(c) The Sydney Morning Herald (Sept 2023)- illustration by Matt Golding

Several years ago in my management blog, I described Elvis Business Model (EBM) as an ‘ideal business’ model. In 1977, the year Elvis Presley tragically died he had less than $US1 million in the bank, but by 2016 his estate had earned more than $US27 million.

The recent corporate history of Qantas ‘the spirit of Australia’ has now provided what may be a better business model. Let’s call it FKBM – the flying kangaroo business model.

In August 2023 Qantas announced a record pre-tax annual profit of nearly AU$2.5 billion up from a loss of almost AU$2 billion the previous year. Following the pandemic years, many travellers were prepared to tolerate, perhaps even forgive their poor customer service, long call centre delays, lost luggage and cancelled or delayed flights. But two years on, trust and esteem for the airline is running at an all-time low.

Now at the time of writing, the Australian Competition & Consumer Commission (ACCC) is taking the action against Qantas for engaging in false, misleading or deceptive conduct by advertising and selling tickets for flights that it had already cancelled sometimes months ahead. This often led to customers having less time to make alternative arrangements and paying higher prices for new flights. These credits exceeded $570 million! Tickets are now averaging 60% above pre-COVID prices. Coupled with this, an international rival of Qantas, Qatar Airlines recognised for its high level of customer satisfaction was refused additional flights into Australia by the current Australian Government. Competition was reduced providing the opportunity to increase prices.

What an excellent business model!

Collecting money for already cancelled flights, thereby having access to this cash certainly helped finance the business, then make it difficult to redeem the credits (this was partially reversed) and later having the government of the day restrict international competition, thus allowing you to charge higher prices.

So, how far has Qantas fallen in Skytrax Best Airline survey?

As Qatar has a significantly better ranking than Qantas, having the government refuse to increase their landing rights is certainly ‘beneficial’.

So, is FKBM the way forward?

Well, no, not really.

Firstly, Qantas has alienated its customers. Judging by the high number of customer complaints this is certainly the case. Many have said they will never fly with them again. The brand has been trashed.

However, it goes further than this.

Qantas has had a difficult relationship with its employees, from shutting down the airline in 2011 in a dispute with staff to sacking thousands of employees during the pandemic and outsourcing maintenance which saved the airline over $100m per year. The High Court of Australia ruled last month that Qantas had unlawfully outsourced the jobs of sacked workers. Whilst not all of this is Qantas’ fault, its restrictive trade union work practices which inflated costs did not help. Businesses cannot reliably add value when the relationship between management and other employees is broken. If a company’s employees have little or no faith in their brand, how are customers be expected to?

Employee disfunction morphs into broken promises to customers, suppliers and other stakeholders further depleting goodwill. Although not all stakeholders are adversely affected – Qantas shareholders and senior management have certainly benefited from good dividends and bonuses. However, if you are a customer, a worker, or you live in a regional area or are a taxpayer you might not agree. It is not helped when the public see the CEO walk away with millions of dollars in bonuses.

Trust is a highly emotive, particularly when viewed through a brand lens. A brand is a belief and values system which acts as the bedrock for guiding management on how to re-engage with its many stakeholders whether they be an employee, shareholder or customer. Businesses cannot be successful without customers. When it comes to convincing customers to believe what you are saying, there is no one size fits all approach.  A good start would be to engage and have faith in your employees. It flows on from there.

Do you think the FKBM is a good long-term strategy?

If not, why not?

How important is employee engagement in ensuring good customer service?

Is excellent customer service vital for long term business success?

Note: On an international flight over 4 months ago, Qantas mislaid my luggage and I had to purchase clothing to continue my travels. Qantas ‘offered’ to pay compensation and I completed the requested form. Despite over 10 emails (Qantas ‘customer service’ claims not to have received my emails), and several phone calls including a promise to return my call within 5 working days which has not been returned, the compensation has not been forthcoming. I am one of many who have experienced Qantas’ poor service levels firsthand. Have you?