Big mistake that wounded Qantas and its brand

Fuelled by accusations of ripping off loyal customers in favour of record profits and huge executive payouts, the flying kangaroo is left with a mountain to climb as dissatisfaction turns to uproar and shareholders put the company on notice.

While new chief executive Vanessa Hudson apologised to customers upon stepping into the role in September, there’s a long way to go before Qantas will “get back to the national carrier that Australians can be proud of”.

“I know that we have let you down in many ways,” Ms Hudson said in an apology video to customers.

But with such a huge fall from grace, experts are predicting there’s a hard road ahead if Qantas wants to be forgiven by the Australian public.

HIGH PRICES, LOW SATISFACTION

While consumers have a plethora of reasons they are unhappy with the airline, most of the ire is directed toward the high price of airfares coupled with the reduced number of flights and headaches around queues and baggage delays during post-pandemic travel.

Perceptions of poor customer service, delays, cancellations and rising prices caused the Qantas brand to nose dive, dropping from the ninth most trusted brand in the country to 40th in just three months to December 2022, according to Roy Morgan.

The airline has managed to return to pre-pandemic levels of tardy and cancelled flights, but many customers remember the times in 2022 when Qantas had nearly 50 per cent of its flights arrive late and seven per cent of flights cancelled.

Aviation experts pointed to 9800 job cuts amid the pandemic as a catalyst for the poor service outcomes, with the airline coming under fire for axing nearly a third of its workforce in a 2020 restructure.

The negative press will need significant investment to counter according to Brand Finance managing director Mark Crowe, beyond its plans to create over 8500 new jobs in the next decade, arguing the brand must focus on quality and customer experiences.

“What Qantas has got to try and do is ensure negative perceptions don’t become convention around actual behaviours and decision making,” he said.

“There’s going to be pressure in terms of people are more likely to consider alternative air travel options.”

His call was echoed by consumer psychology professor at UNSW Nikita Garg, who said that Qantas’s slick advertising campaigns “wouldn’t cut it” with customers.

“What they need to do is come up with some sort of a promotion brand building promotions, for example inviting customers to some special event [or promotion],” she said.

The airline apologised to workers after losing its appeal of a Federal Court ruling that found the airline had illegally sacked 1700 ground crew workers during the pandemic, outsourcing the jobs of baggage handlers and cleaners at 10 airports.

While Qantas accepted the decision after losing twice in court, the airline maintained the decision was made to ensure the survival of the company mid-pandemic, rather than as an attempt to fend off industrial action.

“Borders were closed, lockdowns were in place and no Covid vaccine existed,” the Qantas statement said.

“The likelihood of a years-long crisis led Qantas to restructure its business to improve its ability to survive and ultimately recover.”

ALAN JOYCE

Another issue high up on the list of gripes many customers have with the airline is the generous payouts given to former chief Alan Joyce and other executives while Qantas’ image was circling the drain.

Despite the board being urged to dock Mr Joyce’s exit pay packet, he is still set to walk away with $21.4 million for his final year with the company if the board chooses not to claw back $8.3 million in bonuses and a $2.2 million short-term payout.

While there is an argument for Qantas to remunerate Mr Joyce on the success of the brand, which recently boasted record level profits, Mr Crowe argues some do not think that he should be rewarded when customers are unhappy.

“Obviously there’s a focus on how much Qantas is remunerated people for what often they may see is performance that doesn’t justify those salary levels,” he said.

Ms Garg said that there was still lingering resentment toward how much Mr Joyce was paid in his years at the company, arguing he had taken a “golden parachute” out of his position which many customers saw as a “slap in the face”.

“He’s just rode off into the sunset. They need to make the senior front and centre just like Alan Joyce was, where he was negative, they need to be positive,” she said.

COURT CASES AND GOVERNMENT COMPLICATIONS

Qantas is currently in the midst of legal action lodged by the Australian Competition and Consumer Commission (ACCC) after it allegedly sold tickets on 8000 cancelled flights between May and July 2022, with the commission pursuing $250 million in penalties for the “ghost flights”.

The airline has rejected the consumer watchdog’s allegations that the ghost flights had been advertised and sold for an average of two weeks after they had already been cancelled, arguing that no airline could “guarantee” that flights are operated at their scheduled time.

The case resumes in February next year.

“We reject the notion of ghost flights because people who paid for a flight were given a flight or a refund. This was not a case of ‘fee for no service’,” Qantas said in its defence.

Not only is Qantas under fire over customer satisfaction but also for its seemingly cosy relationship with the federal government, including questions over whether Prime Minister Anthony Albanese’s son was gifted a place in the highly-coveted Chairman’s Lounge.

The Commonwealth and Qantas came under a high level of scrutiny in September over the government’s decision to bar Qatar Airways from operating 28 more flights to Australia, which is estimated to have generated hundreds of millions for the Australian economy.

While a plethora of confusing and often opposing reasons for the decision were given by Transport Minister Catherine King, the overwhelming accusation that many now believe to be true was that the government had chosen to protect Qantas from increased competition. Ms King and the Albanese government remain firm that the decision was made in the “national interest”.

BIG PROFITS

The scandals did not stop Qantas from recording the largest profit in its 123-year history this financial year, raking in $2.47 billion.

Normal circumstances would see board members and shareholders over the moon at such positive results, especially after a difficult few years through the pandemic, but with consumer sentiment turning against the airline, things changed.

The wrath over flight credits, high prices, ghost flights and Alan Joyce was reignited with the news, exacerbating an already tense relationship between Qantas and its customers.

It renewed calls for Qantas to repay the taxpayer over the billions it received from the federal government’s JobKeeper program, claiming $160.5 million in the 2020 financial year and another $695.5 million in the 2021 financial year.

Shareholders overwhelmingly decided to send a “clear message” to Qantas over the months of scandals, with over 80 per cent of members rejecting the airline’s remuneration report in early November in one of the biggest protests in Australian corporate history.

Labor Senator Tony Sheldon characterised the vote as “another week of horror at the airline, with arrogance and platitudes in abundance”.

“The overwhelming 83% strike against Qantas’ remuneration report sums up the near-unanimous disdain that the Australian public and workforce has for the Qantas board and its executive,” he said.

A BRAND IN TROUBLE

The series of scandals has caused the brand to take “a bit of a battering” according to Finder editor-at-large Angus Kidman.

“People weren’t impressed, people haven’t liked the way that the staff had been treated. They felt like, after paying for expensive flights for such a long time [after the pandemic], there was a bit of a disconnect going on there, and then all the ACCC stuff and looking into the allegations of phantom flights.

“That definitely hurts and it’s very hard for anything like that to sound good and the excuses Qantas gave for that weren’t good.”

Not only has Qantas’ brand suffered under the series of scandals, but the “reactive” reaction from the business has worsened public perceptions according to Ms Garg.

“I think they’re scared because they don’t want to make a misstep, which is, to a certain degree, understandable, but they have the resources to get the right help to navigate out of the situation because what they’re doing is they’re leaving consumers to themselves, and letting them think whatever they want,” she said.

“This kind of reactionary sort of response to negative PR is never a good look and doesn’t bode well for the brand.”

With their brand satisfaction now in the toilet, there are concerns that Qantas has harmed its dominance in an increasingly competitive landscape.

“The minute competition goes up, if Qantas does not handle this well, they will suffer because customers are not going to stick to you if there’s something they’re not happy with,” Ms Garg said.

“If they lose the younger generation, the problem is people tend to stick with the brands that they gravitate to earlier in their lives.”

A CHANGING TRAVEL LANDSCAPE

Mr Kidman predicts that the domestic landscape will not change much in the next few years but flagged there was room for “aggressive competition” over international flights in coming months as more airlines return to pre-Covid capacity.

“If you fast forward into the second half of next year over to the end of 2025, I think we’ll see more price competition that will probably force Qantas to have some more sales,” he said.

“There are glimmers of hope for people who want to fly in terms of getting better fares and as their competition increases, Qantas will need to make sure it is part of that conversation.”

As the biggest airline in the country with the largest loyalty scheme, there’s little chance that Qantas will relinquish its dominance overnight according to Mr Kidman.

“I think they’ve got some capacity to weather the storm. If they start behaving a bit, in six months’ time people may not be as upset with them as they are right now,” he said.

“I do think that process takes time, I think when there’s been this much bruising going on, it will be a little while before people forget completely.”

Mr Crowe argued that Qantas will continue to be a major player, despite the scandals.

“Qantas still enjoys significant market share, it still has a customer base that is inclined to continue to use Qantas, so it’s very important to measure up what people’s perceptions may be against what their actual behaviour is,” he said.