OP ED from Qantas Chairman, Richard Goyder AO
I read a story recently about a passenger travelling business class from the US to London, who unfortunately lost her bag in transit.
At one stage, Heathrow Airport was dealing with thousands of orphaned bags in a single weekend, so the experience sounded frustratingly common. Except this bag was ultimately found in Hamburg, a city the airline involved doesn’t even fly to, and it was unearthed by a passenger rummaging in a pile to find their own missing luggage.
For me, that story sums up the hole that global aviation is pulling itself out of.
An industry that was able to juggle multiple supply chains to deliver just-in-time precision before COVID, is losing bags to random countries and unwittingly relying on fellow travellers to find them.
This is what happens when you shut down an entire sector for more than two years. Companies make deep cuts to survive. Skilled people walk away because the uncertainty seems endless. And then it suddenly has to spring back to life with all the precision of a Swiss watch at the same time COVID is driving high levels of sick leave.
And like a Swiss watch, there are multiple moving parts that need to operate in unison – airport security, air traffic control and connecting airlines – that all have their own challenges with labour shortages.
Qantas is little different to airlines worldwide that have struggled with this scenario. As we said last month in our direct apology to customers, too many flights have been cancelled, too many trips delayed, too many bags misplaced. It’s unacceptable and we know it.
Here’s the good news: we’re well on the way to fixing it. Service levels improved back towards pre-COVID standards in August and improved further into September. By October, we expect to be back to our best. If you haven’t heard this, it may be because the data showing the improvement received far less media attention than stories showing how bad things got.
In the meantime, the corporate obituary writers have been busy. Their analysis has (mostly) been unencumbered by what’s happening at other airlines, or that Qantas’ performance has turned around. Some unions have been quick to join in criticism that fits neatly with their objectives.
To help set the record straight, here is a quick response to some of the common criticisms:
Qantas is having issues because it outsourced baggage handling.
Baggage was already outsourced in 55 of 65 domestic Qantas ports before COVID. The decision to outsource the last ten was because specialist companies that service airlines here and around the world can do the work a lot more efficiently. It had been wholly outsourced by Easter 2021 when our flying was back at 100 per cent and service levels were maintained. In Easter 2022, COVID was circulating freely and the whole sector was hit by huge levels of sick leave, which was the main reason bags went missing.
Fares are high at a time when service is poor.
Rising fares reflect a fuel price that is up by around 60 per cent compared with pre-COVID. Fares also reflect the fact there is less capacity in the market, partly in response to fuel costs and partly because airlines are struggling to get crews and aircraft back in the air for the reasons outlined above.
The Board shouldn’t have approved a buyback; it should be spending on aircraft and people instead.
Shareholders gave Qantas $1.4 billion to help us restructure and get through the pandemic. This was in mid-2020, a time when airlines weren’t exactly looking like a great investment. So, it doesn’t seem unreasonable that they should get some of it back. We’ve also set aside almost $200 million in bonuses for our people, hired 1500 people since April and promoted 1000 more, and announced new routes and new lounges. The pandemic delayed several new aircraft for Qantas and Jetstar that have now started arriving, which include the first of up to 300 that will help renew the fleet over the next decade at a cost of several billion dollars. After what we’ve been through, it’s remarkable that we can make these investments across the board.
It’s all the CEO’s fault.
The CEO and the Board are always accountable, but judging Qantas’ recent performance by pre-COVID standards and finding Alan Joyce lacking as a result is like saying the pandemic never happened. Anyone who understands the industry thinks Alan and his team have done exceptionally well to steer the airline through a crisis that sent other airlines (and their creditors) packing. People who think Qantas couldn’t have failed or was enriched by government handouts are simply wrong.
Qantas has lost its way.
This claim has been made throughout Qantas’ long history and it’s also the reason why our national carrier is the world’s oldest continuously operating airline – because it has kept evolving to avoid winding up on the scrap heap with so many other iconic brands. On top of the absolute commitment to safety, I hear at least one amazing story a week that makes me proud to Chair this company.
We don’t shy away from the service failures that happened as the airline restarted. But any reasonable assessment has to start with looking around the world and Australia to see how Qantas compares in an industry that’s working incredibly hard to get back on its feet. We’ll continue that hard work to meet the high standards all stakeholders expect from us.
