Goodwill crashes for Qantas, once hailed as the spirit of Australia
Qantas can trade on its reputation as one of the world’s safest airlines, but it might take some repair work to restore its image as a source of national pride.
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This year should’ve been a great year for outgoing Qantas chief executive Alan Joyce.
After the difficult Covid years and a challenging restart to flying last year, this was to be Qantas’ year to shine with a strong return to profit, the arrival of new aircraft and the launch of new international routes.
Industrial disputes with cabin crew and engineers were resolved without disruption, Qantas consistently beat rival Virgin Australia in the on-time performance stakes, and 1000 people packed a Sydney airport hangar for a star-studded gala dinner belatedly marking more than 100 years of flying. But all the good news stories emanating from the Qantas corporate affairs team could not hold back the tide of discontent over a growing number of issues.
Months after oil prices have fallen, airfares remain well above pre-pandemic levels. There is rising anger about a massive bank of travel credits issued during Covid for flights that never happened, and the difficulty customers are experiencing to use them.
Flight cancellations and delays continue to exceed 2019 figures, despite Qantas’ assurance it has addressed operational performance issues.
Then there is the perception that Qantas and the government were working as one to keep out competition in the form of Qatar Airways, which would have put downward pressure on fares.
And just when it felt like things couldn’t get worse, the Australian Competition and Consumer commission surprised everyone with Federal Court action against the carrier, alleging it sold tickets on 8000 flights after they had been cancelled.
As cost of living continues to rank as the No. 1 issue for most Australians, airfares priced well ahead of 2019 levels, even after inflation is taken into account, are hard to defend.
What makes it harder is a sense that the “premium service”, promised by Qantas in return for premium fares, is being squeezed by a $1bn cost-cutting program.
Faced with questions about excessive prices, Joyce has often referred to the “Jetstar option” for “price-sensitive travellers” despite the carrier only recently getting its cancellation rate below 8 per cent. Even worse was the suggestion that because half of the $100m in travel credits held by Jetstar were for fares of under $100, they were hardly worth worrying about. Another $400m in travel credits are in the Qantas bank of goodwill, and had looked like staying there until the airline bowed to public pressure and scrapped the December 31 expiry date on Thursday.
It was a necessary move by Qantas which is still likely to be left with a significant sum of unclaimed funds, due to the thousands of customers who simply gave up trying to use their credits, or forgot about the $250 flight booked when borders were opening and closing like a fish’s mouth.
How the change of heart will affect fares is another matter, which had conveniently been due to fall after the credits expired.
Qantas international is targeting the middle of next year for a return to 100 per cent of pre-Covid flying, at the same time that other carriers, including Singapore Airlines, China Southern and Cathay Pacific, also are ramping up.
Forced to watch the activity from the sidelines is Qatar Airways, still waiting for an explanation for the federal government’s decision to deny the airline an extra 28 flights a week.
After several bumbling attempts by Transport Minister Catherine King to justify the decision when the tourism and travel industry, as well as exporters, is crying out for more capacity, Qantas stepped in on the government’s behalf.
Spouting lines later parroted by Jim Chalmers in an ABC interview, Joyce explained that granting such access to Qatar would have “distorted the market”, as other airlines took their time increasing capacity.
“It’s not possible to know what other airlines would or wouldn’t have done,” he said at a fiery Senate committee hearing on Monday, adding to the confusion about Qantas’ reasoning.
By the following day, Qantas legal counsel Andrew Fitch seemed to have figured it out, with the incredible suggestion Singapore Airlines and China Southern would not have increased capacity had Qatar moved first – something Singapore has now disputed.
It was a tawdry look for the airline that likes to be known as the national carrier – highlighting the lengths it would go to, to protect the high airfares that helped deliver the airline’s record $1.74bn net profit.
Certainly Qantas can trade on its reputation as one of the world’s safest airlines, having not had a fatal crash in the jet age, but it might take some repair work to restore its image as a source of national pride – the so-called spirit of Australia.
One thing is for sure: it won’t be Joyce’s concern. With an estimated final package of $24m coming his way, Joyce will depart Qantas a very rich man, leaving chief executive-designate Vanessa Hudson with the clean up.
Originally published as Goodwill crashes for Qantas, once hailed as the spirit of Australia
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