Alan Joyce leaves Qantas with a tarnished legacy

Chief executives can’t escape responsibility for the things that happen on their watch. Had Joyce retired in 2019, as was originally loosely envisaged, he would have departed as a hero and been regarded as a towering figure in Qantas’ history.

Instead, the then-new chairman, Goyder, asked him to stay on with an open-ended contract, and so he was still in place when the pandemic erupted and threw the world, and the aviation industry in particular, into three years of chaos.

Virgin collapsed instantly and Qantas, with the help of government assistance, barely survived after losing almost $6.5 billion through the pandemic years.

Like every other airline in the world, as the economy and the industry emerged from two years of rolling lockdowns and border closures, Qantas (and Virgin, Rex and the airports) struggled to scale back up as demand for travel surged.

Lengthy queues, delayed and cancelled flights, lost baggage and a very sharp rise in fares as the available capacity was overwhelmed by the demand, exacerbated by a shortage of planes, pilots and ground staff and the continuing widespread incidence of COVID-19 and flu among those who were available.

As by far the largest Australian carrier, Qantas became the focus for most of the complaints even though an ACCC report on the sector’s performance last year found that Qantas cancelled fewer of its flights (as a proportion of them) than Virgin and its on-time performance was almost identical. Both performed better than most of their overseas counterparts – the issues that plagued the sector were experienced globally.

That doesn’t excuse the poor performance – Qantas itself has said it should have done better – but provides some context.

The period from early 2020 to 2022 was unprecedented and extraordinarily disruptive for the complex ecosystem of aviation and it was almost pre-ordained that those in charge of the carriers who survived the crisis would be tainted by their customers’ experience. The customers don’t care about excuses, only their experiences.

Joyce, whose 15 years at the helm of Qantas has been characterised by often ruthless and profit-driven decision-making, was always going to be an obvious target for those disaffected customers and the aviation unions he neutered in 2011 when he grounded the Qantas fleet in response to the very effective and destructive rolling industrial campaign by Qantas’ pilots, engineers and baggage handlers.

They’ve finally got their man, although given that he was going anyway, the victory is more about the damage to his legacy than his career.

Despite the way it has ended, Joyce’s tenure as CEO has been a positive one for Qantas and its shareholders, transforming a business that couldn’t cover its cost of capital into one of the world’s most financially sound, with a $2.5 billion profit in the 2023 financial year and a conservative balance sheet.

He inherited an airline that, confronted by the (initially) low-cost-carrier, Virgin Blue, had, like most legacy airlines, an uncompetitive cost structure but used the 2011 crisis to slash costs and re-engineer the structure of the group’s operations.

The customers don’t care about excuses, only their experiences.

He saw off the challenge of a market share war with the rebadged Virgin Australia, a competitor backed by some of Qantas’ biggest offshore rivals, despite losing $2.8 billion in 2013-14, using that period to again carve into the Qantas cost base.

And then he dealt decisively, if not perfectly, with the pandemic, raising capital and selling assets to secure its survival (with the above-mentioned help of the federal government). He also tore another $1 billion from its cost base and ramped up Qantas and Jetstar’s capacity at a rate than has enabled it to emerge with a larger domestic market share than it had pre-pandemic.

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He’s also positioned Qantas to break free of the major strategic weakness in its international operations, its status as an “end of the line” carrier trying to compete with hub airlines, with their scale and geographic advantages.

If Qantas can successfully follow up its direct flights to London with non-stop flights to other European capitals and to the US it will have overcome the major strategic disadvantage it has suffered historically and undermined the structural advantage its hub-base competitors have enjoyed. Indeed, it would have, at least for a period, had something approaching a monopoly on those routes.

Joyce’s ability to make tough decisions and his financial discipline is why Qantas shareholders have regarded him so highly and never voted against the eyebrow-raising salary and bonuses he has received over his tenure, although the issue of bonuses might be somewhat less uncontroversial at this year’s annual meeting given what has occurred.

It’s clearly not the way Joyce expected or wanted his time at Qantas to end. However, when the dust eventually settles on the spate of controversies Qantas is experiencing, his place in Qantas’ history will be viewed over his full tenure as CEO and in a more balanced way than it is at present. He will eventually be regarded as a very significant, but not unblemished figure within it.

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