Richard Branson is Right on QANTAS

[IAF747 8]

After the collapse of state owned airlines such as Swissair and JAL, there is no reason for extra funding to be pumped into airlines such as QANTAS.

 

JAL had to commit to harsh conditions in order to get a second bailout.

 

http://www.news.com.au/finance/business/richard-branson-sounds-warning-over-qantas-intervention/story-fnkgde2y-1226829107951

 

And QANTAS has said publicly they aren't after extra funding, only a level playing field, which is the ability for 100% foreign ownership. Branson says there is no problem with this.

 

I saw a heap of VA 330s in YPPH when I visited around lunch time a few weeks ago.

 

And seeing that International routes have been QANTAS's biggest loss earner it seems right that Virgin Australia haven't determined to fly many routes out of Australia.

 

The money to be made is in the Australian Domestic market but business is now starting to feel the pinch and QANTAS must be feeling it even more with its own woes on top of the economy cooling here.

 

http://www.ausbt.com.au/virgin-australia-cautious-about-international-routes-for-airbus-a330

 

This photo is owned by myself. Copyright Daniel McAloon. In adherence to Avsim's rules I allow for it for personal use only but if the photo is uploaded or linked to elsewhere my permission must be received first, as for all copyrighted images. 

 

Branson is right that he would be disadvantaged if money or guarantees were made available to QANTAS thus discouraging further investment in Australia and driving fares up. That is all Government really does, drive the price of everything it touches upwards, or should I say skywards?

 

This is a very good reason why handouts to companies should never happen: http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/toyota_unions_keep_entitlements_lose_jobs/

http://www.theaustralian.com.au/business/opinion/why-shell-be-right-doesnt-cut-it-with-toyota/story-e6frg9if-1226828750475#

 

A$492 million was given to Toyota and it still decided to close up shop. This is a good warning sign that QANTAS won't receive a cent yet the Government may take action on allowing it to be foreign owned. The only choice is that it be given ability to trade just like other companies.

 

DISCLAIMER: Any views expressed in the articles that are linked in this post are not my own and views expressed above about aviation are in the interest of keeping the playing field fair and are non-political in accordance to Avsim's TOS. 

[WR269 367]

Daniel, it is a very different situation to Swissair and JAL...Qantas international has been losing money every year since I can remember. Definitely since the deregulation of the skies in Australia in the early 90s, then you didnt HAVE to fly Qantas if you wanted to go abroad.

The issue is that Qantas has lived on past glory for too long. I know of a baggage handler who earnt more money in Qantas than a Junior First Officer in Virgin flying 737s. That is the issue.

Qantas does NOT have a level playing field, it hemorrhages from the inside, a-la- Pan Am. So when you see SIA and QF flying YSSY-WSSS, roughly the same ticket price, equivalent equipment, and SIA makes far more per seat mile than QF...why?  their cost base is lower. China Eastern is lower still, and more and more players are coming to harvest what was once Qantas' rich undisturbed soil....and they are doing it far cheaper. The way forward? I can't see one....unless the board decides to give it a shakeup, possibly going bankrupt and being reborn is the only salvation for Qantas....they would wipe out all their current contract structure, and re-negotiate on a different cost base. A bit radical, but airlines survive on cents per ticket sold. When the airline is giving cabin crew an envelope with $3000US each as spending money for a two day trip to Japan, you know the priorities need to change....when the airline pays more per base worker than the equivalent airline, you know you will not survive long.

 

The usual story, too many people trying to eat the goose that lays the golden eggs, before it is even dead.

[IAF747 8]

Daniel, it is a very different situation to Swissair and JAL...Qantas international has been losing money every year since I can remember. Definitely since the deregulation of the skies in Australia in the early 90s, then you didnt HAVE to fly Qantas if you wanted to go abroad.

The issue is that Qantas has lived on past glory for too long. I know of a baggage handler who earnt more money in Qantas than a Junior First Officer in Virgin flying 737s. That is the issue.

Qantas does NOT have a level playing field, it hemorrhages from the inside, a-la- Pan Am. So when you see SIA and QF flying YSSY-WSSS, roughly the same ticket price, equivalent equipment, and SIA makes far more per seat mile than QF...why?  their cost base is lower. China Eastern is lower still, and more and more players are coming to harvest what was once Qantas' rich undisturbed soil....and they are doing it far cheaper. The way forward? I can't see one....unless the board decides to give it a shakeup, possibly going bankrupt and being reborn is the only salvation for Qantas....they would wipe out all their current contract structure, and re-negotiate on a different cost base. A bit radical, but airlines survive on cents per ticket sold. When the airline is giving cabin crew an envelope with $3000US each as spending money for a two day trip to Japan, you know the priorities need to change....when the airline pays more per base worker than the equivalent airline, you know you will not survive long.

 

The usual story, too many people trying to eat the goose that lays the golden eggs, before it is even dead.

 

 

Too true. Yes, it is about cost.

 

Or maybe getting rid of every 747, 767 and even a few A380s and store them at Mojave, instead of bankruptcy, but that is where US airlines usually get a 'wake up call for salvation'.

 

Run the International routes on A330s for a while. Take delivery of a dozen dreamliners and run them on routes in high demand.

 

But the money to be made is in the domestic market here.

 

Service quality needs to improve as well. I am not sure if any Australian can compete with that, unless you employ humble people. Funny that KFC is now staffed by foreigners/immigrants.

 

Cathay has a lot of Filipinos working for it and SIA has Indonesians. All humble people. I'll keep it at that and won't make comparisons to keep this thread sweet.

 

Emirates is very popular as well but it comes down to quality as well as cost. I hear Virgin Australia has good service? I have never been on Virgin or VA.

 

JAL had too many 747s and thus got rid of them all and 'streamlining' its International routes like ANA did years ago.

 

JAL was sluggish where ANA new where the market was going. ANA totally stopped flying to Australia although after Hawaii Australia was a top destination with Japanese.

 

Same with VA and QANTAS. Qantas has been cutting a lot of its routes (YPPH is an excellent example-almost no International flights out of YPPH anymore) but it is sluggish. Looking at its industrial relations problems are a part of its woes, like the car making industry in Australia was subject to higher costs driving them offshore.

[elche 5]

QANTAS doesn't want QANTAS. QANTAS wants Jetstar, hence why Qantas foots a lot of the expenses incurred by Jetstar - From maintenance, catering and even fuel.

[WR269 367]

QANTAS doesn't want QANTAS. QANTAS wants Jetstar, hence why Qantas foots a lot of the expenses incurred by Jetstar - From maintenance, catering and even fuel.

And Jetstar is making a profit...the cost model is different.

 

Sent from my Mobile thing

[IAF747 8]

Things get interesting.....

http://www.theaustralian.com.au/business/aviation/virgin-australia-slams-proposed-government-move-on-qantas/story-e6frg95x-1226830439454

 

EDIT: and here: http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/how_many_billions_are_we_prepared_to_give_qantass_debtors/

[IAF747 8]

3000 to jobs to go in breaking news:

 

http://www.news.com.au/finance/business/qantas-expected-to-cut-3000-jobs-routes-reports/story-fnkgde2y-1226833981885

[jonss1948 20]

QANTAS doesn't want QANTAS. QANTAS wants Jetstar, hence why Qantas foots a lot of the expenses incurred by Jetstar - From maintenance, catering and even fuel.

So true and that's why Qantas still survives. The Jetstar aircraft are filling seats, while the overpriced QANTAS flights are losing money. The QANTAS Brand is still their most valuable asset. Still no aircraft loss in the history of the company. That's worth big money...and it's involved. The Vultures are milling, just waiting for the Australian Govt. to lift the restrictions on foreign ownership, then they can feast on the QANTAS corpse. They'll keep the name but not the pride.

 

Jon

[GoranM 3,764]

And now Qantas are cutting 3000 jobs.

Not much more to say.

[anthony31 63]

Hmmm Virgin Australia's major shareholders are Air New Zealand, Etihad and Singapore Airlines all of which have considerable government ownership I believe. And here we have Richard Branson saying the Australian government shouldn't get involved in guaranteeing QANTAS loands. Sounds a bit like "do as I say and not as I do".

[elche 5]

Yes, the cost model is different.

 

Qantas - Charge huge prices, take little profit, give away little profit and take on childs expense.

 

Jetstar - Charge pennies, take profit, keep profit, and pass on expenses to parent.

 

Jetstar is on a winner!

 

Seriously though, the national company I work for will no longer fly with Qantas and will fly Virgin, Jetstar, REX, and charter instead of Qantas/Qantaslink. It's sad really...

[IAF747 8]

>>Anthony: Good point indeed.

 

But, should the taxpayer continue to fund failed business decisions like the half A$Billion we handed out to Toyota?

 

It is better to allow foreign investors to spend their money without fear in the Australian market and have cheaper prices for everyone than have the opposite with more debt for the Government.

[jonss1948 20]

And now Qantas are cutting 3000 jobs.

Not much more to say.

Well, the wages paid to the average worker in Australia is highly disproportianate to workers in other countries. That's why many job losses in many industries are yet to come in Australia. Hold onto your hats because it's only just started.

 

Jon

[WingZ 547]

Airline business is hellishly complicated by factors non-fiscal, and so the NZ gummint bailed out of ANZ and thus VA. For once it was a sound business decision by the Wellington lot, they can buy it back for $1 when the economy crashes, next round.

 

Qantas shot itself in the foot when their clever little CEO took a tip from compatriots over at Ryanair and outsourced maintenance to Asia at cut throat rates, killing the local industry.

Who knows where it will end, Emirates will probably share the spoils with China Southern.

 

On a more interesting note: scrolling down the page in the OP, you find this link:

http://www.youtube.com/watch?v=J9ezob-ALSI#t=121

and I want one for my 747, and also can you skydive from it?  B)

Edited February 24, 2014 by WingZ

[WR269 367]

Not the song and dance about maintenance again. It cists QF a lot less to have their aircraft maintained overseas than it does in Australia. Again because the salary base is so disproportionate. Love how any tine there is a maintenance mishap their union jumps up and down, but they neglect to tell thw public that the vast majority of the aircraft having mishaps are actually maintained in Australia. They have to lower their cost base, or all those people with super salaries will be out of a job.

 

Sent from my Mobile thing