The damage to Qantas’ reputation is deep, costly to mend and will weigh on its profits as business customers reconsider their corporate accounts, brand and travel experts say.
The airline’s reputation may suffer further harm due to a looming court case over allegations it sold tickets for thousands of already cancelled flights, although marketers believe the brand can be restored with time and money.
Peter Hosper, commercial director at corporate travel management company ATPI, said businesses with staff travel contracts with Qantas are reconsidering future arrangements.
“Let’s not forget that travel is an emotive category in the procurement world,” Hosper said.
“In the past, some of these corporate customers were very loyal to Qantas, they’d not had any interest in hearing what the opposition [airlines] were offering, but now they are saying ‘OK, let’s see what they’ve got’.
“There’s a genuine interest in finding alternatives to the status quo for business travel. It’s also that other airlines have become very articulate in how they can service a customer and where they can provide extra value.”
Corporate travel sources who spoke to Guardian Australia on the condition of anonymity said many businesses had grown frustrated with poor service from Qantas and were waiting for existing contracts to lapse.
While Virgin Australia had focused less on the corporate travel market after its pandemic restructure, sources said they were now pushing harder to win those contracts.
Qantas has enjoyed the most profitable period in its history at the same time as registering a record number of complaints.
The pandemic-era torrent of criticism over lost luggage and cancelled flights has been replaced with outrage over ticket refund policies, and alleged “slot-hoarding” to frustrate competitors – an allegation it denies.
On Tuesday, chief executive Alan Joyce left the airline, two months before schedule, as a circuit breaker, resulting in a slight relief to the share selldown that has wiped 10% of the value from the company’s shares in recent weeks.
Mark Crowe, the managing director of Brand Finance Australia, said it is not just customers Qantas needs to win back.
There are also employees, affecting retention and recruitment. Qantas also needs to restore its standing with the government, which oversees policy settings, including how rivals compete with the national carrier.
“It’s nearly impossible to address reputation damage without making significant investment,” said Crowe.
“Everywhere the brand touches people, people need to notice the change.”
Qantas’ brand strength had dropped to 16th place in Australia at the start of 2023, according to Brand Finance, after ranking seventh a year earlier.
Crowe said that events since January meant it would have dropped from that level.
The airline, now under the guidance of Vanessa Hudson, has promised to fix the problems, which it said includes providing quality services.
“We know that the only way to fix it is by delivering consistently. We know it will take time to repair. And we are absolutely determined to do that,” the company said on Monday.
Financial analysts are not immediately sure what that means for future Qantas profits.
“Does that mean it will lower ticket prices? Will it pay back pandemic subsidies? Will it increase frontline staff numbers? They are all costs,” one analyst told Guardian Australia.
There is also the prospect of substantial fines should it lose its case with the competition watchdog, which has said it wants to see hundreds of millions of dollars in penalties imposed if it proves its case that Qantas sold tickets to already cancelled flights.
Qantas will also face scrutiny at parliamentary inquiries.
The head of brand strategy at Kantar Australia, Ryan France, said the early exit of Joyce could help the airline separate its corporate reputation from the consumer brand that has historically played on warm, nostalgic and patriotic sentiment.
“Qantas needs to invest so the customer experience is elevated,” France said.
“The brand is heading in the wrong direction right now, but it’s not going to evaporate.”
