Photograph: Joel Carrett/AAP
Perhaps it is a measure of how far Qantas has fallen when this week’s news of legal action that could see it face hundreds of millions of dollars in fines prompted an almost gleeful response from airport bosses and aviation leaders .
Indeed their delight says much about the bitterness that has developed within the industry and among some of the Australian public towards the national carrier.
After all, it felt like Qantas had been brought back down to earth.
But many may question how it ended up like this – a national carrier that projects a warm image of domesticity and kinship is being portrayed as a villain who preys on its customers to extract more profits. has been accused of cheating.
And while the outgoing CEO, Alan Joyce, may be best remembered by the board for fathoming the end of his 15-year tenure and delivering barely credible profits, he better be on his way out when he finishes in November. can be known. Bumper pay packet – expected to be $24 million – while the Qantas brand is in trouble,
RELATED: One in 10 flights between Sydney and Melbourne has been cancelled. Is slot hoarding to blame?
Qantas, still riding high after announcing a record profit of $2.47 billion seven days ago, collapsed on Thursday morning when the Australian Competition and Consumer Commission (ACCC) dropped its bombshell.
The watchdog was investigating Qantas’ cancellations and has decided to take the airline to court, alleging it was false, misleading or deceptive in advertising and selling tickets for more than 8,000 flights between May and July 2022. conduct, which had already been canceled by the airline. its system. Simply put, the allegation was that it sold seats on planes that were never going to take off.
ACCC chair Gina Cass-Gottlieb later said she wanted to see Qantas fined hundreds of millions of dollars – at least double the current record fine of $125 million. She wanted to convey the message that companies cannot continue to violate consumer law knowingly keeping in mind the possible penalties as the cost of doing business.
While the ACCC’s action focused specifically on Qantas’ behavior after making the decision to cancel services, aviation insiders were more motivated by the watchdog’s other findings.
Through a thorough examination of Qantas’ cancellation data, which included the airline’s service with mandatory information notices, the ACCC found that during the three-month inquiry window, the airline canceled approximately 15,000 out of 66,000 domestic and international services About one in four flights.
The ACCC also alleged, “These cancellations were made for a variety of reasons, including reasons within the control of Qantas, such as network optimization, route clearance or maintaining take off and landing slots at certain airports.” Cass-Gottlieb confirmed that this includes Sydney Airport.
RELATED: The ACCC says Qantas should be fined ‘hundreds of millions’ if guilty of sending messages to companies.
For Geoff Culbert, CEO of Sydney Airport, the ACCC’s allegations appear to vindicate his long-standing complaint – shared by a broad chorus in the industry and independent reviews – that Qantas and its budget carrier , Jetstar, are strategically scheduling and then canceling domestic flights. of Sydney Airport to prevent competitors from launching rival services.
Qantas strongly denies that it engages in a practice known as “slot hoarding”, instead pointing to weather and other operational reasons for canceling flights.
The ACCC said the alleged breaches were not related to improper cancellation of flights.
While the ACCC’s findings did not go so far as to suggest a motive for Qantas’ behaviour, Culbert claimed that its investigation justified calls for urgent reforms to police slot abuse and enforced enforcement that “punishes abuse”. Is”.
“We’ve been highlighting cancellations and delays for six years now,” Culbert said. “These allegations provide even more justification.”
James Goodwin, CEO of the Australian Airports Association, said the allegations of ACCC’s misleading or fraudulent conduct “repeat what many have been raising for some time”.
Qantas CEO Alan Joyce (left) and Jetstar CEO Stephanie Tully during the Senate Committee on Cost of Living. Photograph: Joel Carrett/AAP
Just days before the ACCC bombshell dropped, a furious Senate committee heard from CEO Alan Joyce about the cost of living. He was summoned to appear after the requests were denied and questioned on everything from his eye-watering bonuses to lobbying against the expansion of Qatar Airways.
During this several times angry hearing officers strongly denied the allegations of so-called “slot hoarding”.
He attributed the high cancellation rates out of Sydney – about one in 10 flights on routes to Melbourne and Canberra – to weather, air traffic and operations.
On Tuesday, Qantas General Counsel and Group Executive Andrew Finch began his appearance at a separate parliamentary inquiry saying: “We completely reject these claims.” [of slot hoarding] Which are circulated without any evidence.”
But following the ACCC’s allegations regarding deceptive or fraudulent conduct, Qantas’ media response appeared far less brazen, stating that it “takes these ACCC allegations very seriously”.
It was a somber tone compared to Qantas’ usual response to the legal action. Last week, when a class action lawsuit was filed seeking refunds and interest on money earned from Covid-related cancellations, its PR machine said that “we completely reject these claims”.
‘They got comfortable and lost contact’
The ACCC launched an investigation into the Qantas cancellations following a spate of complaints.
Qantas was the company most complained about in the last two financial years, the ACCC said, and last year 50% of those complaints – around 1,300 cases – were related to canceled flights.
Consumer experts say Qantas’ reputation is slowly declining, and this is due not only to its focus on delivery for shareholders rather than the customer experience, but also to the nature of Australia’s aviation market Has happened.
Qantas operates 66% of domestic aviation together with budget carrier Jetstar. Gerard Brodie, president and former chief executive of the Consumers Federation of Australia, argues that with no dedicated ombudsman for the industry, there is little incentive for airlines to take complaints seriously internally, and the ACCC’s involvement There is no middle ground to raise the issues first. Consumer Action Law Center.
“Competition plays a really important role in not only driving up prices but making businesses more responsive to customer needs and good service,” Brody said. He said less competition and a lack of consumer protections in aviation had created a “level of mistrust”.
Brodie said of the allegations, “There’s not a lot of love for Qantas in the community… It’s a real blow to its reputation.”
Tom van Laer, associate professor of narratology at the University of Sydney, said the ACCC’s allegations alone would not easily allow Qantas to recover the damage to its brand.
Van Laer said Qantas running ads showing its role in family reunification, as well as attempting to promote an image of being highly profitable, had also contributed to the gap in expectations. “They’re driving hearts with their ads and making billions in profit, but then customers are faced with cancellations and poor service.”
“They became comfortable and lost touch with the difference between what they were offering and what they were delivering.”
RELATED: Qantas record profit: joy for shareholders, disbelief and derision from customers
Van Laer said, “Everyone has a Qantas horror story now, it’s not something you can fix with a clever corporate ad.”
Qantas aviation analyst and former chief economist Tony Weber says the company’s strategy in recent years appears short-sighted.
“Their focal point is value and earnings, making shareholders happy at the expense of those who consume their product,” he says.
“They’ve struck a really good balance between shareholders and passengers over a long period of time, but this has over-exposed the shareholders and they’re paying the price.”
‘They play really hard ball’
If the allegations are proven, Weber said that although the airline could easily pay hundreds of millions of dollars in fines and still be very profitable, executives would now worry about customers turning to it and shareholder panic.
In the week to Friday afternoon, Qantas’ share price had fallen more than 6.5%, and was trading at its lowest point of the year.
“Yes $250m is a big amount but it can have a huge impact on earnings [if] Brand takes a hit.
“The management and the board will be really hurt, I know they don’t like the Qantas name being tarnished,” Webber said.
Within the industry, there is hope that the ACCC’s allegations will force Qantas back into line.
Among airports, Qantas is known to be a tough negotiator over fees for landing rights, and the airline’s high cancellation rates, which some allege are strategic, have become a growing source of anger.
A source requesting anonymity said, “They play really hard ball, they really use their market power in a way that airports can’t, to get the results they want and to keep their reduce costs.”
“I think a lot of people are hoping that their shamelessness will be mitigated somewhat by what has happened.”