Asianisation of Qantas Plans Unveiled

Qantas has unveiled a five-year plan to overhaul its international operations.

Chief executive Alan Joyce has described as a “steadily fading business, suffering big financial losses and a substantial decline in market share”.

“To reverse that decline we need fundamental change,” he said. “Qantas International takes up enormous amounts of capital and our cost base is around 20% higher than that of our competitors. To do nothing, or tinker around the edges, is not an option.”

The overhaul would result in about 1000 redundancies from Qantas’ 36,000 workforce after the retirement of older aircraft and network changes. Unions have vowed to fight the loss of jobs at Qantas which is already battling unions over outsourcing of pilots and conditions.

The Australian Services Union said the cuts could compromise safety and vowed to fight the airline.

“ASU members strongly believe that what makes Qantas great is it is the spirit of Australia,” ASU assistant national secretary Linda White said. “This announcement flies in the face of all that makes Qantas great – that is its staff.”

One of the main changes will be the creation of a full service premium airline in Asia. Mr Joyce confirmed Kuala Lumpur and Singapore were the likely bases. The creation of a low cost carrier in Japan, Jetstar Japan, was also confirmed with a launch date of late next year.

The government has acknowledged this was a “regrettable” commercial decision by Qantas.

In an effort to sell its Asianisation, the airline spent $2 million in one day this week with ads in Australian newspapers announcing that a “new Qantas will take on our global competitors” with a “state-of-the-art fleet”. The ads said passengers would have “more choices through new gateways to more destinations around the world”. The ads are part of a pre-emptive strike by the airline to minimise further damage to its brand that has suffered negative publicity due to maintenance issues, the continuing industrial dispute with pilots and earlier concerns over the safety of Rolls-Royce engines.

Further partnerships will be sought with oneworld carriers as part of a ‘gateway strategy’. “We cannot fly our own aircraft to every port but we will get our passengers wherever they want to go,” Mr Joyce said.

He said Qantas International’s cost base was about 20% higher than its key competitors.

Plans include a low-cost Asia airline, Jetstar Japan, with 11 A320 aircraft to initially provide the operating fleet and a domestic service to follow.

“Australians flying to Japan will see a huge difference in the airfares offered, with Jetstar Japan airfares over 40% below what’s being offered there today,” Mr Joyce said

He said the new airlines will offer “decent” wages, stating that a Jetstar captain can earn up to $280,000 per year. However he said there won’t be the same terms and conditions Qantas pilots are offered, as the airline “wouldn’t survive”.

Other changes include launching a direct flight to Santiago, replacing Buenos Aires as the entry point to South America; restructuring the joint services agreement with British Airways; and developing the joint agreement with American Airlines and explore opportunities with Malaysia Airlines.

However, the lynchpin of the restructuring will be creating a new premium airline based in Asia, with a new name, new aircraft and new look and launching Jetstar Japan as a new low-cost carrier together with Japan Airlines and Mitsubishi.

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