Taxpayers didn’t rate a mention at the Flying Kangaroo’s AGM on Friday. But as the excuses for poor performance pile up, the airline is planning to play on our patriotism and better judgment in its push to thwart competitors, writes Michael Sainsbury.
Prime Minister Anthony Albanese had his pants pulled down well and truly by Qantas chief executive Alan Joyce when the Irish-Australian blindsided him by grounding the airline’s fleet in 2011, when the now PM was transport minister. Albanese was told nothing until after the grounding order was given. He and Prime Minister Julia Gillard were furious.
Now, Joyce is trying to do it again as Qantas battles a bid by Qatar Airways to double its flights into Australia, which it lodged last week barely a year after Qantas pocketed the last of about $2 billion in taxpayer subsidies. Airfares both domestically and internationally are soaring and is now the main source of complaints about the company on social media.
Joyce boasted to shareholders at the company’s annual general meeting held in Sydney and online on Friday that the company had increased its international market share from 24 to 31 per cent, but admitted that Qantas could not increase capacity offshore until the middle of next year when it would receive three new 787s. After that, it will have no new twin-aisle long haul planes that would compete with rivals such as Qatar until at least 2025, when its first delivery of A350s is due.
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Qatar Airways CEO, Akbar Al Baker, has said that his airline is “offering an alternative to the Australian people”, adding that “the largest operator in Australia [Qantas] has cut its flights to 50% of pre-Covid level [and] more than doubled the price of the fares to the Australian people in the benefit of the shareholders… in addition, getting billions of dollars of state aid during the pandemic period in ’20 and ’21.”
The right to airline slots lies with the Federal Government. Qantas has a long history of successfully lobbying governments of both stripes. So this is the company’s first test against the Albanese Government, which faces a choice between a quasi monopoly, privately owned airline, or Australian consumers and better competition.
Quibbling at Qatar’s quest
Central to Qantas opposition appears to be a new alliance that Qatar has entered into with Virgin Australia that would see Qantas face more competition in the lucrative domestic market. Qantas did not respond to questions about Qatar’s proposal.
At the AGM, Joyce made the extraordinary claim that Qantas wanted to increase its domestic market share, currently in the high 60% range, to what he described as its natural market share of 70%”. Quite why and how any company in any sector should have a “natural market share” defies logic and certainly defies any concept of free and fair competition.
In a market update on October 13, Joyce said the airline would make between $1.2 billion and $1.3 billion in profit in the first half of the financial year. One reason was that the airline had pulled back capacity on a number of occasions in the past six months, claiming that “maintaining our pre-Covid service levels requires a lot more operational buffer” than it did previously. “That means having more crew and more aircraft on standby and adjusting our flying schedule to help make that possible.”
Joyce admitted that fares were higher and Qantas continues to make much of the fact that the price of aviation fuel has increased – about 75% in the past year – but it only makes up 20% of the airline’s cost base. Indeed, it has almost completed a $1 billion cost reduction program, part of a three-part program that will see 42 million shares handed to Qantas managers after June 30, 2023. Joyce himself will receive a hefty $4m in shares at today’s stock prices.
Indeed, a return flight from Sydney to Melbourne on Qantas next Friday, November 11, returning on Sunday, November 13, starts at $440 on Jetstar, $551 on Virgin, $583 on Rex and $865 on Qantas.
For a Melbourne-Perth flight the same weekend, Jetstar starts at $1134, Virgin at $1260 and Qantas at $1538. To leave at 8.20 pm on Qantas is in excess of $2000. A flight on Qantas from Melbourne to Singapore for the same dates is $1600 and eight hours versus four hours to Perth. So much for the fuel excuse.
A flight from Brisbane to Alice Springs next Friday for a week-long trip on Qantas would cost $1400, the same price as a return flight from Brisbane to Singapore on Jetstar.
Transport Workers Union national secretary, Michael Kaine, said ahead of the meeting that shareholders were being denied their right to have a say on “ludicrous bonuses and drawn-out legal battles.”
Over the next two months, Qantas is due in court for 15 days total over a prosecution brought by SafeWork NSW and hearings to determine the compensation of nearly 2000 illegally sacked ground-handling workers.
Stiffed: first workers, now shareholders
Under Joyce, Qantas management has always focused on its shareholders at the expense of its workers and customers at great detriment to the airline, but now even shareholders are being swindled by the Qantas dictatorship.
Michael Kaine, TWU
Kaine continued:
“After Qantas became Australia’s worst-performing airline, received a second emphatic Federal Court ruling that it broke the law in sacking nearly 2000 workers, faced charges from SafeWork NSW in the first prosecution of its kind, and heard a chorus of voices calling for Joyce’s resignation, today’s AGM should be about honesty, integrity and rebuilding trust. Whichever way shareholders vote today, Alan Joyce will walk away millions of dollars richer, despite having systematically trashed a once-iconic brand. Meanwhile, workers who have kept the airline afloat are still struggling after two years of wage freezes.”
As Qantas continues to battle unions in its efforts to give its workers new enterprise agreements that would see then only receive pay rises of 1.2% each year over five years, Qantas chairman Richard Goyder made a point of warning about the proposed new industrial relations bill from the federal government at the AGM.
“We’re concerned that lowering the bar for compulsory arbitration and enforcing multi-employer bargaining would effectively lead to centralised wage setting,” Goyder told the AGM.
“This kind of system will have little regard for the fact that different companies have different needs. And that will have a massive impact on productivity, growth and (in the longer term) the ability to pay more.”
In a stunning moment of self-congratulation as the company bathed in the warm glow of its rising share price Goyder failed to thank or even name taxpayers for their part in propping up the airline during the pandemic.
“We’ve been able to raise $1.4 billion from our shareholders. We sold the land [at Mascot] for $800 million. We raised about $2 billion from our finances from the banks. And so all that helped us get through some of that was because we owned a lot of the assets of aircraft in the like,” Goyder said.
The point of competition is choice so consumers can make their own choice, it does not seem like a reason for the government to limit choices for Australian consumers that also have the effect of keeping ticket prices higher.
The Australian Competition and Consumer Commission is clearly wary of Qantas’ dominant position in Australia’s domestic market. Earlier this week it delayed a decision on its planned takeover of regional airline Alliance, announced in May. The ACCC first raised concerns in its preliminary report into the takeover in August. The move came after the competition regulator dropped an investigation into anti-competitive behaviour spurred by a complaint by Qantas rival Rex (Regional Express).
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“Qantas today expressed disappointment in the ACCC’s decision to delay its findings on the airline’s acquisition of Alliance Aviation Services for a third time,” the company sniffed.
Consumer advocacy group CHOICE made it clear where Australian consumer stand, this week handing Qantas its annual Shonky Award.
If there were ever a company that appeared to deliberately be going out of its way to win a Shonky award, it’s Qantas, CHOICE noted.
The so-called Spirit of Australia, which has been a part of the national fabric for over 100 years, has been a disappointment to customers since the COVID-19 pandemic hit in 2020.
“Qantas has always sold itself as the premium Australian domestic airline, and Australians have been very proud of Qantas as a premium airline. But what we’ve seen recently is Qantas taken down to the level of a budget airline,” says CHOICE money and travel expert Jodi Bird.
The travel chaos at airports and cases of lost baggage have been well documented.
“They had the worst rates for flight delays, and their baggage handling has really been poor in the last year. People are still paying premium prices, but not getting premium service.”
Truths and half-truths
In response, Qantas rolled out its latest statistics. “We’ve beaten Virgin for on-time flights eight out of the past 12 months, and in some months that’s been by a significant margin,” the airline said in a statement.
But as ever with Qantas, there are truths and half truths. Its statistics only relate to the main Qantas brand and do not include regional arm QantasLink nor Jetstar whose performance Joyce admitted on Friday was poor, having cancelled 17 flights during the past 24 hours.
The choice for a government that has promised Australia a new and better way of governing is clear. Help a privately owned company that thinks it is owed 70% of the domestic airline market. On the back of that market domination, it pays multimillion-dollar bonuses to its top executives and offers regular workers pay deals that sees them lose spending power .
Or Anthony Albanese and his team can offer Australian travellers more choice and lower airline prices. At the very least, letting Qatar boost its flights will make Joyce and his team work a little harder for their handsome pay packets.
Michael Sainsbury is a former China correspondent who has lived and worked across North, Southeast and South Asia for 11 years. Now based in regional Australia, he has more than 25 years’ experience writing about business, politics and human rights in Australia and the Indo-Pacific. He has worked for News Corp, Fairfax, Nikkei and a range of independent media outlets and has won multiple awards in Australia and Asia for his reporting. He is a fierce believer in the importance of independent media.