Time For Change?

Qantas at the crossroads

It may well come to pass that the travails of Qantas will be a watershed for Australian work practices. The oft-quoted saying that Australians are not prepared to pay for the salaries and conditions they enjoy is becoming truer every day. Aviation is the most global of all industries and, like it or not, every time a foreign airline touches down at an Australian airport it imports the labour costs and work practices of that country, from low-cost Indonesia to high-cost Europe. For years Qantas has traded on – and charged a premium for – its superb safety record. In the movie Rain Man, Dustin Hoffman, playing Raymond Babbitt, uttered the now famous words: “Qantas never crashed”. The movie came out in 1988, at a time when the then international-only Qantas was at the top of its game with well over 40 per cent of the traffic into and out of Australia. It was government policy to protect the national carrier from foreign competition. Qantas was an airline that taxpayers owned and which was selling tickets at a premium to faithful travellers at a time when well-known airlines likePan Am, Alitalia, Korean Air and Continental Airlines were having many accidents. In 1989, there were 231 accidents and incidents, which made Qantas’ unblemished record shine. The landscape is starkly different today. For 2013, the number of fatal crashes involving IATA members is likely to be near zero. Today only about 25 per cent of travellers list safety as a major consideration when choosing a flight, with most citing price and frequency as the two most important factors. By these measures Qantas falls behind, particularly on the international front. As a result, only 16 per cent of international travellers into and out of Australia are choosing Qantas.

Product, price and planes

Australian travellers have been deserting the airline for years. Initially it was because of cabin offerings. Malaysia-Singapore Airlines and Cathay Pacific started the rot, snubbing IATA by offering free drinks way back in the late 1960s. Qantas and other airlines reluctantly followed. Fast forward to the early 1990s and Singapore Airlines led the waywith seatback videos for economy passengers. Emirates and Virgin Atlantic were also early adopters of entertainment for all. Inexplicably, Qantas was stoic in its resistance. This magazine and the author then pleaded the case for premium economy to the late James Strong, who said the airline could not “make the business case”, despite the fact that Australians are the second tallest people in the world behind the Dutch and fly the longest distances after the Kiwis. Premium economy is a no-brainer, as the airline has now discovered, just as business class was when Qantas introduced it in 1979. While price has always been important, in the last two decades it has become critical as flying becomes more affordable to budget-conscious travellers. Internationally we have seen UTA, Alitalia, Lufthansa and KLM, to name a few, withdraw from Australia because they could not compete with the new breed of Asian airlines such as Singapore Airlines, Cathay Pacific and Malaysia Airlines. Qantas itself quit a host of Asian cities for the same reason, first using lower-cost Australian Airlines and then budget airline Jetstar to serve these markets. In the last 10 years, the Middle Eastern giants Emirates and Etihad (and, to a smaller degree Qatar) have stolen traffic with lower fares, superb inflight product and extraordinary networks.