Rivals circle as Qantas image tarnished

Australia's Qantas is slowly getting back in the air but analysts say its brand has suffered serious long-term damage, with rival carriers in Asia and the Middle East set to benefit from its disarray. Many passengers who were stranded by Qantas's weekend decision to ground its entire fleet, bringing a long-running dispute with unions to a head, are already vowing never to travel with the "Flying Kangaroo" again. Experts say that their bad experience, and the impact of months of negative publicity arising from the labour disputes, could affect the carrier's international business running up to the crucial Christmas holidays. "The shutdown has severely tarnished the reputation of Qantas," said Shukor Yusof, an aviation analyst with Standard & Poor's Equities Research in Singapore. "It takes decades to build the reputation of a company and only one day to destroy it. That day arrived on Saturday," he told AFP. Qantas chief executive Alan Joyce, who has infuriated unions with an Asia-focussed revamp, argues that drastic action is required to salvage competitiveness on the airline's loss-making international arm. Qantas began resuming passenger flights on Monday after Australia's industrial mediator stepped in. The tribunal stands ready to impose a binding settlement on management and unions if they fail to agree a way forward. But, observers say, the damage to the 90-year-old flag carrier's reputation has already been done and the airline is likely to suffer in an industry where competition is becoming fiercer, from low-cost and established carriers alike. Moody's Investors Services spelt out the damage, warning that it may downgrade the airline's "Baa2" credit rating as the weekend shutdown could "have longer term implications for Qantas's brand and reputation". Moody's analyst Ian Lewis said "incremental earnings loss and impact on Qantas forward bookings are likely to exert additional pressure on the ratings". In the long term, Qantas is already facing an uphill fight against established rivals like Singapore Airlines and fast-rising competitors like Dubai's Emirates Airlines and Abu Dhabi's Etihad Airways, analysts said. "Despite Qantas's resilience, this has pushed them back further behind its competitors," Shukor said. "The longer the dispute goes on, the more damaging it will be to the airline," he said. "Essentially we're back to square one." Domestic rivals such as Virgin Australia, co-founded by British tycoon Richard Branson, eagerly stepped into the breach over the weekend, boosting capacity and enlisting its airline partners to help stranded Qantas passengers. Internationally, Malaysia's budget AirAsia X offered "rescue fares" to unhappy Qantas fliers. Singapore Airlines, Emirates and Etihad already pose stiff competition on Qantas's business to Asia and Europe. "Over the past two days, we have been accommodating affected passengers on many of our flights and that will continue wherever possible," Singapore Airlines said in a statement to AFP. Peter Harbison, executive chairman of the Centre for Asia Pacific Aviation in Sydney, noted the short-term hit to Qantas but sympathised with Joyce's determination to drive through change. "It's great to have a brand, but PanAm was the best brand around, and it doesn't exist anymore because it couldn't change, it couldn't make the adjustments," Harbison said. Qantas would have to work hard to win back disaffected passengers, he added, "but in the long run it's still a tough task". Passengers like Scotsman Iain Taylor, 65, who was stranded in Singapore on Monday, will not be rushing to rebook with the airline. Asked if he would fly Qantas again, he said: "I would have serious thoughts about doing that."