Sir Richard Branson has lashed out at Qantas, accusing the Australian icon of being badly managed and offering bad service, in one of the most damming attacks in the Australian airline industry has ever seen, writes Geoffrey Thomas.
“If Qantas was better managed and offered the public a decent service; it would not be in the financial mess it is currently claiming it is in,” said Sir Richard, still a cornerstone investor in Virgin Australia.
In the attack launched from his website Branson said the “Government should be there to encourage competition, not to prop up the weak when the going gets tough.”
Qantas has been lobbying the federal government to stop the Virgin $350 million capital raising arguing that the airline will use the funds to continue an unsustainable fare war.
Virgin counters that the fare war has resulted because Qantas has dumped capacity to defend its “line in the sand” 65 per cent market share policy.
Branson said that when Virgin Blue started competing with Qantas – and Ansett – it had just two aircraft and one route.
“Qantas was the giant in the market with a myriad of foreign alliances and advantages determined to bleed Virgin Blue, now Virgin Australia, dry.”
“However, thanks to the superior quality of Virgin Australia’s management and its staff, it has not only survived but has now managed to create a much more level playing field which is offering the customer more choice and better value.”
“Over the last 13 years we have grown the airline to more than 140 planes but flying in Australia has sometimes been akin to having a bleeding competition with a blood bank.”
“Today Qantas’s alliances are still larger than Virgin’s but our improved position is having a big impact on Qantas, who are now complaining about the intensified competition,” said Branson.
He added that it “seems strange that a Liberal government would even consider tilting the playing field once again in Qantas’s favour.”
“It would be grossly unfair, undermine the great work of Virgin Australia’s management team and staff and bewilder investors in Australia and worldwide.”
Via a spokesman, Qantas responded to Branson’s comments saying it was not interested in a “slanging match”.
“Qantas thrives on competition, but everyone except Virgin now recognises that the playing field is tipped in their favour,” the spokesman said. “Their battler status is far behind them, thanks to the backing of three government-owned foreign airlines covering their losses. Qantas doesn’t have that luxury and yet our customers have never been better served. That’s thanks to Qantas staff, who are the people responsible for our record customer service ratings. We’re not interested in a slanging match, we’re interested in a serious debate about the true nature of the Australian aviation market.”
Branson’s comments comes as an analysis shows that Virgin Australia’s costs are 17 per cent lower than Qantas’s, reinforcing commentators’ views that the Australian icon needs to address inefficiencies.
Those figures exclude the low cost subsidiaries of both airline groups.
Qantas says the figure is more like 10 per cent but that includes Jetstar.
At the core of the problem Qantas’s cost structure is too high compared to virtually all its major competitors just as Ansett’s was well above Virgin when it first entered the Australian market in 2000.
Three years after Ansett in 2001 collapsed under a mountain of debt, then Virgin chief executive Brett Godfrey, claimed that his airlines was carrying as many passengers as Ansett did, with one third the staff being paid 50 per cent less.