Good afternoon and thank you to John King, Peter Shelley and everyone at ATEC for the invitation to be here today.
When I saw that this year’s conference theme was “Drivers of Change”, I thought it was interesting.
As a business you can be driven by change, or you can drive change yourself – through your strategy, the decisions you make and the culture you build.
For Qantas, four major factors have changed the world that we operate in.
– Globalisation, which has opened up the industry and led to intense competition.
– The rise of Asia, which has put Australia at the centre of the most competitive aviation region of all.
– Record fuel costs that are only now beginning to ease.
– And new technology, which is changing the way airlines do business and serve customers.
Twelve months ago, I said that Qantas was facing the toughest market conditions in recent memory.
In late 2013 we were already working through the biggest transformation since Qantas was privatised in 1995.
I took the decision that we had to accelerate and expand this transformation, given the conditions we faced.
We set a target of $2 billion in transformation benefits over three years.
Why $2 billion? Because that’s the scale of reform needed to ensure that Qantas is permanently, sustainably profitable in this very tough industry.
The decision we took was to drive change – not to be driven by change.
Transformation in Action
I confirmed on Monday that Qantas is set to report its best first half result in four years – a profit of between $300 and $350 million.
That represents a turnaround of more than $550 million, compared with our position just 12 months ago.
The figures show that the major driver of this improved performance is the rapid progress we have made with transformation.
By the end of December 2014, we expect to have unlocked almost $600 million in transformation benefits – over a quarter of our target.
Qantas is becoming stronger, leaner and more globally competitive – without compromising the service that matters to our customers.
Customer satisfaction with Qantas and Jetstar is at record levels, and we have won a huge range of awards over the past 12 months.
Unlike other airlines, we made a conscious decision to continue investing in our fleet, lounges, technology and training, throughout our transformation. And our people have risen to the challenge magnificently.
We’re still just one year into a three and a half year process. But we’ve made a strong start, and that’s very satisfying for those of us who are so passionate about this great company.
The Tone is Changing
In recent months, the tone of conversation about Qantas has changed.
There’s a buzz around the Qantas brand, and genuine excitement about the announcements we’re making for our customers.
Look at the response to our new Feels Like Home campaign.
Employees were in tears when they saw it for the first time. And customers have told us that it perfectly captures what Qantas means to them.
Over 1.6 million people have already watched the ad through social media, and the sentiment has been overwhelmingly positive.
Australians want to see a strong, successful Qantas, because Qantas is more than just another brand.
The responsibility of national carrier extends to every facet of national life. And nowhere is this responsibility more important than in tourism.
Australia’s Tourism Opportunity
It’s a good time to be talking about the future of Australian tourism.
Our economy has entered a transition.
The peak of the mining boom is behind us.
And while resources will always remain fundamental to our economic success, there is a major opportunity for other sectors to step up.
In the past, people complained that tourism was not taken seriously – that it was taken for granted.
Not any more. These days, tourism is on everybody’s list of the industries that can help to shape our economic destiny. And the reasons why we should succeed far outweigh the reasons to doubt ourselves.
We have the some of the world’s most spectacular natural landscapes. The world’s most ancient Indigenous culture. Vibrant, multi-cultural cities. Incredible food and wine.
We are a destination of choice for Americans and Europeans. And we are on the doorstep of Asia, the world’s biggest growth market, which is so vital to our future as a nation.
As always, the challenge is to convert this rich potential into results, at a time when global tourism is more fiercely competitive than ever.
We are acutely aware of that role that Qantas must play in seizing Australia’s tourism moment.
Every Qantas aircraft is a symbol of Australia and every Qantas employee is an ambassador for Australia.
When the Qantas and Emirates A380s flew over Sydney harbour together last year, it was one of the biggest TV news stories in the world.
And when Ellen DeGeneres phoned the Qantas call centre, it got huge cut-through with her global audience of 80 million people.
Both clips have been watched over 500,000 times on YouTube, adding to the huge TV audience.
In just the past few years, we have hosted a series of big, set-piece events to put Australia on display.
– The Emirates partnership
– The Ellen show
– Modern Family
– The launch of A380 services to Dallas
– And most recently, the delivery of our retro-themed 737.
These events have generated an equivalent ad value worth tens of millions of dollars, at a conservative estimate.
When you add in our formal marketing spend, we are by far the biggest private sector supporter of Australian tourism.
Two years ago, we shifted our funding from Tourism Australia to the state tourism organisations, forming partnerships worth $74 million over three years.
The results so far have not only met but exceeded our expectations.
Working with the states means we can develop tailored campaigns, increase our speed to market, and take a more flexible approach to promoting destinations across our global network.
And let’s be clear – it is a global network.
There’s been a lot of talk about Qantas International shrinking.
Right now, Qantas International is growing.
The Qantas Group as a whole is on track to carry 50 million passengers in 2014, the first time we have reached that milestone in a calendar year.
We’ve been able to lift passenger numbers and loads, not through major capital investment, but by working our assets harder and using our fleet in a smarter way.
Since July, we have added more than 100 additional services across the Qantas International network, and this will continue throughout the peak holiday period.
We have launched new destinations, including Vancouver and Tokyo Haneda. Qantas International will double its frequencies to Tokyo next August, including Brisbane-Narita services, which we announced yesterday.
At the same time, we continue to expand our range of strategic partners in gateway hubs.
The Emirates partnership has transformed our network into Europe. The American Airlines alliance in North America is performing well, as the U.S. economy recovers. And we’re excited about the potential for our alliances in China, with China Eastern and China Southern.
I would also point to the growing network of Jetstar airlines in Asia. Jetstar Japan is now the biggest low cost carrier in the world’s third biggest economy, with massive growth potential. That is a unique position for an Australian brand to be in.
This broad, deep and growing network represents a major tourism asset for Australia, given that Qantas Group passengers spend around $5 billion in the visitor economy each year.
We’re not satisfied with that number, though.
Our goal is to keep harnessing our brand, working with our partners, and building our network to give Australia a competitive advantage in this crowded global market.
If we work together as an industry, there is a chance for Australia to follow the mining boom with a different kind of boom – a tourism boom that will benefit our economy for decades to come.
Of all the drivers of change for Qantas, none is more powerful than our desire to build a prosperous future for this great Australian airline.
We believe a strong Qantas means a strong tourism industry. And as the industry navigates its own process of change, Qantas will be there with you.
We will do everything possible to help unlock Australia’s tourism potential.