Latest / Uncomfortable Conversations with Josh Szeps / How QANTAS Corrupted Everything with Joe Aston

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How QANTAS Corrupted Everything with Joe Aston · Uncomfortable Conversations with Josh Szeps

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  G'day, humans! Welcome to The Safe Space for Dangerous Ideas, and the most dangerous
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  notion in politics is the suggestion, the mere hint, the mere whiff or insinuation, that
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  gifts bestowed by a megacorporation on a humble public servant could in any way sway
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  that politician or public servants attitude towards regulating the industry that the gift
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  comes from. Yet it happens all the time, of course. It's not technically bribery. I mean,
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  companies are allowed to do nice things to politicians and politicians are allowed, then
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  to, of course, preside over decisions that are relevant to the fate and profitability of those
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  companies. And as long as there's not a real literal quid pro quo, it's all kosher.
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  But it sure doesn't smell very kosher. When you see it all put together by one of Australia's
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  leading financial journalists in an explosive new book called The Chairman's Lounge,
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  the Inside Story of how Quantus sold us out. Now, yes, this does very much tickle my personal
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  fancy because I love aeroplanes and I'm an in-veterate travel hacker and a frequent
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  flyer points juggler and a frequent critic of Quantus and of the way that the Australian Government
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  panders to that corporation and favors it against the interests of Australian travelers.
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  However, this is not just a narrow Josh Zeppes hobby horse episode. This has implications
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  as a parable for what happens when one gigantic mega corporation that has almost monopolistic power
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  in a country gains too much sway over the people who make the decisions that they are supposed
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  to be making on the basis of our best interest, not the best interest of either them and their
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  family when they get upgraded or the shareholders of a private corporation. Joe Aston is a legendary
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  financial journalist. He has been extremely influential in blowing the lead on big stories
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  in Australian business and finance for years. He's had a particular interest in Quantus
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  where he used to work in the communications department of Quantus after having been a political
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  staffer himself. So he's seen this from both sides, actually from three sides, from the political
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  staffer side getting wood with incentives from Quantus, from the side of Quantus itself,
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  and now from the side of the media, which also enjoys taking free upgrades and junkets to
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  wherever Quantus wants them to and order to report favorably on the national airline. I find
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  this stuff absolutely fascinating. I hope that even if you don't know anything about Quantus and
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  even if you're not in Australia and have no interest in Australia or Australian aviation,
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  that this is useful as an analysis of democracy and capitalism and corporatism and corruption.
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  Please enjoy the one and only Joe Aston.
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  Books going well are here, unless but that's just the thing the publishers say.
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  No, it's going very well. I mean, look, I'm not a book publishing expert. This is the only book I've
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  ever written. I don't know what to compare it to. But I think from for a business book,
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  the numbers of books. But that's what's great about it. It is not a business book per say.
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  It's actually a book about corruption and about how like corporatism and capitalism and
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  cronism kind of seniority themselves rent seeking into the political process, which is why I loved it
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  because I this is a field about which I know quite a lot as a as an aviation geek. And you know
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  when you know about something and you read it in the newspaper and you realize how bad most of
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  the reporting is. Yes, I do. I know a lot about that. And then you turn the page and there's a
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  subject about which you know nothing and you assume that it must all be correct. But you don't
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  bring the same skepticism to that. It's interesting to actually know about. That's so true.
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  Aviation is one thing where I just think the quality of reporting is usually so bad. It's either
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  corrupt because they're forning over something or it's just clueless because they don't understand
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  industry. And in defense of aviation reporting, it's a very complex industry like
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  Qantas would pound for pound B I think the most complicated company in Australia. And that's
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  by the way an argument that people like Alan Joyce make for how much they earn. Yes, right. It's not
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  the most profitable company in Australia by a long way because of the industry structure of
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  airlines. But in terms of the number of moving parts and how one thing can go, one cog can fall
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  out and bring the whole thing down. It's like a Swiss. It does sound like you're making the case
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  for why Alan Joyce was a great leader. I'm making the case for why it's a hard company to run.
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  And I think I'm making the case in the book that there were times when he did so very well.
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  I don't think anyone who reads the book will say that I am saying that. That Alan Joyce did it
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  well at the end. If people are watching the YouTube, I don't know if you can see how many. I started
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  out by putting little doggies in the pages of the bits that I wanted to talk to you about. And then
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  there were so many that I just gave up halfway through the book and stopped doggy doggy. It's great.
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  It's great. It's entertaining. My point about how hard it is to do that reporting is that I think
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  you've done it in this book in really interesting ways. The most interesting thing, the first insight,
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  I guess, that came to me from the book was that politicians are the only people who live lives
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  that seem like they're very wealthy but are not in fact wealthy. And therefore,
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  something like an airline is a perfect tool to corrupt them because they get driven around
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  in fancy cars and they go on a pair on television and everyone's interested in them and says yes to
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  them. But they don't have all of money. They don't get paid like movie stars or even CEO.
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  So when they go on holiday, they have to sit in seat 53k. No, they have to pay for seat 53k, but
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  they never have to sit in seat 53k. Yes, that's the issue. How do they never sit in seat 53k? Because
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  quantists and not only quantists, all many airlines in the world, even the international airlines
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  that fly to Australia, know how susceptible they are to, well, not only the offer of a seat that
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  they haven't paid for, but in fact, even asking, you know, just flat out picking up the phone and
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  saying, listen, me and the family are in economy on the way to Disneyland this summer. Put us in
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  business class, please. Now, what politicians will say and what companies like Corners will say is
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  when, of course, you try to like get the things that you can get. I mean, if it was a person,
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  if it was a celebrity or if it was an Instagrammer and they had millions of followers and they were
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  in seat 53k, they too might try to put it in place. They do and they do get upgraded, but they are
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  not being paid by us as taxpayers to set policy and regulate the airline industry on behalf of the
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  public. That's the difference. Right. So if you're a, if you're a CEO of a big company that spends a
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  lot of money with quantists, you get put in the chairman's lounge, you might get lots of free
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  upgrades. As you say, you know, if you're a movie star, but the difference is we're paying
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  politicians, we're electing them and then paying them to look after the interests of the traveling
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  public. And by the way, none of this would be an issue if politicians took upgrades and then
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  did the right thing by the Australian public and set airline competition effectively. But what they
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  do is they take the upgrades, they travel around on, get these freebies worth tens of thousands
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  of dollars from, from quantists particularly. And then mysteriously, quantists is allowed to treat
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  the Australian public with contempt, especially in a national crisis like COVID. I mean, I think it
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  still would be an issue even if they did do policy correctly because there would be the appearance
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  of corruption. I mean, you can't take massively lavish, really pampering gifts from a company
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  that you regulate, even if you end up being fearless about it because you don't know how you can,
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  you know, supplementally, whether or not you're being as rigorous as you should. I agree with you.
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  I agree with you. But I think we wouldn't have, you know, maybe wouldn't have been on the radar
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  as much if quantists hadn't been, yeah, such a had not acted. I mean, it's supposed to be the
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  national carrier. If it had not let down the Australian public during COVID and coming out of COVID,
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  you know, deciding to make these record profits at the expense of providing a minimum level of
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  service, I don't think it would have become such an obvious problem. Well, you wouldn't have
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  written a book about it. No. And it wouldn't have become so obvious that that the political class
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  doesn't, like, sorry, the political class is understanding of quantists diverge so far from our
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  understanding of quantists because we had all waited 11 hours on the phone to track down a lost bag
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  or to try unsuccessfully, usually to redeem a COVID credit, you know, or to figure out what flight
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  we'd been put on to after it was canceled for the fourth time. No, no politician did that. Now,
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  they got, they got looked after immediately, you know, if their bag was lost, someone tracked it
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  down and they delivered it to their house. If they wanted to redeem a COVID credit, it was one phone
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  call away. They had the special number, the chairman's lounge number. It rang three times,
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  they prefer an Australian person in Australia answer the phone and could actually solve their problem
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  rather than getting sent to the South Africa or VG, you know, outsourced call center where no one
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  really even understands how the ticketing system works, not not now, but in COVID when those systems
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  I mean, it's still still to an unacceptable degree, you know, due to unexpectedly high call
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  volumes, you know, because it's unusual. Yeah, what are the, how is it on it? If it's unexpected
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  every single time I call, at what point does it become expected in that call volume? Indeed.
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  You mentioned chairman's lounge a couple of times, a significant, I have a big audience in the US
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  and abroad, which will not understand the ins and outs. So the interest for them in this conversation
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  is about how monopolistic behavior in a company can corrupt politics, right? But let's specify
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  just so they can, what is chairman's lounge? Well, it gives them good ideas. Yeah, that's right.
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  And look, the US airline industry works very effectively, like there's great competition,
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  because no airline controls more than 18% market share, you've got competition based on the level
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  of product and service. I mean, I don't think many people would say that it's a, well,
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  that it's a good place to fly in the domestically in the US. Well, it depends when you last did it,
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  fair to cheap, but I think it's a pretty miserable experience. I don't agree with that. I think a lot
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  of people have this ideas of what domestic travel in the US is like based on their experience 10
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  years ago. Anyone who's been there in the last five years, I mean, certainly the domestic
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  travel experience in the US during COVID and since this far superior than here, I live there, I know.
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  What obviously in the days around 9, 11 and all of the chapter 11 bankruptcies that the US
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  carriers went through, the fleet were very old. The crew were highly unionized and the customer
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  experience was poor. No doubt about it. But if you look at today, delta, I would say delta is
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  probably the best airline in the world. United follows them very closely. By what metric? By the
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  metric of the amount of money they invest in technology and how much they innovate on that
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  front for customers. So this is the thing in, sorry, if I gave you the option of either flying
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  delta on a long haul or Singapore Airlines on a long haul, which would you choose?
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  So I understand what you're saying. Clearly, I would choose Singapore. I'm talking about
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  for a public company listed and not owned or not owned by a government, which Singapore
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  Airlines is. I'm saying, traditionally owned by institutional investors with a profit only
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  motive, not a nationalistic motive. They are very good airlines. They have new fleets.
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  The things that they do for customers that, Quantus and Virgin Australia have failed to do,
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  for instance, delta introduced bag tracking on their app in 2016.
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  Now, Quantus and Virgin Australia introduced that this year, eight years later.
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  Delta and Singapore still doesn't work. Yeah, well, I digress slightly, but Delta, Singapore,
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  Emirates, they all introduced in long haul Wi-Fi in 2014. Quantus still does not have any international
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  Wi-Fi on their long haul flights, which is a joke. I mean, they say that that's a choice,
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  a customer preference that Australians like to be able to switch off. That is ridiculous.
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  I mean, if 50% of people like to switch off, then they could choose not to turn it on.
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  Right, but what about 50% of people? There's an expectation from your boss that you're
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  going to be online, if they know that it's on July 12th. If you believe that from Quantus,
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  then you'll believe anything. Maybe on July 12th. But going back to Delta, for instance,
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  in 2021, they introduced a function on the Delta app where if a flight was cancelled,
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  you just go into the Delta app and you see five other flights that day and you choose which one
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  you want to put yourself onto and it's done. Now, if Quantus had invested in that kind of capability
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  in their own technology, the whole meltdown in 2022 when all the cancellations happened,
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  or especially around the ghost flights, again, referring to things I might have to explain later,
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  but then Quantus customers were like, the call centers wouldn't have melted down at Quantus,
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  because people could have just done things on the app, but because Alan Joyce never invested
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  in that technology the way the US carriers had been forced to compete with each other,
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  then Quantus sort of melted down if they failed. So you're talking about essentially functionality
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  and technology. I mean, I could experience a lot of other examples I could use. You know,
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  like the United brought in this special connection saver app, it's technology that allows them to
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  move the departures of flights at big hubs by, you know, five minutes, seven minutes, ten minutes
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  before they close the door in order so that fewer connecting passengers miss their connections.
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  So it sort of makes the network more malleable in a live sense. What was Quantus' solution?
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  They just increased international connection times to minimum, times to 90 minutes.
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  So just made everyone's trips slower. That was their answer to the amount of misconnections,
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  and in particular the missed bag connections. So Quantus' solutions were all analog,
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  because they'd done no investing in technology. Right, I see. I mean, I get so the experience
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  that I'm talking about is, and maybe it's attributable to airports, to the number of people
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  traveling to air traffic control or something. But my experience, even recently of traveling a lot
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  domestically in the States, is still one of much more chaotic boarding areas, much more aggressive
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  and angry, flustered people who are more confused about getting on the plane a lot longer taxi
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  and wait times, gruffer flight attendants, a less customer service oriented ethos,
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  and just generally a more chaotic and unpleasant experience, longer lines and so on.
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  I think airports were better at that here. There's no doubt about that.
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  Oh, no. Well, I think you're talking about a few things there. I think the Quantus stuff
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  are excellent. Like, and one of the things that I felt the saddest about and which drove me to
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  write this book was the way they'd been treated. But I think Quantus crew and airport staff and
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  the like, they're really dedicated and they, I think they go to another level compared to your
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  experience in the US. That's true. But I think from the fleet reinvestment, so having the youngest
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  planes point of view and also from a technology point of view, particularly, which is
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  very important for the most frequent business travelers, which are the most valuable customers for an
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  airline. The US carries a miles ahead. Interesting. But they don't have a chairman's land, which was
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  the question you actually asked me. The chairman's land is globally unique. It is in the US. They have
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  I think Delta. What's it called? Americans. One's called concierge key. One's called one K.
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  One's called United. One's called global traveler. Global travelers. Another one. So
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  they're special invite only tears of their loyalty programs. Right. And they have them in the US.
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  And they British has one called Brent Shiaway says premier. And so they've, they've got them.
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  And so just to clarify for people, if people think about their frequent flyer membership status,
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  you do a certain amount of flying and then you get up to silver and you get up to gold,
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  to platinum or whatever. And then there's a tier of a tier that is not actually determined by flying.
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  You can't get there. You can't get there any other way that I have an invitation and invitation
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  in the mail. And so the US carriers and some other carriers around the world have these invite
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  only tears, only quantists globally and Virgin Australia. It's an Australian unique thing where they
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  have their own actual physical lounges for those members only in all domestic airports in Australia.
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  Right. And Virgin's is in Melbourne, Sydney, Brisbane only. They shut their camera one,
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  which was a big mistake for them. Absolutely. I mean, one of the interesting statistics that
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  you have in the book is that in 90% of cases, Virgin Australia's, which is the main competitor
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  to quantists, they're flights at cheaper, but I only get 11% of the traffic of members of parliament
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  and their staffers who are supposed to fly the cheapest flight. And for Bidden from taking
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  lounge access into account for making their decisions. Right. But of course do because the chairman's
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  lounge is it's not even marked as a lounge. You'll just walk through the airport and there's a
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  sliding door that says private on it, but people who are members by invitation only VIPs, celebrities,
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  CEOs of companies and most controversially politicians will be escorted in there and there it's
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  sort of a first class lounge atmosphere. Exactly. They also have free upgrades, which is very
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  common in the States. Based on availability. Based on availability in the States, everybody who's
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  elite gets an upgrade. I mean, it never clears, but theoretically you're on the upgrade list.
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  Yeah. It's not the way that it works here. It is an unusual thing to have a free complimentary
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  upgrade from the airline regardless of status. And obviously the better things are going
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  demand-wise, the less upgrades that you get because those premium cabins are full already,
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  but with paying customers. Right. Usually you get more upgrades when the airlines doing the worst.
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  Yeah. Or when they're being run the least efficiently. They're putting on too many flights.
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  So is there a system of auditing like MPs travel? How do they just find themselves?
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  They're very careful not to have one. Look, Qantas could certainly order it in their system
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  should they wish to or should they be compelled to. Of course, that would be-
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  But I just mean like, is there nobody tapping any member of parliament on the shoulder and
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  saying, is it true that you're taking the cheapest flight? No, no one does that.
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  Well, obviously not because otherwise how could it be openly flattered the way it is? No one's
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  enforcing the rules. No one's enforcing the rules requiring them to take the cheapest flight
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  of the day. No one is enforcing the rules around what they're disclosing and failing to disclose.
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  As we learned from Bridget McKenzie, the shadow transport minister in Australia,
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  banging on about Albanese's upgrades, which were to were disclosed, she hadn't disclosed
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  16 free upgrades from just from Virgin Rex and Qantas. Although I think the disclosure thing is
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  also a bit rich because who gives a shit really? If you disclose it or don't disclose it, the fact is
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  you got something really, really, really nice that everybody wants to get for free.
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  To me, I don't- Well, I think it helps to- But how do you know that it's happened if it's not
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  disclosed? On that basis, surely you want politicians to disclose the gifts that they're given.
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  Yeah, I do, but I mean the problem is what is the consequences? Yeah, it is, but what are the
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  consequences for politicians failing to disclose their gifts? Nothing. And I think if, for instance,
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  if Bridget McKenzie or Anthony Albanese or whoever failed to disclose a gift,
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  whether it be an upgrade or a bottle of grain or whatever, if the officer of the parliament
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  was authorized to say, well, sorry, you failed to disclose this, you're suspended from the house
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  for two months, and you can explain to your constituents why you're not representing them in parliament.
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  Right. I think they would be better disclosure, but of course there's not because it's basically
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  an opt-in scheme. And if you don't disclose, then what happens? Nothing. Yeah.
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  But I don't have any rules about not receiving gifts from companies that you have to regulate.
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  I totally agree. There's, you know, she's not able to receive a gift worth more than $100.
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  There is no way that it is appropriate. And I've made this analogy repeatedly for an airline,
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  for any member of parliament or indeed any public official in Canberra to receive an airline
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  upgrade at all. I don't think it's appropriate. It would be like if like no one thinks that the
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  bank can put $20,000 in a politician's bank account. Right. Even whether they disclose it or not,
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  that's exactly. We would say that's bribery. Yes. Although usually you need to have some sort of
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  decision that the politician then makes in return for that money to call it bribery,
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  there's usually has to be causation. But even so, I mean, at what point do we,
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  there will come a time at which a decision needs to be made that will either be favorable or unfavorable
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  to a massive company, right? That is what it means to run a government.
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  I know you won't mind my life this either, but this is an argument to pay politicians more
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  and to remove all the side-fringed, the murky benefits. No, I agree. I'd say pay politicians
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  50% more, no gifts, zero dollars, no upgrades, no chairman's lounge, none of that.
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  Yeah. And then and just be really clear about it. Yeah. No, I mean, I've always said the same thing
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  about my previous employer at the ABC whenever, you know, a Murdoch journalist to like, you know,
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  do you know how much the managing director of the ABC gets paid? I'm like, well, yeah, it's
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  but it's an important job. Like pay good people well. Yeah. And you'll get good people. And
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  by the way, managing an organization of that size, it's not a huge amount of money. If you put
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  compared it to the private sector, it might be $400,000. Well, what are you reckon to see of
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  news cooperation, mate? Yeah, exactly. That's right. Yeah. I think Robert Thompson's been
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  taking on 25 million. Right. I mean, you have been a fact check that on, but so now let's just
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  talk about the ways in which in which quantists does get government, you know, which the government
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  does help in quantists. Because I mean, there are that there's this constant refrain from
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  quantists that wear a private company. We have to, you know, please share holes and we have to
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  make a profit. But a lot of our competitors, as you mentioned earlier, government owned airlines.
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  And the government owned airlines, I can't move which one in the book, you quote one of them saying,
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  well, yeah, I mean, we get subsidies from, you know, the government of the United Arab Emirates or
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  whatever or Qatar. But the best subsidy of all is government protection. Yeah. Well, that was
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  what quantists said that right. Maurice Flanagan, he's passed away since then, but he in 2006,
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  ironically, quantists was madly trying to stop Emirates from increasing its flights to Australia.
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  Just like 20 years later, it was trying to stop Qatar. And so the chairman of quantists at the time,
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  Margaret Jackson was saying publicly, you know, let's not kid ourselves Emirates is not a commercial
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  commercially run airline. It's not run like quantists where we have to make a profit.
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  And yes, the Emirates executive responded well, that actually the biggest form of subsidy is
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  government protection for competition. Now, hilariously, a few years later, Emirates and quantists
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  hopping to bed together where they remain. And now they're doing exactly what, you know, quantists
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  never changes it. This is the whole point of this book. It's the same story, different names,
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  different faces, different year, same story. And now, and the story is what that quantists will do
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  anything. And we'll carry favor with politicians in order to get the politicians to block proper
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  competition. So Singapore Airlines wanted to fly from Australia to the United States. That was
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  blocked. Qatar wanted to just increase the number of flights that it was permitted to take from
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  a handful. What was a couple of dozen? It was from when he something to, well, it was from 35 to
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  70. Right. To major to the four major cities of Australia. Right. But we're talking about,
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  and I was, I mean, because I was banging on about this when I was doing the ABC radio show last
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  year, I just looked back at the things that I was looking at. And so I sit in an email that I sent
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  to the minister at the time, the transport minister, when she blocked the Qatar Airways request,
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  I said, for context, listeners are frustrated by exorbitant air fares. Many perceive quantists to
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  be gouging customers sitting on slots. We can explain that later. And taking a captive market for
• 25:24
  granted, quantists has about 400 international flights a week out of Melbourne, Sydney, Brisbane,
• 25:29
  and Perth. Qatar Airways has 28. Yeah. That's that 28 to major cities to my right. It was
• 25:36
  40 to 42, but yeah. Okay. Many travelers feel that successive governments from both parties have
• 25:42
  defined quantists as interests as the national interest at customers expense. And then I sent
• 25:47
  a few questions like, is there any difference between the national interest and quantists as
• 25:51
  interests? And quantists doesn't think so. And nor seemingly to politicians. Well, nor does
• 25:57
  nor does Anthony Albanese. I don't know if all politicians feel that way. But but and Catherine
• 26:03
  King is just. Well, I mean, definitely translated Anthony. One of the things that has frustrated me in
• 26:09
  the reporting on your book is that a lot of the journalist journalistic coverage of the book
• 26:14
  has been around the Anthony Albanese using his close relationship with the head of quantists to
• 26:20
  secure upgrades on first class flights. The front cover of the Murdoch tabloid had a photoshopped
• 26:27
  image of the prime minister's face on on the first instance and the in the quantist first class
• 26:33
  seat, wearing corners pajamas, holding up a glass of champagne. But to me, that's a distraction
• 26:38
  from the point of the book, which is that there's actually nothing anomalous at all weird about this.
• 26:42
  It's actually been pretty consistent. And as I said, from the very first pages of the book,
• 26:49
  when I was a junior liberal staffer nearly 20 years ago, I saw this with my own eyes. And it wasn't,
• 26:55
  you know, it was back benches. It was even, I mean, I was about the most junior person in parliament
• 26:59
  house. And even I managed to get Matt get upgrades out of quantists. I mean, it was just happening
• 27:04
  on an industrial scale. It's a mindset there that we don't pay for business class. Of course.
• 27:10
  Yeah. I mean, we're in the political system. They just give them to us. And so it would say,
• 27:15
  well, it saves the taxpayer money if you don't have to buy it outright business class. But
• 27:19
  in the world, on their personal travel, I see, I see personal travel. So, um, so yeah, Anthony
• 27:25
  Albanese is not a anomalous per se, but he exemplifies what is a terrible and rotten system.
• 27:32
  Right. And I mean, the big difference, of course, is that he was transport minister in this period
• 27:37
  of time. Like he had the personal power. As we learned when Catherine King, the current
• 27:41
  transport minister blocked Katar last year from increasing their flights to they wanted to add
• 27:46
  another 35 flights a week. Um, it was her personal decision to she had the total discretion to say,
• 27:53
  yes or no. Now Anthony Albanese had that power for six years. Um, in those circumstances,
• 27:59
  how can when you hold that office and have that power over which of quantices competitors can
• 28:04
  fly in and out of Australia and how often? How can you possibly be taking upgrades on your holidays
• 28:11
  on an almost annual basis on your personal holidays from quantists and from Emirates?
• 28:16
  They were the two airlines he always got upgrades from internationally. Yep. And so one of the other
• 28:21
  things that I asked the minister, which he also didn't respond to was, would the minister have any
• 28:26
  concerns about the perception of a conflict of interest if Katar Airways gave gifts to seniors
• 28:31
  right in politicians? By the way, which they do. Right. You think they don't all take upgrades from
• 28:35
  Katar as well. Right. Yeah. Yeah. But they're not gifted a mysterious chairman's lounge membership.
• 28:41
  No. No. No. No. No. No. Although Katar is finding its own way into the game. That's 25%
• 28:46
  of virgin Australia. Yes. subject to government approval. Um, be a hard one for Albanese government
• 28:50
  to knock back, but we'll see. Um, and then through and then so by owning virgin, they own
• 28:57
  virgins version of the quantists, uh, uh, chairman's land, which is called, uh, beyond. Yeah.
• 29:03
  So, so, you know, they'll be in the game. I mean, they'll find ways. But I mean, in the meantime,
• 29:08
  you've got these ridiculous inefficiencies like, uh, I've, I and family members have twice this
• 29:14
  year flown the Adelaide to Doha to Europe route because it's got this weird, I mean, it's ridiculous
• 29:22
  that Katar is forced to do that. But, but without getting too down in the weeds about it, Katar has a
• 29:28
  cap on the number of flights that it can operate out of the big, the big cities in Alban, Brisbane.
• 29:33
  Adelaide, you can fly as often as well. Adelaide doesn't, yeah, you can fly as often. So they have
• 29:36
  this flight where they take off in Adelaide, they fly for 50 minutes or whatever to Melbourne,
• 29:42
  they land, and there they just happen to be allowed to take on more passengers. Yeah.
• 29:48
  And then they fly onward to Doha's Europe. So it's a second Melbourne flight. Yes,
• 29:53
  bearing my thoughts to do this ridiculous hop to Adelaide, even though they already have a
• 29:57
  direct flight from Adelaide. Correct. So it's the second Adelaide flight. So it's actually the
• 29:59
  second Adelaide flight. And I suppose the third, maybe the third Melbourne flight, if they've got
• 30:03
  two daily, they don't from Melbourne. One from one daily from Melbourne. So it's the same, whichever
• 30:06
  way you want to count it, it's a stupid, pointless way of getting around. Especially when
• 30:12
  Catherine King says the reason that she, one of the reasons she blocked Katar was because she
• 30:16
  wants to decarbonize the transport sector. Well, why are you letting them fly an empty plane?
• 30:20
  Madeleade to Melbourne every day, so as a workaround for, you know, like it's none of their
• 30:26
  decision, none of their reasons made any sense at all. They also used to do the same before COVID,
• 30:34
  it was a tag service from Canberra to Sydney, and they did the same. Yes, I did that one.
• 30:37
  But bear in mind, like, you know, if you're living in Adelaide, I'd have, I'd be a big Katar
• 30:42
  Airways fan. Sure. And then they fly two flights from Adelaide. Yeah. Pontus has not flown
• 30:46
  an international flight from Adelaide since 2013. Right. Alan Joyce killed the last flight,
• 30:52
  which was to Singapore. And from then on, no more international flights. And they're supposed
• 30:55
  to be the national carrier. Yes. And they also abandoned Australia during the pandemic and
• 30:59
  didn't operate any international flights. And Australians who were stranded abroad, who wanted
• 31:03
  to come back to Australia, had to rely exclusively on non-Australian airlines. Indeed. I lived in
• 31:08
  the national flight in the US at the time. I was, I was, I understood this problem acutely. And
• 31:14
  lots of the expats outside Australia, we were all talking to each other in various, in various ways.
• 31:18
  And it was hugely disappointing. Now, don't get me wrong. That was a decision Quantus needed to
• 31:25
  make for its financial survival, you know, not literally survival. But, you know, it was, could
• 31:31
  they afford to lose hundreds of millions of dollars more a year by operating an international
• 31:38
  network where, you know, they were only allowed to have 20 people on each flight. Like Qatar did not
• 31:44
  stop flying to Australia. And as its former CEO, Akbar Albaq, had told me for this book,
• 31:49
  they lost 150 million US dollars. Well, how did United do it? In their shareholders. Yeah.
• 31:55
  Yeah. Well, indeed. Correct. Right. And United never stopped. And there's freight and stuff like
• 32:02
  there's still, you know, you might have 20 passengers, but there's still ways of making money. You
• 32:05
  don't have to fly you, you know, Singapore Airlines. Singapore Airlines never stopped flying to
• 32:09
  Australia. So yeah, the freight was important. That's how they made the difference. Yeah, it's
• 32:16
  pretty disappointing. I think people would have forgiven Quantus for shutting down its international
• 32:19
  network if they'd acted ethically in all the other ways that they did that they failed to, you know,
• 32:25
  if they'd been fairer on the way they refunded their ticket revenue. If they'd been treated
• 32:29
  their employees with respect, if they hadn't have tried to, well, if they hadn't have sacked too many
• 32:34
  of them and then tried to operate the airline without enough staff. And they basically, you
• 32:38
  argue that they basically use the cover of the pandemic as a way to implement industrial relations
• 32:44
  changes that they wanted to do anyway. In other words, get a cheaper workforce so they fired a bunch
• 32:47
  of people who, yeah, well, that's not my argument. That's the finding of three courts. Yeah. Yeah.
• 32:53
  And especially baggage handlers and people like that. Yeah. Well, they illegally sacked 1700 of them.
• 32:58
  Yeah. There's no doubt that's, that's, that's beyond just my opinion. But more broadly, they did
• 33:04
  the court impose a penalty on that. The penalty hearings begin only once the compensation judgment
• 33:11
  is determined. So this is still dragging on. They because Quantus appealed it twice,
• 33:16
  full court of the federal court, then to the high court, 11 judges out of 11 ruled that they'd
• 33:21
  behaved illegally. Then they fought the baggage handlers on the compensation bill. Now,
• 33:26
  the compensation bill has been the formula for the compensation bill has been determined by my
• 33:31
  justice, Michael Lee of the federal court. It's going to be in the vicinity of $150 million.
• 33:36
  But that has to be nailed down. That'll take another couple of months, three months maybe. I don't know.
• 33:41
  Only then will the federal court have a hearings to determine what the penalty will be. But the
• 33:46
  maximum penalty is $105 million. Okay. Incredible. But they say, by sacking those people,
• 33:53
  they say about $100 million a year. So they don't, secretly, they don't give a shit with a,
• 33:58
  what they what they pay. In the end, they're already ahead because they sacked these people five
• 34:03
  years, four, four and a half years ago. One, they're already ahead. I mean, one of the amazing
• 34:08
  things is that they're able to get away with this without, look, they did take a hit to their
• 34:13
  national reputation for a period. But it's hard for foreigners to understand how large the
• 34:21
  brand looms in the national consciousness of Australia. It's like a patriotic. They've
• 34:25
  done such an incredible job there, marketing. Yeah. I don't even, I can't think of a global
• 34:30
  comparison because if you think about some of the possible comparisons, there's none in the US
• 34:34
  because they have such great competition. British Airways has fallen so far in the public
• 34:39
  side, psyche there. They were disrupted a long time ago by the entry of Ryan Air and easy jet.
• 34:45
  And the whole European aviation market became very sort of commoditized. And then it might be
• 34:52
  something like Emirates for Dubai. Yeah, but Dubai is not a real place. There's a few locals,
• 34:58
  but really, it's just the rest of it's just a hard help. That's not an organic, no, no, no,
• 35:02
  no, no, no. Culture. Yeah. I mean, so they've had this ad campaign for a long time,
• 35:10
  which uses the Peter Allen song I still call Australia home. And it's sung by a chorus of
• 35:16
  children all dressed in white standing in front of the world's greatest monuments and icons.
• 35:22
  And it sends a chill down the spine of every Australian it does. I remember at the end of the
• 35:28
  pandemic, this is how cynical or brilliant their media their marketing is. This is a pandemic
• 35:35
  during which they haven't been operating. They haven't been repatriating anyone. They've been
• 35:40
  turning their backs on Australians completely or a few repatriation flights, but they were
• 35:44
  department of foreign affairs and trade flights. They run by, run by corners, even though the
• 35:48
  corners planes were used. I was sitting at the, I think it was the open air cinema,
• 35:55
  you know, with the you're looking at the screen and you're looking across the harbor at the
• 35:59
  Harbour Bridge in the Opera House. And before the movie, they run a one minute long
• 36:05
  Qantas ad. And it's all about reopening and the world reopening and theory families connecting
• 36:11
  with each other again in little villages in Italy and Australians. I was weeping by the end of a
• 36:17
  show, you know, and I was like so cynical about this airline, but they've got this place in our
• 36:24
  consciousness that allows us to give them a pass. Yep. And people keep coming back from all,
• 36:30
  no matter how much punishment they dish up. And part of that is they're competitive position,
• 36:36
  you know, like eventually if you've got a fly somewhere, you look at your options and you sort of
• 36:40
  go, well, they're my only option. And once you've done that, you're halfway back. But is that true?
• 36:45
  I don't, I mean, I never do that. And I never fly them unless I'm burning freaking fly points on it.
• 36:49
  Because I don't understand why there's a reason. But people do. So we'll come back to that.
• 36:52
  We'll come back to that. But if you certainly if you live in regional Australia,
• 36:56
  they've got your own barrel. Right. Sure.
• 36:58
  Yeah, especially since Rex, you know, but it since Rex has fallen over. But if you live in a large
• 37:02
  regional center, you rely heavily on Qantas link and they absolutely renew on airfares because
• 37:08
  they cause of the lack of competition. And and look, no, I was thinking when I say Qantas,
• 37:13
  I'm talking about jet star as well. Okay. Yeah. They're part of Qantas that Qantas owns jet
• 37:18
  star as well. So internationally, it's less so that you have a lot of other choices. And that's why,
• 37:23
  by the way, that's why the Qantas international is part of Qantas is the the worst performing
• 37:30
  and the most challenged because they're they're open to competition and the competition's better.
• 37:34
  Yeah. Then they are. They said, but the one of the key reasons why they have this pull over
• 37:40
  the Australian people and this is one of Alan Joyce's greatest successes of his 15 year rain
• 37:46
  is the penetration of the Qantas frequent flyer program, which is much like Qantas's cultural
• 37:53
  position in its home market, unlike any other in any other part of the world. So you think 16
• 38:01
  million people are Qantas frequent flyer members. There's only 25. There's probably only 20
• 38:07
  million adults in Australia. So there are thereabouts. That would be like if deltas,
• 38:14
  united or Americans frequent flyer program had 250 million members. That's crazy. And as
• 38:23
  people, it's like that there's this idea of there's this thing called the sunk cost fallacy.
• 38:28
  So once you put a certain amount of money or a certain amount of hours into something,
• 38:32
  you feel like you can't walk away from it because it's how much you've invested in it. And
• 38:36
  that's what people go with it do with the frequent flyer program. I've got 500,000 points. I've
• 38:41
  been saving them up forever. I've been a silver frequent flyer every year since 2005. It's
• 38:46
  all part of how my whole thing I'm used to going to the lounge, bloody, bloody, but when in actual
• 38:52
  fact, that'll be much better if they just walked away. Yeah. I mean, not all, you know, that's a
• 38:57
  sweeping statement, but people convince themselves that they're trapped. No, I completely agree.
• 39:01
  And then they've got all the credit costs. You just have to understand that the frequent flyer
• 39:06
  points are a different thing than the travel experience. I mean, I play arbitrage on the
• 39:10
  frequent flyer points all the time in a whole bunch of different currencies and never spend money
• 39:14
  on flights because I'm always acquiring the points cheaper than I could buy and outright ticket
• 39:19
  for and then redeeming them for business class on various airlines within an alliance.
• 39:22
  Right. But if you want to join playing the game, then it's sort of like playing. So if you understand
• 39:27
  the game, I mean, most people in Australia, if you look at credit cards in Australia, most people
• 39:31
  have their credit cards tied to quantists. So they don't get an MX and then choose which airline
• 39:38
  program to put their points into. Their points just go straight to quantists and quantists offers
• 39:42
  a higher earn rate on those as well. So they get sucked into those. It is absolutely better to
• 39:48
  get the points into MX or whichever card program and then say, oh, I'll put these in Singapore or
• 39:53
  put these in, you know, Emirates or you know, or even I mean, there are sometimes, you know,
• 39:57
  sometimes foreign airlines will just sell points for nothing. I had to pop over to the states
• 40:02
  recently and Alaska Airlines had like a 300% mileage bonus on their miles. So I just bought
• 40:08
  miles for about $3,000 and redeemed them with a few days notice on Sri Lankan Airlines,
• 40:14
  which is a member of one world as is Alaska and look at you guys, $3,000 business class return
• 40:19
  flight to London. Now it's not about the airline in the world, but you can have a side hustle with
• 40:23
  the point. I could. Yeah, totally, totally. So they, you know, you don't have to be, but I understand
• 40:27
  what you're saying that the sunk cost fallacy means that people just think, um, I've come this far.
• 40:32
  I'm not going to abandon it. I'm in this deep. I mean, this deep. I need to go the whole way.
• 40:36
  What incidentally do you do about acquiring points? Do you care about, um, when you're actually
• 40:41
  flying or when you're using your credit card and stuff like that? Are you in velocity, which is
• 40:46
  Virgin's woman, but I mean, but I have a, I have a, I have a hard time to quantify. When I lived in
• 40:50
  the US, uh, until 2021, I had an MX and I would, and you could choose and I regrettably
• 40:57
  when I moved back to Australia, I got a card that was quantus instead of just an MX where I could
• 41:02
  choose. She'll keep your American card. It's not much more lucrative. Yeah. Uh, yeah. I have a regret.
• 41:08
  So I have a few, um, but that's out. So yeah, that's my personal experience. And maybe I'll,
• 41:13
  maybe I need to adjust my affairs on that front. You can still open American credit cards and get
• 41:18
  the sign-up bonuses from them. I don't have an American income anymore. So I might find that
• 41:23
  difficult. But look, I'll come back to you on that one. Yeah. All right. Uh, so you've got the
• 41:26
  national, the way that it looms in the national consciousness. Um, and then you've got the way that
• 41:31
  it particularly woos politicians and so on. And I, and you write in the book, but you sort of gloss
• 41:36
  over it about how you were writing an Australian financial review magazine cover story of Alan Joyce
• 41:40
  in 2016. And so they put on the Gold Star treatment for you. What was that like? Uh, well, they've
• 41:48
  all what, I mean, they put on the Gold Star treatment from that's, that's accurate, but, um,
• 41:52
  they're very good at that for anyone that they're seeking to, um, curry favor with. But it was good
• 41:57
  opportunity for me as well. It was a great story. Like they told me before, uh, anyone else knew
• 42:02
  that they were going to launch these direct flights from Australia, London. And I was thinking,
• 42:06
  how's that work? It was, it turns out it was via Perth. Perth London now, everyone knows about
• 42:11
  those now. Doesn't seem that remarkable. But in 2016, when they said we're going to do this,
• 42:16
  do you want to write the story about it? I was like, Hey, oh, yes, what a story. Having worked
• 42:20
  in the airline industry and being an av geek like yourself, I understood the significance of it.
• 42:25
  And to get widespread access to Alan Joyce, their chef Neil Perry, David Kayon and Martin
• 42:31
  Newson, their industrial designers, um, Mark, uh, Martin, um, uh, I'm having a blank. And so they flew
• 42:40
  you to where? I flew with Neil Perry, the chef and David Kayon, the designer to Tokyo. And we've
• 42:46
  got the train to Nagoya to go to the Noratake factory, which is the, the China factory where they
• 42:52
  make the tableware, like the little plates and the cups and all that stuff. And they chose which ones
• 42:56
  and they said, change them, put the, make the handle like this. And I watched as Neil and David did
• 43:01
  all of that. It was sort of dubiously necessary for the story. They made great photos, but did I
• 43:06
  actually need to do that? Not really. But it was a great junk. Yeah. And like going to Tokyo,
• 43:11
  going to great restaurants in Tokyo with Neil Perry is a pretty one of those once in a
• 43:14
  long time experience. He's probably as great as chef. Oh, yeah. And so that project sunrise,
• 43:22
  as Quantas called it, which is, no, no, no, no, project sunrise is the Sydney Melbourne. Is Sydney,
• 43:27
  is Sydney, London and Sydney, New York and Melbourne, London and Melbourne, New York non-stop.
• 43:32
  That hasn't happened yet. Okay. Right. Right. But this was this, this was the pre, this was the
• 43:38
  pre project sunrise project. And certainly still, still groundbreaking to have direct non-stop flights
• 43:46
  from Australia to London. And now to Paris and to London. Yeah. I mean, the caveat being that nobody
• 43:51
  lives in Perth. So you have to fly four or five hours. If you live on the East Coast, I don't really
• 43:56
  see the deal. And I've never done it. No, I mean, you might as well just stop in Doha or Singapore. Which is
• 44:01
  a much nicer experience, anyway, than Perth. Yeah. Yeah. So project sunrise has been the obsession
• 44:08
  of amateur pack journalists for what? Six years, seven years or something. There are, there are
• 44:15
  that. So basically since I wrote since that story, right, since they launched from Perth to London
• 44:20
  and said, don't worry, soon we'll go from Sydney. It feels to me like every eight months. There's
• 44:24
  another story on morning television, featuring a reporter who has been flown to the States or Europe
• 44:32
  in their business class pajamas on contours to announce some other some some dance elements. Yeah,
• 44:38
  that is coming to me like it's like, oh, project sunrise gets another. And for people who don't
• 44:43
  understand why this is so revolutionary, obviously, it's an incredibly long. This will be the longest
• 44:47
  flights in the world. It's an incredibly long way. There isn't the technology that, you know,
• 44:51
  they've got Airbus making us a special type of aircraft just so they can do these kinds of
• 44:55
  distance modifying the aircraft to have an extra fuel tank. Yeah. And these are going to be sort of
• 45:01
  20 hour plus flights. But you'll be great in first class, but I wouldn't want to see that in
• 45:07
  economy. No, no, no, imagine. I cannot imagine. I mean, I haven't tried even Singapore's ultra long
• 45:15
  that they have a special plane. I'm doing that in two weeks. Are you in business or a premium
• 45:20
  economy? In business. Yeah, I'll be really interesting. But they've also got a very good premium
• 45:24
  economy. They've got no economy class on those flights. It's all just premium economy or business.
• 45:30
  And of course business will be fine. You can sleep and do whatever you want.
• 45:33
  But they're still really interesting. I think I could do the premium economy for
• 45:38
  18 hours. Not my not my idea. It doesn't sound fun. But anyway, so there's constantly all these
• 45:44
  reports, these updates about how they'd come one step closer or something. And there's a funny
• 45:48
  line. What do you say? There's some they did some test flight. Yes. From Heathrow to Sydney in 2019.
• 45:55
  Yeah. But it was a completely empty aircraft. Yes. And one aviation journalist said they're not
• 46:01
  testing anything except the appetite of the media to take free flights and write gushing stories.
• 46:05
  Yeah, that was Brian Summers who's a really terrific aviation journalist in the US.
• 46:09
  Totally true. Totally true. So they've got us all by the balls. We didn't all get invited on
• 46:16
  the flight. But no, that's true. The media and look, I put my hand up. I have been one of those
• 46:22
  journalists. I've been on those flights. I've taken those free trips. I've written the gushing stories.
• 46:26
  So I know how it works. And I'm guilty as charged. But it is what it is. I'm characterizing it
• 46:35
  truly as I've experienced it myself. And we, you know, it's reasonable to be cynical about the
• 46:41
  media's coverage of quantists just as much as as the political classes. Yes. So you've got the
• 46:48
  media's gushing reporting. You've got the public experience. There was plenty of criticism
• 46:53
  of quantists in the media. It's not all gushing. Like when all of this happened, there was plenty of
• 46:57
  true. Yeah, it's still happening within the context of, you know, our buddies are really, you know,
• 47:04
  in a tough moment at the moment. And they were 11 weeks from bankruptcy. But now they're just
• 47:09
  taking too long to get the back on track. This way, the media is quick to forgive when they
• 47:15
  launch a new flight. Yes. That's right. Yeah. Vanessa Hudson, in June this year, she launched a new
• 47:21
  quantisers, new Perth to Paris flight. And they all the journalists go along, have a terrific time,
• 47:26
  have a lovely weekend in Paris. Yeah. Which likes to go to Paris. Sure. Not my idea of a good time,
• 47:30
  but they very quickly. And I don't mean to be too critical of my colleagues in the media.
• 47:38
  I've done it myself. And some of them still turn up and ask Vanessa hard questions.
• 47:43
  But I'm just, you've got to put yourself in the situation and realize that that's the reality.
• 47:48
  And that's the powerful inducements that uniquely an airline has at its disposal. If you're
• 47:55
  a mining company or a bank, you know, what's your excuse for taking 30 journalists to Paris?
• 48:00
  Right. And showing them a great time. And that always is going to help you build a relationship
• 48:04
  with those journalists. It's an incredibly powerful tool. And politicians go on those trips as
• 48:08
  well. Yep. I mean, one thing I was thinking when I was reading your book is an airline, an aircraft
• 48:17
  is an almost perfect encapsulation of aspiration because it contains literal classes. Yeah.
• 48:25
  You are pegged according to the social hierarchy, depending on where you see an economic hierarchy.
• 48:31
  I mean, I guess, I guess it's a decent that politicians and media and people like that don't
• 48:36
  pay for the seats at the front, but they get them anyway. I guess in that way, it's a social
• 48:40
  hierarchy. I mean, there is first, first, you're the first, you're the top of the wrong.
• 48:47
  Yes. And then there's all the way up the back. You're at the bottom. And then there are various
• 48:50
  tiers in between. It's a wedding cake, right? And like where you are on the ladder is quite
• 48:57
  literal on a plane. So yeah, if you're a journalist and you're getting offered business class, you know,
• 49:05
  flights, there is a very clear or a politician, obviously, there is a very clear way in which
• 49:12
  your aspirations are being. And by the way, your audience in the US and in other parts of the world
• 49:17
  would find all this quite confounding to hear because my experience having I worked in the P.I.
• 49:22
  Department of Quantice after I worked in politics. So I know the company very well. And my experience
• 49:26
  with the US journalists is they don't take free trips. They're then allowed to and they never
• 49:32
  will. Not the trend. Not the credible. Yeah, your Bloomberg's in New York Times, your Wall Street
• 49:36
  journals of the world. They're not coming on those trips. Their editors would not let them and they
• 49:40
  and and they certainly would never accept or ask let alone ask for an upgrade on one of their
• 49:47
  holidays. So it's really quite a loose Australian practice. And that's the thing about the Australian
• 49:53
  media from a global point of view. It's more like the British media. It's just it's quite loose.
• 49:57
  I mean, in America. By the way, no one at the ABC would ever accept or ask for an upgrade.
• 50:01
  I have no idea. Does that happen? No, no, no, no. In defense of the ABC, they would also not,
• 50:07
  yes, engage in that kind of in those kind of freebies. The ABC would never send a journalist on one
• 50:12
  of those trips. No, but the commercial networks and the and the newspapers, they do. Yeah.
• 50:18
  And so you mentioned briefly the refund situation during COVID. I had a flight, a domestic flight
• 50:25
  booked for next week in the States. I had my plans changed. I had to cancel it yesterday.
• 50:32
  So I logged in. And in 20 seconds, I clicked through and it gave me the option to get a full refund,
• 50:38
  no cancellation. There are no cancellation fees in the States anymore. So thanks to the Biden
• 50:43
  administration. Is that right? Yeah, that was a mayor Pete. Right. Policy that he was the Secretary
• 50:49
  of Transportation Pete. I did it voluntarily during the during the pandemic. They would like
• 50:54
  to be too difficult to charge. Oh, maybe that was free changes. No, no. Look, they've been
• 51:00
  iterations, but put it this way. The airlines have been forced to change a lot of their consumer
• 51:08
  policies by the by the US government in the last two years. And particularly, including around
• 51:13
  compensation for late flights. Oh, yes. Yeah. Yeah. But all of that's been, you know, whether or not
• 51:19
  they volunteered right before they were forced to or not. Right. A lot of this has been driven by
• 51:23
  the transportation department under Pete Buttigieg. Okay. And Pete Buttigieg is not being given
• 51:27
  free free flights, presumably, not the other compliance. So on the screen, it said you have two
• 51:34
  options. It said it can be refunded to the original form of payment or you can keep it as an airline
• 51:38
  credit. This brings us to Quantice's misbehavior during COVID where they didn't have the refund
• 51:45
  button. And a lot of people when their flights were cancelled in the early days of the pandemic,
• 51:49
  were sent emails that basically made it seem like if they just clicked the big button that they
• 51:55
  were going to get their money back as a credit. And then they thought that that was all they were
• 51:59
  entitled to. There was no indication that they actually under law were entitled to a refund,
• 52:04
  because the flight wasn't taking place. Under their contract with the airline exactly. And by
• 52:09
  the way, US carriers got in trouble for this as well at the time. There's been and and a lot,
• 52:16
  but a lot of airlines, you know, they they gave refunds immediately.
• 52:20
  Qatar being one, for instance, you know, I've had Cathay paid refunds really quickly.
• 52:26
  The that I think that the the COVID flight credit scheme that Quantice ran ran was up there
• 52:33
  with the absolute worst thing that Quantice did in COVID. Firstly, as you say, by forcing
• 52:38
  the people into these instruments when they were entitled to a refund and not letting them know.
• 52:42
  But secondly, then by making it almost impossible for them to get their money back.
• 52:47
  If they did want to refund. If they wanted a refund. Because if they knew that they were
• 52:51
  allowed to get a refund, you'd have to call. And of course, the call centers were correct.
• 52:55
  And if you could get through the people on the phones would tell you that you weren't entitled
• 53:00
  to a refund or then they'd say, oh, sorry, I can't authorize a refund. I'll have to do it manually
• 53:04
  and refer it. You'll get a refund in 16 weeks. 16 weeks pass. No, the refund doesn't turn up.
• 53:11
  You have to call back again. You probably can't get through again. If you do get through,
• 53:14
  they say, oh, there's no record of that call you made. I will have to start again. I mean,
• 53:18
  it was just it went round and round and round. Where's the code? What's the number of you?
• 53:22
  What's the number for your COVID credit? I never received the email. Well, we sent you an email.
• 53:27
  We have no record of it. You know, like it just it was it was like, you know, David Bowie's
• 53:32
  labyrinth, including with the bulk of eternal stench, you know. Everyone was stuck.
• 53:36
  It's one thing if it's a $129 trip to Melbourne that got cancelled, but if it was a family trip
• 53:42
  to Europe, you know, and it was $10,000 or $15,000. By the way, it sort of depends on your
• 53:46
  economic circumstances. Sure. You know, if you're a single parent on a support pension, and it was
• 53:52
  you know, $100 jet star flight to Adelaide, that's money that really matters to pay. Sure. Yeah.
• 53:57
  And that was sort of jet star. So that was Quantess's argument when they were being challenged on
• 54:02
  this in late last year, when things really fell apart for Alan Joyce. They were saying, oh, well,
• 54:07
  you know, most of the money, half of the money is $100 or less. So why should we bother following
• 54:13
  up? It's not our problem, you know, let the meat cake. And the fact is, A, that's so... Quantess takes
• 54:20
  credit for how when they make travel more accessible for working people. Oh, we democratized
• 54:26
  air travel because, you know, with jet star, you know, people, we've sold this many $100,000
• 54:32
  airfares under $100. So it matters when they're doing a great favour for Australia when it makes
• 54:37
  them look like heroes. But when it comes to owing someone less than $100, well, not their problem.
• 54:42
  Also, if $100 isn't very much money, then just give it back. Yeah. Well, exactly. Yeah. It's not
• 54:47
  all so much to us. It's not a lot of money to you either. So it also shows if the amounts
• 54:51
  were that low, you knew what the balance owing to customers was. And they're saying, well, half of
• 54:56
  them, it's under $100. That tells you that's a very large number of people. So it turns out,
• 55:01
  that's $500,000 customers. They owe less than $100. That's a mass theft event.
• 55:06
  Amazing. When they were trying to, by the way, make those credits, they were about to expire.
• 55:11
  On the 31st of December, just gone. Those, all of those credits, $570 million of those credits
• 55:19
  were going to expire. And they were running down the weeks. We're up to August. And for the first
• 55:25
  time in three or two and a half years, Qantas removed the slide from its results pack that showed
• 55:32
  how much money was left owing to customers. It was just gone. And then I wrote an article about
• 55:37
  that. And then Alan Joyce and a couple of his lieutenants appeared before a Senate committee.
• 55:42
  And a couple of senators were hammering him for the amount. What do you owe? And why are these
• 55:45
  about to expire? And he misled the Senate. He's, I should say, his lieutenant misled refused to
• 55:53
  give a straight answer for how much money was owed. And they eventually, after really fiery
• 55:58
  proceeding, televised proceeding, they had to admit that actually they owed customers $200
• 56:03
  million more than they'd been admitting to. And those credits were about to expire. And as a result
• 56:10
  of that happening, they basically had to back down and cancel the expiry on the credits. Fabulous.
• 56:16
  But that was that, well, they were about to bank an extra half a billion dollars of profit
• 56:21
  for money that they should have given back in the first place. Yeah, incredible. I mean, the way
• 56:25
  that they phrased the offer to get your, we were airline credit when the flight was canceled
• 56:34
  at the beginning of the pandemic. Incredibly genius. Genius. Let me read it. We strongly
• 56:40
  encourage customers to retain the value of your upcoming flight to a quantist flight credit.
• 56:47
  We strongly encourage customers to retain the value of your upcoming flight. So it sounds like
• 56:53
  the alternative is to lose it, to lose the value of your upcoming flight. But the only reason you
• 56:58
  would be losing the value of your upcoming flight is because they'd be giving you cash instead.
• 57:02
  It doesn't sound like that. It doesn't sound like so tricky. We strongly encourage
• 57:06
  customers to retain the value of your upcoming flight to a quantist flight credit.
• 57:11
  Amazing. So if an ordinary person reads that, of course, they assume that that means
• 57:16
  click this button and you don't lose your money. Don't click this button. You lose your money.
• 57:21
  Exactly. And this is currently the subject of a live class action. Now that hasn't got much
• 57:26
  headlines. No one really even knows, I mean, specialists know, but you mug punters out there,
• 57:32
  they don't know that there is a class action about this. I didn't know. Am I in the class action?
• 57:36
  Or you could have been affected. Yeah. Yeah. Absolutely. Anyone who had a lot of Australians
• 57:40
  would have had a flight on a quantist at some point in 2020 booked millions. Yeah. Millions.
• 57:45
  So and I think as this class action gets further along, I think it's going to look worse and
• 57:50
  worse for a quantist because I mean, I'm not a lawyer, but from a bush lawyers perspective,
• 57:55
  like their position is quite indefensible. Yeah. And so every time essentially criminal, when they,
• 58:01
  they then automatically just gave people flight credits if people haven't done anything and then
• 58:05
  removed the option of getting a refund altogether. Didn't they get slapped down by the regulator
• 58:08
  for doing that? The agency will see attacks them in June 2020. That's the competition and
• 58:13
  consumer commission. Yeah. Yeah. The competition watchdog in Australia, the government's
• 58:19
  competition regulator attacks them in June 2020 and demanded that they make it clearer
• 58:25
  that cost their customers in their communications to customers, that those customers were actually
• 58:29
  entitled to a refund. Right. And hilariously at the time, quantists change the wording slightly,
• 58:35
  but it remained very ambiguous. It wasn't, it was certainly not, hey, guys, sorry, we've been
• 58:41
  right. Just to be clear, you're entitled to cash. It definitely didn't say that. And in fact,
• 58:45
  hilariously, the chairman of the competition regulator at the time said, yes, he sort of
• 58:50
  lamented, yeah, well, even the new communications that we force them to wish you aren't really
• 58:54
  very clear either. Right. Because it was still way down in small print that said, and at that
• 58:58
  time, quantists was just still in the attitude that everyone else can get stuffed and we can do
• 59:02
  what we want. Amazing. The other condition on these refunds, on these credits that was
• 59:08
  amazing was that they persisted with in spite of terrible PR about it was this single use condition
• 59:15
  and an equal or higher value condition, which meant what? Yeah, that's there. That's the same
• 59:20
  condition with an interchangeable name. It effectively meant that if you say your, say your
• 59:29
  COVID flight credit was $300. And this condition didn't apply to all COVID credits, but certainly they
• 59:36
  did if they were a credit for a discount, they, which almost everyone buys. Yeah. So say it's
• 59:44
  $300 that your COVID credit is, you go to book a flight on the, with your credit on the quantists,
• 59:51
  you get sent to a special quantist booking engine, not the normal one on the quantist.com, a special
• 59:55
  booking engine, and you go to book a flight to Sydney Melbourne on eight o'clock tomorrow morning.
• 1:00:00
  And the cheapest fare that will appear in the booking engine will be $300. Even though if you
• 1:00:05
  went to quantists.com directly just to pay with the credit card for a new flight, there'd be $100
• 1:00:10
  or $150 seats on the exact same flight. So they, right, trick you into spending all of your credit,
• 1:00:16
  which you have to do under the conditions of the credit. Now, just to be fair, there are
• 1:00:21
  fairs on that flight that are $300 or more. Yes. Right. Because each flight has different
• 1:00:26
  fare buckets. They're the only ones you can say. Because you have to spend, you can't book
• 1:00:32
  a cheaper flight than the total value of your credit. No. And it has to be in a single flight.
• 1:00:36
  So what, so maybe more accurately to say the ticket that would be $150, if you just went on
• 1:00:43
  the normal website and booked it with your credit card, we'll show up in the special booking
• 1:00:48
  engine that engine that you've been sent to. It will show up as $300. Yes. Because you're not
• 1:00:52
  allowed to take it for less than 300 dollars. They just take the leftover money. Yeah. And you
• 1:00:56
  never know. Because you don't realize that not everyone's checking both engines. It is taking
• 1:01:01
  that money off you. I mean, even if you do know, it's galling. Yes. It's galling. It's extremely
• 1:01:06
  had $500 worth of AFM. And so let me fly, let me get by one flight that's 150 and another one
• 1:01:13
  that's 180. And then I'll just, I'll pay the extra once I go over. But don't say that I have to
• 1:01:17
  use it all on more. And so I was really giving quanters a hammering about this. And to her credit,
• 1:01:24
  Vanessa Hudson has abolished that condition going forward. That is no longer under the flight
• 1:01:31
  credits that quanters issues now. That condition is no longer there. Having said that,
• 1:01:36
  they increased their booking fee from $99 to $129. So actually, if you have a $300,
• 1:01:43
  what's a booking fee? Or cancellation fee. It's a fee that comes off
• 1:01:49
  any credit that you, when you read book of light, even when you book it yourself. So if I go,
• 1:01:54
  if I have that $300 credit, we're talking about now. Okay. I can see the $150 fare.
• 1:02:00
  Now and I can buy that $100.50 fare. But on top, they charge $129 to book it myself on their website
• 1:02:08
  because you're using a credit. Yeah. So they're just basically lopping $129 off of every credit.
• 1:02:13
  Yes. Correct. It's incredible that a government that would not regulate that it's absolutely
• 1:02:23
  obscene. And what quanters says is, well, all airlines have booking fees and ours isn't the highest
• 1:02:28
  out there. And they're right. That's true. That doesn't make it okay. Who has a booking fee
• 1:02:33
  of more than $129 to book a ticket? You're putting me on the spot. I can't answer that question
• 1:02:38
  off the top of my head. Back a stand-end. I don't know. But it's not uncommon. All airlines have
• 1:02:46
  booking fees. But I don't sort of, I've never seen, I don't understand what you're talking about
• 1:02:49
  with a booking fee. I've never seen a booking fee itemized. They might have, I might have air
• 1:02:54
  fair surcharges or fuel surcharges. When ever you book, this is a booking fee that applies to
• 1:03:00
  credits only. Okay. All right. If you ever book with a credit, it will be itemized. And it's
• 1:03:06
  gone from $99. And in October, just gone. It was increased to $129. Ridiculous.
• 1:03:14
  Quantists also get subsidies from governments because one gauving thing that I couldn't believe
• 1:03:19
  when I read it in the book was that they'll just launch internal inquiries into whether or not
• 1:03:24
  they're going to leave, for example, Sydney and move somewhere else, like they're going to leave
• 1:03:31
  by father, you know, what could be Melbourne. But they're not going to, they're not going to leave
• 1:03:35
  one of the two vastly larger metropolis as in Australia than any other. Yeah, be like,
• 1:03:41
  they're pretty shareway saying we're going to move to a wider London. Yeah, that's right.
• 1:03:45
  They're not going to happen. But they will occasionally just say they're going to do that.
• 1:03:49
  And then invite various state governments to bid for them to come, including stupidly the
• 1:03:57
  government, the city, yeah, the state. And they will, they extract $50 million or something
• 1:04:04
  in money from taxpayers for doing nothing, for not moving just because they say, we're thinking
• 1:04:11
  about it. It's classic rent seeking. And again, Quantist says everyone does this and they're
• 1:04:16
  right that lots of companies do it. It doesn't make it good behavior, you know. And Quantist,
• 1:04:23
  that was Quantist's excuse for so much of their conduct. Everyone does this. You know,
• 1:04:30
  you're in a bad place culturally when you're saying that all right. That's where they got to. And
• 1:04:37
  it doesn't make it okay. So the bigger question here that we can wrap on is why is it the case that
• 1:04:43
  Australia seems to have duopolys so much because it would be a lot smaller population.
• 1:04:49
  That's not small. It is, it is pretty small and this particularly the size of the landmass. So
• 1:04:57
  for the airline, small population, big landmass, the economics of airlines are challenged.
• 1:05:04
  You know, if you had the population of California and the east coast of the US in Australia,
• 1:05:12
  you would definitely be able to have three, four or five airlines. It's harder. It's much harder
• 1:05:18
  with a small population. And the whole Australian economy is built like that because we've got a
• 1:05:23
  small population. There's two major supermarkets. There's sort of three to four. The supermarkets
• 1:05:30
  is more competitive than airlines. There's four banks. You know, there's two telecommunications
• 1:05:37
  providers. It's sort of, it's the nature, it's the nature of the Australian economy. I mean,
• 1:05:44
  to make it fair for consumers. This is a really strong argument for having higher population.
• 1:05:49
  Now obviously, presumably that's very unpopular. Also an argument for having better
• 1:05:54
  competition regulation in the sense I don't quite buy it in telecommunications and airlines
• 1:06:00
  because you've got gigantic, one gigantic legacy carrier in both cases that used to be owned
• 1:06:05
  by the government that was privatized and still has a position of massive privilege and
• 1:06:11
  is still favoured by regulations and still favoured by politicians. I'm not sure
• 1:06:16
  Telstra would say that it was favoured by government. I mean, the government basically stole
• 1:06:19
  its broadband business with the NBN. Well, actually, there is more competition in telecommunications
• 1:06:27
  as well because there are other clients. The airline industry in Australia, the competition
• 1:06:33
  is very poor. And as a result, the customer experience is very poor. And when we say like
• 1:06:38
  small population, isn't Sydney and Melbourne like the busiest domestic route in the world of one
• 1:06:43
  of the top, you know, it's like Jedda and Reade, or whatever. Yeah, and I think the other one is,
• 1:06:53
  well, that's not domestic, but in Japan, I think, the support hotel Tokyo, it's one of the top five
• 1:07:01
  Valk traffic. I mean, at city pay, there's a, there's a fully loaded
• 1:07:06
  flight every 57, every 15 minutes. Well, two because you've got two airlines.
• 1:07:12
  So the idea that you couldn't get a new entrance into that market if they were protected from
• 1:07:17
  price gouging, you know. Well, see, this is a thing, right? So you get, you get a third carrier in
• 1:07:24
  and Rex was a bad example. Rex obviously just went broke trying to do this. They did it very
• 1:07:29
  poorly. It wasn't well managed. They didn't have enough aircraft to do it effectively because
• 1:07:33
  obviously, you know, what you want is premium travellers. The people will pay the most
• 1:07:36
  traffic are the ones who travel for business and what they need is the option to change flights,
• 1:07:41
  you know, to an hour later, an hour, two hours later, move it back, move it forward. And you
• 1:07:45
  can only do that if you got lots of flights. So they're not going to fly with an airline like Rex
• 1:07:49
  that has 12 planes, 12 jet planes that because two flights a day or eight a.m. flight, you can't
• 1:07:58
  make it. And so the next flight's midday, you know, it's just not going to work. So the,
• 1:08:02
  so in order to successfully challenge Qantas slash jet start domestically, you'd need at least
• 1:08:07
  30 aircraft flying just between Sydney Melbourne and Brisbane and maybe, maybe Adelaide occasionally.
• 1:08:14
  But the, and you'd probably need a rule that says Qantas and jet start have to charge the same
• 1:08:19
  prices that they did on an rolling average of 12 of the past 12 months. Yeah, I mean, you then
• 1:08:24
  getting into like, you know, state managed prices. And that's, that's not the way the market
• 1:08:28
  is supposed to work these days. But, but the problem is that airline comes in, Qantas and jet start
• 1:08:33
  and Virgin will drop their prices to loss making to kill that competitor. And that's what I mean,
• 1:08:39
  but that's anti-competitive behavior, which is why that's what I say. Well, the government doesn't
• 1:08:43
  have to set the prices. The government just has to say it can't be, it can't be lower than the
• 1:08:47
  average of what you've been charging. Well, well, look prior to it. No airline, no new, no one who wants
• 1:08:52
  to do that would, in their right mind challenge, Qantas, because they know that Qantas has the
• 1:08:57
  government wrapped around their little finger like, who would honestly do that? It would be suicide.
• 1:09:01
  If you look at how Rex went under, a lot of it was mismanagement. And the thing is that helps
• 1:09:07
  the Qantas slash Albanese narrative that it was, it was only mismanagement because there was
• 1:09:13
  mismanagement there. So it gives their, their narrative some, some plausibility. But it was, it was,
• 1:09:19
  mismanagement was a part of it. The other part of it was extremely aggressive commercial
• 1:09:25
  conduct by Qantas. And what, what I mean is Rex was obviously flying these capital city routes
• 1:09:32
  with jets, seven three sevens that they'd leased from Virgin that had been there with our former
• 1:09:39
  Virgin jets when Virgin went insolvent before it came back under new ownership. So they were flying
• 1:09:45
  these city flights. And whenever they flew, whatever city flights that they flew, like Melbourne,
• 1:09:52
  Adelaide, Adelaide Perth, you know, Sydney, Adelaide, Radirah, jet star would increase its capacity
• 1:10:00
  on those cities by a significant amount, like even 40, 50%. And of course, the prices of
• 1:10:07
  air fares on those cities would collapse and Rex would lose money on those cities.
• 1:10:12
  So that was killing Rex on the new part of its business. As I say, not that it wasn't poorly
• 1:10:16
  managed as well, but the compare, like the Qantas group was killing them commercially. Then on the
• 1:10:21
  other end, or jet stars adding all these flights on those Rex city routes, Qantas was, was able
• 1:10:29
  to reduce its capacity on those city routes because jet star was taking it up and increase its
• 1:10:35
  its regional flying into the regional cities that Rex made all of its profits on. So jet Qantas
• 1:10:42
  link, which is the the country arm of Qantas, massively increased its capacity by something like
• 1:10:48
  45% between 2019 and 2023. And again, what do you think happens to Rex's great routes to
• 1:10:57
  Armadale and all the way in places like that? So just going for the juggerlar, just like go for the
• 1:11:02
  last making. So Rex was bleeding on both ends. Qantas was with Qantas and jet star together,
• 1:11:07
  were just squeezing it to death. And as I say, they made mistakes themselves. So clearly what we
• 1:11:12
  need is I need to start a new airline in Australia, but the inducements to government to politicians
• 1:11:18
  has to be better than the chairman's lounge or upgrades. So you also need. It'll be hand jobs.
• 1:11:25
  It'll be blow jobs. It'll be ever. This will be the look at me the lot, Joe. I wouldn't want to
• 1:11:29
  I don't know that this is a great job. And if you're trying to recruit style showers in the sky,
• 1:11:35
  eight or eighties between Sydney and Melbourne. Yeah, that would take a long time to board.
• 1:11:41
  I'm not very practical. What were you just about to say? It looked like you were just
• 1:11:44
  about to say. Oh, well, look, I was just going to say, given what Qantas was able to do there,
• 1:11:49
  that that and jet star was able to do there, that's what I was talking about in terms of their
• 1:11:54
  capacity and their price, the what that effect on prices against wrecks. I am shocked that the
• 1:12:00
  atropal sea was not able to make a case there. I really am. And look again, I'm not a competition
• 1:12:05
  lawyer, but I would like to see competition law strengthened and the atropal sea, the competition
• 1:12:12
  regulator is very focused on, you know, changing the law around mergers and acquisitions takeovers.
• 1:12:18
  I'd like to see them like look at what powers they need to be more aggressive at policing,
• 1:12:25
  anti-competitive behaviour. Yeah, I mean, we should just ban, we should ban all
• 1:12:30
  gifts. You know, you could call it price dumping. I don't know if it fits the capacity dumping.
• 1:12:36
  I don't know if it fits the legal description of that, but it certainly feels like it's in that
• 1:12:41
  area. It's never going to be proper regulation or oversight for all the reasons that we've just
• 1:12:47
  articulated. It's my A380 is because I'm not going to take a long time to board because it'll
• 1:12:52
  only be for members of parliament. I only have four poster beds and a home of a home of women
• 1:12:59
  for them. Joe, thank you. It's a great book and it's lovely to talk to you about it. Thanks, I haven't