Good to be back in Perth
It’s good to be back in Perth and back at the Chamber of Commerce and Industry.
This is the third year in a row that I’ve spoken at the Chamber, so it’s becoming a tradition!
Every time I visit Perth I’m struck by the pace of development and the sense of energy and optimism that comes with it.
WA has been a star player for the Australian economy for many years now.
And with its closeness to Asia, Western Australia is playing an active role in a changing world.
Needless to say, Qantas is also going through a process of change.
There has been a lot of commentary on us over the past six months.
I was taken with one comment I read on social media, in response to what was the latest batch of speculation on the national carrier.
It said simply – “less talking, more flying”.
I couldn’t agree more!
Rather than reinforce that perception, I want to make some brief remarks to set the scene – and then I’m looking forward to a more detailed chat with Geoff about Qantas the airline and the customer flying experience.
Transformation and Renewal
As I said here last year, Qantas is in the midst of its biggest transformation since it was privatised.
In February we accelerated that transformation. This was not a choice that we made lightly. But it’s essential for Qantas’ future.
The Australian aviation market has changed permanently. And Qantas faces three major challenges:
– First, a giant wave of airline capacity that has reshaped Australian aviation – making this the most competitive market in the world. Since 2009, we’ve seen growth of 46 per cent in contrast to a global growth rate of less than half that.
– Second, ongoing record fuel prices. Our fuel bill for 2014 is expected to reach $4.6 billion – that’s $300 million higher than the previous high.
– Third, an uneven playing field in the domestic aviation market. Our competitor recently had a $300 million cash injection from its majority foreign shareholders – while Qantas is uniquely limited in the amount of foreign capital we can access.
In order to stay strong we have to cut our costs. But we also have to maintain the premium flying experience that people – that all of you – expect from Qantas.
At the end of the day, it’s about being smarter and more nimble in how we do things.
Since 2008, we have reduced our costs by 20 per cent.
We have shut down maintenance centres that are no longer viable, because our fleet is more modern.
Over the past five years, we have introduced more than 130 new aircraft to our fleet – while retiring older, less efficient aircraft.
Our average fleet age is now 7.6 years, the youngest in 20 years.
For many legacy carriers, the average is well over 10 years.
We have had to rationalise our international network in some areas.
We’ve already done some serious heavy lifting.
But there is a lot more hard work ahead before we can be satisfied with our cost base.
We are removing $2 billion in costs over the next three years.
This is one of the biggest reform programs in Australian corporate history.
Unfortunately we can’t insulate WA from the need for hard decisions.
I recognise that Perth has been affected by the withdrawal of some Qantas International routes – routes that were unprofitable.
But this transformation is not just about tomorrow, or next week, or next year.
It is about building a Qantas that can compete and succeed for another 94 years.
As national carrier.
As a global business.
And as an employer of tens of thousands of Australians.
Customers Come First
Our customers remain central to this success – and we will keep investing.
More than 18,000 employees have gone through service training, helping us earn record customer satisfaction.
In the domestic market, we remain focused on providing the best network, frequency, punctuality and service – through both Qantas and Jetstar.
Our on time performance in and out of Perth is market leading and last month we had the most on time flights we have ever had.
This means that we get our customers to their destination on time far more often than our competitors.
We know that customer loyalty can’t be assumed – it has to be earned.
That’s why we continue to invest in projects that make a difference for customers.
For example, by the end of this year we will have opened new lounges in Hong Kong, Los Angeles and Broome.
Qantas in WA
There are some other exciting developments in the pipeline.
And WA will be among the first to benefit.
Our upgraded A330 aircraft will serve the East – West domestic market.
We believe that Qantas customers flying between Perth and the east coast will get the best domestic airline experience in the world on these aircraft.
The new Business Suites will have completely lie-flat beds, and you can stay reclined from take-off to landing – something that is truly unique in this market.
Then there’s our investment at Perth Airport.
We are expanding our operations from Terminal 4 into Terminal 3, which means greater connectivity for our intra WA services with our flights to the East Coast.
We will be continuing to invest in the customer experience including in our lounge offering.
The Qantas Group today has a bigger presence in WA than ever before.
We operate more than 500 flights per week serving WA, with 13 destinations around the state – and that’s not to mention our growing charter business.
We connect WA to 58 international destinations through Emirates, Jetstar and our oneworld partners.
And we will continue to operate seasonal international flights on routes like Perth – Singapore and Perth – Auckland.
We’ve ramped up our domestic network within WA – working in partnership with the mining sector.
Through our subsidiary, Network Aviation, Qantas has become the market leader in FIFO and charters.
Network has grown from two to 12 aircraft in just a few years, and now has a 30 per cent share of the charter market off a very low base.
Network has the flexibility, reliability and value to clients like Fortescue and Roy Hill. We can ramp up and ramp down as their business demands.
It’s clear that the mining boom has moved into a different phase.
But we still see strong demand, especially in the most resilient and fast growing sectors, such as iron ore, LNG and coal.
Overall, we expect WA to continue to play a lead role in the Australian economy.
And as we transform the Qantas Group, we are committed to working with you to secure future growth and success for the West.