Alan Joyce: Did the Australian public’s anger at Qantas motivate outgpoing boss’ early departure?

A controversial decision, a shoddy explanation and a flood of legal action have the Australian public hopping mad at the Flying Kangaroo. What should have been a pivotal turnaround for Qantas after posting a whopping $2.47 billion profit and an improvement in on-time performance, the national carrier has instead found itself at the centre of a huge public backlash against a botched refund system and a controversial decision by the Government to block new routes from one its major competitors. What was once seen as an emblem of national pride, Qantas has had its reputation as the country’s premium airline put through the wringer. In the past few days, Qantas has had to concede its refund decision on travel credits issued during the pandemic was wrong and did not meet community expectations. And the Federal Government’s move to block 28 additional flights to major Australian airports asked for by Qatar Airways has raised serious concerns about the influence Qantas has on decisions that impact the wider aviation industry — particularly when the decision could have reduced airfares that are running at double price of tickets before the pandemic. The Senate hearing from hell The visceral reactions to the airline — which was the most complained about company to the Australian Competition and Consumer Commission in 2022 — was put on full display at a Senate inquiry last Monday in Melbourne and fuelled a torrent of bad press over the coming week. Qantas boss Alan Joyce and Jetstar chief executive Stephanie Tully faced a barrage of questions and accusations about the airlines’ involvement in the Qatar fiasco, while also being grilled over their credit refund policy. Senators from across the political spectrum took aim at the pair, with shadow transport minister Bridget McKenzie criticising Mr Joyce over his personal wealth and decision to cash in shares when the airline was at its most profitable. Mr Joyce was paid $24 million this year. “It’s a very cosy arrangement that you have set up for yourself,” Senator McKenzie said. “Meanwhile, Australians can’t find their bags. We’ve got cancellations and delays particularly in and out of Sydney ... that seems very premeditated.” Labor senator Tony Sheldon accused Mr Joyce of trashing the airline’s credibility and eroding the rights of workers, while Liberal senator Jane Hume asked how the Qatar decision helped in bringing down the cost of airfares and if the top boss understood the basic logic of supply and demand. Qantas has maintained the Qatar bid for more flights would have distorted the return of more airlines to the Australian market, claiming all carriers needed to be able to return to pre-pandemic capacity before new flights were added. “We have seen that rapidly happening and so any distortion that’s a short-term fill for that before those companies get back to those capacities is an issue.” Senator Sheldon then accused Qantas of pocketing millions of dollars from travel credits, with the hearing revealing more than $500 million had not yet been refunded or used for new bookings. “We are asking questions about substantial sums of money that is owed to the Australian public that has not been paid … and you’re seriously telling the public that you don’t know how many millions of dollars are involved,” Mr Sheldon said. The backlash that followed forced Qantas to axe the December expiry date on refunds, with the airline conceding the system was fraught with problems. “We know the credit system was not as smooth as it should have been, and while we’ve improved it recently and extended the expiry date several times, people lost faith in the process.” That same credit system is also subject to a class action, which alleges the company unlawfully retained money during the pandemic from customers who had flights cancelled. Echo Law, which launched the class action, claims the COVID credits lined the pockets of the company with hefty profits. The airline has refuted those allegations, highlighting the pandemic brought on losses exceeding $7 billion. Qantas’ increased profit mostly stems from a period of high demand for travel with limited capacity that pushed up prices — prices that were also under pressure from a big hike in the cost of jet fuel. A shoddy explanation Mixed explanations by the Federal Government also put the heat on Qantas and the central role it had in influencing the blocking of more Qatar flights. Assistant Treasurer Stephen Jones raised eyebrows after attempting to defend the Government’s decision that it was in the “national interest” to protect Qantas and its profit from more competition. Mr Jones then walked those comments back, claiming he was attempting to illustrate the need to retain a viable aviation market in Australia in the medium and long term. But the damage was done. That set off a number of business leaders, industry experts and commentators about whether it was the Government’s role to prop up private companies and if the Qatar ruling would have affected competition. Virgin Australia chief executive Jayne Hrdlicka was left baffled by the comments, saying: “Every CEO in the country was disappointed to learn that there’s one company in the country that should be protected.” Former ACCC chair Rod Sims argued the move would have put downward pressure on fares. He said the Government’s decision — which went against the department’s advice — would hurt overall competition in the sector, particularly for high-demand services through to Europe. “I think it needs to change and what we see now, particularly in Australia, is very high airfares internationally and not enough capacity,” he said on Wednesday. “If there was a time to allow new entrants in — this is it.” Flight Centre boss Graham Turner also flagged the Qatar deal would have helped alleviate pressures caused by the natural year-on-year growth in overseas travel demand from Australia. He said the exorbitant fares were only benefiting the airlines and would only get worse while capacity remained constrained for both Christmas and the European summer, which next year included the Paris Olympic Games. But the pressure on the Government has largely centred on the decision made by Transport Minister Catherine King. Prime Minister Anthony Albanese — who was laughing it up with Mr Joyce at a Yes Voice to Parliament Qantas launch last month — attempted to distance himself from the fiasco and said the decision was made by the minister and never brought to Cabinet. Ms King has not yet explained her decision. The national carrier had placed a formal submission against the Qatar deal on the basis it would distort the sector’s recovery. However, it is understood the decision largely stemmed from information provided to the minister’s office from the airline. This fuelled calls from Qatar’s airline partner Virgin for a review. “If the facts were on the table, this would be a different decision,” Ms Hrdlicka said on Tuesday. “I think there may have been late information coming in from Qantas to try and stop this and there wasn’t enough information provided to help balance out … an invested view.” Qantas has largely tried to defend the Government’s wording around why it was important to protect the sector in the national interest when traffic rights through bilateral agreements are granted. Virgin airstrike Qantas’ major domestic competitor, Virgin, has been front and centre in putting the heat on over the Qatar decision, particularly around how it would have dramatically eased the cost of a ticket. Ms Hrdlicka spent the week arguing the 28 additional flights from Qatar using its spare Airbus A350s would have brought down the cost of international airfares about 40 per cent. That figure has been disputed by a number in the industry, but Ms Hrdlicka said the counter-arguments made by Qantas on market distortion and capacity recovery were “nonsense”, and were more about protecting its revenue and partner airline Emirates. “Qantas says that it’ll take until 2028 for those (pre-COVID) seats to recover,” Ms Hrdicka said. “The reality is that many of the airlines that provided those seats pre-COVID won’t recover that capacity back into Australia. “Qantas and Emirates together as partners have roughly a 45 per cent share to Europe over the Middle East, and Qatar has about 23 per cent and would add maybe 2 per cent share to their total of the capacity between here and Europe by adding these additional services. “So there’s no market distortion that can be argued as a reason not to add Qatar’s flights.” Virgin’s top boss also claimed preventing the flights would cause the Australian economy — particularly the tourism sector — to miss out on $500 million a year. “So, $500m out of the economy in this decision means less jobs, less opportunity and denied growth for a part of the economy that suffered most during COVID,” she said in a video that was shared internally across Virgin. “Qatar is one of the only airlines in the world that could overnight put four additional services per day into Australia — and for some reason, they were denied.” Virgin does have skin in this fight. Its code-sharing arrangement with Qatar is a selling point for its network and loyalty program. The airline’s corporate affairs executive Christian Bennett highlighted the decision only benefited Qantas and reduced competition in the international sector. Perth Airport highlighted it had the capacity to take on more flights and slammed the Government for not considering what it would do for tourism in the State. “We’re closer to 60 per cent of the world’s population and we’ve got this really unique opportunity with direct flights across into Europe and certainly across most of Asia,” acting Perth Airport chief executive Kate Holsgrove told The West Australian. In light of the decision, the Australian Airports Association has asked for the return of airline monitoring by the ACCC, which ended in June. Ghost flight allegations Aside from the backlash on credit refunds and its involvement in the Qatar debacle, the airline was hit by a wave of new allegations about selling customers tickets on cancelled flights. The Australian Competition and Consumer Commission launched fresh legal action against Qantas for allegedly selling seats on cancelled flights and then not telling passengers of the change in time. The consumer watchdog alleges 8000 flights scheduled between May and July last year were still being advertised for sale up to two weeks after the flights had been cancelled. In some instances, it has been claimed, tickets on cancelled services were still being sold for up to 47 days, while some passengers were only notified of the cancellation two days before the flight was scheduled to take off. ACCC chair Gina Cass-Gottlieb said customers were given less time to make alternative arrangements, which may have led to them paying a higher price to rebook. “It’s not about the circumstances that occurred as to why they decided to cancel,” she said. “It’s what they did next in the engagement with consumers that the case is following on.” Ms Cass-Gottlieb on Friday revealed the regulator would be seeking a penalty of above half a billion dollars in order to deter other companies from similar action. “We are going to seek a penalty that will underline that this is not just to be a cost of doing business — it is to deter conduct of this nature,” she said. “The highest penalty to date against a breach of the Australian Consumer Law was $125m against Volkswagen and we consider that this should be a record penalty for this conduct.” Qantas confirmed it is looking into the allegations, which stem largely from its booking management system. Former deputy PM and ALP National President Wayne Swan called the company “arrogant” and said it was engaging in “deceptive conduct”. By Friday, Qantas’ image had been trashed. Its attempts to rebuild it after one of its worst operational years to date has fallen flat and the public has largely put the blame on one man — Alan Joyce. Mr Joyce will be out of the top job by November. Incoming boss Vanessa Hudson will have to help the Flying Kangaroo bounce back up off the canvas.