Global Courant 2023-05-05 09:19:07
Vanessa Hudson, who will replaces Alan Joyce inherits as CEO of Qantas Airlines in November, an airline still struggling to resume services after the pandemic and border closures closed much of the global airline industry in 2020.
The silver lining for Qantas is that the high demand for air travel has allowed it to charge higher airfares. We even managed to get one A $1.43 billion (US$963 million) profit in the second half of 2022.
But these conditions will not last. Like Hudson – an accountant who joined Qantas in 1994 and has been Chief Customer Officer since 2018 – dealing with the very unusual short-term challenges associated with recovery, she will increasingly need to focus on all the long-term challenges that existed prior to 2020 for Australia’s flagship airline.
There are two main reasons why demand for air travel is recovering faster than supply.
First, the time and effort to re-maintain the aircraft stored during the pandemic. parked at regional domestic airports and aircraft stores. Qantas left 100 out of 126 aircraft retired six obsolete Boeing 747s and delayed delivery of new Airbus A321neo and Boeing 787-9 aircraft.
Never in the history of civil aviation have airlines had to park so many aircraft. Extensive maintenance checks and tests are required to put them back into service. Limited trained maintenance personnel can only prepare a limited number of aircraft for flying again.
That leads to the second, more important problem: the need to fill vacancies.
Even before the pandemic, the industry was facing a global shortage of experienced pilots. Now it is struggling to replace all the workers – air and ground personnel – who withdrew when the borders closed in 2020.
Quantas nearly a third laid off of its 30,000 employees, including illegally cutting nearly 2,000 ground staff. It is now looking for recruitment over 2,000 employees by the end of 2024 and a total of 8,500 by the end of the decade.
A Qantas aircraft parked at Southern California Logistics Airport in Victorville, California, in December 2022. Shutterstock
Many who have found work in various industries do not return. Some in the industry fear that aviation is no longer an attractive career. And the pilots, flight attendants and mechanics who are hired back in service all need refresher training before they are allowed to return to work.
Labor shortages affect the entire aviation supply chain, including manufacturers. Qantas is currently experiencing delays of approx six months on the delivery of new aircraft.
Compete for customers
Competition for customers will be a relatively minor concern as Qantas struggles to meet demand. But this won’t last as airlines rebuild their fleet capacity and current high air travel prices fall. In the American market, for example, airline tickets back to pre-pandemic levels (adjusted for inflation) end of 2022.
By late 2023 or early 2024, I expect Qantas to struggle with much the same competitive pressures that drove pre-pandemic cost cutting and outsourcing. For this, it can partly blame global government support for airlines, which had the perverse effect of fewer airline collapses in 2020 than in 2018 or 2019.
While Qantas made a profit for every year between 2015-2019profit margins were quite thin.
It has been said a lot that the pandemic has irrevocably changed the air travel market. Business travel, for example, may never recover. Consulting firm McKinsey predicted in February 2021 that the post-pandemic business travel market be 20% smaller.
With the jury still out on these and other questions, the challenge for Qantas and other airlines will be to plan and adjust services accordingly.
In the longer term, Qantas needs to reduce its carbon footprint.
From 2027, all international airlines will be required to offset CO2 emissions from flights – a condition set by the International Civil Aviation Organization. Carbon offset and reduction scheme for international aviation.
More generally, the drive to decarbonise commercial aviation also makes stricter domestic environmental requirements very likely.
This will be more difficult for Qantas than for competitors, due to the airline’s extensive network of medium-haul and long-haul flights (which consume more fuel) and the airline’s aging, less fuel-efficient fleet.
The average age of the Qantas fleet is a little over 15 years, more than double that of rivals such as Singapore Airlines. Fleet renewal will be a formidable task.
Volodymyr Bilotkach is an associate professor, Purdue University
This article has been republished from The conversation under a Creative Commons license. Read the original article.
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