Qantas Says It Does Not Want An Australian Monopoly

In the last two months, Australia’s two big airlines have taken divergent paths. Qantas has channeled Charles Darwin…

Qantas Says It Does Not Want An Australian Monopoly

In the last two months, Australia’s two big airlines have taken divergent paths. Qantas has channeled Charles Darwin and adopted the survival of the fittest mode – easy enough to do when you are among the fittest. Virgin Australia, in contrast, took the “we are all in this together” approach.

Qantas is making pro-competition noises, but a lot of people think it would prefer a monopoly environment. Photo: Andrew Thomas via Wikimedia Commons.

Qantas’ tone hasn’t won it many fans. Virgin Australia struck a gentler approach, but that airline is in voluntary administration now. There’s probably a lesson in that somewhere.

Two different messages from two different airlines

The difference in tone and message from the two airlines has been one of the defining features of Australian aviation as this crisis has unfolded.

It’s fair to say the two competitors have never been friends. The two CEOs came together in a rare joint appearance last year to campaign against the high fees imposed by local airports. Since then, it’s been gloves off.

In mid-March, Qantas CEO Alan Joyce gave a wide-ranging interview to Sky News. He was asked about government support and bailouts for airlines, including Virgin Australia.

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Qantas’ Alan Joyce and Virgin Australia’s Paul Scurrah in a rare moment of co-operation last September. Photo: Getty Images.

Mr Joyce said it was not the role of government to prop up poorly managed companies backed by Singaporeans, the Chinese, Abu Dhabi, and a British billionaire – a reference to Virgin Australia.

“With good companies that have managed their position very well, the Government should let them manage their way through this and not look after the badly managed companies that have been badly managed for ten years, that have resulted in them being very weak.”

The Qantas boss firmly rebuffed calls regarding government assistance or nationalizing Virgin Australia.

“The Government can’t do everything, and it has to allow the healthy companies, like Qantas, to look after itself, get through to the other side, and then help the country get back on its feet. It can’t pick winners and losers, and it has to be equal to any company in any sector.”

The survival of the fittest theme in the eight-minute interview caught a lot of people’s attention. At a time when Virgin Australia was struggling for survival, the comments at best were ill-considered. One newspaper report referred to Alan Joyce’s bloodlust for Virgin Australia.

Qantas softens its tone

Since then, things have been quieter at the Qantas HQ. Perhaps they were relieved at not being the usual center of attention. Maybe they were chilling drinks. Who knows. Then yesterday, when Virgin Australia slid into voluntary administration, Qantas issued this statement.

“This is a very tough day for all the people at Virgin, and the thoughts of everyone at the Qantas Group are with them. Their hard work has brought more competition to the market, which helped create Jetstar and ultimately pushed Qantas to do better.”

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The tone from Qantas has softened over the last day or two. Photo: Qantas.

It’s a lot more esprit de corps than you usually get from Qantas. In fact, it’s quite the turn-around from the survival of the fittest tone Qantas has been adopting over the last couple of months. Qantas has been aggressively individualistic as this crisis unfolded. That’s fair enough, it’s not illegal, and you can do that when you are in a position of strength in a crisis.

It’s just that it makes yesterday’s help-my-fellow-man olive branch a little hard to swallow. Qantas went on to say in its statement;

“Like everyone else, we want competition to continue. The fundamental strength of the domestic travel market in Australia means that is inevitable. So, when people start to travel again, we look forward to competing once more and continuing to serve Australia.”

A monopoly won’t fly even if Qantas might like to give it a whirl

A lot of people think the Qantas CEO would love to have the aviation sandpit to himself. Think of the efficiencies and revenue drives he could implement. Sure, Mr. Joyce would take some flack, but he seems to thrive on flack.

But a monopoly is never going to happen. It is not something the market would tolerate. As it stands, Virgin Australia looks like getting back in the air again, one way or another.

The present situation doesn’t give Qantas much choice but to soften its rhetoric, extend its sympathies to a competitor it loathes, and make pro-competition noises.

But are people buying it? What do you think? Would Qantas prefer to operate in a monopoly environment or a competitive environment? Post a comment and let us know.

Source : Simple Flying More   

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South Africa Eyes New National Carrier From SAA Remains

We’ve all joked about how it’s impossible to kill off South African Airways, the Alitalia of the southern…

South Africa Eyes New National Carrier From SAA Remains

We’ve all joked about how it’s impossible to kill off South African Airways, the Alitalia of the southern hemisphere. But it seems not even SAA can weather the 2020 aviation crisis. The airline had suspended all international and domestic flying in late March, and the South African Government has discontinued financial support, crippling the carrier. But phoenix-like, the government is already busy working to ensure a new carrier emerges from the ashes of SAA.

The South African Government is working on a new airline should SAA fail. Photo: Alex Beltyukov via Wikimedia Commons.

With a history tracing back to 1934, the South African flag carrier flew to six continents in its heyday. But the government-owned airline has frequently struggled to make a profit. Longstanding government interference, mismanagement, and poor business practices have exacerbated SAA’s woes.

For some time, the airline has relied on financial assistance from the government to keep operating. The South African Government has poured more than USD$1.1 billion into the airline over the past three years.

The South African Government turns off the funding tap

Now, the South African Government has turned that tap off. SAA has been told there will be no more funding from the government, no more lending guarantees, and foreign financing of a rescue plan will not be allowed.

All of SAA’s 5,000 odd employees are due to have their employment terminated by the end of April. The airline’s administrators say this is by mutual agreement.

Adrian Saville, the founder of Cannon Asset Managers in Johannesburg, told Quartz Africa this week;

“For all intents and purposes, [SAA] has already collapsed. As it stands, it is very difficult to come to any conclusion other than its days are done in its current format.”

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All of SAA’s domestic and international flights are now suspended. Photo: Aero Icarus via Flickr.

But Reuters is reporting that South Africa’s Public Enterprises Ministry is saying that the South African Government and various unions will team up to ensure that a “financially viable and competitive airline” rises from the remains of SAA.

It is a sharp turnaround for the South African Government. Earlier this year, the government set aside USD$863 million to repay guaranteed debt at SAA and was expecting a further call for funding.

No airline ready to step into the breach

But Corona is impacting all sectors of the South African economy, not just SAA. It is causing the government to refocus its thinking about SAA. However, the closure of SAA isn’t without its problems. Ogaga Udjo, founder of ZA Logics, an aviation consultancy in Johannesburg, says;

“If SAA were to collapse tomorrow, there would be no other local airline that could immediately take up its place.

“The business case for a strategic equity partner still holds, but the corporate structure and subsequent dynamics will have to be ironed out in order to provide any partner with confidence to invest in the entity. The future of SAA is fully dependent on political will.”

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It has been a big fall for an airline that was once one of Africa’s best. Photo: Aero Icarus via Flickr.

The South African Government is being vague about what it plans to do with South African Airway’s assets. It isn’t keen on outside investment, but even if it was, would anyone tip money into an airline widely regarded as a basket case?

Moving forward, we could be looking at a half baked State-owned airline relying on old SAA assets that lurches from crisis to crisis. It’s a significant fall for an airline that was once the best in Africa.

Source : Simple Flying More   

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