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.
They bemoan that its flights are unreliable and expensive. They are aghast at how government protectionism has made Qantas by far the biggest airline in Australia and pushed up the price of travel. They are stunned by allegations that it sold tickets for flights it never intended to fly. They cannot square how Qantas unfairly laid off hundreds of workers, then handed out enormous paychecks to its chief executive and board directors.
Now, as the baying for blood intensifies, labor unions and lawmakers are calling on the company’s board to resign en masse.
The anger is personal for Australians, who feel profound ownership over the carrier that bills itself as “the spirit of Australia,” said Geoffrey Thomas, the Perth-based founder of AirlineRatings.com. “We’re fiercely proud of it — so we expected better of it.”
Qantas is rooted in Australian aviation history and long enjoyed a reputation for safety and comfort. Air travel is an indispensable part of everyday life in this sparsely populated country roughly the size of the United States, with some cities hundreds of miles from the next major center. Qantas operates three of every five commercial domestic flights, and signing up for a Qantas frequent flier account is a rite of passage for many.
The recent scandals, which many Australians see as betrayals, sting acutely.
Qantas posted a record profit of about $1.6 billion for the year that ended in June.Credit…Abigail Varney for The New York Times
Seeking to reassure her compatriots, Vanessa Hudson, the airline’s new chief executive, posted a video message of apology online on Friday. “I know that we have let you down in many ways, and for that I am sorry,” she said, adding: “We want to get back to the national carrier that Australians can be proud of.”
Qantas may be scrambling to apologize — but its balance books are in exceptional health. Last month, it posted a record annual profit of 2.47 billion Australian dollars, about $1.6 billion, as well as multimillion-dollar bonuses for the previous chief executive, Alan Joyce, and other top brass, and a share buyback program of 500 million Australian dollars.
Those blockbuster results have come at a cost, with the pursuit of short-term profits above all else tarnishing the brand in some customers’ eyes, said Angus Aitken, a Sydney-based stockbroker and the founder of Aitken Mount Capital Partners. “Profitability is one thing, but you also have to look after your clients.”
Investors have taken note: Qantas shares have fallen 20 percent since July.
Mr. Joyce, who is credited with turning the company around after the global financial crisis, tried to quiet the din in early September, resigning as chief executive two months before he was scheduled to step down. But since then, Qantas has not been able to move on, lurching from one challenge to the next as new difficulties seem to come to light in the Australian news media almost daily.
Despite the hits to its reputation, Qantas is well positioned for a recovery as the country’s largest carrier, aviation experts say, and with plans to introduce ultralong-range nonstop flights that will connect Australians to the rest of the world in record time on new Airbus A350 planes in late 2025. For the first time, passengers will be able to fly nonstop between Australia’s eastern seaboard and Paris, New York and London.
“It’s going to be the ultimate flying machine, and passengers are going to flock to it,” Mr. Thomas said of the new planes. In a year’s time, he said, Australians will be having “a totally different discussion about what a wonderful airline Qantas is.”
There are many hurdles on that path. One of the first big tests comes next week when Ms. Hudson, the new chief executive, begins court-ordered mediation with a labor union. That follows a finding that Qantas illegally outsourced the jobs of nearly 1,700 baggage handlers during the pandemic, in part to prevent union action. The airline, which has apologized, now faces a compensation bill of as much as 200 million Australian dollars, and calls for the board to resign.
“You have to ask yourself, where is the line?” Bill Shorten, a cabinet minister, said after the court’s decision. “If this is not it, what is the test? Is there nothing they would ever resign over?”
For as much as Australians feel that Qantas owes them something, the airline is far from being publicly owned. Founded in 1920 and nationalized in 1947, the carrier was slowly privatized in the 1990s, and only 51 percent of shares in it must be held by Australians, while the rest may be held by offshore investors. Still, the Sydney-based airline is critical to the ordinary functioning of Australian life, operating 61 percent of domestic flights.
Qantas has become a household name and maintains a very strong brand with its iconic slogans. Credit…Abigail Varney for The New York Times
After Australia closed its borders in 2020, Qantas parked its planes and limped along, propped up by almost 900 million Australian dollars in government aid. Returning to the skies was a painful process: Passengers cited poor service at premium prices, chronic luggage losses and difficulty in getting refunds for canceled flights and in redeeming vouchers and air miles.
In 2022, regulators say, Qantas advertised and sold tickets for more than 8,000 flights that it knew would never take off, a move designed to muscle out competition. The national consumer watchdog has said it is seeking a record fine of at least 250 million Australian dollars to set an example for other companies.
At the same time, the authorities have buttressed Qantas’s dominant position. This year, the federal government blocked Qatar Airways from adding more flights to Australia, on the grounds that it would hurt Australian enterprises — even though it would have most likely made flights less expensive for Australian customers. (Qantas had previously lobbied to keep Qatar from hubs in Australia’s eastern states.)
The interference is not new. Governments led by both major national parties have been “quite openly supporting a business which is patently market dominant and which is anticompetitive,” said Kyle Kimball, a commercial litigator based in Australia’s Sunshine Coast.
The relationship between Qantas and figures in government has also been criticized as too cozy. Recently, there was outrage in the domestic news media about the 23-year-old son of Prime Minister Anthony Albanese getting access to a Qantas members-only lounge that is typically reserved for celebrities, business executives and top politicians.
“To me, they’re just so intermingled,” Mr. Aitken, the stockbroker, said of the government and Qantas. “You can smell it, I can smell it.”
It is challenges like these that Qantas has to overcome to regain its status as a beloved brand.
“Reputation takes a lifetime to build and five minutes to ruin,” Mr. Kimball said. “They’re going to have to work awfully hard to rebuild that brand.”