Like many global airlines, Qantas Airways has faced pressure in the recent past with soaring fuel costs, shaky consumer confidence, and intense competition on international routes.
The Australian dollar also hit the business, with Qantas seeing labour costs increase by 50 per cent, forcing them to lay off thousands of workers. Strikes by pilots, engineers and baggage handlers in June last year also forced it to temporarily ground its fleet.
Led by chief executive Alan Joyce the company then staged a five-year plan to turnaround the airline. Qantas shed poorly performing routes and expanded into the growing Asian markets. It also announced a 10-year partnership with Emirates in September 2012.
Joyce described the airline’s new partnership with Emirates as a “milestone achievement” for Qantas, which would deliver “major benefits over many years”.
“No other two airlines in the world could do something as significant as this,” he added.
The arrangement includes changing Qantas’ hub from Singapore to Dubai for European flights, and a combined total of 98 flights a week between Australia and Dubai.
Qantas will also continue to book transition costs in the second half of 2012/13 as a result of its global partnership with Emirates. Qantas recently received antitrust approval from the Australian Competition and Consumer Commission (ACCC) on a deal allowing it to coordinate schedules, ticket prices and frequent-flier programmes with Emirates.
Comparing the Emirates alliance with its previous alliance with British Airways, Joyce said, “Our 17-year partnership with British Airways was a revelation. In a joint venture, we realised, both parties have to be equally incentivised. We have three to five times more customers with Emirates than with British Airways.”
Joyce is confident that this overall turnaround strategy will help the airline make profits on its international routes in the next couple of years.
“Qantas was always making more money on short-haul routes. In our domestic market, we have a 85 per cent corporate penetration rate. Now we’re seeing a big uptake on the European market, along with our domestic routes,” Joyce said.
Qantas is the oldest continuing operated airline in the world with 30,000 plus employees and an average fleet age of 8.3 years.