ABC Inside Business on TT grounding, Australian aviation, Qantas INT restructure

[thewinchester]

The ABC program Inside Business spent over 15min looking at Australia's aviation industry today, specially in light of the grounding of Tiger Airways Australia (TT), industrial relations pressures facing Qantas (QF) and the concerted efforts of Virgin Australia (DJ) to grab a stable foothold in the corporate market.

A lengthy interview was also had with QF CEO Alan Joyce on these topics, the carriers international restructure planned for 24 August, and the pressures its facing during industrial negotiations with various aviation unions which it feels pose a threat to the airlines continued viability.

You can view the full video online at ABC iview (15min combined). Transcripts for each of the pieces are also available from here (Wounded Tiger) and Here (Qantas benefits from Tiger woes).

Now for the highlights..

TT accounts for about 5% of the total Australian DOM aviation market, and the carrier stated that 30k+ pax have been affected this week alone from its grounding. QF Group estimates that it has picked up over 10k+ of these pax between QF and Jetstar (JQ), with the remainder either going to DJ or as they predict not even flight at all due to the price sensitivity of pax at that end of the market.

In light of the TT groundings, the share prices of both QF and DJ have received a good shot in arm, picking up part of the gains lost after both dropping nearly 1/3 as a result of the GFC, fuel price rises and natural disasters affecting their ability to do business.

Some of the quote highlights:

DJ CEO John Borghetti, obviously taking a stab at his former employer (QF) said on industrial relations issues:

Every company goes through the A negotiations, you know, salary negotiations, conditions, all the rest of it. We're no different; we'll go through those. We're going through some at the moment. But I think you can resolve anything between any two parties if you approach it in a very rational and pragmatic way.

Countering the views on the QF response to labour issues, John Guadagnuolo, an investment manager for Aviva Investors stated:

Qantas have to dig in and fight these battles, as unpleasant as they are. I mean, I think no-one's going to argue that people shouldn't receive a pay rise; it's an expensive place to live, Australia, these days.

Borghetti again, this time on feedback received on DJ's new business orientated hard product:

And, you know, I can tell you that on a daily basis, on a daily basis I get either an email or a call from someone in the business community saying, "Good on you and that's terrific. We've just flown your new product. It's fantastic." And it's about time competition comes into that sector.

QF also seems to be revelling in who the parents of TT are, not missing an opportunity to connect their long standing rival SQ back to them at every opportunity:

Joyce: Yes, I think, you know, from a Singapore Airlines point-of-view, certainly they're getting involved in getting Tiger back into the air. I think there's - I can't see an alternative for Tiger redeploying a lot of the aircraft into Asia at this stage. I think there's a big issue in Tiger's business model being successful if it only has Singapore as a base.

On TT impact on fare pricing, Joyce stated:

Well, I think the impact of Tiger's been overstated. This has been a very competitive market in the Australian market for some time. We have very strong competition between Virgin Australia and Jetstar in the leisure end of the market.

And when pressed on the pilots in respect of the industrial issues, Joyce didn't mince his words.:

What we're working on is making sure that we have sensible wage settlements with all of our employees, and unfortunately after 25 discussions with some of these unions, we have still some very outrageous demands on the table.

And given the challenges that our international business actually has, we don't believe that is appropriate, that's correct and that actually helps us turning this business around, and that's why we haven't been able to reach agreement with some of these unions. And some of these unions are actually asking for a veto on change.

It's back to the old-fashioned way that the unions used to be run in Australia. It's back to making sure that change doesn't happen in business.

 

[jakeseven7]

This is being discussed elsewhere but think it deserves its' own thread.

Don't care about all the TT stuff.

But was interesting to hear that their intention is very much to grow the QF brand internationally and that is linked to the Aug 24 announcement.... So are we all thinking they are going to set up Qantas in Asia to hub into Europe??!!