CASE 5
Qantas in the global airline industry, March 2010
Dallas Hanson
Un¡versity of Tasmania

In mid-2009 Alan Joyce, chief executive officer (CEO) of Australia's national airline, had a range of difficult decisions to take. Qantas was at a crossroads, still profitable, but in the middle of a financial crisis that posed a threat to the whole airline industry. What alternatives should he contemplate and what should he do?

The history of Qantas
Early years

Qantas started in l92O in Winton in outback Queensland as Queensland and Northern Territory Aerial Services. Between 1926 and1928 it operated eight aircraft out of a hanger in outback Longreach. In1934 it merged with British firm Imperial Airways to form Qantas Empire Airways (QEA). From 1935 it flew internationally to Singapore, and then briefly provided a service to Southampton in the UK. This stopped in 1942 with the fall of Singapore in World War ll. After the war the company was nationalised under Chifley's Labor government. Using an L749 Constellation airliner it began the four-day service to London called the Kangaroo route and soon after began flying to South Africa and then North America. In 1954 it flew the British Queen Elizabeth and her husband to Australia and the same year began flying twice weekly to San Francisco via Fiji, Canton Island and Hawaii. By 1956 it had 34 propeller-driven aircraft and used them to carry a record number of passengers to the Melbourne Olympic Games. In the same year it entered the jet age, ordering seven Boeing 707-3IB jetliners at a cost of $38 million.
By now Qantas was established as a world airline and in 1958 this was demonstrated literally when two Superconstellation aircraft took off on a round the world service. One flew via India and the other via the USA. They rook six days to circumnavigate the globe. Its fleet expanded rapidly and by 1964, 13 of the Boeing 707 aircraft were in action and by 1966 it had 19. Hudson Fysh retired as Chairman in 1966 as did CEO Cedric Turner. They were replaced by Captain Ritchie as CEO and Roland Wilson (also Governor of the Reserve Bank) as Chairman,
In 1966 it updated its December that year opened the luxury Wentworth Hotel in central Sydney, adjacent to headquarters. In the late 1960s it took the strategic decision to buy bigger aircraft as the basis of the fleet but carefully decided to buy the second series of the giant Boeing 747 rather than the first. These were in action by late 1971 and, using the increased capacity, Qantas started to offer lower fares- the era of cheap air travel had begun. The record for numbers in a single aircraft was established in 1974 when a 747 carried 673 people out of Darwin after cyclone Tracy had flattened the city. Qantas finished with 707 aircraft in 1979 and at that stage had the world’s only 747 fleet, with 17 of them. It also started Business Class in that year, a world first. It did not add a new type of aircraft to the fleet until 1985 when the Being 767-238ER ( for ‘ extended range’) was introduced. It then added supplemented 747-438 aircraft to the fleet.

Privatisation and the aftermath

The Australian government sold it domestic carrier Australian Airlines to Qantas in 1992 and then announced the whole group would be privatized. In March 1993 this happened with British Airways (BA) taking a 25 per cent share. The rest of the float （of shares） followed and the public took advantage of the opportunity and A$1.5 billion was raised. In the end, Qantas was 55per cent Australian owned, just over the 51 per cent required by law.
In 1994 Qantas increased capacity. In 1998 it started the Oneworld Alliance with American Airlines, British Airway, Canadian Airlines and Cathay Pacific, and in 1999 Finnair and Iberia joined. The alliance is an arrangement where airlines agree to share departure lounges, frequent flyer points and joint booking of lights so that the traveler can go wherever they want.
Drama in the domestic market came