Qantas CEO labels national carrier the ‘little Aussie battler’ as competition heats up for 2022

Competition has never been hotter in Australia’s airline market as a new company prepares to launch and others expand their routes. But “little Aussie battler” Qantas is ready for the fight.

Qantas CEO Alan Joyce has described the national carrier as a “little Aussie battler” as the airline readies itself for a competitive 2022.

Qantas today announced its half yearly results, reporting an underlying $1.3 billion pre-tax loss for the six months until December 31 as ongoing lockdowns and new coronavirus strains almost brought travel to a standstill.

Qantas, Jetstar and Virgin are also readying themselves for a more crowded flying market this year, as US private-equity backed Bonza prepares for a mid-2022 launch and Rex (Regional Express) Airlines widens its net from the regions to our capital cities.

Bonza will land in Australia in mid-2022.

The growing competition in Australia’s flying market will make for an interesting 2022 but also sparked a warning from Australian Competition and Consumer Commission Chairman Rod Sims, who said he would be watching Qantas and Virgin “very carefully”.

“Obviously, aviation has had a shocking time and Australia desperately needs a competitive aviation sector, given our landmass and the fact that we’re basically a whole lot of city states,” Mr Sims said at the National Press Club on Tuesday.

“We’ve got the prospect of more competition from Rex on city routes and Bonza who will target unserved routes.

“Whatever the chances those companies have at success, they must not fail simply because they can’t get slots at our airports.”

But speaking at today’s half yearly results press conference, the Qantas CEO said he wasn’t worried.

“We know we’re in one of the most competitive markets domestically in the world,” he said.

“We’re in the position in Australia where any carrier can be 100 per cent foreign owned and that doesn’t happen anywhere else in the globe. In the US, you can only be 25 per cent foreign owned. I think in Japan to have an airline you can only have 33 per cent of foreign equity on it.

“So what’s great for the Australian travelling public is they’ve got these big American private equity companies setting up airlines here that are 100 per cent owned by them and you’ve got the Singaporean companies investing in an airline like Rex.”

Qantas CEO Alan Joyce. Picture: NCA NewsWire / John Gass

Qantas is 82 per cent Australian owned, “the biggest percentage we’ve ever had since we were privatised”, Mr Joyce said.

Mr Joyce described Qantas as “the little Aussie battler” that was going up against big foreign investments.

“We’re competing, we’re the Aussie little battler against these big private equity companies around the globe and we’ll do pretty well at that,” he said.

“But there’s nothing wrong with being competitive and we do everything to be competitive. That’s why Qantas has survived 100 years.

“But we think actually the battle is not between Qantas and Rex or Virgin and Jetstar or Rex and Bonza, it’s actually happening where these carriers are on a route together.

“We can see where Rex and Virgin are on the same routes, there’s massive competition on airfares. We can see that potentially happening with Bonza, it’s actually avoiding routes that Qantas and Jetstar are on.

“Of the routes they launched, only one of them is a Jetstar route, a Melbourne route, so we’re very comfortable on Jetstar’s position at that moment in the market.”

Qantas isn’t worried about new airlines coming in. Picture: James D. Morgan/Getty Images for Tourism Australia

Mr Joyce said Qantas and Jetstar were in a comfortable position and commanded their spots in the market.

“Qantas is by far the best premium carrier here. It’s by far got the best lounges, the best in-flight products, free Wi Fi, the best international network which we just talked about, which is actually growing, which actually makes us unbelievably competitive in the corporate market,” he said.

“And Jetstar has the lowest cost base as it continues to do and operates the lowest airfares. Jetstar for example had $22 fares on Tuesday and believe it or not, not making this up, in 22 hours, they sold all 22,000 of those airfares.

“Jetstar just kills that end of the market. It’s so competitive in that end of the market and we’re very comfortable in that position.”

Mr Joyce said Aussie travellers and companies should be “thankful that it is a very competitive market”.

“The Australian consumers do really well out of it and that’s a positive,” he said.

“I’m sure the ACCC watch everybody, that’s part of their job.

“We’ve told the ACCC that in the interim we’re going to be flying for cash and we’re going to be generating revenue in the air ... I’ve covered that off with Rod Sims directly and that continues to be our strategy until normal demand resumes and that’ll continue to be our position for some months, maybe years.”

Qantas has spoken with the ACCC about new airlines. Picture: Glenn Campbell

In an interview with news.com.au last year, Bonza CEO Tim Jordan said the airline was here to stay, thanks to its backers.

Bonza is backed by 777 Partners, a massive private investment firm based in North America with assets under management of more than $US6 billion.

Aviation is one of the company’s business cornerstones and 777 Partners has already successfully launched Flair Airlines, a low-cost carrier based in Canada.

“(777 Partners) saw the opportunity in Australia and Bonza is coming and here to stay for the long term,” Mr Jordan said.

“We have a very big investor behind us and they’re not private equity looking to exit in three or four years.

“They’ve got deep pockets and they are a serious aviation investor.”

Bonza will acquire a number of brand new Boeing 737-8’s through 777 Partners, which owns an aviation leasing company, valued at $160 million each.