Fielding tough questions from a furious audience is no one’s idea of fun. But as Richard Goyder and Vanessa Hudson – Qantas chairman and chief executive, respectively – dealt with angry question after angry question at the airline’s annual general meeting today, the pair knew their main audience was not those in the room. It was, in fact, the decision-makers in Canberra.
The AGM comes at a critical time for the national carrier. The federal government is considering a suite of aviation policy reforms, many of which Qantas would rather stay unreformed.
Qantas can ill afford further damage to its public image now.
Shareholder and community anger
Qantas had a good year financially, as demonstrated by its A$2.47 billion full-year profits. But consumers are less happy.
These profits have been delivered in part by rapidly rising air fares.
The Qantas board has also had to deal with anger on executive remuneration, especially around former chief executive Alan Joyce’s multimillion-dollar payout.
This rage over executive pay was on full display at today’s AGM, when 83% of shareholders voted against Qantas’ remuneration report for the 2023 financial year. Reported as “one of the biggest strikes ever recorded in corporate history”, it is a clear rejection Joyce’s payout.
Qantas has also had to manage allegations it sold tickets for flights it knew had been cancelled, on top of a suite of PR disasters around flight delays and lost luggage issues.
The aviation white paper and Qantas’s optics problem
The federal government released a new green paper on aviation policy in September and is consulting stakeholders, ahead of publishing a new white paper on aviation policy next year.
There are several contentious areas of policy Qantas would prefer to remain unchanged.
The white paper panel will no doubt also take into account public sentiment. Optics matter in politics, and so Federal Transport Minister Catherine King and her department would have been taking the pulse of today’s AGM.
The anger on show from shareholders – with Goyder facing jeers, boos and cries of “shame on you!” – can’t have helped Qantas’s optics.
Any political advisor watching would likely caution the government that now is not a good time to be seen cosying up to the airline.
The 2024 aviation white paper (itself a sequel to Anthony Albanese’s 2009 aviation white paper while he was transport minister) aims to set a new aviation policy framework out to 2050.
Unlike its predecessor, it will take into account consumer and worker rights – so the angry scenes at today’s meeting will not help Qantas in its efforts to stave off the kind of regulation being discussed in the aviation white paper.
One policy under consideration is the idea of mandatory compensation for flight cancellations and delays.
For almost 20 years, air travellers flying from European Union airports have been able to access a guaranteed compensation scheme that is tiered according to length of delay and inconvenience.
Airlines in Europe fought the introduction of the mechanism in 2004. It’s unlikely Qantas would welcome such policies in Australia either.
Bilateral air service agreements
Another issue on the table is the negotiation of bilateral air service agreements. These agreements between nation states govern the number of flights between countries, but are seen as archaic in many other OECD countries.
In their place, “open skies” agreements allow unfettered access to foreign carriers and often deliver lower fares to consumers.
Qantas and Virgin Australia both rely on a bilateral air service agreement with the United Arab Emirates for the bulk of their international connections. This agreement still has ample expansion room, but the agreement with neighbouring Qatar is already at capacity.
The seemingly opaque way in which the application by Qatar to enlarge this quota was denied by the federal government angered many in the industry. It led to a senate committee inquiry.
Indeed, a freedom-of-information request was required to discover the decision was, in part, linked to the treatment of women strip-searched at Doha airport in 2020.
It’s likely the government will reform the way these bilateral service agreements are negotiated (at least to add greater transparency).
Goyder and Hudson wanted the focus at today’s AGM to be partly on their plan to boost non-stop international flights, all of which hinge on bilateral service agreements with European countries. So Qantas may be nervous about any proposed changes to the negotiation process that make it easier for their would-be rivals to also expand services.
Greater competition monitoring
The white paper panel is also considering greater monitoring of competition in air transport.
Airports operate as monopolies in their cities and are regulated as such. Airlines, on the other hand, operate in a competitive landscape.
But the playing field is not level for all airlines and potential entrants, not least because capacity restraints such as takeoff and landing slots can be engineered to favour incumbents. As such, Qantas would no doubt prefer no reform in these areas.
So the terrible optics of today’s Qantas AGM come at a moment when it is very keen to mould the legislative landscape of aviation in its favour. In other words, it couldn’t have come at a worse time.
As Goyder and Hudson fronted shareholders today, their promise to work harder to address customer concerns was aimed as much at Canberra as it was to the Melbourne audience.
The post “The fury on show at the Qantas AGM couldn’t have come at a worse time for the airline” by Justin Wastnage, Adjunct Industry Fellow, Griffith Institute for Tourism, Griffith University was published on 11/03/2023 by theconversation.com