Qantas 2011: its Agenda and its Future

Qantas CEO Alan Joyce delivered a speech to the Melbourne Press Club early February 2011 to unveil his agenda 2011 for Australia’s national airline Qantas. As he has to cope with though competition, economic downturn and terrific natural disasters, it seems quite difficult for him to actually fufil his proposed agenda. This short story provides you with a summary of his February speech as well as a recent embedded video interview with the 7.30 television program broadcasted by ABC Australia.

Navigating the Recovery
Starting his speech, Joyce said: “I’ll begin with the recovery. The Qantas Group is a portfolio business. Our premium and low fares airlines, loyalty program and freight business all contribute to our success. Together the two airlines form a natural hedge for our business. They help us succeed through the upswings and the downturns. Now we are in recovery but, like many of our customers, we remain cautious about prospects ahead. The Australian economy is performing well, relative to the rest of the globe. Of course, the economic impact of the Victorian, NSW and Queensland floods- not to mention the devastating impact of Tropical Cyclone Yasi – is not yet clear.”

“Domestically we are strong. We are holding and building upon our 65% market share across our two airlines, which are the most profitable in Australia. Business and corporate travel has rebounded for us.”

Positioning the Group in Asia.
“We all know that Australia’s future is tied up with Asia, and with China in particular. The Qantas Group plans to contribute to Australia’s Asian future, and also benefit from it. We are already laying the groundwork with Jetstar. But it is not only Jetstar that has a lot of potential in booming Asia. We think premium airlines will also have a role to play. We are looking closely at all opportunities to participate in the Asian opportunity and benefit ourselves, our customers and shareholders, and Australia.”

Securing the Future for Qantas International
Joyce continues: “Obviously the incident last year and the subsequent grounding of our A380 fleet was a major setback for us. But the issue has now been fully resolved to the satisfaction of the manufacturer, Rolls-Royce, all the authorities and our own experts.”

“This was the engine manufacturer’s issue, and we are currently in dialogue with them. In September we commence our fleet reconfiguration program to translate those premium A380 features across our B747 fleet. Our aim is to have a consistently excellent international offering in-flight and on the ground. We are now looking to get our first B787 for the Group towards the end of next year. Capacity has flooded into Australia from China, the Middle East and elsewhere. To give you an idea, total growth in direct aviation capacity to Australia between 2003 and 2009 was 39%. Meanwhile total inbound passenger growth was only about 10%. So that tells us these carriers are not growing the market, but simply taking existing demand. And the result is that Qantas International market share has fallen from 35% to 20%. As an end-of-the-line carrier, serving a market of 22 million people, in a marketplace flooded with so much capacity that our competitors aren’t even using their full quota, we face severe limits to growth. If we continue on our current path, there will be a real question mark over the viability of Qantas International. And I have no intention of letting our flagship business decay through lack of action.”

Conclusion
CEO Alan Joyce concluded his speech: “The Qantas Group has made an annual profit every year since 1995, a claim only two other major full service carriers can match: Singapore and probably Emirates, both operating under very different models. We have new aircraft arriving, with many more to come. Our Australian domestic base is very sound. We have a skilled and stable workforce. And we are laying the groundwork to maximize the enormous opportunities of Asia.”