Platy

I seem to be having a run of bad experiences with QF at the moment (what's new) and can't help wondering how $25 million could be better spent than on one overpaid CEO who has so much cash on his hands he can afford personally to donate $1 million to a worthy cause.

Call centre wait times

It is not unusual now to wait 30 minutes or more just to speak to someone at QF - even with premium line access. Reportedly QF axed its call centres and staff (270 staff). How can you do business (sell tickets) when customers can't communicate with you?

I've rung other airlines (with no status) over the last few weeks and my calls were answered within minutes (including Avianca, United, American, and Singapore).

No call back option was offered on my calls to QF.

The insult to the customer is then having to pay a huge fee just to make a booking (which is allowing the airline to recoup costs anyway!).

So how many call centre staff could you employ for that $25 million to provide a level of customer service to match your competitors - 500 at $50,000 apiece!


IT Platform

So I booked a first class award a few weeks ago for SIN-BNE on EK using QF points. Or at least I thought I had - a PNR was generated and I chose my seat. And then 24 hours later the booking just disappeared. It turns out the payment wasn't processed by QF in their assigned window so the booking was automatically cancelled. I had no way of knowing there was a problem. By the time I could attempt a fresh booking, the award seat was gone.

Perhaps an efficient IT operation could manage basic functionality?

How about spending some of that $25 million on the inefficiencies in the IT systems?!


Point Reinstatement

I cancelled an award flight. It took close to 4 weeks to get the 134,00 points reinstated and that only after I chased up a number of times.

Why can't QF manage its cancellation process as efficiently as competitors - my points have been reinstated by other airlines virtually immediately (Avianca, United, AA, Singapore, etc).

QF are charging a fee (6,000 pts) and then making no serious commitment to provide the service paid for in a reasonable time frame, let alone one comparable with their competitors.

There appears to be a highly inefficient process behind the scenes with steps involving overseas QF offices.

How about spending some of that $25 million on process simplification?


EpiQure

Maybe a QA system over at EpiQure might avoid receiving the wrong wines as well!


Context

Published renumeration received by other airline CEOs show that the QF Board has totally lost the plot:

United (86,000 employees) - USD18.7 m
Delta (80,000 employees) - USD12.6m
AA (113,000 employees) - USD11.1m
Southwest (53,000 employees) - USD6.1m
Alaska (10,000 employees) - USD4.2m
Hawaiian (6,000 employees) - USD3.7m
Allegiant (3700 employees) - USD3.6m
JetBlue (20,000 employees) - USD3.1m


And yes, I know in Joyce's case, it's to do with rights invested in 2014, share price growth, etc., etc., but when ordinary staff are on a pay freeze and customer service standards are bombing, surely the QF Board must take responsibility for such a farcical situation?!

og

Why do you assume the Board even knows of the issues you raised?

I too concur about call centre wait on other airlines (add AS to the list of "almost no wait times"). Likewise award redeposit times (my UA example of this week was almost instant redeposit of miles and $ back to me - with no penalty).

QF won't blink on these issues until the money stops flowing in.

Platy

I don't because I perceive that the senior executive / board levels at QF are totally disconnected from their staff and customers.

The institutional investors don't care either because they are seeing a return (at least for now).

I doubt that lost customers are being surveyed as part of the custom satisfaction measurement, so the powers that be can ignore issues that vex real customers.

At some point, however, surely the Board does need to consider the downside / business risk of runaway renumeration for the select few as part of its function?

bensyd

And the money won't stop because the majority of people will whinge about these issues, but will keep directing their business toward QF.

crub

Most customers wont experience the issues you have.

The company is making money, which is his main task.

If you have problems with the customer service don't use the airline.

I don't understand how you can join the two dots Epiqure sent me the wrong wine therefore Alan Joyce is getting paid too much. Personally I don't mind epiqure sending me the wrong wine it just meant free wine for me in the past.

Platy

Unfortunately customers are reporting long wait times to speak with QF: based on myself, friends who have rung QF, various threads on this board discussing the issue.
'
Do you have any actual data to share?

A cursory online search on customer behaviours would indicate that most customers give up waiting within 2 minutes - a statistic even more critical if your competitors haven't have run their own call centres into the ground. Simply not good business practice.

QF admit that their own target for reward reinstatement is 21 days - the reinstatement goes through multiple steps and offices - inefficient for the company to manage, more to go wrong and out of step with the competition who can manage in a simply process near instantly.

And you expect QF to giveaway $540 worth of wine (6 bottles of Toolangi Block F Chardonnay in this case) every time somebody messes up? You think that is business savvy?

QF Group profit is down by 17% from 2016 to 2017 - QF International has declining revenues (from $5,750m to $5,708 m) declining underlying EBIT (from $512m to $327m) and declining operating margin (from 8.9% to 5.7%).

Of course I've taken most of my business elsewhere - in fact over the last 12 months I've spent more of my personal time on call hold and chasing up QF's mess ups than actually sitting on their aircraft.

Globaliser

Aren't these the two key points? IIRC and if I have correctly remembered the chronology, in 2014 QF looked almost doomed - in fact, the brightest hope for the future sometimes seemed to lie in a transformation into "Jetstar Group". Joyce was the subject of trenchant (if not virulent) criticism from all sides. Old allies had been turned by QF into vigorous competitors, yet the EK/QF alliance didn't look like it was working well. Yet (whatever you may think of the balance between all the factors that have contributed to QF's current condition) QF is still here and still recognisable, and in many respects has been reinvigorated. So why shouldn't Joyce take the benefit of the rewards which he was promised in 2014? And in an era in which so many fat cats just pocket their rewards, one might have thought that a large charitable donation out of his rewards was something for which he might be lauded, not further criticised.

Platy

Yes, of course they are the key points. But please consider:

• The Board could have presented a package that anticipated a substantial surge in share price in the event that the company made a turn around and put some sort of limit on a pay out, which is excessive (relative to the renumeration of other other airline CEOs)
• The current share price / divided payouts reflect short term financials not long term sustainability of the business

There is a point of view that excessive CEO pay and bonus aren't necessarily in the interests of shareholders anyway. A recent study (Cebon and Harmelin in Review of Financial Studies) found that performance bonuses encourage short / medium term strategies rather than long term and in any case the large wads of cash are probably not necessary to motivate the CEO.

Consider too that Joyce loaded the 2014 result ($2.8 billion loss) with one off costs and write downs (including a $2.6 billion non cash write down of value of the QF International fleet).

Surely this strategy contributed to the low share price (around $1.00) at the time, which in turn provided an extremely low entry point for the share price differential used to calculate the CEO bonus 3 years on (so was Joyce very lucky or very smart in that case?).

Whereas the current share price and dividend is obviously what it is, the question that folk might ask is whether the airline is in a fit state for sustained financial performance.

Any fool can blunder around on a slash and burn mission (cut staff, cut services, not replace older assets, cut custom service standards, etc), surely the real art is creating the basis for an enduring future? We could spend countless hours debating the merits of various decisions (failed Jetstar expansions in Asia, deferred fleet renewal, ongoing partnership with EK, misalignment of lounge strategy with international services (LHR / SIN) etc) - the key point is that future proofing factors aren't being measured and rewarded as part of the pay deal.

IMHO basics such as staffing your call centres appropriately is a business essential and it is ludicrous that the cost of maintaining the number of staff that were axed is similar to that paid out in an excessive CEO bonus.

Regarding Joyce himself....it was not my intention to criticise him for making a donation to the "Yes" campaign, rather to illustrate the point that if he can afford a $1 million donation he's doing rather well on the pay front (ironically supporting LBGTI rights / marriage equality is the one thing I do respect him for).

But a leader of the mould of Haruka Nishimatsu, he is not...

moa999

I think AJs salary is only $2 million. Granted still far too high compared to frontline staff.
But the big $$ figure has come from shares/options that were issued at or around $1.

In that time the Qantas Market Cap - has gone up about $8bn - I think shareholders on the whole are pretty darn happy.

As for the writedown -- much of it was previous management not writing down fleet appropriately in order to protect their earnings (and bonuses) -- and a decline in older fleet value (when the oil price is high old inefficient jets arent worth much)

lokijuh

My initial thoughts are that he did very well - out of essentially a fuel price driven turnaround. Qantas share price has what seems to be a fairly strong negative correlation with the AUD aviation fuel price.

However what is interesting, airlines that are considered to have quite a strong customer focus (such as SQ and CX) are really struggling with the shifts in the industry at the moment, despite the low fuel price. So maybe the answer is to slash and burn your customers. Those who want to actually pay slightly higher fares in turn for shorter call answer times, better customer service, maintenance of lounge standards etc. are probably in the minority.

On the topic of call wait times, in 2017 I don't mind having to wait on hold for 30 mins for a call to be answered IF it is answered by a compentent, empowered customer service agent who can resolve the query or undertake the transaction efficiently (it's not as if you have to sit there at the phone table with the phone held up to your ear when on hold, like you used to in 1990). Far too many organisations I have dealt with answer the phone in seconds, but it take multiple calls that take an eternity to resolve, because the agents have no clue. Often in an outsourced call centre in Manila, with KPIs that are obviously driven by call churn. Give me a 30 min hold and 5 min resolution any day to 4-5 calls with no hold time but no resolution.

However QF seems to have the worst of both worlds ! A 30 min wait does not guarantee a higher degree of competence in dealing with matters.

Platy

It is reported that CX were caught out by the collapse in fuel prices because their fuel contracts had tied the airline to higher prices for up to four years.

So the very fact that has bent the good fortune of QF has been the opposite for CX.

The second factor is the changing Asian aviation landscape, including Chinese airlines now flying directly to countries, which may have formerly involved a routing via HKG.

SQ is taking on the challenges with an impressive roll out (compared with the excruciatingly slow uptake of 787s by QF!) of new cost-efficient aircraft with the A350 already assigned to 16 ports with BNE to come in a few weeks.

And pricing?

I just priced a LAX-CNS return for early Dec 2017 through early Feb 2018: QF was USD8361 and CX was USD6169, making QF 36% more expensive.

This partly reflecting the fact that QF has largely "given up" on northern Australia forcing all to route through the southern cities: in CNS we'll soon have two mainland Chinese and two HKG based airlines serving CNS together with Silk Air and not a QF-branded aircraft to be found!

Dave Noble

Going LAX-CNS via HKG is not likely to be a popular routing

LAX-CNS is 7190 miles
Going via HKG is 49% further than this at 10,711 miles whilst going via BNE is only 11% over at 8024 miles

Given the long routing and over 33% longer journey time of 24hrs 35 minutes vs 18 hrs 5 minutes, not surprising to me that QF would be charging more

I much prefer CX over QF, but wouldn't want to fly via HKG if going between LAX and CNS

I just had to call the Qantas phone number and wait time was listed as 9-12 minutes - used the callback service and didnt worry about it. I doubt that QF would lose many passengers over call waiting times given that I suspect that most people would make new bookings via online means

Platy

Actually, using CX for N American cities is popular for people based here in CNS, based on those I personally speak to about their travel preferences. Real data - not presumption.

Some (perhaps not yourself) would prefer to save the $2700 even if flying for few extra hours - at least both flights are on international fitted aircraft, with no terminal change in BNE.

On my last few phone calls to QF the quoted estimated wait time was less than the actual - and I don't recall being offered the call back service.

Where would you draw the line, Dave, if you were managing the QF call centre? What is a call wait time that you presume would not affect the business?!

Would you cut another 270 staff from the call centre and have people wait 60 (?) minutes instead of 30 minutes?!

Do you not regard service standards as integral to a "full service" airline brand?
'
(In any case, I thought you'd already turned your own back on QF for various reasons?).

PS LAX-BNE CNS is 18:50 not 18:05 hrs.

Dave Noble

I do use Qantas where it makes sense to - e.g. last week for SYD-WLG - cheaper than Air New Zealand

I have also been managing some ATW bookings for a friend and have had to make calls

For wait times of 6 minutes I havent been offered callbacks but a 9 minutes I have

If callback becomes generally offered at that time level, I don't see it as a big issue if there is a wait time

It may be 2 international configured aeroplanes, but I would much rather a shorter joruney and I would settle for Qantas over Cathay to save 2700 miles of travelling.

Globaliser

Quite so, and if the board were today putting in place a package of that size, I would be right alongside you asking the same questions and pointing to the same things. But it seems to me that the chronology is important. What was done was done, and it would be odd for promises made in 2014 to be reneged on today, given the circumstances in which they were made.