Finding The Spirit

That pioneering spirit, that vision of using aviation to bring Australia closer to the rest of the world, became synonymous with Qantas over the decades, and the airline became one of the country’s most recognised and loved brands.

But the one thing that Qantas’s 90 year history proves is that the only constant in aviation is change, and the 90th anniversary provides a good moment in time to take stock of just where the company is at, and the future it is trying to reach. In this issue of Australian Aviation we attempt just that in marking the anniversary with a range of feature articles, from an interview with CEO Alan Joyce to an analysis of the airline’s strategy, a review of its fleet, a look at an example of its technical innovation (in its RNP ops at Queenstown), plus a review of the airline’s 90 year history.

The conclusion that can be drawn from all this is that Qantas has been a remarkable success story and technical innovator, an airline group today that flies over 250 aircraft, employs over 37,500 people, and has remained profitable (if only just) throughout the tumult of the global financial crisis.

And from a strategy point of view the company seems well placed with, and is working hard on refining, its two brand strategy in developing Qantas as a ‘premium’ brand that plays to its Australian-ness, and using Jetstar as its low cost growth vehicle, a competitive foil to Virgin Blue and Tiger in Australia and a significant growth vehicle for the company in Asia.

But is Qantas the pioneering airline it once was? And does it still hold the same place in Australia’s affections? Is Qantas still a pioneer? Less so, in more traditional areas if you consider its inflight product such as its slow embrace of premium economy, its lack of a long haul type such as the 777‑200LR that could fly to London (at least from Perth) nonstop, and its pared back international network based on flying through major hubs. But in other areas, it is definitely more so, if you consider the success and growth of Jetstar, its hugely profitable frequent flyer scheme, and its new embrace of technology such as its ‘Next Generation Check-in’ rollout.

Clearly, as a publicly listed company run for the benefit of its shareholders, Qantas will only pioneer in areas where it can make the business case to do so, rather than having the freedom of operating from the safety of government ownership, as it had for about half of its existence from the late 1940s to the early 1990s.

That same shareholder imperative has no doubt seen the Qantas brand lose some of its lustre with its passengers as well, given the need for endless cost cutting programs, flying aircraft for longer, filling them with more passengers, and trimming meal services, baggage allowances and frequent flyer entitlements.

But there again Qantas is seeing a business opportunity in the fresh pursuit of positioning Qantas as a premium airline that provides it with a competitive point of difference over low cost airlines (including its own Jetstar subsidiary) for which it can charge a premium, hence initiatives such as its huge investment in lounges, and the introduction of seatback inflight entertainment on domestic flights.

But that’s a case of judicious investment in product where management deems it’s needed, not for its own sake, and Qantas seems to be facing the challenge between premium positioning and striving for lowest possible unit costs. Its plans for the 787 are a good illustration. The Qantas Group’s first 787-8s will be delivered with a 313-seat two class configuration, easily the highest planned 787-8 seat count yet publicly disclosed.

That Jetstar would have such a high density seat count is not surprising, but more surprising is that those same aircraft will be transferred to Qantas domestic service with the same 313- seat configuration. That will give Qantas phenomenal seat-mile costs (and savings in not having to reconfigure the aircraft from a Jetstar to a Qantas configuration), but economy passengers will experience a nine abreast interior at a less than generous seat pitch.

It is a good example of the product versus cost compromises Qantas faces across its business in being a premium airline in a competitive world, another being the recent news that it is trimming by one the number of flight attendants it uses to crew its flagship A380s.

It is a tough challenge in an always tough operating environment – one thing that has barely changed in 90 years!