Defending Qantas: Criticism of the flying kangaroo needs some context

During the first week of the school holidays in NSW, Western Australia and the ACT in early July, Virgin cancelled 14.7 per cent of its flights and Qantas 6.7 per cent. In the last day of those holidays Virgin cancelled one in five flights out of Sydney.

The industry’s on-time performance in July was also the worst on record, with only 55 per cent of flights arriving on time. The long-term average is 81.9 per cent.

Rex’s on-time rate was 68.3 per cent, also its lowest on record. Only 51.5 per cent of Jetstar’s flights arrived on time, 53 per cent of Qantas’ and 52.5 per cent of Virgin’s.

There is a possible explanation as to why Jetstar’s performance was particularly poor. The resurgence in demand was largely for the leisure routes that it services. That may also have been a factor in Virgin’s performance statistics.

The larger point is that all of the airlines struggled to match the unexpectedly rapid rebound in demand with capabilities that had been reduced significantly in response to two years of COVID-decimated demand.

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The bigger carriers had mothballed planes, shed large numbers of staff relative to pre-pandemic levels (Virgin, coming out of administration, was in a better position than Qantas to manage its staffing requirements) and flown fractions of their pre-pandemic capacity during those two years.

Several attempts to ramp up their capacity last year were ended after abrupt lockdowns and border closures, so it’s not surprising that airline managements were cautious about re-staffing and slow to return capacity to their operations.

They were, as a consequence, caught short by this year’s increasingly buoyant demand. More passengers – 4.7 million of them – flew in July, the ACCC said, than any other month since the pandemic began.

The airlines have not been helped by rates of COVID and flu-related illness that have led to staff absences 50 per cent above their normal rates.

The Qantas group and Virgin, after initially scrambling to try to service that demand – and experiencing operational chaos and a massive backlash from their customers as a result – have significantly cut back their capacity to bring it into line with their reduced capabilities and have been adding more people as quickly as a tight job market, security clearances and the demonstrated insecurity of employment in the industry allow.

When increased demand meets reduced capacity fares rise. With the price of jet fuel in the Asia Pacific now more than 70 per cent above its level a year ago they rise a lot. The ACCC said its index of the cheapest discount fares had risen 56 per cent in the four months to August. The impact of the higher fuel costs is obviously greater on the long-hail international routes.

As the ACCC’s report says, the problems plaguing the domestic carriers – and domestic airports – have occurred worldwide. Delays, cancellations, lost baggage and staff shortages are characteristic of the global industry, not just Australia’s.

In the Netherlands, the ACCC said, almost one in ten flights were cancelled in a week in February. British Airways has cut nearly 30,000 flights from its April-to-October schedule. Weekly cancellation rates have been as high as 8.3 per cent in the US and 5.6 per cent in the UK. Airports are imposing caps on the number of flights they will allow.

Contrary to the impression the Four Corners report might have given, these are common challenges to all airlines, not just Australia’s and not just Qantas.

Qantas, because of its brand and premium pricing, has always been heavily scrutinised and held to higher standards than its competitors.

It could be argued that Qantas, and its peers here and elsewhere — cut too hard in response to the pandemic but the closure of, not just national borders but (rather erratically) state borders as well left them no option.

Even with the assistance provided by the federal government to the sector to keep at least some planes aloft, Qantas alone has lost about $7 billion over the course of the pandemic. It was, it has said, only days away from insolvency.

Globally, the industry has lost more than $US200 billion ($296 billion) and shed an estimated 2.5 million employees. It wasn’t an option to retain pre-pandemic staffing levels when their fleets were grounded and revenue was only trickling in. The industry – and Qantas and Virgin – went into survival mode.

There are indications of improvement occurring within the Australian industry. The rates of delays and cancellations are declining, as are the rates of illness and absence now that we’ve passed the winter peak of COVID and flu infections.

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Qantas, because of its brand and premium pricing, has always been heavily scrutinised and held to higher standards than its competitors. That’s reasonable and Qantas and its much-targeted chief executive, Alan Joyce know they haven’t lived up to expectations – their own or their passengers’.

If the group, and Joyce, are to be singled out for unusually vitriolic and, in Joyce’s case, very personal criticism, however, it ought to at least be recognised – which its shareholders do but Four Corners didn’t – that they have definitely not been alone.