News that Alan Joyce was bringing forward his exit as Qantas chief executive acted as a circuit breaker in what had been a wave of negative press for the airline.
After 15 years as chief executive, Joyce had been set to exit at the airline’s AGM in November – part of a carefully planned six-month transition of power to the current chief financial officer, Vanessa Hudson.
While the consumer watchdog’s announcement that it was taking legal action against Qantas last Thursday marked an end to the airline’s brazen attitude towards criticism, a number of issues simmered under Joyce’s tenure.
Qantas’ board is hoping Hudson’s reign is a chance to wipe the slate clean.
However, the airline is still in crisis mode. Here are five big issues still plaguing it.
1. The ACCC’s legal action
Perhaps a sign of just how seriously it is treating this, Qantas’ normally defiant attitude against any accusations of wrongdoing abruptly ended as it responded to the allegations from the Australian Competition and Consumer Commission (ACCC) last Thursday.
The ACCC has alleged Qantas engaged in false, misleading or deceptive conduct in advertising and selling tickets to more than 8,000 flights it had already cancelled in its system and, in some cases, taking up to 48 days to notify customers their flight had been cancelled.
Qantas could be hit with hundreds of millions in penalties if found in breach. The ACCC chair, Gina Cass-Gottlieb, has said she is hoping for more than $250m, twice the previous record for a company, to send a message to the corporate community.
Legal proceedings could also include senior airline figures being dragged in to give evidence.
2. An aviation sector fed up with Qantas
The watchdog’s in-depth investigation also revealed how Qantas has been operating its business, beyond any alleged deceptive conduct.
During the May-July 2022 period the ACCC’s allegations relate to, it found Qantas cancelled about 15,000 out of 66,000 domestic and international services – almost one in four flights.
The ACCC is also claiming that “these cancellations were made for a variety of reasons, including reasons within Qantas’ control, such as network optimisation, route withdrawals or retention of take-off and landing slots at certain airports”.
While cancelling flights for reasons within an airline’s control doesn’t breach any rules, and as such is not part of the legal action, the ACCC’s findings bolster long-held accusations from the industry about slot hoarding out of Sydney airport, where cancellation rates are so high that just under one in 10 flights to Melbourne and Canberra are axed on average.
The industry will likely feel emboldened to fight back on issues such as airport fee negotiations, during which Qantas has previously been able to outmuscle players due to its more than 60% market share of domestic aviation.
Questions about Qantas lobbying the Albanese government over its decision to reject Qatar Airways request to almost double its capacity have also opened a debate about Qantas’ political influence that has been welcomed by the industry.
3. Other legal battles
Beyond the ACCC’s action, Qantas is fighting two other legal battles.
It is currently appealing a federal court decision that it illegally outsourced the jobs of about 1,700 ground handlers. The 2021 decisions ruled the airline had acted against protections in the Fair Work Act when it terminated jobs at 10 airports amid the pandemic in November 2020.
That decision has already been upheld on first appeal and, if the high court does not overturn it, Qantas could be up for a mammoth compensation bill exceeding tens of millions of dollars.
Separately, Qantas is facing a class action lawsuit over its refund policy for flights cancelled due to the pandemic, with lawyers alleging the airline’s use of travel credits allowed them to treat their customers’ money as more than “$1bn in interest-free loans”. Lawyers are seeking compensation for interest lost on the credits.
4. Customer reputation
Perhaps the biggest issue of all is Qantas’s standing in the eyes of the Australian public.
While its safety record remains impeccable, it has been the company most complained about to the ACCC for the past two years, and its reputation took a battering after its mishandled baggage rate, poor on-time performances, cancellations and airfares hit new records in the second half of last year.
Qantas has also dropped off the list of Australia’s most trusted brands entirely. It has now entered the distrust index in the most recent edition of Roy Morgan’s rankings released last week and is the 13th most distrusted brand in the economy, held in poorer standing than its own budget carrier Jetstar.
5. Fleet issues
When she was unveiled as CEO in waiting earlier this year, Hudson addressed Qantas’s ageing fleet of aircraft as a key issue for the airline. The average age of its planes is about 15 years, up from about nine years when Joyce began as CEO in 2008.
It does have a pipeline of new planes arriving in coming years, including fuel efficient A350s which will be used on non-stop flights between Sydney and Melbourne to New York and London, as well as other new planes for long and short haul flights.
However, for now, Qantas’s fleet is significantly older than its international competitors, posing increased maintenance and running costs amid a parts shortage at the same time as aircraft manufacturers work through Covid-related delivery backlogs affecting all major airlines.
As a result of these issues and the slow process of returning aircraft mothballed in the desert during the pandemic to being ready to fly, Qantas remains capacity constrained.
While consumers are crying out for more flights, Qantas is unable to offer those seats, an issue shared by some but not all of its international competitors – Qatar Airways being one example.
