HE’S THE QANTAS CEO, AND AUSTRALIA’S MOST BEWITCHING BUSINESS LEADER, WHO STOOD UP TO UNIONS AND CYNICS, AND WHO CORRECTED THE CARRIER’S FINANCIAL FREEFALL ALMOST OVERNIGHT. HE’S ALSO THE MAN STEERING THE AIRLINE TOWARDS AN EVER-BRIGHT FUTURE, OVERSEEING
It’s a long, cruel climb from pariah to messiah. But Qantas CEO, Alan Joyce, has trodden that pocked path over the past half-dozen years and somehow, he claims, never endured a single day where he wanted out. In that same period he managed to turn a basket-case business into the envy of the global airline industry, and performed financial alchemy by taking Qantas from a $2.8bn loss to a $900m profit in a single year. Along that same path were job losses – he axed 5000 Qantas staff in 2014 – savage headlines (‘For the love of Qantas, sack Alan Joyce’) and pundits predicting his demise. But right now, he’s head of a company which, in the first half of the 2016-17 financial year, has made more money ($515m after-tax profit) than Cathay Pacific, Air New Zealand, Singapore Airlines, Etihad and Virgin Australia combined, “with a couple of hundred million to spare”, he proudly points out. Sat in a Sydney office that feels a lot like a Qantas lounge (many of his staff arguably dressed like flight attendants), 50-yearold Joyce seems boyishly excited by what lies ahead; about a future that soon means direct flights from (Western) Australia to London and expected non-stop routes from Melbourne and Sydney to New York and Europe by 2022. Qantas is also rolling out things we’re not so sure about – like free wi-fi on planes – while pondering the removal of in-flight entertainment screens. On the plus side, it’s also testing engines that can fly on fuel made from recycled refuse, and which may help reduce the huge part aviation plays in CO -induced global warming. After years of battling industrial action, naysayers and economic conditions, Joyce hasn’t lost his taste for a fight, either, leading the corporate charge to pressure the federal government on marriage equality. Not because he’s an openly gay man, but because he’s become – despite his lilting, lingering Irish accent – a very proud Australian.
GQ: Direct Perth - London services are set to take off next March. This is massive news if you’re in WA, but should the rest of us be equally excited? Alan Joyce:
The effect on in-bound tourism for WA will obviously be huge, and the amount of excitement in Perth has been amazing, but it will change things for everybody. Going via Perth from the east coast is still going to be one hour faster than going through Dubai. This is a step change in aviation and it’s been huge news worldwide – someone calculated it generated $70m worth of publicity for us. And this is only a stepping stone to the fact we’ll soon have aircraft that can do Melbourne and Sydney direct to New York and London.
GQ: It means an eventual 21-hour direct flight to London from the east coast – that’s a cruel amount of time to sit in economy. AJ:
Look back to when we first flew 14 hours direct to LA – a lot of the commentary was around, ‘will people sit on a plane for that long?’ And now we do it without thinking. We’re very conscious of this, and what we’re saying is, can we reimagine how we interact with the customers? We’ve been working with the University of Sydney and saying, ‘let’s start from scratch’ – what would you do with meals on a super long haul flight like this, and what would you do to keep people refreshed by using mood lighting? What’s the best thing for your body? And the [Boeing] 787 [Dreamliner] is completely redesigned for these long flights. One of the problems with existing technology is that the engines that run the air-conditioning take the humidity out of the aircraft, whereas the 787 has a completely new system, so the humidity stays in, which makes you feel less jet lagged, and less dried out. You’ll notice a dramatic difference.
GQ: How is it that airfares, much like homedelivered pizzas, seem to defy inflation? Is it competition, or better fuel economy? AJ:
It’s technology. When we first flew the Kangaroo Route [London to Sydney], in 1935, it used to take 13 and a half days – with a few stops and even a train journey in the middle – so you can imagine the costs involved. Then, in the ’40s, with the introduction of the 70-seat Super Constellations, the average airfare was still 122 weeks average salary – the [current] equivalent of $200,000 to get to London... But then the 707 came along, and the price came down to 22 weeks wages. Today, it’s one week’s. So, we’ve taken those technology changes and passed them on to the consumer, and that’s what will happen with the 787 – airfares will keep getting cheaper, because it’s 25 per cent more efficient.
GQ: Cheaper airfares also mean more flights and more C0 dumped in the upper-atmosphere. AJ:
We’re passionate about that topic, as 2
an industry, and the members of the IATA [International Air Transport Association] have said we want to get to a point where, by 2020, we have carbon-neutral growth from then on. We’re actually the only industry in the globe that’s agreed to a market-based mechanism for pricing carbon, post that date, for any growth in carbon emissions. Our intention is that, by 2050, we’ll have half the CO emissions that we had back in 2 2004. We also want sustainable aviation fuels and we’ve trialled some to show you can get the kind of energy per cubic centimetre out of sustainable fuels that you get out of jet fuel… We’ve also hired the CSIRO to do a study, because there are a number of different mechanisms, from food stocks to algae, or another big one is potentially using city waste and converting that into sustainable fuels. We think it’s a great potential industry because our fuel bill this year will be $3.2bn, which is basically an import, and if we could convert that into a local industry, wouldn’t that be phenomenal?
GQ: You’re also rolling out on-board wi-fi – we’re not convinced this is a good thing. AJ:
I was recently flying back from London with a friend and he was saying, ‘I really love the space you get flying – wi-fi is not going to be great, I don’t know why you’re doing it.’ Then he was saying that he and his wife missed out on a house at auction because he was flying, and I said, ‘but you’ve just given me the perfect example of why you need it.’ We’re not telling people they have to use it, and we’re not allowing calls, no Facetime or Skype. But if people want to stream Netflix, they can. I think, eventually, in the medium term, that kind of thing might replace on-board entertainment, because people can bring more content with their own subscriptions than we’ll ever be able to provide. And that could be a huge change – allowing us to de-spec and take some more weight out of the plane. And weight is everything. They say on an A380 flight to Dubai today, nearly half the fuel is used just to carry the other half of the fuel. It’s a crazy statistic, but if you can reduce weight, you can reduce the amount of fuel you’re using. And the pilot benefits of wi-fi are huge as well, because they’ll now have real-time weather for the first time, and they’re very excited about that.
GQ: You’ve said Australia is the ‘land of the fair go’, your brand represents ‘The Spirit of Australia’ and so, speaking out on marriage equality was an obligation. How did you feel, then, when Immigration Minister Peter Dutton told you to keep out of the debate and “stick to your knitting”? AJ:
When you’ve been in this job as long as I have, you get a thick neck on things – you have to be very hard nosed in your approach and your views and not be intimidated by anybody. What’s important is that people understand what we’re saying – which is that parliament should just get on and do something about marriage equality, most Australians are fed up with this and just want it to happen. The reaction from all of our stakeholders to our efforts on marriage equality has been overwhelmingly positive, and there are a lot of shareholders these days that will only invest in companies that have good corporate social responsibility. I’ve also had so many employees saying it’s great that Qantas is supporting this cause, because it affects so many of the 30,000 people who work here. There was a great Deloitte study recently that said if you take the LBGTI community, the indigenous community and disabled people as well – who are all looking at forms of discrimination – they now represent more than 30 per cent of your customer base. And they’re three times more likely not to recommend a service or a product if they believe they’ve been discriminated against. So, if you don’t appeal to that segment of the community, the economic impact is going to be huge… Not only do we think it’s morally the right thing to do, there’s a strong business case. And we also find it makes a big difference in attracting talent… I remember doing an event and a young indigenous girl asked if I could see a young indigenous woman becoming the CEO of Qantas one day. And I said, which I fundamentally believe, ‘If a gay Irish man can become the CEO of Qantas, then easily a young Indigenous woman could.’ So we’re very happy with sticking to our knitting, but our knitting involves being part of the community, and our knitting involves us being outspoken on issues like this.
GQ: In 2011, you went to war with the unions and controversially grounded the fleet to bring the battle to a head. It was a brave move, and no doubt one that also carried a great degree of distress? AJ:
That was a tough year, because there were a lot of issues happening. But I think the hardest thing was when the engine on QF32 went [in November, 2010, a Qantas A380 suffered an engine failure on take-off in Singapore]. I was on my way back from an investor conference in the city and the first we knew about it was we noticed the Qantas share price collapsing… At the time, pictures of what looked like the tail of a Qantas aircraft were being posted on social media, then a news agency reported we’d lost a plane. That was a horrible moment. I rang the Operations Centre and they said that no, they were speaking to the pilot but he was busy, the plane was still in the air. So now we don’t know if our A380s are safe, that aircraft is still circling, trying to burn fuel so he can land, and we have to make the call because we have three A380s about to push back – is there a safety problem? Our senior engineer could see from the pieces in photos that it was a catastrophic engine failure, so we made the call to ground the fleet immediately. In the end, that was my call, and it went on for 12 days, and Qantas was under a lot of pressure, even though it turned out to be a problem with the Rolls-royce engine.
GQ: Then came the cutting of 5000 jobs as part of the 2014 company restructure. And, after Qantas reported a $252m first-half loss, the media was calling for your head. How do you front up for work at times like that? AJ:
I don’t think you can worry about it. If you have a clear direction, if you know you’re doing the right things, which will eventually pay dividends – excuse the pun – and people will be better off as a consequence of the hard decisions, then you have the determination and the focus to get through. Most leaders who go through periods like that, say you have to compartmentalise. So, when you’re at work, you’re focused on what you need to do, you’re focused on the issues that need to be addressed. And at home, I wasn’t discussing work with my partner, I tried to switch off. You have to make sure you keep that balance – it helps you get through. And I’ve never felt I’ve been under enough pressure that I wanted to leave the job, or ‘I’m not coping with this.’ … But they were tough decisions – 5000 people lost their jobs. And a lot of those jobs didn’t exist because the technologies and efficiencies just weren’t there any more. During the dispute, in 2011, we were losing $20m a week. We had the prospect of that continuing for another year, or we could have given into the unions’ demands, which never would have let us restructure the company the way we did in 2013, with all of the 30,000 people in the company working together to try and fix the company. And we fixed it in three years, which was absolutely amazing.
GQ: So, you can simply stick criticism in a box and shut it out? AJ:
Yes. In this job there are probably 20 or 30 things you could be thinking about or spending your time on at any given moment, but we’re here now, and all I’m thinking about is this interview. And you’re doing that too, so why can’t you do it all the time? When you’re at home, you focus in on your family life, or if you’re on holiday, why would you think about the work you’re going to do when you get home? We can all do it, it’s just a matter of training your mind. And we’re putting a lot of our senior managers through
“Parliament should just get on and do something about marriage equality. most Australians want it to happen.”
this kind of mindfulness training now, because it’s a great way of dealing with stress and getting people to have that kind of focus, to avoid distractions around them.
GQ: And that same ability to ‘compartmentalise’ shields you from stress – and assisted in your rise to CEO? AJ:
It’s important, as a leader, that you don’t demonstrate any stress – you’ve got to be the swan on the water. And I talk about operating at the right level. To use the airline analogy, most of the time in this job, it’s about staying at 35,000 feet, but when you’re uncomfortable with something and you’re not sure that it’s working well, then coming down to five feet is OK. But if you’re operating at five feet all the time, as a CEO or a senior leader, you’re not doing your job.
GQ: A recent business survey named you the CEO most Australians would like to work for – not despite of what you’ve done at Qantas, but because of it? AJ:
It was a nice thing to read, but if anyone thinks that one person is responsible for a significant change like we’ve achieved, it’s absolute nonsense. There are 30,000 people in the company, and your people are the key. When we were going around talking about the restructure in 2013, there was so much angst and worry from people who worked here, were they going to have jobs? But we needed a big turnaround, and they pulled together to make it happen. And seeing the positive nature of the place now, it’s a real credit to all those people. Not even the top 10 people here can take credit for what’s happened, the credit goes to everyone.
GQ: What of that recent pie to the face - can we confirm it was lemon meringue? AJ:
Yes, though I’m not really much of a pie man... There’s been a lot of things happen over my time at Qantas, that was different, but not unusual.
GQ: You’re nearly a decade in the job, would you like to move on and do something easier, say, Prime Minister of Australia? AJ:
No, I’m not going anywhere. I love Qantas, I’m an airline person, and the aviation industry is a very exciting one to work in. qantas.com