Will you accept Qantas's apology?

Qantas yesterday announced the “first phase” of a package of measures to apologise to customers disrupted by the grounding of the airline for two days last Saturday week. It has also been blitzing the media with ads proclaiming the return to certainty for the first time in more than six months, after Fair Work Australia ordered the end of industrial action by unions representing pilots, engineers and ground handlers.

In the week since the grounding, consumers have been stirred up by highly misleading claims about the personal pay packet of chief executive Alan Joyce and have joined in a disgraceful outburst of xenophobia, bordering on racism, against the Australian Irishman.

There are 22 million different opinions about the national carrier and many of them miss the point: Qantas’s costs are too high, especially on long-haul international routes, and must be reduced if it is to survive.

Joyce has been held responsible for the late delivery of new planes by Boeing and Airbus – problems that had nothing to do with with him. That has also been used to argue that he has the wrong fleet strategy, but the Qantas we have would look vastly different if Boeing had not stuffed up development of its new super-plane, the 787 Dreamliner, which is running four years late.

There is also a nonsense being promoted mostly by the unions that Qantas is immensely profitable. In fact, dragged down by its international flying, it is a hiccup away from losing money; as things stand, it would be far better off putting its money in a fixed deposit earning 5 or 6 per cent a year than continuing to fly its planes around the world.

In the year to June, Qantas’s net profit was $249 million on $14.9 billion in revenue – a net margin of 1.6 per cent. Bluntly, that means it is breaking even. In business terms, it is a basket case.

Yet readers of this blog gleefully report they no longer fly Qantas because its fares are too high, especially in business class. To London, for example, you can regularly fly Emirates business class for around $9000 return, while the Qantas rate is nearer $15,000.

That is because Qantas, with all its legacy issues, faces its strongest competition to Europe from what are effectively low-cost carriers, all less than 20 years old – Emirates, Qatar Airways and Etihad Airways – who can provide the same seat for around 40 per cent less than what it costs Qantas. Singapore Airlines’ operating cost advantage is 20-25 per cent.