Monday, August 15, 2011

Is Australia still home for Qantas?

It doesn’t get much more Australian than a bunch of kids at the beach - Bondi nippers. It’s a wonderfully nostalgic image, one that makes up feel warm, cosy and proud of our heritage.

This was the image used by Qantas in newspapers this morning in a major advertising blitz aimed at convincing the community that it still calls Australia home.

The airline needed to shore up support for the very controversial new strategy outlined this morning - one that will alienate just about every one of its constituents other than investors.

The plan to launch a low-cost carrier in Japan under the Jetstar banner and a full-service Asian airline hubbed out of another Asian location (thought to be Kuala Lumpur) demonstrates clearly that the airline of the future will be far more focused on the region north of Australia in terms of growth.

The aim of the exercise is clearly to lower costs and drive the company’s international Qantas business to profits. In the first instance bringing this part of the airline to break even will be achieved by cutting 1000 engineers, pilots and cabin staff.

This is a big fight for Qantas to pick with a couple of its major unions, which have already been threatening industrial action.

Qantas might eventually achieve its outcome but it might have to wear some severe industrial pain in the meantime.

The reality is that Qantas runs a high-cost airline - higher cost than most of its competitors.

It’s international market share has fallen to 18 per cent of outbound.

It needed a radical overhaul of everything from fleet to routes and lounges but there is already a backlash from Canberra at the prospect of employing staff for the two new airline ventures at lower wages than existing Qantas mainline staff.

Independent Nick Xenophon was out of the blocks early today saying, "If you are employed by an Australian airline, flying on an Australian registered plane, you should be employed under Australian standards."

He must have missed the penultimate paragraph of the Qantas advertisement this morning, "We will always be proud that the vast majority of our operations are based in Australia".

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