What Qantas should do (and not do) next
07 Nov 2011
Professor Geoffrey I. Crouch
This opinion was originally published in the Sydney Morning Herald 4 November, 2011.
Now that Alan Joyce has been grilled by MPs, it's time for Qantas to start repairing the damage. To start, ditch the I Still Call Australia Home campaign.
The decision by Qantas chief executive Alan Joyce and the board to last weekend suspend all flight operations and ground all aircraft around the world with little warning was astounding from every angle. It was as if Joyce and the board said to themselves: ''If it wasn't for those damn employees and customers, boy could we run a great airline!''
The negative impact of this for Qantas's reputation is clearly massive in the short term. The question, of course, is can they recover? Time will tell, but it is possible to identify some of the things that Qantas should not do, should do, and might seriously consider.
In the ''should-not-do'' category, it is likely that never again will we see the ''still call Australia home'' advertisements. Clearly, to run these ads anytime soon would merely bring a sour taste to the mouths of all Australians. Qantas have made it clear that they plan to Asian-ise. This advertising strategy has now passed its used-by date.
They should also not put Alan Joyce in front of the cameras for a very long time. To do so will only remind Australians of his central role in the action of Qantas — he told the Senate inquiry today that the decision to ground the planes was his alone. There is probably no need to paint over the words, ''Spirit of Australia'', on Qantas aircraft, but they should avoid directly referring to these words also in their promotional efforts.
In the ''should-do'' category, Qantas has to compensate those affected quickly and generously. Words of apology are not enough. The email sent from Joyce to Qantas frequent flyers did no more than to say sorry, blame unions, and promise that things would get back to normal soon. Given the unprecedented disregard shown by Qantas to its customers, thanking them for their patience and continued support hardly seems commensurate with the action taken.
And in the ''might-seriously-consider'' category, the reputation of Joyce, in the eyes of Qantas customers and Australians in general, is in tatters. Many people will have taken some joy in witnessing the grilling of Joyce by MPs today. As long as Joyce remains chief executive at Qantas, he will be forever a reminder to Australians that Qantas is hardly now the Spirit of Australia.
Qantas must also go back to its core values. As Qantas is not a low-cost airline, to maintain a sustainable competitive advantage it must be able to offer customers a level of service that differentiates the airline from competitors in the mind of air travellers so that they are prepared to pay a higher price.
To date Qantas has largely succeeded with this strategy as a full-service airline in a highly competitive marketplace. For Australians, the airline has been a national icon proudly displaying the flying kangaroo and emblazoned with the "Spirit of Australia". It promoted itself heavily by associating the airline with our sporting champions and events. For international air travellers, Qantas is respected for its Aussie friendliness and reputation as the safest airline in the world.
Flying on an airline, however, is more than a service – it is an experience.
For Qantas, the quality of that flying experience is more critical to their success than almost every other airline in the world. The long-haul distances Qantas must fly heightens the importance of comfort, reliability, and service. Of course it also heightens the importance of price as well, but the evidence suggests that international travellers to Australia are far more concerned about comfort and reliability than they are about marginal differences in the price of the airfare.
Whenever research has investigated the attractiveness of Australia as a tourist destination, the results have found that Australia is one of the most desired international destinations in the world.
Yet, Australia actually receives a relatively low number of international visitors despite its inherent attractiveness. Canada, which shares a common border with the US, receives each year about 12 million American visitors. By comparison, less than half a million Americans visit Australia each year. The thought of flights lasting up to 24 hours, and the hassle of airport check-ins and transits is enough to deter millions of visitors to Australia even when the cost of the airfare is not an obstacle. The action by Qantas has now heightened this barrier and reminded people around the world that it is too much hassle to travel that far.
What occurred last weekend has demonstrated most powerfully to Qantas customers and frequent flyers, the Australian tourism industry, all Australians, and those businesses around the world that share a commercial relationship with the airline, that Qantas will pursue what is felt to be in their own self-interest with little regard to the impact on others.
Qantas must move beyond this dispute as quickly as possible if it is to have any chance of recovering some of its reputation. While it drags on, it will continue to be in the news reminding Australians of their treatment and disdain by the airline. From that point in time, Joyce might then become Qantas's greatest liability. The board showed ruthlessness in its agreement with Joyce's decision to ground Qantas. Will the board then be equally ruthless in saying to Joyce that it is now time he moved on?
Geoffrey I. Crouch is Professor of tourism policy and marketing, faculty of business, economics and law at La Trobe University.