Still calling Australia home

Along the way, it has become a part of the Australian national psyche. Many ex-patriates have told of their feeling of being home when stepping onto a Qantas flight, while the airline has always played heavily on its iconic status in its marketing.

Despite Australia being a large island at the end of the world, and hence a natural fit for aviation, it was not inevitable, even with the natural need for air travel, that Qantas would grow from a two aircraft operation into the multi-billion dollar company it is today. But Qantas has proved a survivor, and along the way the airline has often played a major role in shaping the country, with its aircraft responsible for moving millions of passengers and tonnes of freight to, from and within Australia every year.

Beginnings

The Qantas story begins in 1919 when former Australian Flying Corps officers W Hudson Fysh and Paul McGinness started working on plans to fly an aircraft from England to Australia. The catalyst for this venture was a £10,000 prize put forward by the Australian government for the first Australian to fly from England to Australia within 30 days. Despite arranging to receive funding for the journey from Sir Samuel McCaughey, the pair was forced to abandon the attempt after McCaughey’s death.

Instead, the two partners accepted an assignment from the Defence Department to survey possible landing sites in Queens-land and the Northern Territory for the England-Australia air race. Setting out on August 18 in a Model T Ford, the two un-dertook an arduous 51 day, 2179km journey to the Katherine River, and ultimately became the catalyst for the two pilots to pursue a commercial air service.

“We were convinced of the important part aircraft would eventually play in transporting mail, passengers and freight over the sparsely populated and practically roadless areas of western and northern Queensland and North Australia,” Fysh later wrote of the expedition.

With that in mind, Fysh and McGin-ness set about building their plans for an air service that would link a number of outback towns. Fortuitously, McGinness struck up a friendship with wealthy grazier Fergus McMaster after he helped McMas-ter recover his car after it broke an axle while crossing the Cloncurry River. Work-ing with McGinness and Fysh, McMaster convinced a number of business acquaint-ances to invest in what would become Australia’s national airline.

That led to Fysh, McGinness and former flight sergeant Arthur Baird taking a trip to Sydney where they ordered two Avro aircraft on August 19 1920, initially under the name of The Western Queensland Auto Aero Service Limited. Shortly thereafter, the name was changed to Queensland and Northern Territory Aerial Services, and frequently referred to as QANTAS. The pa-pers formally establishing the airline were signed on November 16 1920.

In its early days, Qantas was based at Winton but soon moved to Longreach, and by 1921 the airline began operating with one Avro 504K and one Royal Aircraft Factory BE2E, both biplanes which were surplus war aircraft. Initially, the airline flew joy ride and demonstration flights, but in 1922 Qantas was given its big break, with the government awarding it a contract to run scheduled airmail flights between Char-leville and Cloncurry.

The first scheduled service with a pas-senger took off on November 1922 from Longreach, flying to Winton, McKinlay and Cloncurry. As well as the mail, the flight also carried 84 year old outback pioneer Alexan-der Kennedy, although it didn’t go all to plan as Fysh wrote in his book Qantas Rising.

“When I opened up the throttle with a roar we gathered motion, careering towards the far fence, but we did not seem to be getting the usual lift, the revs were down a shade, and the old AW refused to come un-stuck. I shut off and taxied back for another try,” wrote Fysh.

“After three attempts with the same result I taxied back to the hangar again and running up the engine found that we were 50 revs down, just enough to make the dif-ference. The other machine, old G-AUDE, which the day before had opened the service with McGinness, was hastily got out, our load transferred, and we were out for another try. ” “No doubt about it this time as we rose in the morning air and headed over the still sleeping town for Winton, our first stop, 35 minutes late on our departure time. ” Although relatively small, the advent of air mail to the towns of western Queens-land in many ways became a lifeline to those communities, and it helped improve communications with the major centres. For those wealthy enough, the air mail service also became the first way for many to experience the relative speed and thrill of air travel.

In 1924, Qantas made its first fleet upgrade, placing a de Havilland DH. 50A into service. With room for four passen-gers and an enclosed cabin, the aircraft was a major step up for passengers. It also became a historic aircraft, with Prime Minister SM Bruce making parliamentary history as the first Prime Minister to use air travel for an official journey by flying in the DH. 50A. The airline later started construction of a second DH. 50A, with Arthur Baird taking responsibility for the construction of the aircraft.

During the late 1920s, Qantas also played a key role in pioneering aeromedical services and laying the foundation for the modern Royal Flying Doctor Service. In May 1928, the Australian Aerial Medical Service, which had been founded by Rever- end John Flynn, signed a one year contract with Qantas to operate medical flights on demand utilising one of its DH. 50As leased at a charge of two shillings per mile.

The first flight of the AAMS took off from Cloncurry on May 17 1928, and soon became known as the Flying Doctor. A number of years later, Trans Australia Airlines took over the service, while in the 1950s it became the Royal Flying Doctor Service. Nowadays the RFDS plays a key role in providing aeromedical serv-ices for thousands of patients in regional Australia, and like Qantas has become an Australian icon.

By the end of the 1920s, the small com-pany that had started with two small aircraft had grown into an established aerial services business, and in April 1929 moved its head-quarters to Brisbane. Fysh later wrote about the event, saying, “It will be seen that the progress of Qantas has been comparatively back to front, extending gradually from the outback posts of Queensland and emerg-ing into the capital city 10 years after the company was formed. ”

Empire Era

Although it started as a small outback airline providing vital air services through-out western Queensland, the move to Brisbane in 1930 started a major expansion for Qantas, one which would ultimately set it on the path to being a major interna-tional carrier.

Still primarily a regional airline, that changed in 1931 when it entered into an agreement with Britain’s Imperial Air-ways to start flying air mail from Darwin to Brisbane. The service was part of an experimental air route between England and Australia which saw Imperial operate flights from the UK to Darwin, with the mail then transferred to Qantas aircraft.

That led to the establishment of Qantas Empire Airways on January 18 1934, which saw Imperial Airways and Qantas each take a half stake in the new carrier, with Fysh was appointed as its managing director.

Just over a year later the airline started its first international service, which saw it take over the Darwin-Singapore leg of the joint operation with Imperial Airways. This saw it operated by a four engine DH. 86 aircraft bearing the initials RMA (for ‘Royal Mail Aircraft’). The aircraft would operate the four day journey from Brisbane to Singa-pore until 1938 when growing demand necessitated a move up to a larger aircraft.

That saw Qantas move into operating flying boats, with the airline starting out with a Short C Class Empire flying boat. It also saw it establish a new base at Rose Bay on Sydney Harbour, and the airline later went on to operate complete flights from Sydney to Southampton in England with the boats. With the airline’s flying boats operating out of Rose Bay, the company relocated its corporate headquarters to Syd-ney in 1938.

WW2

With the outbreak of World War 2, Qantas played a key role in the war effort, with most of its operations impressed into military service, often transporting people or cargo in a range of dangerous situations.

For the duration of the war, a number of Qantas pilots played key roles in RAAF operations in Papua and New Guinea and other theatres. In particular, Qantas crews played a key role in dropping supplies for troops engaged in fighting on the Kokoda Trail, utilising Empire flying boats and Lockheed Lodestars. Two Qantas DH. 86s were also later involved in operations in PNG.

With the outbreak of war, the airline’s Australia-England services became a vital communication link, and the airline con-tinued to operate them three times a week until the first stopping port of Singapore fell to the Japanese in 1942, effectively end-ing the traditional Kangaroo Route.

In its place, Qantas, the British Air Ministry and British Overseas Airways Corporation (the successor to Imperial Airways) hatched a plan to use Catalina flying boats to fly from Crawley Bay on the Swan River in Perth to Koggala Lake in southern Ceylon (Sri Lanka).

The first flight was undertaken on June 29 1943 and represented a major logistical feat. With the Perth-Ceylon sector over 5652km, flying times could stretch out to 32 hours, requiring large amounts of fuel to be carried. As a result, only three pas-sengers and 69kg of diplomatic and armed forces mail could be carried, while the war meant that radio silence had to be main-tained, and navigators relied upon the stars to ensure the aircraft remained on course.

The service became a vital lifeline and a unique experience for those passengers and crew operating them. The 648 pas-sengers who had travelled on the service by the time it ended on July 18 1945 were awarded ‘The Rare and Secret Order of the Double Sunrise’, in recognition of the fact that they had been airborne for more than 24 hours.

With the end of the war in August 1945, Qantas had to effectively rebuild itself from the ground up as an international carrier. That saw it place an order in 1946 for Lockheed Constellations, while it also took a number of Douglas DC-3s and later added the larger DC-4.

After long public debate, the Australian government took over the airline in 1947. Later that year, Qantas also began the Kan-garoo Route service with its Constellations, providing a weekly link to London that took four days to complete, with the air-craft later replaced by the higher perform-ance Super Constellations in the 1950s. The airline also soon expanded its network to include Karachi and Johannesburg.

With the expansion of the airline, Qantas soon became etched in the Australian national psyche. Just as the country had been rebuilding itself and getting used to lower-ing its dependence on England, Qantas also started charting its own path and in 1953 it took over services to North America from British Commonwealth Pacific Airlines.

Into The Jet Age

The jet powered airliners served to shrink the globe, and enabled Australians to ven-ture further out, eventually opening up air travel to many, and Qantas was one of the first airlines in the world to take delivery of jets in July 1959.

The seven Boeing 707-138s were revolutionary in shrinking the globe for Australians. Initially, they began serving the US, and later extended to London via New York. A few months after that, the 707s began operating Sydney-London services via India.

Qantas also soon took the opportunity to upgrade its 707s to the -138B stand-ard. Fitted with Pratt & Whitney JT3D turbofans, the aircraft had significantly better performance, which was a crucial factor for an airline whose sector lengths were among the longest in the world. The aircraft also saw the introduction of ‘Australia’s Overseas Airline’ titles, further reinforcing the national pride felt by Aus-tralians in their airline.

The move to jets was a rather swift one, and the airline quickly shed the piston-powered Constellations with which it had pioneered postwar long haul air travel. By 1966, the 707 fleet had hit 16, includ-ing six larger 707-338C series aircraft. That year, the Qantas board also made the decision to standardise its fleet around the larger -338C.

A major change also occurred one year later, with Qantas cutting the ‘Empire’ from its name, leaving it officially as Qantas Airways Limited. The loss of the Empire in many ways reflected the change that Australia was going through in finding its own identity.

The late 1960s also saw Qantas start an enduring relationship with the revolution-ary Boeing 747. Although it was strongly interested in the aircraft, the airline passed on the early model, waiting for the longer ranging 747-200B, the first of which ar-rived in 1971.

For an airline which primarily oper-ated on long flights to Europe, Africa and North America, the 747 proved to be nothing short of a phenomenon. The increased seat capacity saw the airline introduce cheaper fares and opened up air travel for many Australians, while the large underfloor capacity opened up air freight as a viable option for Australian exporters and importers.

The 747s also played a key role in evacuating residents of Darwin in 1974 after the destruction of Cyclone Tracy, and ultimately carried 4295 people out of the devastated city. That included one flight where 673 people were carried, establishing a new record for the most passengers on a single flight.

By 1979, the airline had become a solely 747 carrier as the last of the 707s was phased out. This also saw it become the first carrier in the world to introduce Business Traveller class. Distinct from Tourist and First Class, the new class offered the same economy seats but with more inclusions, such as alcohol. Eventually, through the 1980s and 1990s, business class became a standard among carriers around the world.

Going Corporate

The 1990s proved to be a significant era of transformation for Qantas as it merged with Australian Airlines and moved away from government ownership to become one of the most influential companies in Australia.

For most of its postwar history, Qantas had remained solely an overseas carrier since its domestic services were hived off to TAA in 1947, but that changed in 1992 when it made a $400 million takeover offer for Australian Airlines (as TAA had become), engineered by the Keating Labor govern-ment which owned both carriers. One year later, the government completed a public float of the airline, allowing many Austral-ians to buy shares in the Flying Kangaroo.

The merger with Australian Airlines transformed Qantas from an international

carrier to an integrated airline connecting worldwide destinations such as London and Rome with regional centres such as Armidale. Corporately there was also a significant change, with former Austral-ian Airlines CEO James Strong taking the helm of the airline from 1993 to 2001.

The merger came as part of a wider set of economic reforms which included deregu-lation of the domestic airline industry. This was initially greeted with enthusiasm, and Compass Airlines was born soon after. However, with Australian and Ansett given control over their own terminals at most of Australia’s airports, terminal access and other issues soon saw the upstart third airline fail. A second Compass launched a few years later also foundered.

Somewhat ironically, as Qantas trans-formed into a leading corporate entity in the Australian business environment, it once again turned back to mother England. Ahead of the float, the Australian govern-ment accepted an offer from British Air-ways to acquire a cornerstone 25 per cent share of Qantas which set the stage for a close relationship between the two carriers on the Kangaroo Route.

That left Qantas in a strong position during the 1990s where it shared a cosy duopoly on domestic routes with Ansett, although on its international services it faced growing competition on its then broad network of services.

Despite its move towards a corporate structure, the airline never lost its identity. In 1997, it launched its first ad campaign featuring Peter Allen’s iconic song I Still Call Australia Home sung by a number of Australian celebrities. Later that year, the airline’s head of marketing Geoff Dixon recast the concept, instead using the Aus-tralian Girls Choir and the National Boys Choir. That concept of I Still Call Australia Home sung by children’s choirs has been re-fined over the years, and the song has come to be indelibly linked to Qantas.

Into The Low Cost Era

Although the initial attempts to launch a third carrier in Australia had come to naught during the 1990s that changed radi-cally at the start of the new decade with the the entry of Impulse Airlines and Virgin Blue onto the key golden triangle routes between Sydney, Brisbane and Melbourne.

As could be expected, Qantas, with Geoff Dixon now CEO, acted quickly against the new threat to its core domestic market. The airline followed both Impulse and Virgin Blue closely, adding capacity and slashing fares to ensure that it remained competi-tive. Ultimately, it appeared Qantas’s man-agement at the time wanted to make sure that the two upstart airlines did not get a foothold in the market.

In late 2000, the four-way competi-tion claimed its first victim, with Impulse Airlines announcing that it would cease flying its trunk route services and instead become a contract provider to Qantas. Less than a year later, the airline became a wholly-owned Qantas subsidiary.

Despite the lower level of competi-tion in the market, the biggest change to Qantas’s history came with the collapse of its main domestic competitor – Ansett. Having been crippled by problems with its fleet and ongoing losses, the airline fell into administration on September 14 2001, only three days after the terrorist attacks which would define a generation.

Despite the airline’s administrators launching ‘Ansett MkII’ and an attempted buyout led by Lindsay Fox and Solomon Lew, the airline eventually succumbed, leaving Qantas as the only two class, full service domestic carrier.

With the Ansett collapse, Qantas acted quickly to add more capacity to the mar-ket by leasing in a number of aircraft. It also carried thousands of Ansett passen-gers who had been left stranded.

While the Ansett collapse effectively removed Qantas’s largest competitor in the domestic market, it also fundamen-tally reshaped the dynamics of it. Instead of competing against a competitor which had a largely similar cost base and product offering, it was forced to defend itself against a maverick in Virgin Blue, which after a slow start had set its sights high on gaining more marketshare.

The travelling public had also shown their willingness to embrace discount travel, and as Virgin grew its network, Qantas was increasingly forced to take action to ensure that the upstart discount carrier didn’t gain too strong a foothold.

Initially, it sought as much as possible to compete with Virgin by adopting some of its approaches. The airline reconfigured some of its 737s into all-economy con-figuration and began serving meal boxes on some off-peak services.

However, it wasn’t until 2003 that the airline was able to come up with the right answer, and announced that it would launch its own low cost airline, Jetstar. Based around the shell of the former Impulse Airlines, Jetstar would offer LCC service and low fares primarily on low yielding leisure route.

The plan at the time was daring, particularly given the failure of previous attempts by legacy airlines around the world who had tried to start their own LCCs, only to see them rack up losses and cannibalise traffic from their parent companies.

Time would later show that the ‘two brand strategy’ was executed with near perfection. Jetstar took over a number of leisure routes from Qantas, with the two carriers deliberately avoiding competition as much as possible. However, by the end of 2010, the two carriers had refined strategy to offer complementary services on an increasingly overlapping domestic network.

The two brands also allowed what is now referred to as the Qantas Group to effectively hem in Virgin Blue’s growth ambitions, with Qantas maintaining its control of the business market through its combination of full service, loyalty sys-tems and lounges, while Jetstar competed at the discount end. Jetstar also became a major growth vehicle, and helped to open up tourist hotspots such as Ballina and the Sunshine Coast to more tourists, both domestic and from overseas.

The introduction of Jetstar also helped airfares hit new lows thanks to a number of promotions launched by the airline over the years. However, the entry of Tiger Airways into the market in late 2007 has helped ensure that discount airfares have consist-ently been lower than ever.

But those fares have also come at a cost, with both Qantas and Jetstar making ma-jor changes to improve productivity and lower costs. This has seen the dismantling of many structures built up during Qan-tas’s time as a government owned carrier, while the airline was also involved in a number of skirmishes with various unions, at times leading to industrial action by en-gineers and ground handlers. Nevertheless, the shine of the Qantas brand continued to be strong.

For most of the 2000s, Qantas was one of the strongest performing airlines in the world, and in 2006 became the target of a takeover by a consortium of private equity firms. Through a series of negotiations the Airline Partners Austalia consortium, led by Allco and Macquarie Bank and also including private equity firms TPG and Onex, eventually offered Qantas sharehold-ers $5. 60 per share, with the aim of taking the airline private.

The offer was given backing by then chair Margaret Jackson and CEO Dixon. Part of the appeal was that the airline would have access to long term capital and would not have to deal with the volatility in its share price as a result of being publicly listed.

The proposed buyout saw a mostly nega-tive reaction from the public, with many opposed to the idea of selling the airline to a consortium backed by foreign private equity firms. Public surveys also showed that many still believed that the airline was government owned, while many also peti-tioned the government to block the deal.

Ultimately, it was the shareholders who killed off the deal, with the proposal failing to gain more than 50 per cent acceptance upon its closing on May 4 2007. While at the time many executives viewed it as a golden opportunity missed, many commen-tators have since noted that it was some-what fortuitous, as it would have saddled Qantas with a large debt just before the onset of the global financial crisis.

Despite the failure of the takeover, Qantas again became a target in 2008, with the airline starting merger discussions with British Airways, although they faltered soon after due to disagreements over the valuations of the companies.

Despite current CEO Alan Joyce noting that the airline is not actively looking to merge with another carrier, it is expected that any further international consolidation could see Qantas involved, likely as a buyer rather than an acquisition target.

90 Years Young

Throughout its long history, Qantas has been an iconic Australian company which has in many ways played a key role in the development of the country. Whether through opening up rural towns, support-ing the war effort, shrinking the globe with faster jets or opening up new tourism and trade opportunities, at many levels it still remains an icon of the country.

Despite that role, it remains to be seen how the company will continue to balance the commercial necessities of a modern airline with its place as a national carrier. Talk of overseas outsourcing and continued growth of Jetstar in Asia has left some members of the public feeling that the airline has demonstrated less of the spirit of Australia and more of the spirit of the corporation.

Nevertheless, with a strong position in the global aviation market, solid finances and a strong management team behind it, it appears that Qantas will continue to be the number one Australian airline for many years to come.