Grey skies for Qantas

[oz_mark]

The good news is the Allco-consortium failed to nail its Qantas takeover two years ago, so we still have a national airline. And Qantas can now raise $500 million-odd without the anvil of $11 billion in covenant-lite debt drooping from its neck.

Qantas, to its credit, remains one of the few profitable airlines in the world.

The bad news is the carrier may be headed for losses next year. Its first-half profit today was down to $210 million, way below the $618 million for the same time the year before. And although management's guidance is still plumping for a profit of $500 million for the full year, they must be inclined to put a smiley face on things.

Michael West on Qantas

 

[stryker]

It's about time Qantas joined the real (competitive) world.

Grey skies indeed, especially as their huge cash cow, the USA routes, will have two additional players this year.

It'll be interesting to see how it pans out...

 

[Nigelinoz]

It'll be interesting to see how it pans out...

Indeed it will,what with the credit crunch,falling passenger numbers,a decline in profit etc the
next few years are set to be very interesting times for the flying kangaroo and they could be
testing times for Alan Joyce.
Joyce has an impressive resume,he holds a masters of science from Trinity College with a
double major in Physics and Maths,so when Qantas needs to run the numbers you couldn't
imagine that there would be a better man for the job.
One things for certain,by the time his contract comes up for renewal Joyce will either by a
hero or a hasbeen .

 

[JohnK]

There are tough times ahead for most companies. Unfortunately Qantas is not immune to the golbal economic crisis and any profit must be seen as a positive result....

 

[Nigelinoz]

I think the most interesting thing to watch over the next few years will be to see whether
Alan Joyce can get the Qantas employees back on side,I know from talking to friends
who work there that Geoff Dixon was not exactly the most popular CEO Qantas has had
and it will be very interesting to see whether Joyce can turn that around and get the people
at the coalface back on the company wavelength,if he can then that could go a long way to
improving the image that Qantas has become,at least in some peoples minds,an arrogant airline with poorly trained staff.

 

[Platy]

Joyce has an impressive resume,he holds a masters of science from Trinity College with a
double major in Physics and Maths,so when Qantas needs to run the numbers you couldn't
imagine that there would be a better man for the job.

The web sites and articles I have seen claim he has a masters degree in "management science" - not sure if this was a genuine research degree or a coursework based degree...either way, I fail to see how this makes him the best man for the job!!!

Unfortunately, IMHO, that is one of QF's main problems - failure to see the wood for the trees because they are too obsessed with the numbers to factor in the human dimension either to handle employee relations/morale and also in terms of customer satisfaction/customer service. :shock:

I very much doubt,as CEO, the gaelic hobbit will be at his laptop writing mathematical models...

As for number crunching at QF Group HQ, their outrageous claims about numbers of increasing pax on the CNS-NRT Jetstar services (actually too many pax claimed for aircraft flown!!!) show that they would be hard pressed to execute a basic level calculation on a pocket calculator.

 

[Platy]

I think the most interesting thing to watch over the next few years will be to see whether
Alan Joyce can get the Qantas employees back on side,I know from talking to friends
who work there that Geoff Dixon was not exactly the most popular CEO Qantas has had
and it will be very interesting to see whether Joyce can turn that around and get the people
at the coalface back on the company wavelength,if he can then that could go a long way to
improving the image that Qantas has become,at least in some peoples minds,an arrogant airline with poorly trained staff.

Well, mate, as posted elsewhere, if his recent visit to CNS is anything to go by, he certainly hasn't made a positive start in the being respectful to staff stakes...

 

[Nigelinoz]

The web sites and articles I have seen claim he has a masters degree in "management science" - not sure if this was a genuine research degree or a coursework based degree...either way, I fail to see how this makes him the best man for the job!!!

Quote from Profile: Alan Joyce - Planning - Money - Business - Home - theage.com.au
His mathematical skills have been far more useful to his aviation career than a pilot's licence. The Irish-born Joyce holds a master of science degree from Trinity College, Dublin, with a double major in physics and maths, which has proved invaluable when facing complex revenue management issues such as forecasting the percentage of no-shows on a particular route on a particular day (which allows the airline to over-sell seats by up to 3 per cent"
"

 

[Platy]

Quote from Profile: Alan Joyce - Planning - Money - Business - Home - theage.com.au
His mathematical skills have been far more useful to his aviation career than a pilot's licence. The Irish-born Joyce holds a master of science degree from Trinity College, Dublin, with a double major in physics and maths, which has proved invaluable when facing complex revenue management issues such as forecasting the percentage of no-shows on a particular route on a particular day (which allows the airline to over-sell seats by up to 3 per cent"
"

I am sure Qf can buy that skill in a moderately skilled analyst who understands optimisation and game theory - you certainly don't need that in a CEO, you need a competent people person with sound business sense and ideally a polymath.

Incidentally, the basic mathematical models have been around for decades albeit in diverse applications.

A smart boss might even employ a spatial ecologist, behavioural ecologist, etc for such skills.

An even smarter one would look towards one adept at applying dynamic systems theory/models.

At risk of bursting your idolisation bubble such skills are not that remarkable in the right circles...

 

[serfty]

Bugger that - if you're good at "Yield Management" then you can be good at most things.

It requires innate understanding of people (sorry, PAX) from all socioeconomic strata as well as detailed knowledge of the per seat costs of various loadings on various arcraft on various routes.

 

[Platy]

Bugger that - if you're good at "Yield Management" then you can be good at most things.

It requires innate understanding of people (sorry, PAX) from all socioeconomic strata as well as detailed knowledge of the per seat costs of various loadings on various arcraft on various routes.

How exactly is innate understanding of people quantified into parameters, which are integarted into yield management models??? Typical variables are...???

 

[Mal]

How exactly is innate understanding of people quantified into parameters, which are integarted into yield management models??? Typical variables are...???

The chance of people sleeping in after a big footy match, the chance of an executive cancelling a fully flex ticket etc etc.

 

[serfty]

... chances of people employing "throw away ticketing" ...

... chances of an AFFer blowing off an MR ...

I've been watching a flight I have on Sunday; it's been well sold out in WHY for weeks. (J9 B0) Of course YM see any seat as saleable, but for what price.

For the last few weeks, on the Monday it's gone B9... X9 ... within a day or so its back to J9 B0

This week it's been daily as by now Qantas are prepared to sell any of the remaining J seats for what they can get (even X!) overbooking WHY of course.

Seats are starting to run low as this morning all WHY buckets only went to 5; earlier this afternoon WHY back to 0.

As I post this, it's K3 M3 L1 V1 S1 N1 Q1 O1 X1 E0

From experince, if any grab that seat in either L/V/S/N/Q/O/X seat, all of those buckets will drop to 0.

(By tomorrow, I'm sure it'll all be snapped up again.)

That's YM!

 

[Nigelinoz]

At risk of bursting your idolisation bubble such skills are not that remarkable in the right circles...

Well with the greatest of respect ,platy,I never said anything about idolising Alan Joyce,all I did is make a comment that he has a double maths degree from Trinity,and I postulated that his experience in maths may stand Qantas in good stead if they need someone who can "run the numbers",I also,by the way,commented that the next few years are likely to be tough going for Qantas (and Joyce) and that at the end of it he will either be acknowledged as a good choice for CEO or a bad one,only time will tell,but having read a few of your recent posts on the subject of Qantas and their management team I suspect that you hold pretty firm views about Joyce (and Dixon) and that you are unlikely to change them.
Would that be a fair statement? I don't wish to put words in your mouth.

 

[FL360]

I think the future of Qantas depends on the Australian government's position on whether they allow its monopoly to continue over Australia's skies....

 

[oz_mark]

I think the future of Qantas depends on the Australian government's position on whether they allow its monopoly to continue over Australia's skies....

What monopoly?

 

[Platy]

Well with the greatest of respect ,platy,I never said anything about idolising Alan Joyce,all I did is make a comment that he has a double maths degree from Trinity,and I postulated that his experience in maths may stand Qantas in good stead if they need someone who can "run the numbers",I also,by the way,commented that the next few years are likely to be tough going for Qantas (and Joyce) and that at the end of it he will either be acknowledged as a good choice for CEO or a bad one,only time will tell,but having read a few of your recent posts on the subject of Qantas and their management team I suspect that you hold pretty firm views about Joyce (and Dixon) and that you are unlikely to change them.
Would that be a fair statement? I don't wish to put words in your mouth.

Actually you claimed that you "couldn't imagine that there would be a better man for the job" given his education

My counter points were that there are master degrees and masters degrees, that his educational skill set isn't actually that remarkable and I question why that should make him the best!

My concerns about Joyce are his lack of people skills (based on personal reports from folk I know who have dealt with him in QF) despite the rhetoric to fix the morale and customer service problems at QF.

And his belief in the JQ model without acknowledging the great debt the start up owed (and continues to owe) the infrastructure of the parent airline.

QF/JQ continue to issue PR, which any self respecting jouralist could pick apart as fantastical (eg my example above of claims of increased pax on routes where they simply ain't enough aircraft to acommodate the volume of traffic increase claimed) and one questions whether he believes the hype as much as the unquestionning journos (my insiders tell me they think he does).

I personally see great problems in Group QF including poor brand demaraction and I suspect that Joyce will further that confusion rather than fix it.

Is Joyce broadly competent? Probably, yes. The best? That's a matter for subjective debate.

From a customer perspective my concern is that we will continue to see an erosion of service, product, loyalty benefits, etc, etc and Joyce's background both academic and in the LCC arena accentuates that perception.

Qf survive the GFC? Sure, make the whole thing LCC and crunch those numbers and be very thankful Dixon's love affair with private equity fell flat on its face.

 

[NM]

Perhaps they need to bring back the bow tie for some strong leadership .

 

[FL360]

Modelling number is easy, modelling human behaviour and their value perception is hard....

for example, for full service pax, how will you model the price differential which the customer is willing to pay to give up earning pts and SCs to travel to another full service airline on the same route ? (given better service / newer planes /perhaps better price from the other airline) ?

for potential LCC customers how will you model the price differential which the customer willing to pay to get QF service and pts and SCs ?

Value perception changes according to external factors such as economic conditions as well, in good times people will pay a bit more for good services, in bad times it will be different. It also depends on some un-foreseen factors as well such as reputation (linked to accidents/delays/system outage etc etc)

Back to the topic, I came from a highly (perhaps too highly) numerical background, and I think being a successful CEO requires more than just numerical skills.

 

[Platy]

Perhaps they need to bring back the bow tie for some strong leadership .

Ah, now you have a worthy candidate for the title "best man for the job"