Is loving Qantas to death in Australia’s national interest? Airline ownership dogma defeats logic

Australian flag carrier Qantas will on 27-Feb-2014 report a loss of around AUD300 million for the first half of the 2013/14 financial year; it will also announce a 2-3,000 reduction in staff numbers. There is an atmosphere of crisis at the airline - which is (at least partly) justified. Its smaller homegrown competitor Virgin Australia will the next day also announce a loss in what has become a fiercely competitive domestic market.

Qantas faces two main challenges to its future: (1) its classic legacy model is extinct, notably internationally; and (2) domestically it is overweight and ill-equipped to deal with the competition that Virgin Australia has generated since its metamorphosis from LCC to full service airline.

The first is a long term problem that requires major surgery; the second is a pressing one that has to be addressed immediately, including perhaps even a change of strategy. Staff reductions and a level of restructuring at Qantas may help reshape the short term; more complex solutions are required to resolve its dinosaur dilemma.