply 29):
Like I said before, I believe the market, in all due respect, is a fair one.

I don't believe the Australian market is a fair one. I think it is ludicrous that foreign owned airlines can operate domestically in Australia and this may give rise to inequities in the financial structure of Virgin, that Qantas cannot achieve.

Because of the constraints of the Sales Act, Qantas competes with one arm tied behind its back, so of course it is watching what Virgin is doing with a beady eye. I would.

I think Australia has to make up its mind if Qantas is a commercial enterprise operating in a free market or if it is a "national icon" and a protector of Australian jobs.

As to Oneworld, I think you can lay a deal of the problem on American, which fought against the inevitable - Chapter 11 - for far too many years.

But the whole airline world is changing, right before our very eyes, making life especially difficult for airlines at the arse end of the world with no great population base struggling against the ascendency of lower cost airlines and high fuel prices (longer flights - more fuel consumed).

Australia to almost any large population centre is a darn long way. Emirates, say, to India is a hop, skip and a jump.

This is compounded by the way Australia was developed, the so-called Darwin Line, meaning that only the east coast (and mostly southeast) and Perth were considered defensible.

mariner

[Edited 2012-03-15 13:39:08]
aeternum nauta
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 10:12 pm

Quoting Independence76 (Reply 29):
I'm not entirely sure why they dumped SFO and I'm still a little confused by this.

Because the cash flows from DFW were deemed to be better than SFO. I'll tip that either QF or JQ will return to SFO with the 787 in the future.

Quoting Independence76 (Reply 29):
Qantas' Pacific routes seem to be more or less profitable, while anything west of Singapore appears to be a money drain (publicly, at least).

And the simple reason for that is United, Delta and Virgin all have similar cost bases and cost issues to Qantas. So the market is more or less rational with capacity and pricing. The same cannot be said with the markets between Australia and Europe when you look at the volume of capacity new carriers into Australia such as Emirates, Qatar, Etihad, China Southern etc have all injected into the marketplace. That's why there is a money drain for QF. More capacity from carriers with substantially lower costs than QF = retreat from marketplace.

Quoting Independence76 (Reply 29):
If alliances are the way to go, I would do something in between QF and CX....however difficult it may be. CX has a reasonable amount of routes to Australia and an association with QF just seems logical.

CX and QF, even if they did like each other, would never be allowed to co-operate by the IASC or ACCC due to competition issues on the Australia/Hong Kong routes. You would essentially have a monopoly.

Quoting sparklehorse12 (Reply 24):
why was there an entire team of ex big 4 management consultants working with Lesley Grant on the project??

It's hard to know why anyone would employ ex Big 4 Management consultants aside from having a desire to waste money.

Quoting sparklehorse12 (Reply 24):
It was a massive failure and to resign it to "pie in the sky" is an indication that you find it hard to admit that QF have made some school boy errors.

I relate to Red Q flying the way I relate to Wayne Swan saying he'll produce a surplus. It's a good idea, maybe worth exploring, but ultimately it's just not going to happen.

Quoting sparklehorse12 (Reply 24):
SE Asia is a grave yard of Australian businesses going up there with all guns blazing and failing

Jetstar Asia anyone? I even think it made a profit this year.....

Quoting sparklehorse12 (Reply 24):
However, you underestimate the power of indumency in the corporate travel market and I can tell you DJ sales team are useless, it is Borghetti that is doing all the heavy lifting.

Again, it is inevitable that some QF contracts and new contracts will be either split or lost to Virgin for a whole variety of reasons. When you start with 100% of something and you have an overall 60% domestic market share you're bound to lose and Virgin has been doing its best to status match etc for new frequent flyers converting over to them. Virgins corporate marketshare is now about 17% and I'd expect it to stabilise somewhere between 20% and 30% of the market
 
AusA380
Posts: 113
Joined: Wed Jan 28, 2009 10:38 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 10:47 pm

Quoting mariner (Reply 30):
Because of the constraints of the Sales Act, Qantas competes with one arm tied behind its back, so of course it is watching what Virgin is doing with a beady eye. I would.

It needs to be remembered that all the people and businesses that purchased shares when QF was floated and have continued to purchase shares in the years since then have fully known that this constraint existed.

The shareholders and directors allowed QF management the 65% mantra on domestic pax irrespective of whether this was the most appropriate investments.
 
747m8te
Posts: 388
Joined: Fri Aug 29, 2008 10:14 am

RE: Qantas The " Corporate Sook" Of Australia

Thu Mar 15, 2012 11:18 pm

Quoting Sydscott (Reply 14):
I'd have thought culling jobs, cutting routes and locking out your workers to bring an end to the industrial disputes was QF trying to get its house in order. (Whether or not we agree that they're doing it the right way is another matter)
Quoting sparklehorse12 (Thread starter):
QF quit sulking and get down to developing a legitimate strategy to deal with your butts getting kicked by VA!!!!!

QF are a far bigger airline, with a major route network VA could only dream of...VA doesn't have the issues QF has to deal with because they still do things on the cheap and send many jobs off shore or out to contracts, most of its internatioanl network is simply through codeshare and not actually operating flights with their own metal or crew....thus not supporting Australian jobs and sending business off shore. VA doesn't have the issues with unions, as a large percentage of its employees, ground crew and so on are all contracted.....you don't hear about it when 100 staff lose their jobs, have a decrease in wage/conditions with Virgin, but it happens! Sure you could say Virgin are smart for doing this, then how about a bit of exposure or attack by the media to show their lack of support for Australian workers just to balance out the negativity towards QF hey?

Quoting mariner (Reply 17):
I think it is nonsense to compare Virgin Australia - international - with Qantas. How many overseas routes does Virgin Australia actually fly? Are you content to fly with other airlines every time you book on Virgin, which is, internationally, almost a virtual airline? That doesn't do much for Australian air crews.

  
Flown on:DHC8Q200,DHC8Q400,EMB145,E170,E190,A320,A332,A333,A343,A380,MD80,B733,B734,B737,B738,B743,B744,B744ER,B762,B763
 
Independence76
Posts: 401
Joined: Thu Jul 19, 2007 9:59 pm

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 12:12 am

Quoting Sydscott (Reply 31):
And the simple reason for that is United, Delta and Virgin all have similar cost bases and cost issues to Qantas. So the market is more or less rational with capacity and pricing. The same cannot be said with the markets between Australia and Europe when you look at the volume of capacity new carriers into Australia such as Emirates, Qatar, Etihad, China Southern etc have all injected into the marketplace. That's why there is a money drain for QF. More capacity from carriers with substantially lower costs than QF = retreat from marketplace.

That's my main argument on their international losses. The Trans-Asia market is now a bloodbath between such carriers. The only truly competitive edge that can bring Qantas back to their previous position in a short time is find a sufficient Middle Eastern stop for all AU-EU flights. This is more of a hypothetical suggestion, however, knowing there is no current negotiations or announced plans regarding this.

Quoting Sydscott (Reply 31):

CX and QF, even if they did like each other, would never be allowed to co-operate by the IASC or ACCC due to competition issues on the Australia/Hong Kong routes. You would essentially have a monopoly.

Then, once again, hypothetically, it would probably be best if Virgin Australia became more associated with Air Asia and Air Asia X. This could potentially allow some Asian routes to having connections into China so that a QF and CX alliance could work without the possibility of monopoly.


But, I see no reason arguing any of my two points above - it would be an imaginary board game if I did.
 
RyanairGuru
Posts: 6554
Joined: Wed Nov 01, 2006 3:59 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 12:39 am

Quoting Independence76 (Reply 29):
If Virgin wants to grow in Australia, a real alliance would certainly help. Air Asia/Air Asia X is close by and would provide a lot of Asian routes that Virgin Australia doesn't have. Connections in the US with Virgin America would also allow them to put their foot in the door between QF and AA (although, the contrast between AA's and VX's frequency is noticeable).
Quoting sparklehorse12 (Reply 24):
Borghetti had the vision and the desire to develop a way to build an extensive network through alliances. How many failed alliances have QF had in recent times??? MH and BA come to mind. QF had the opportunity to work with EY and CX but everyone knows QF are to hard to work with. They had the opportunity and squandered it...

They already have an 'alliance' of sorts with SQ who is there Asian distributor. So long as that relationship works out they have no need for Air Asia. Also don't forget that VA are positioning themselves as a full-service carrier. Association with SQ will do much more for strengthening their brand in this regard than Air Asia!

Also don't forget the JSA with DL means that they're not particularly friendly with VX: DL is obviously a much stronger partner in the USA. The only advantage of VX is the larger number of non-stops ex LAX and they do codeshare on those.

Quoting Independence76 (Reply 34):
Then, once again, hypothetically, it would probably be best if Virgin Australia became more associated with Air Asia and Air Asia X. This could potentially allow some Asian routes to having connections into China so that a QF and CX alliance could work without the possibility of monopoly.

The issue isn't Australia-China. There is already CZ, MU and CA to provide competition in that market. It is Australia-Hong Kong. VS have a stopover to LHR, but other than that a combined CX/QF would have 100% market share.


I'm of two minds about VA's recent international 'expansion'. With EY, SQ and DL they have a larger 'network' to Europe, Asia and North America than QF. The problem is that they've effectively set themselves up as a branch of Flight Centre, earning only marginal revenue by selling tickets on other airlines.
Worked Hard, Flew Right
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 1:11 am

Quoting Independence76 (Reply 34):
The Trans-Asia market is now a bloodbath between such carriers. The only truly competitive edge that can bring Qantas back to their previous position in a short time is find a sufficient Middle Eastern stop for all AU-EU flights. This is more of a hypothetical suggestion, however, knowing there is no current negotiations or announced plans regarding this.

QF wouldn't need to negotiate as Dubai has already said it's open to another airline to hub there for flights. So QF could move from Singapore to Dubai with minimal regulatory problems. The problems come from re-working the entire QF feeder network since SIN is within A330 range of every Australian city whereas Dubai isn't. The QF strategy for Europe flights is to focus exclusively on SIN and to leave the other cities beyond flight to Europe in the hands of alliance partners. Whether that is enough to restore those services to a competitive footing is something we won't know for a little while.


Quoting Independence76 (Reply 34):
This could potentially allow some Asian routes to having connections into China so that a QF and CX alliance could work without the possibility of monopoly.

The only way the ACCC would allow a QF/CX tie up is if there was another competitor on the direct routes between Australia and Hong Kong. So if Virgin Australia commenced flying directly to Hong Kong on its own metal an arrangement would be allowed. Short of that I'd say Australian regulators would say no.

As a side note, the Hong Kong/Australia bilateral was under negotiation last year but talks collapsed. Hong Kong Airlines wants to start services between Australia and Hong Kong but currently CX takes up 100% of the capacity allocation to Australia from Hong Kong. So Hong Kong wants more capacity. In exchange for that the Australian Government asked for additional beyond rights, on behalf of Qantas, through Hong Kong to Europe. The Hong Kong Govt flatly said no so talks collapsed.
 
RyanairGuru
Posts: 6554
Joined: Wed Nov 01, 2006 3:59 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 1:26 am

Quoting Sydscott (Reply 36):
QF wouldn't need to negotiate as Dubai has already said it's open to another airline to hub there for flights. So QF could move from Singapore to Dubai with minimal regulatory problems. The problems come from re-working the entire QF feeder network since SIN is within A330 range of every Australian city whereas Dubai isn't

It's within A330 range from PER and 744/380 range from the East Coast.

The key benefit is that is within A330 range of Europe.

Increasingly I'm wondering if a VA/EY style tie up with EK (or QR) is the best chance of offering a competitive European network, using the Gulf carriers lower cost base.
Worked Hard, Flew Right
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 2:06 am

Quoting Sydscott (Reply 36):
The QF strategy for Europe flights is to focus exclusively on SIN and to leave the other cities beyond flight to Europe in the hands of alliance partners. Whether that is enough to restore those services to a competitive footing is something we won't know for a little while.

As a concept, it works for me.

Hindsight is always perfect vision but I believe now what I believed at the time - that the biggest single mistake that Qantas (Dixon era) made was when it believed Boeing's promises for 787 delivery in 2008.

But for those early delivery promises, as Qantas has said, it might have gone with the then A350 - the A330 on steroids - which would have been flying by now and many of these conversations might have been moot.

It really doesn't matter how good the 787 is - it is useless if the airline doesn't have them.

mariner
aeternum nauta
 
Sydscott
Posts: 3065
Joined: Thu Oct 30, 2003 11:50 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 2:46 am

Quoting mariner (Reply 38):
As a concept, it works for me.

It works for me too. As I said above, QF wanted more beyond rights through Hong Kong so if they got that I could imagine QF using that as a second hub down the track. But for now all we need is for expanded traffic rights for France, so that QF can run SIN-CDG, and as an idea it works for me. I've stated in another thread how I think QF group should handle India and China and also use SIN for that but that's for another discussion thread.
 
VH-BZF
Posts: 738
Joined: Fri Oct 29, 1999 1:28 pm

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 5:23 am

Quoting sparklehorse12 (Thread starter):
The only reason this debate could get traction is due to Virgin Australia outsmarting QF and now, they cry foul at VA, cry foul at the QF sale act!!!!!!!!!!!!!!!

                                                        

Quoting mariner (Reply 17):
I think it is nonsense to compare Virgin Australia - international - with Qantas. How many overseas routes does Virgin Australia actually fly? Are you content to fly with other airlines every time you book on Virgin, which is, internationally, almost a virtual airline? That doesn't do much for Australian air crews.

  

Quoting mariner (Reply 20):
Um - Virgin (Blue or Australia) owes much of its initial success to the collapse of Ansett - nothing to do with "getting a good look at the market."

As to its present success, certainly it was profitable in the last six months of 2011 - well done:

Well said Mariner!

Look no one doubts that Virgin have had to reinvent themselves to be relevant and MORE profitable in the Australian market. They are a minnow when it comes to international service, with a small fleet and even smaller number of destinations, so of course they want foreign investment, otherwise they will always be irrelevant. Yes Virgin have John Borghetti, big deal! He's a good manager and yes he knew the Qantas business very well and has used that to improve the plot at VB. However Qantas is a 91 year old business that is also transforming itself with Alan Joyce at the helm. They employ 35K Australians and are entitled to voice their opinion in my mind. The QF sale act needs to be changed, that won't happen though for some time, because the politicians who are so vocal in their vitriol against QF are the very ones who won't change the legislation.

BZF
Ansett Australia - (was) One of the worlds great airlines!
 
RyanairGuru
Posts: 6554
Joined: Wed Nov 01, 2006 3:59 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 1:31 pm

Quoting RyanairGuru (Reply 35):
I'm of two minds about VA's recent international 'expansion'. With EY, SQ and DL they have a larger 'network' to Europe, Asia and North America than QF. The problem is that they've effectively set themselves up as a branch of Flight Centre, earning only marginal revenue by selling tickets on other airlines.

Having reflected on my earlier comment, I think I've discovered a new-found respect for this model:

VA is not loosing money on its international "network" (unlike QF). However marginal the revenue may be (I'm guessing 1-2% of ticket price) at least it is a profit.

BUT Velocity members earn status credits on EY, SQ and DL. Further through these partners VA have a more comprehensive "network" to the three most strategically significant regions on the planet than QF do.

This therefore makes them (in theory) more attractive to corporate clientele who then fly domestically on DJ, which is where the real money is...

VA have taken on a truly global network with zero liabilities.



For the record I am staunchly in the Qantas Faction on here, but I do have to admire VA's international strategy for what it is. After all, 18 months ago they flew to LAX, HKT and JNB - and that was it!
Worked Hard, Flew Right
 
sparklehorse12
Topic Author
Posts: 512
Joined: Fri Feb 02, 2007 12:19 pm

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 9:51 pm

Quoting VH-BZF (Reply 40):
However Qantas is a 91 year old business that is also transforming itself with Alan Joyce at the helm. They employ 35K Australians and are entitled to voice their opinion in my mind.

Transforming itself......? Wow, how are they doing that?

By:

Squashing everyone into QCC & QCA?
Going open plan?
Coming out with "Grow With Asia" strategy then bungling an MH JV?, neglecting proper diligence in Vietnam? alienating OW and potential partners in SE , Central and North Asia?
Attempting a block move on a competitor rather than focus on their own business?
Appointing Olivia Wirth?
Sacking an entire Gov Relations Team 8 months ago?
Appoint a new team and then sacking it's head of on Tuesday?
Cutting international routes?

Which one of these constitutes the ridiculous Corporate speak "transformation" ? The business is sleep walking..not really awake not really asleep and making stupid errors which question the capability of management. I actually think the QF sale act is at the end of it's life but don't point the finger at VA about it......


Sydscott - Yes, you rightly point out the big 4 are vampires for cash, guns for hire

Mariner - I don't understand why you say that you want a choice of who you fly with internationally rather than as Virgin do put you on another alliance partner. QF are moving the same direction except through HKG and BKK you can go to LHR on BA, on VA you take EY or shortly SQ...which one would you prefer? I Have flown J in all of them and I know which one I would pick!
Airlines Flown : QF,NW,AA, CX, AC, MH, SQ, DJ, NZ, TG, PG,US, FJ, J8, AN, DD, JQ
 
User avatar
mariner
Posts: 18169
Joined: Fri Nov 23, 2001 7:29 am

RE: Qantas The " Corporate Sook" Of Australia

Fri Mar 16, 2012 11:09 pm

Quoting sparklehorse12 (Reply 42):
Mariner - I don't understand why you say that you want a choice of who you fly with internationally rather than as Virgin do put you on another alliance partner. QF are moving the same direction except through HKG and BKK you can go to LHR on BA, on VA you take EY or shortly SQ...which one would you prefer? I Have flown J in all of them and I know which one I would pick!

I don't like alliances, I don't use them. If I want fly on Etihad (which I do) why would I book on Virgin?

And since any trip I make to London will always involve a stopover in Asia, Qantas gets me there. I'll choose my own airline the rest of the way, which may be something interesting like Royal Jordanian.

Once upon a time, I flew Iraqi Airways BKK-BGW-LHR. That was wild.  

mariner
aeternum nauta
 
5MillionMiler
Posts: 88
Joined: Thu Sep 29, 2011 2:35 am

RE: Qantas The " Corporate Sook" Of Australia

Sat Mar 17, 2012 12:28 am

Quoting sparklehorse12 (Reply 24):
why was there an entire team of ex big 4 management consultants working with Lesley Grant on the project??

Well technically Bain and BCG are not "Big Four". "Big Four" are accounting firms: PwC, Deloitte, Ernst & Young and KPMG. All the geniuses supporting the Asia strategy were BCG then Bain/ex-Bain, where QF's head of strategy came from. They made a lot of money out of Qantas over a dumb idea. But your point is right; it was a serious endeavour.

Qantas has had Asia aspirations rather than a strategy. Indeed they spent a lot of money looking at SIngapore, Japan and Malaysia... all failures that never really made sense. I had seen some analysis of these and the people I thought who knew their stuff said it was crazy, and the fundamentals were not there to make it work.

And what is Lesley Grant doing running an Asia expansion strategy? Not qualified in my opinion. They have people who could do it, and access to those who could, but that is not her strength.

I do think the recent rationalisation of schedules and routes makes sense. The increase in 330s to Asia, dropping AKL-LAX, going to Santiago and making DFW daily make sense. I think they should drop JNB even though it is a bruise to ego. 744 too big and the profits aren't there for the route.

Being at the end of the line in Australia and flying everyone into London with no real midpoint to connect with Central/Eastern Europe, Middle East/Southwest Asia and North Africa is a huge disadvantage. Even Western Europe, except London, is more easily served from MEL/SYD/BEN/PER by Emirates, Cathay, Singapore etc with one stop service.. without overflying your destination and then turning back around.

The other challenge I find with Qantas is that internationally in business class QF is generally always the most expensive by a big margin. Right now Cathay is cheapest in business SYD-LHR, and the times and service are fantastic. $7,500 return on CX, $8,500 return on EK/SQ and over $10K for Qantas/BA. Try to Paris or Moscow and the numbers get worse for QF/BA AND you have a much longer flight time doubling back. Qantas can't compete in Europe, so exiting makes sense. They will always have enough O&D into London to support a route via Singapore, but other than that it is ugly. So they are smart to pull back.

Who is online