Qantas repairs image, but problem remains

FOR Qantas, it is time to work on repairing its image, after the strikes and subsequent lockout that resulted in a cancellation of some 450 flights affecting 70,000 passengers in 22 cities around the world and costing the airline A$68 million.

All the more urgently so, when barely two weeks after the resumption of scheduled flights, a flight from Singapore to London last week was diverted to Dubai because of an engine malfunction – adding to its woes and compounding the reliability issue. It may appear that Qantas has not completely plugged a recurring problem concerning the Rolls-Royce powered A380 aircraft that only last year led to a grounding of the entire A380 fleet for security checks.

Qantas had already offered to refund all “reasonable losses” incurred by passengers affected by the industrial dispute, following the recommendation of the Australian Competition and Consumer Commission (ACCC) to act on the matter. ACCC chairman Bob Sims said: “If you (the passenger) have incurred additional expenses as a result of the grounding, the ACCC is of the view that Qantas should compensate you for all your reasonable losses.”

Lest it be seen to be complying only because it had been compelled by an external body to do so, Qantas quickly followed up with a statement to take the initiative under its wings. Qantas said it “agrees to, and accepts, the ACCC’s request that it compensate passengers for all reasonable losses incurred as a direct result of the grounding.” But it added that “Qantas has always intended to ensure that disrupted customers incur no financial loss.”

Additionally, Qantas has announced that it will also offer passengers within Australia and New Zealand free tickets for a flight within the two countries – the compensation likely to cost the airline A$20 million. Further announcements would follow on offers for affected passengers outside Australia and New Zealand and frequent flyer customers.

Qantas CEO Alan Joyce said: “This ticket offer is one of a range of initiatives we will be launching as a way of saying sorry as we move forward into this period of stability.”

Indeed, image repair can be a costly affair. But it would be penny-wise pound-foolish if Qantas chose to pretend that it would be business as usual without a slew of timely PR initiatives. Qantas must be conscious of the alternatives offered by the competition, particularly if the rivals are seizing the opportunity to make attractive “switch” offers.

However, Qantas can rest be comforted that the public is generally more forgiving than it professes to be at the onset of a problem, and how much more so is often measured by how soon after an airline expresses its humility and offers a sweetener. Admit it, compensations do appease, especially in situations when the affected passengers understand full well there is little else they can do but to make good their “losses”, whether pecuniary or otherwise; the adequacy of the offer is a different matter.

In light of the extent of the damage, Qantas knows it may have to over-compensate to restore goodwill and retain loyalty. Recovery with impact in times of adversity has the magic of turning an unhappy passenger around to singing praises of the culprit airline. The nature of the air travel business is such that there is no crystal ball gazing into the future to help with passenger bookings made in advance; while passengers may try to avoid airlines with a bad record of strikes, this factor may not carry sufficient weight to swing the decision on choice of carrier to fly, so the comfort lies in the excellence of the aftercare service in the event that expectations are not met.

Many corporations – not just airlines – have clawed back after a disastrous streak, better placed. Ironically, the embattled airline can ride on the high profile thrust upon it to dose up publicity stints on new products and customer programs for the very simple reason that time heals and a passenger’s memory is short-lived and overridden by the most recent recalls. Unfortunately in present times of an uncertain global economy, most airlines are more concerned about keeping their nose above water than expend energy on trying to spark new excitement to maintain or enlarge their customer base.

Can Qantas prove to be the exception?

Delivering the promised compensation may be the easy part, and will repair Qantas image somewhat. The real question is, What next? Mr Joyce spoke about moving back into a “period of stability”, but if “stability” means the status quo, Qantas may find itself back to square one as it continues to struggle to resuscitate its loss-making international operations arm while its workers and the unions persist in thwarting Qantas’ plan to restructure its operations (which includes shifting operations to Asia which Qantas has identified as the elixir to lift it out of its doldrums) and outsource some of the services.

It looks like it’s going to be a long, if not difficult, hop for the flying kangaroo.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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