Woes could still turn up trumps
Published by the Sydney Morning Herald, June 10, 2008
GEOFF DIXON, the blokey boss of Qantas, is in his final stretch. With less than a year to go on his contract at the national carrier, he should be basking in the glory of having run one of the world’s most profitable airlines during a period of unprecedented difficulty.
He’s ridden through global disease epidemics, terrorist attacks and tumultuous economic times, emerging from each crisis with the airline in a strengthened position and with his leadership enhanced.
He was quick to recognise the threat discount airlines would wreak on full service operations like Qantas, domestically and internationally, and he responded with deadly accuracy.
But now nothing seems to be going according to plan.
The world economy is in the grip of an oil price shock that could make those of the 1970s look like mild tremors.
Airlines will be an early casualty and already the scythes are being unsheathed across America and Europe.
Qantas unions, meanwhile, are in an uproar over continued wage restraint proposals while the company is groaning at the seams with continued flight delays and reduced service knocking some serious dents in its once seemingly unassailable consumer loyalty.
It’s in tough times that only the truly strong survive. But the problem for Dixon and his management team is that they have cried wolf several times too often. For years, they have beaten staff over the head with dire predictions of doom about Qantas and the airline industry in general. This gave them the leeway to reduce pay and conditions and improve productivity within the airline which they, rightly, argue underpins the relative financial health of Qantas compared with its international competitors.
But it also has limited the effectiveness of the message. Frankly, no one – and particularly Qantas workers – believes a word management utters.
Geoff Dixon originally was a journalist. He rose through the Qantas ranks via the marketing and communications path, and he’s an expert in the art of massaging public opinion.
But there’s only so many times you can get away with it. Remember late in 2006, when Dixon stood arm in arm with the airline’s then chairman Margaret Jackson, as they announced the $11 billion privatisation of Qantas?
Back then, the argument went, Qantas – and most airlines – just weren’t suited to the stockmarket. The market, Dixon said, had never properly valued Qantas. It always traded at a discount to other similar sized industrial companies.
He was right, of course. But the reason Qantas never attracted a sharemarket premium was because, for years, Dixon had spent every minute of the day talking down its prospects to the point where he became the Hanrahan of the airline business.
Even worse, it became obvious after the bid was announced that airlines were entering what appeared to be a golden era and Dixon and his top management team wanted to reap that harvest themselves. That did nothing for their credibility.
Shortly before, they had successfully hoodwinked the Howard government into providing them with a virtual monopoly on the airline’s most profitable route – the trans-Pacific route – by denying access to Singapore Airlines based on the spurious arguments that it was in the national interest and that it would save Australian jobs.
The Pacific route is a rare asset in the airline business these days; a highly profitable near-monopoly. If Dixon could get the unions to come along for the ride, he could manipulate the present fuel crisis to Qantas’s advantage.
Domestically, Australia has only ever really needed 1½ airlines. Ansett, Compass I and II, and East West all fell by the wayside. If oil prices keep rising, Virgin Blue could well be the next casualty. Even if it survives, its activities will be severely curtailed. Guess who that will benefit? Geoff Dixon may still go out on a high.
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