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Qantas aircraft at Melbourne Airport. (Image: Josh Withers/Pexels)
Opinion: With great power…
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Qantas has a lot of influence in Australian business and politics – but perhaps should be more judicious about how it uses it, argues Jake Nelson
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There’s a wise old saying heard a lot in fairy tales, as well as horror stories about monkey’s paws and capricious genies: be careful what you wish for. There may not be a company in Australia feeling that as acutely as Qantas at the moment. It’s achieved its ambition of becoming by far the dominant airline group in Australia, having seen off numerous potential competitors – Rex and Bonza this year alone – with Virgin Australia, its main domestic rival, having nowhere near its level of market share or influence in the halls of power.
And yet – that same influence has now been put in the spotlight once again, with former AFR columnist Joe Aston’s book, The Chairman’s Lounge, kicking off a nationwide media firestorm about politicians accepting free flight upgrades, memberships to the titular ‘Chairman’s Lounge’, and other lurks and perks.
The Chairman’s Lounge itself has been very effective in courting politicians, Aston told me in a recent podcast (see later this edition) – just look, he says, at how government travel is done in Australia. “There is a policy of the Australian Government that all government travellers, from a federal minister right down to the most junior public servant, is required to take the cheapest fare available – and secondly, they are not permitted to take into consideration lounge access when they make their travel arrangements,” he says. “Now, how is it, then, that in financial year 2024, 90 per cent of the money the government spent on domestic travel went to Qantas? Because Qantas is never the cheapest fare available, or at least, almost never.”
Of course, it may have the ear of most of Australia’s political and business elite – but the Flying Kangaroo probably doesn’t appreciate the public being reminded of that, yet again, when it’s still playing damage control over some mighty whacks to its reputation and public trust over the past couple of years and would much rather be talking about fleet renewal and Project Sunrise. This is, of course, before we get into what all that lobbying and influence has accomplished – in particular, around Virgin Australia and Qatar Airways.
In his book, Aston discusses how Qantas and then-CEO Alan Joyce made quite the fuss in the media during COVID-19 when Virgin Australia went into administration and the Morrison government was considering giving it a helping hand, saying that to nationalise or bail out Virgin would be unfair and the government “can’t pick winners and losers”.
“Whatever aid is given to one company has to be given to every company in that sector,” he told Sky News in March 2020. “It would mean we’re competing against the Australian government, and that would be a completely unfair competitive environment.”
But after Virgin was taken over by Bain Capital, suddenly it was slimming down its fleet, refocusing, and becoming leaner, meaner, and hungrier. The result? Far from collapsing, Virgin is in arguably the best position it has seen in years, posting profits for the first time in more than a decade. Would it have been better for Qantas if it had kept quiet, let Virgin keep limping along under its previous owners and played the waiting game? Maybe, Aston said in his book – though, looking back on it later, he thinks it might just have worked out for the Flying Kangaroo.
“Virgin’s certainly financially stronger than it was, and perhaps that’s a bad thing for Qantas – but they’re also much more commercially sensible,” he says. “They’re being very careful about the capacity that they operate. They’re not over-investing themselves either in their product or service. So, all of a sudden Qantas has a competitor that is very happy to play a similar game to Qantas, which is to keep prices as high as possible, keep investment in products and services as low as possible, and keep EBIT margins as high as possible.”
One thing that’s less likely to work out as Qantas hopes, however, is the situation with Qatar Airways. Qantas reportedly went hard against Qatar last year being allowed to increase its weekly flights into Australia by 21, which Aston says was at the behest of its codeshare partner Emirates.
This may have played a part in the government’s decision to block the additional flights – but led to a nasty surprise for Qantas this year, when Qatar decided to take a different tack and buy 25 per cent of Virgin and at the same time enter an agreement whereby Virgin would wet lease its planes to operate its own flights to Doha … potentially to the tune of 28 per week. This may turn Virgin back into a bigger headache for Qantas, Aston argues, as the national carrier was “afraid” of its rival when it was backed by foreign investors with deep pockets.
“Qantas lost a lot of money last decade fighting against Virgin, which was funded at the time by Air New Zealand, Singapore Airlines and Etihad, so Qatar Airways turning up with deep pockets on Virgin Australia’s equity register, and also then providing it with an international network and fleet of its own – that’s really a big threat for Qantas, particularly with its JV to Europe with Emirates,” he says.
Perhaps Qantas, and new CEO Vanessa Hudson, should consider another wise old saying – this one from one Uncle Ben Parker – when deciding where to use its influence in future: “with great power comes great responsibility”.
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