Qantas devours its own

And for much of this year, that's exactly what the whole industry has been going through.

One of the outcomes has been the rapid blurring of the line between traditional full-service carriers and discount airlines.

In Australia, Virgin was the airline that turned the traditional domestic model on its head, offering significantly-reduced fares and friendly service in late-model efficient planes. Its rapid success in soaking up the infrequent flyer sent Qantas into a bit of a spin. Virgin, together with the success of northern hemisphere carriers like EasyJet and Ryanair, prompted Qantas to launch a low cost subsidiary, Jetstar, which has proven hugely successful in increasing the number of Australians – and recently Asians – taking flights, expanding the market rather than cannabilising its mainstream brand.

But this year, Qantas has lost the plot on the cannabilisation front. For reasons best known to itself it has started handing Virgin customers in droves.
In the last year Virgin has matured into a carrier with schedules, a rewards program and even lounges to attract the lucrative business market – the Virgin of today still offers great value to infrequent travellers who book reasonably well in advance, or even just a few weeks out. But by introducing wider seats at the pointy end and improved catering menus, it now offers a very real alternative to Qantas for the more frequent traveller.

Qantas has responded to Virgin's repositioning by giving it a hand – throwing thousands of customers Virgin's way.

In rash, sweeping decisions, Qantas has decided to pull its mainline brand out of domestic and international routes it has decided are tourist routes and thus can be served by Jetstar.

One of those routes is the Gold Coast. Apparently, Qantas has decided that the Gold Coast with its sandy beaches and extravagant nightlife is just a destination for tourists. Well it is, but it also had a thriving convention industry. And people who go to conventions don't want zealously-enforced baggage limitations, cramped seats, poor flight punctuality, minimal food choice (assuming there is actually food packed on board; a colleague of mine recently boarded an evening flight from Gold Coast to Melbourne only to be told no-one had loaded any food on the flight and passengers couldn't even buy it) or to be told they can't change flights at short notice without paying a penalty sometimes higher than the original fare itself. They want more than a "tupperware airline” as a friend described his Jetstar experience last month.

So those people can now travel with Virgin Blue – they can even use a lounge at one end (although not, yet, on the Gold Coast). If you're going to a convention or doing any business on the Gold Coast you now have a choice of Jetstar or Virgin Blue. I am a Qantas Platinum level frequent flyer. I won't fly Jetstar on principle, so off I went to Virgin.

This scenario is being repeated in a number of domestic destinations as Qantas hands routes over to Virgin Blue by replacing its services with cheap-Charlie Jetstar flights – and to places like Osaka and Kuala Lumpur where business travellers, or those who prefer to fly comfortably, now have to choose another carrier.

Worse, the fewer cities Qantas flies to, the less comprehensive its route map and the more likely frequent travellers are to consider alternative airlines.

It's a slippery slope: Outgoing Qantas CEO Geoff Dixon admits it takes a long time to build passenger volumes – and thus profits – on new routes. My view: handing loyal customers over to rivals like that simply nurtures the cancer that consumes brand loyalty.

From talking to colleagues and others who travel frequently, I know I am not alone: Qantas' decision to start whiting out those red lines on its once extensive route maps inspired me to sign up for Virgin Blue's Velocity reward program. It also prompted me to hire a seat in a V Australia Boeing 777 to Los Angeles in January to attend an industry convention; not only did I save a lot of money on the fare, I get to fly on a brand new month-old aircraft with a large personal TV screen and comprehensive entertainment system – much more comfortable than down the back of a shaky old Boeing 747 which may or may not get to the destination on time and without an unscheduled stopover.

Last week Qantas sent me a glossy magazine they told me was only sent to the top 1 per cent of their customers.

It will be a short-lived subscription, I am sure. But will that message reach Qantas' board in time?

Robert Stockdill is the co-founder and group editor of Aviation Record.com.