High airfares a blow to Qantas brand, says new analysis of world’s top airlines

Qantas may be flying towards a record profit in 2023 but its brand is yet to fully recover, according to global airline analysis.

The strength of the Qantas brand has been dented by high airfares, negative publicity and performance issues, according to new analysis of the world’s top airlines.

The Brand Finance report examined the economic credentials and marketing power of major airlines, along with consumer sentiment and media coverage.

Japan’s All Nippon Airways was rated the world’s strongest brand, followed by Korean Air, with Singapore Airlines’ fifth and Japan Airlines sixth.

Qantas slipped out of the top five for the first time since 2018, coming in at number seven.

Brand Finance Australia managing director Mark Crowe said a checklist of factors was taken into account, under the headings of investment in the brand, the equity the brand held and brand performance.

Qantas scored a total of 78.1, down from 82.4 last year, and a high of 86.6 in 2019.

“When you look at Qantas in terms of brand strength there are mixed results,” Mr Crowe said.

“Under that investment pillar, Qantas has seen a drop in ratings for value for money and innovation, and then under brand equity they’ve had falls in recommendation and reputation. “Finally under performance they’ve also experienced a drop in loyalty which is perhaps not surprising given there’s been a lot of negative publicity around Qantas and customer service.”

Brand was considered particularly valuable in the airline industry, accounting for “anything from 18 to 25 per cent of overall enterprise value”, he said.

“Brand is a critical asset in the airline industry and is really a key determinant in terms of those businesses being able to extract a price premium,” Mr Crowe said.

“Certainly customers’ perceptions and their willingness to pay a premium are very much shaped by a brand that they are very favourable towards.”

Qantas chief executive officer Alan Joyce. Picture: AFP

The report also looked at brand value with Delta Air Lines coming in at number one with an estimated worth of $13.7bn.

In addition to the huge market Delta serves in the US, the carrier recently acquired 20 per cent of LATAM Airlines, giving it a significant presence in South America.

Qantas came in at 16th with a brand value of just over $3bn, down from a pre-pandemic high of $4.1bn.

Mr Crowe said brand value was largely dependent on the actual scale of the business, which meant the big four US carriers dominated, along with Emirates and major Chinese airlines.

A Qantas spokeswoman indicated they were very confident in the strength of their brand, with a huge response to recent marketing campaigns.

She said the past 12 months had been spent “getting operations right”, which was reflected in on time performance data, and a better passenger experience.

“The latest government data showed that we were a full 10 percentage points ahead of Virgin for flights leaving on time in April. Our call wait times are better than they were before Covid and our mishandled bag rate has also improved,” the spokeswoman said.

“We’re not taking our foot off the gas, now we are operationally back on track we’re focused on what we can do better and investing in improving our customer experience.”

Financially Qantas is powering along, with the airline expecting to achieve a record profit of close to $2.5bn for the year to June 30.

The guidance prompted Motley Fool analyst James Mickleboro to question whether the current share price of $6.43 represented a “bargain buy”, given the potential for growth in the next 12 months.

Goldman Sachs revised its target price to $8.50 on the back of Qantas’s ASX announcement, JPMorgan was targeting $9 by May 2024, and UBS moved up its valuation from $7.60 to $7.95.