Qantas Faces Backlash from Australians Despite Profitability
Barely three years after its entire fleet was grounded, Qantas Airways has never been more profitable. But as Australia’s national airline has emerged stronger from the pandemic, it has alienated its most important constituency: Australians.
Australians bemoan that Qantas flights are unreliable and expensive. They are aghast at how government protectionism has made Qantas the biggest airline in Australia, resulting in higher travel prices. Moreover, they are shocked by allegations that Qantas sold tickets for flights that were never meant to take off. Adding insult to injury, Qantas unfairly laid off hundreds of workers while giving enormous paychecks to its CEO and board members.
As anger continues to escalate, labor unions and lawmakers are demanding the resignation of Qantas’ entire board.
The anger from Australians is deeply personal considering their strong sense of ownership over the carrier, which is famously known as “the spirit of Australia,” according to Geoffrey Thomas, the founder of AirlineRatings.com. He added, “We’re fiercely proud of it — so we expected better of it.”
Qantas has a rich history in Australian aviation and has long been recognized for its safety and comfort. Air travel plays a vital role in everyday life in this vast country, and Qantas operates three out of every five domestic flights, making it a rite of passage for many Australians to sign up for their frequent flier account.
However, recent scandals have shattered this image of Qantas as a reliable and respected carrier.
Attempting to reassure Australians, Vanessa Hudson, the airline’s new CEO, released a video apology message stating, “I know that we have let you down in many ways, and for that I am sorry.” She added, “We want to get back to being the national carrier that Australians can be proud of.”
Despite Qantas’ efforts to apologize, its financial position remains strong. Last month, the airline reported a record annual profit of 2.47 billion Australian dollars, along with multimillion-dollar bonuses for the previous CEO and other top executives, as well as a 500 million Australian dollar share buyback program.
However, this focus on short-term profits at the expense of customer satisfaction has tarnished the brand in the eyes of some consumers, according to Angus Aitken, founder of Aitken Mount Capital Partners. Qantas shares have fallen 20 percent since July as investors take note of these reputation hits.
Alan Joyce, the CEO credited with turning the company around after the global financial crisis, tried to quell the backlash by resigning two months earlier than planned. However, Qantas continues to face new challenges and scandals that are revealed almost daily in the Australian news media.
Despite these setbacks, Qantas is well-positioned for recovery, according to aviation experts. The airline plans to introduce ultralong-range nonstop flights with new Airbus A350 planes in late 2025, connecting Australians to major international cities in record time. This move is expected to significantly boost Qantas’ appeal to passengers.
However, there are numerous obstacles on this path to recovery. One of the first major challenges awaits Qantas next week as the new CEO enters court-ordered mediation with a labor union. This comes after a court ruling that Qantas illegally outsourced nearly 1,700 baggage handler jobs during the pandemic, which could result in a compensation bill of up to 200 million Australian dollars.
As much as Australians feel Qantas owes them better service, it is important to note that Qantas is not publicly owned. The carrier was founded in 1920 and was nationalized in 1947, undergoing privatization in the 1990s. Currently, only 51 percent of Qantas shares must be held by Australians, with the remaining shares open to offshore investors.
Qantas relied on government aid of almost 900 million Australian dollars while its planes were grounded during the border closures in 2020. However, the process of returning to full operation was marred by complaints of poor service, high prices, lost luggage, and difficulties in obtaining refunds and redeeming vouchers.
In 2022, Qantas faced further controversy after it advertised and sold tickets for over 8,000 flights that it knew would never happen, as a strategy to squeeze out competition. The national consumer watchdog is seeking a record fine of at least 250 million Australian dollars as an example for other companies.
Despite these issues, the government has continued to support Qantas, even blocking competitors such as Qatar Airways from adding more flights to Australia. This support, coupled with allegations of a cozy relationship between Qantas and government figures, has led to criticism of anticompetitive behavior.
Rebuilding the Qantas brand will be an arduous task, as reputation takes a long time to build but can be tarnished in an instant. Qantas will need to work diligently to regain the trust and loyalty of its customers.
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