Adele Ferguson has a good take on the travails of Qantas this afternoon:
Alan Joyce’s series of phone calls to the treasurer, minister for transport and opposition leader minutes after issuing a statement to the ASX that Qantas would book massive losses and be forced to slash another 1000 staff was designed to ramp up the pressure on the government to pull out all stops to help it out and in the process crush its competitor Virgin Australia.
…Joyce believes a key reason for the problems at Qantas are Virgin and its dumping of capacity on the market and the resultant airline wars. What he doesn’t say is his own line in the sand of 65 per cent market share has driven much of the capacity war. Interestingly it is Qantas that the ACCC is investigating whether it is abusing its market power by insisting on maintaining a 65 per cent share of the domestic market.
The airline industry is a tough game but Joyce hasn’t made it easy for himself. Qantas is far bigger than Virgin but he has allowed the airline to outwit him every step of the way. If this latest demonstration of the pain Qantas is suffering doesn’t work, his next card might be to threaten to close international and the many thousands of staff.
He could also float the frequent flyer program but that would severely dent the net present value of the airline. Such is business. Lift the foreign ownership restrictions and liberalise all routes. Let ’em fight for our business.
