Australian tourism downturn impacts Qantas

Thursday, 27 February 2014  Features

Qantas will cut 5000 jobs, remove unprofitable routes and retire ageing aircraft in a huge shake up of its operations.

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Today’s cuts to Qantas’ network are not unexpected, according to a senior academic at UNSW’s Australian school of Business, and are far better than not having Qantas at all.

Qantas will cut 5000 jobs, remove unprofitable routes and retire ageing aircraft in a huge shake up of its operations.

Professor Larry Dwyer said “Qantas has to make decisions to its commercial interests, and it is vital that we still have a strong international airline; we are after all an island nation a considerable distance from our main partners, and building a strong, viable business is crucial for it as an airline.”

He said one big problem is that the more Qantas gets bad publicity, it erodes into its loyal customer base who have stood by it through previous downturns and strikes. “At the moment all the publicity it gets is negative. Previously with the lockout in 2011 Qantas forced many customers to try Virgin and, of course, a good percentage of those will now continue on with Virgin Australia.”

Professor Dwyer said the lessons of the Ansett collapse haven’t been learnt, or perhaps have been forgotten. “We are far too complacent and assume Qantas is, like Ansett, too big to fail. It is not. Perhaps the best thing to do would be to relax the foreign ownership restrictions: Qantas is a commercial entity, and Australia needs it to be a strong one. Maintenance jobs may move overseas, but it still sustains a lot of jobs in Australia. From a tourism perspective I’m relaxed about a change to the Qantas Sale Act - after all, it’s ​best we still have a strong Australian airline.”

Qantas will also ditch flying between Perth and Singapore later this year and retire six ageing Boeing 747s, but in a surprising move, the historical routes to London are staying. “Qantas has a long standing connection with London, and for many Australians that’s where they want to go to see family & friends. So it will continue to fly them there. The new Kangaroo route via Dubai isn’t popular – I don’t see people getting off and going into Dubai on a stop-off as they would at Singapore – but it gives direct one-stop access to a number of European cities, unlike the old system where you had to route via Heathrow, which could be a nightmare at 5am in the morning.”

The cuts on flight to Perth and Singapore are he says all to the benefit of Singapore airlines, and British Airways, which is seeing a rise in passengers who just prefer to stop off at the Lion City. However Qantas has been impacted by two changes in tourism trends.

“The old ‘rite of passage’ for Australians to save to go backpacking, taking a Qantas flight to London, and go and work in a pub in Shepherd’s Bush for a year is no longer there. The number of Australian backpackers in London has more than halved since 2006 to fewer than 15,000. Australian themed pubs in the UK have closed in droves. And Qantas sees fewer of those passengers. Australian teenagers are now much more likely to go and get a job in Sydney as a result of the GFC.”

Equally fewer European tourists are coming to London. “Recent falls in the value of the Australian dollar give the tourist industry some cause for optimism that inbound tourism numbers will grow, but it’s been bad of late. Australia was just too expensive for many tourists.”

Professor Dwyer, who is also President of the International Academy for the Study of Tourism, said “the fact is that the dollar still remains relatively strong against the currencies of many of Australia’s competitor destinations. And it is that historically high level which deters tourists in coming to Australia, and that’s a key reason why Qantas’ passenger numbers have taken a downturn.”

For further details, contact
Professor Dwyer on 0439 648892, or 02 9385 2636 or l.dwyer@unsw.edu.au


Media contact:
Julian Lorkin: 02 9385 9887

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