What can Qantas do to be a better airline?

24 replies

AlexT

Member since 14 Apr 2014

Total posts 22

What can Qantas do to be a better airline?

Qantas used to be so good, but now its losing traffic to competitors.

How can it get back to its former glory?

johnaboxall

Virgin Australia - Velocity Rewards

Member since 24 Aug 2011

Total posts 384

It isn't about restoring "glory" like some jingo-istic football team, QF just needs to get back into the black financially and stay there. Part of this process is to maintain safety, encourage customers back with improved hard (e.g. those new A330 J seats) and soft (new, more motivated and less renumerated staff) product, and fly them to where they want to go at the right price. Interesting times ahead. 

watson374

Qantas - Qantas Frequent Flyer

Member since 17 Aug 2012

Total posts 1,285

An excellent summary, tronixstuff, and one I agree with wholeheartedly!

In order to do that, they just need to follow the money, which in my view would be taking advantage of the Asia Century.

riley

Virgin Australia - Velocity Rewards

Member since 19 Mar 2014

Total posts 358

Joyce argues they're doing that with Jetstar Asia. I'm not across the process of a foreign airline establishing an operating hub in a country but I would assume the Qantas brand / product would appeal more to the new wealth folks in China / Taiwan as well as financial hubs Singapore / Hong Kong and not forgetting Japan. Surely, surely this market is dominated by business over leisure? 

Culturally, there's a lot of patriotism so maybe a lot cost product is the only way to entice passengers to travel with someone other than their flag carrier? I wouldn't short sell the cultural challenges as each market above is vastly different. Heck, even one end of china to another is a completely different market. But on face value, I feel there'd be a demand for a full service carrier with an unprecidented Asian network.

watson374

Qantas - Qantas Frequent Flyer

Member since 17 Aug 2012

Total posts 1,285

Yes, but they tried a couple years back in the form of Qantasia. It didn't take off, unfortunately, which is bizarre as Jetstar Asia did take off.

I don't think there's really a place for an Australian carrier trying to make itself into a pan-Asian premium carrier there. It's too difficult culturally and financially. Sure, you could run some Qantas flights from SIN to HKG and so forth like they used to in the nineties, but even if you were to open a crew base in SIN it would be asking for a slaughter by carriers like SQ and CX that dominate the Asian sphere.

Beyond that, you need at least one centrally-placed hub, but almost all of these are hostile by carrier (SIN, HKG, BKK), hostile by regulator (PVG, HKG), poorly located (NRT, ICN) or nearly useless (MNL).

So let's go with what they've got, which is a sort-of hub in SIN.

I think the best course of action is to do what they want to do, which is grow Jetstar Asia (3K). For all of its faults (and this is the airline that lost my bag for a week), Jetstar Asia is actually the better-performing of the two Singapore-based narrowbody LCCs. (Valuair doesn't count anymore as it got eaten by 3K.)

Here, the prudent course of action would be to go on the offensive. Pull A320s off the other franchises that are going topside, like the HKG one. Re-register and re-deploy them as 9V-*** Singapore-based aircraft and let loose. More frequency and more ports are needed to really develop SIN into a real hub again. Growth at the Asian end has to come from Jetstar Asia.

This answers the question of how to grow the network. It doesn't answer the question of how to provide a premium service. But Jetstar International has a premium product. So why not Jetstar Asia?

A two-class Jetstar Asia doesn't need to be sexy. Far from it. With A320s alone, there is a definite upper bound of what you can do. So let's not go overboard. I'd suggest creating (at least in the interim) something like Club Europe (and not dissimilar to the J setup on the old QF 734s!). Suspend a curtain that can create a forward cabin of anything from two to five rows and block the middle seats. Sell this as premium economy that comes with perks like an included meal and priority boarding and the like, and when customers book J tickets on QF, put them straight into this class of travel.

It's not the same, but a two-class Jetstar Asia is a start.

riley

Virgin Australia - Velocity Rewards

Member since 19 Mar 2014

Total posts 358

I believe when Qantas operated connecting flights between Hong Kong and Singaore it was under 5th freedom arrangements so it wouldn't allow Singapore passengers to get on to travel to Hong Kong, only those originating in Aus to get off. (The freedoms are complex, I'm not fully across what you can and can't do under an agreement.)

For it to be successful, I believe they'd need to up 9th freedom arrangements, allowing passengers to book economical, direct flights.

Not so much about the red kangaroo, but more about establishing a pan-asian full service - premium carrier. One with it's own identity. One geared to the enormous regional corporate market. I know Jetstar wouldn't hit that mark.

Crew base would have to be employed and based locally under local laws. 

I like the two class jetstar concept, it'd be jolting at first, akin to scoot-biz, but some perks for short trips that mightn't hit travel policy business class thresholds. Prioty processing, boarding and exiting would be a huge draw for carry-on customers. 

watson374

Qantas - Qantas Frequent Flyer

Member since 17 Aug 2012

Total posts 1,285

No, my family has flown between HKG and SIN on QF on a standalone ticket before. This was around 1999 when the 763s were on international runs.

Yes, that was the idea behind Qantasia. It's a fantasy. It would cost too much and be too hard. When I talk about taking advanatage of the Asia Century, the idea is for Qantas to make the most of the Australia to Asia market.

Of course, and Jetstar Asia already has the SIN base.

Yes, that's correct. With that, you'd get priority check-in, extra baggage with priority, lounge access where available, priority boarding, an empty middle seat and an included meal service. You could even throw in a free iPad use.

In short, the aim would be to provide everything Business normally offers, except additional legroom because that requires ripping seats up. So in a sense it's very much like Club Europe (BA) and Works Deluxe (NZ).

I agree it'd be jolting at first, but as a customer who's connected QF J to 3K Y, this is going to be a lot less jolting!

drsimon50

qantas

Member since 10 Oct 2013

Total posts 80

understandly financially QF has pulled out of those less profitable routes and that has helped with its rising back into the black - but how does that make those of us feel in those places no longer serviced internationally? who else can we use other than those international airlines who still service ADL and PER? we have no option to use Emirates or Cathay etc as QF has left us - unless we want to add hours onto our journeys by transiting in either SYD or MEL - their hard product is wonderful, their service generally brilliant too, but the choice of using their hard product internationally does not equate to an easy, relaxing trip due to transiting - its not an easy answer!

hutch

Member since 07 Oct 2012

Total posts 761

I assume this is primarily an international thing... well, it will never be back to its former glory.

It needs to be remembered that during those glory days, Qantas flew through protected skies. There was a considerable amount of protectionism by both the Australia and foreign governments. This basically meant your options to fly overseas were greatly limited.

These days, those protections are greatly removed or in some cases completely gone. Additionally, many foreign governments have realised that aviation can bring wonders to their economy and are happy to invest in it (Singapore and Middle East)...hence making their products more attractive (and with friendlier labour laws).

So whilst Qantas can do things internally to become / or continue to be a world class airline (depending on your point of view), it will never return to the days where it completely dominated the international market from Australia.

undertheradar Banned

Member since 28 Oct 2011

Total posts 234

QANTAS is a 90+yr old company/entity has gone from govt to public ownership along with certain restrictions imposed on it....please show me any other company of similar age AND/OR circumstance in OZ or overseas that doesnt/hasn't changed its 'business model' in order to survive for the longer term...QANTAS is now a public owned business (but ownership still govt restricted) ....and it's a fact that QANTAS will be a leaner/smaller airline... in order to survive...I'm sick of those who refer to 'the good ol days'

riley

Virgin Australia - Velocity Rewards

Member since 19 Mar 2014

Total posts 358

Qantas is starting to breathe easy again, thinking the battle is over and the war is won. The balance sheet has been fixed but the airline is in a much weaker position. They're actually a smaller airline now than 12 months ago. The Qantas network coupled with certain partners (Emirates) are why people fly internationally. I see a lot on the horizon for VA / Sinagpore / Air NZ and Etihad, the unofficial Virgin Alliance. As soon as the Virgin alliance gets an international network sorted, Qantas will experience an exponential loss of domestic loyalty. It's medium sighted leadership that is basking in their own glory right now are 3 years away from being blindsighted. 

There have been some great inititives rolled out but they're all in response to a crisis and very little of this has set them into a strong position moving forward.

What can they do to be a better airline? 

1) Sort the labour issues out. Fight it tooth and nail whilst we have a liberal government. Establish subsiduaries with new aircraft that don't bolt their air hostesses on ridiculous wages. It's not just the cost of labour, but the attitude and sense of entitlement that comes with it.

2) Outsource all heavy maintenance. Countries like Singapore do it just as well and a lot cheaper.

3) Tie international network into maintenance base to avoid ferry flights.

4) Sell airport terminals to free up capital. Sell them whilst they're modern and profitable (i.e Sydney.) As cities like Sydney and Melbourne build towards genuine second airports, there'll be added pressure to keep terminals modern and comfortable. That pressure shouldn't be on an already capital intensive airlines balance sheet.

5) Lease more, buy less. Sureley the 747 write downs explain that? Big price tag and long lead times. The aircraft you order in 2015 mighn't be the right aircraft for the market conditions come 2022 delivery. Lease affords more agility. When even a Qantas 747, withs it's perfect, locally performed heavy maintenace record spends it's post service life days rotting in a Californian dessert, then it tells you how quickly the market has shifted.

6) Lease simplification. It's optimisation of capital, mainentance, associated administration and crew first and foremost, then using the best fit aircraft to service the route. Then supplement that aircraft with continual review, marketing and promotion and schedule tweaking to make it best fit. Having up to 5 configurations of the A330 sacrifcies so much versatility for what benefit?

7) Invest in resisting the booking site savages. Take charge of your revenue. Use the brand strength to make the Qantas website first port of call. Develop software that is friendly with large corporate customers systems. The coproate market is Qantas. Encourage business to deal with Qantas by making it efficient and painless. Encourage employees to want to travel with Qantas through loyalty, rewards and a benchmark service level.

8) Frequent Flyer overhaul. It's profitable, it's popular and it's relevant. But it's a sitting duck. There's so much Blockbuster Video about it. When was the last pulse check on the prohram? Why do people use it? I can see a lot of reasons why people do and why people will stop. I also see loyalty programs dominating consumer habits in the future. They'll be the dog and the airline will be the tail. If I were at the helm, I'd be retaining control (as Qantas have) and ensuring we're best placed to tap into that next generation of flyer / consumer.

9) That next generation of flyer. Qantas talks to the 40+ demographic. That's cool now, probably the most lucrative demograohic for the next 10 years. But it's brand simply does not resonate with the next generation. This is where Virgin are best equipped to swoop on the domestic market. Sure, they have a lot of work to do also but they're leagues ahead. 

I could write a further essay on how to better tap into the younger market but I suspect that's why the brought Todd Sampson on board. So maybe they are in better shape than I know?

hutch

Member since 07 Oct 2012

Total posts 761

1. Having a liberal government ain't going to help them much unless they change the current laws. Which they won't do during this term.

2. I think they current balance of the single BNE maintenance facility works well with larger international planes going offshore. This essentially means domestic planes are predominately maintained here and internationally planes (not the A330) are maintained overseas.

3. Essentially already done except for the A380's. Don't see SYD- MNL working though.

4. Already trying to do that one.

5. Won't comment on that, as I don't know enough about the economics.

6. Lease simplication... or do you mean fleet simplication? If fleet, they are doing that.

7. QF site is pretty rubbish.

8. Not sure what the problem is. I don't think you've identified it either.

9. The next generation are important. But the importance of the domestic market is more on the corporate side of things. I know many late 20's Platinums earnt through flying for work with high yield. Qantas needs to continue locking in corporate accounts as this flows through to customer choices... including future generations.

riley

Virgin Australia - Velocity Rewards

Member since 19 Mar 2014

Total posts 358

Re point 6, yes Fleet.

Re 8, correct, there is no problem now. It clearly out performs Velocity with higher qualification criteria, lower earn and comparible partnerships. But it's not well positioned to cope with the shift that is coming.

Speaking anecdotally with 25-35yo frequent flyers, unanimously I'm hearing it's Qantas because of company preferred partner or because they don't pay. Of those people, despite enjoying such luxuries as gold / paltinum status, healthy points balances and reward seats, they choose to fly Virgin or "jetstar as a minimum" when financing their own travel. There is no perception of value amongst even Qantas' loyal customers.

It's funny how airline travel evokes such emotion, I hope to study this subject one day!

Moving into the future, Gen Y are a discerning breed. They mightn't go for the most luxurious brand but they'll make a connection with a brand and stick with it. We're talking about kids who have debates the pros and cons of Android technology versus iOS since they were in primary school! A group of people that know what a brand stands for and stick.

Of frequent flyers and their typical social standing, this is only magnified. (Not suggesting current generation aren't clued in brand wise, just pointing out that Gen Y are acutely brand connected.)

As soon as these people start taking charge of corporate dollar allocation, they'll bring into question the value of Qantas as a preferred partner. Airline schedulling is no longer an issue. It's low hanging fruit for mine, shifting the travel from Qantas to VA. Then you know what happens when it becomes a 50/50 split for corporate market....

TheRealBabushka

Member since 21 Apr 2012

Total posts 2,059

riley,

How about adding "national cultural change" as part of that list? Particularly so for 1 & 2. As they say, only Nixon could go to China.

Personally I think Qantas is already a great airline, whatever great means. Part of being "great" is knowing the extent of your scope and reach.

Unless of course there is still a deep seated inferiority complex ingrained in the psyche of the Australian public, which equates greatness to the number of international destinations.

riley

Virgin Australia - Velocity Rewards

Member since 19 Mar 2014

Total posts 358

I think there is some level of inferiority complexed ingrained into us. If not as a nation, then definitely in the media. Probably a discussion for a forum other than travel? 

No doubt geography limits Qantas' scope, hence arrangements with Emirates. Although despite the geopgraphic luxury afforded to Emirates, they invest endlessly in their brand. 

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