Record Profit for Qantas

[Gold60]

Seriously? A quality, safe, airplane interstate ride that costs less than an average days wage? And yet people still complain?? Some people will only be happy when Qantas offers flights in business (and full-flat in a widebody) for FREE before they are happy. But wait, no, even then there will be complaints because of the poor menu choices, the lack of a selection of twenty three boutique beers, and lack of on-arrival, all-the-piss-you-can-drink, lounge access.

And God forbid someone try to feel success with an airline that still dares to serve lamb stew

well said sir, well said !!!!!!

 

[MEL_Traveller]

Seriously? A quality, safe, airplane interstate ride that costs less than an average days wage? And yet people still complain??

Clearly the airline is still making a profit from it. They're not doing it for free. Yeah I think people do have a right to complain when massive fuel surcharges are still applied to award bookings, or incorporated into base fares, when those were only introduced to combat rising fuel prices.

 

[JohnK]

Clearly the airline is still making a profit from it. They're not doing it for free. Yeah I think people do have a right to complain when massive fuel surcharges are still applied to award bookings, or incorporated into base fares, when those were only introduced to combat rising fuel prices.

Could not agree more. Fuel surcharges have come down slightly but charging ~$200 fuel surcharge on an award where the revenue airfare that earns points costs ~$400 is taking the piss big time.

 

[medhead]

There are a lot of routes in the USA that are more expensive than comparative flights in Australia and they have 35x the population density and considerably more carriers. Personally I think airfares are pretty reasonable considering comparative costs of buses or trains.

Considering they have to work in one of the worst industrial relations countries in the world and deal with 50 million levels of incompetent government bureaucracy, I think they deliver a pretty excellent product for half a days wage.

Like I said, Qantas want to charge me more than half a days wage for a flight.

 

[dajop]

There are a lot of routes in the USA that are more expensive than comparative flights in Australia and they have 35x the population density and considerably more carriers. Personally I think airfares are pretty reasonable considering comparative costs of buses or trains.

And Europe isn't a whole lot better either, "full" service carriers there are anything but that and are quite expensive as well. Even with the cheaper fares on the LCC's the cost of adding a checked bag can be a good $40 or so, not to mention that getting from SYD to BNE may instead involve flying from Sydney (Wollongong) to Brisbane (Toowoomba)

I always find it amusing that people still fly QF because they provide a better service than VA, JQ and TT both normally, but especially during IRROPS, yet complain about a 3% fare increase ... cause and effect perhaps ?

 

[medhead]

And Europe isn't a whole lot better either, "full" service carriers there are anything but that and are quite expensive as well. Even with the cheaper fares on the LCC's the cost of adding a checked bag can be a good $40 or so, not to mention that getting from SYD to BNE may instead involve flying from Sydney (Wollongong) to Brisbane (Toowoomba)

I always find it amusing that people still fly QF because they provide a better service than VA, JQ and TT both normally, but especially during IRROPS, yet complain about a 3% fare increase ... cause and effect perhaps ?

If we're going to continue the hyperbole then lets just say last I checked The difference between $120 and $226 is a lot more than 3%. If you want to discuss this without belittling people's opinions, it would be worthwhile noting that the issues isn't just 1 3% increase. The base fare ADL/SYD has been going up by 4 or 5 dollars every few months. Last I checked inflation is below 2% as well.

So getting back to JohnK's point, of course they can make a profit when fares are increasing all the time and increasing faster than inflation.

 

[JohnK]

I always find it amusing that people still fly QF because they provide a better service than VA, JQ and TT both normally, but especially during IRROPS, yet complain about a 3% fare increase ... cause and effect perhaps ?

From memory airfares have gone $145-> $149-> $155-> $159 in not that long a time. I'll be stuffed if that's in line with inflation.

Add to that the ~11% increase in health care, cost of food going up, the very soon to be increase in train fares which looks like getting me by ~50% and I can see that I can't keep up.

 

[junbugging]

From memory airfares have gone $145-> $149-> $155-> $159 in not that long a time. I'll be stuffed if that's in line with inflation.

Add to that the ~11% increase in health care, cost of food going up, the very soon to be increase in train fares which looks like getting me by ~50% and I can see that I can't keep up.

You know the second line of your post? That stuff is called 'inflation'.

 

[Mattg]

You know the second line of your post? That stuff is called 'inflation'.

I realise inflation exists, but I do tend to agree with JohnK that QF airfares have increased significantly more quickly than inflation alone accounts for.

In 2011, CBR-SYD on QF was a regular price of $79. Over the past 5 years, standard prices increased to $129, then $139, $149 and now $156. That's an average annual price increase of ~10% over 5 years. The annual inflation rate during this same period has hovered between 1% and 3.5%.

 

[medhead]

How about some hard numbers?
Here is a graph of the average annual price I've paid for flights between ADL and SYD for the last 7 years. Total number of flights is 393, with following sub-totals QF730 -166, QF732 -9, QF743 -83, QF 759 -18, QF 783 -25 and QF785 -92.

Clearly my goto flights are 730 (monday 6am), 743 or 785 for the return. QF783 has become a viable alternative to QF785 due to a schedule change this year, so utilisation of that has increased in 2016. QF732 is my alternative selection when QF730 is too expensive, but that is no longer offered on Monday morning in 2016. I also use VA when QF730 is too expensive. My VA average for 2016 is $129 and for QF is $166. QF730 is advertised at $220 almost constantly, with rare dips down to $180.
QF759 flights are tax deductible, same for QF783 prior to 2016, meaning lower cost control required.

The price increase I've seen is very real, and is much more than 3%.

 

[dajop]

it would be worthwhile noting that the issues isn't just 1 3% increase. The base fare ADL/SYD has been going up by 4 or 5 dollars every few months. Last I checked inflation is below 2% as well.

So getting back to JohnK's point, of course they can make a profit when fares are increasing all the time and increasing faster than inflation.

From memory airfares have gone $145-> $149-> $155-> $159 in not that long a time. I'll be stuffed if that's in line with inflation.

As far as I am aware, there is no obligation for QF (who is of course a publicly listed company), to restrict their pricing adjustments just to inflation, although in sectors where competition is low and barriers to entry are high (like the airline industry), then excessive exertion of market power is something that regulatory authorities should take a close look at.

Ultimately, it is the responsibility of Qantas management maximise profit (or return on capital for shareholders, by growth) in a sustainable manner (i.e by not upsetting customers enough to drive them away from buying their services). Increasing fares whilst maintaining or reducing capacity is a legitimate - and indeed effective way of doing this - and not unique to the airline business. Many businesses seek to maximise their return through pricing, managing supply and perhaps in the process forgoing a set of customers they see as being less than profitable. Of course whether this approach is sustainable, is questionable.

Also there is also always Virgin, Jetstar & Tiger on many routes, and each traveller needs to make a decision whether each companies overall offer (price, product etc) matches their needs. If the QF price is too expensive, as you suggest, surely demand will go down and a correction will be forthcoming, if not and demand keeps up, well maybe they've made the right decision.

Also, whilst recent fare increase exceeed inflation, it would be interesting to see if the recent increases are really just realignment to long term trend (honestly have no idea on this, although I have an unproven hunch that pricing is back to the levels - with some inflation - of where they were before the VA & QF capacity war). That capacity war, which led to lower prices for a while, was ultimately unsustainable.

 

[juddles]

.....The price increase I've seen is very real, and is much more than 3%....

Airlines have fare wars and drop fares to bargains, then when they creep back up these increases are judged against "inflation"??

At the end of the day air travel is incredibly cheap. "We' all seem to expect to be able to trapeze around the planet for nothing.

Why don't you do such detailed analysis of your local fish and chip shop...

 

[medhead]

As far as I am aware, there is no obligation for QF (who is of course a publicly listed company), to restrict their pricing adjustments just to inflation,

I'll stop you right there. No one is suggesting any such obligation. Clearly you misunderstand the point of my post, not sure why there needs to be such constant misrepresentation of people's opinion. The topic of this thread is "Qantas' record profit' - I've offered observed data to support my opinion that profit is partially due to massive fare increases. That is a statement of fact that is completely devoid of judgement on Qantas' behaviour or the rights or wrongs of those increases. It is simple statement that it is easy to turn around profit when you increase your prices as much as has been observed.

Your reply to my observation is to tell me to stop whinging about a 3% fare increase. Refuting your view about the size of the fare increase is in no way a judgement about how much Qantas should increases fares. It is a matter of correcting wrong information.

Airlines have fare wars and drop fares to bargains, then when they creep back up these increases are judged against "inflation"??

At the end of the day air travel is incredibly cheap. "We' all seem to expect to be able to trapeze around the planet for nothing.

Why don't you do such detailed analysis of your local fish and chip shop...

I'm sorry to have disproved your feelings about the Australian domestic airfare market. No need to lash out in anger. I sure as hell don't have the expectations or make the judgements that you're now trying to attribute to me. It's pretty pathetic really.

Strangely enough I haven't purchased 393 crumbed butterfish meals from my local fish and chip shop over the last 7 years. But when I do I'll be able to pull out cold hard data to refute misinformation that might be pedalled around by ex-pats who have no idea about Australian domestic fish and chip pricing.

 

[juddles]

..... No need to lash out in anger. I sure as hell don't have the expectations or make the judgements that you're now trying to attribute to me. It's pretty pathetic really....Strangely enough I haven't purchased 393 crumbed butterfish meals from my local fish and chip shop over the last 7 years. But when I do I'll be able to pull out cold hard data to refute misinformation that might be pedalled around by ex-pats who have no idea about Australian domestic fish and chip pricing.

medhead, I did not lash out in anger - anger is the last thing I feel in these discussions - I truly enjoy them

you have a constant issue that people do not understand you - maybe I am one of the slow crowd, but to ME, I interpret your posts as meaning that in some way you disapprove of Qantas airfare price increases that go over basic inflation. Is this the case or not? Sorry, I do not now know if that is what you want to convey or not?

.... to have disproved your feelings.....

sorry to have a gentle dig, but "disproved your feelings" ??? Please think about what you wrote. As someone who surely has a decent grasp of both the English language and of logic, are you really saying that you can "disprove" another persons "feelings"?

 

[dajop]

Your reply to my observation is to tell me to stop whinging about a 3% fare increase. Refuting your view about the size of the fare increase is in no way a judgement about how much Qantas should increases fares. It is a matter of correcting wrong information.
.

Where have I said specifically to you "stop whinging about a 3% fare increase"? And where did I say "stop whinging" to anyone? I did mention that I find it amusing people complain about fare increase yet continue to fly Qantas for a range of reasons .... in any event that was more in relation to JohnK's comments , so if he wants to have a go at me for this, fair cop, I'll take that on the chin.

 

[Limewood]

No doubt with this massive profit, Al and the board will stop charging the outrageous fees for award flights and fix the award booking pages

 

[juddles]

No doubt with this massive profit, Al and the board will stop charging the outrageous fees for award flights and fix the award booking pages

I suspect the first use of a "massive" profit should be to first maybe payback even more "massive" losses?

 

[anat0l]

I suspect the first use of a "massive" profit should be to first maybe payback even more "massive" losses?

Well, we have a problem between:

• Stocking hay while the sun still shines (i.e. low fuel prices)
• Capital expenditure (new planes, new products, new routes)
• Employee demands (inevitably, wages will need to rise, and the workers won't hesitate to use the profit announcement to their advantage)
• Keeping a tab on debts

There's likely something I've missed there.

 

[Limewood]

I suspect the first use of a "massive" profit should be to first maybe payback even more "massive" losses?

and more bonuses to all .

 

[JessicaTam]

Well, we have a problem between:

• Stocking hay while the sun still shines (i.e. low fuel prices)
• Capital expenditure (new planes, new products, new routes)
• Employee demands (inevitably, wages will need to rise, and the workers won't hesitate to use the profit announcement to their advantage)
• Keeping a tab on debts

There's likely something I've missed there.

Ramping up the competition with VA again?