Qantas in crisis: Alan Joyce has departed but the airline still has plenty of baggage

The announcement of Alan Joyce's earlier departure as the CEO of Qantas served as a much-needed change in the midst of a series of unfavorable media coverage for the airline.

Following a long tenure of 15 years as the CEO, Joyce was scheduled to step down during the airline's Annual General Meeting in November. This move was a well-orchestrated transition of power lasting six months, aiming to pass the torch to the current chief financial officer, Vanessa Hudson.

The recent declaration from the organization in charge of protecting consumers that it will be suing Qantas last week signified a shift in the airline's unabashed response to criticism. However, there were various lingering problems during Joyce's time as CEO.

Qantas' board is optimistic that Hudson's tenure will provide an opportunity to start afresh.

Nevertheless, the airline remains trapped in a state of crisis. Here are five significant challenges that continue to afflict it.

ACCC Sues For Justice

Maybe an indication of how seriously it is considering this matter, Qantas suddenly changed its usually strong stance against any claims of misconduct when it addressed the allegations put forth by the Australian Competition and Consumer Commission (ACCC) last Thursday.

The ACCC has accused Qantas of participating in dishonest, misleading, or deceitful actions while promoting and selling tickets for over 8,000 flights that had already been canceled in its database. Additionally, in certain situations, customers were informed of their flight cancellations up to 48 days later.

Qantas may face substantial fines if it is discovered to have violated regulations. The head of the Australian Competition and Consumer Commission (ACCC), Gina Cass-Gottlieb, desires a penalty exceeding $250 million, which would set a new precedent and serve as a stern warning to other businesses.

Legal proceedings could also involve high-ranking airline officials being compelled to provide testimony.

Tired Qantas: Aviation Sector's Woe

The thorough examination by the watchdog also uncovered the manner in which Qantas has been running its business, surpassing any claimed misleading behavior.

Between the months of May and July 2022, when the ACCC investigated, it discovered that Qantas had cancelled approximately 15,000 out of a total of 66,000 flights, which amounts to nearly a quarter of all domestic and international services.

The ACCC also alleges that "these cancellations happened due to various factors, which include reasons that Qantas had the power to influence, like enhancing their network, discontinuing certain routes, or securing exclusive rights to use specific airports for take-off and landing."

Even though it is not against any regulations or laws, canceling flights due to reasons under the airline's control has been a subject of criticism within the industry. The ACCC's recent findings support the claims made by industry members regarding the issue of airlines occupying too many takeoff and landing slots at Sydney airport. The cancellation rates are alarmingly high, with nearly 10% of flights to Melbourne and Canberra being canceled on average.

The sector will probably become more confident in resisting and countering issues like discussions on airport charges, wherein Qantas has previously been able to overpower other participants due to its dominant position, controlling over 60% of the domestic aviation market.

Inquiries regarding Qantas advocating to the Albanese government concerning its decision to turn down Qatar Airways' plea to significantly increase its capacity have sparked a discussion about the political sway of Qantas, which has been positively received by the aviation sector.

Legal Disputes Beyond The Norm

In addition to the ACCC's legal action, Qantas is engaged in ongoing disputes with two separate legal battles.

The airline is currently challenging a ruling by a federal court that found it unlawfully subcontracted approximately 1,700 ground handlers. The court decision in 2021 concluded that the airline violated the Fair Work Act by firing workers at 10 airports during the pandemic in November 2020.

The ruling has already been maintained during the initial legal challenge, and if the supreme court does not reverse it, Qantas may face a colossal payment of compensation that could surpass tens of millions of dollars.

In a different vein, Qantas is currently dealing with a legal case where they are being sued for their refund policy concerning flights that were cancelled due to the pandemic. Lawyers claim that the airline's practice of issuing travel credits enabled them to treat their customers’ funds as something more than just "$1bn in interest-free loans". These legal representatives are seeking recompense for the interest that was forfeited on the credits.

Arguably, the most significant concern of them all is Qantas's reputation among the Australian populace.

Despite having a flawless safety record, this company has garnered the highest number of complaints to the ACCC over the last two years. Furthermore, its reputation took a severe blow due to its increased mishandled baggage rate, subpar on-time performances, numerous cancellations, and skyrocketing airfares during the latter half of the previous year.

Qantas has completely fallen off the roster of Australia's most reliable brands. In the latest version of Roy Morgan's rankings, which were published last week, Qantas has now made its way into the index of distrust. It currently holds the unimpressive position of being the 13th most distrusted brand in the economy, ranking even lower than its own low-cost counterpart, Jetstar.

When she was introduced as the future CEO earlier this year, Hudson highlighted Qantas's outdated collection of airplanes as a major concern for the airline. The planes' average age is roughly 15 years, which is higher than the nine-year average when Joyce took on the role of CEO in 2008.

The company has a series of new aircraft scheduled to arrive in the upcoming years, which includes environmentally-friendly A350s. These planes will be utilized for direct flights from Sydney and Melbourne to New York and London, in addition to other new aircraft designated for both long and short distance travel.

Nevertheless, at present, Qantas possesses a fleet that is considerably more aged compared to other airlines operating globally. This gives rise to amplified expenditures for both maintenance and operation, especially in light of the current scarcity of aircraft parts. Additionally, all major airlines are currently facing the impacts of Covid-related delivery delays, as aircraft manufacturers strive to cope with the backlog.

Due to these problems and the sluggish procedure of preparing aircraft that were stored in the desert during the pandemic for flight, Qantas is still facing limitations in terms of capacity.

As customers demand more flights, Qantas is unable to provide the desired number of seats. This is a problem faced by some, but not all, of its global rivals. Qatar Airways serves as just one instance of an international competitor that is not experiencing this issue.