WEBVTT - Will Australians ever love Qantas again?

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<v Speaker 1>You can listen to the Front on your smart sneaker

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<v Speaker 1>every morning to hear the latest episode. Just say play

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<v Speaker 1>the news from The Australian. From the Australian, Here's what's

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<v Speaker 1>on the Front. I'm Claire Harvey. It's Friday, August thirty.

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<v Speaker 1>Jewish creatives dogsed by a pro Palestinian activist want a

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<v Speaker 1>full investigation by the Australian Federal Police. The Australian's revealing

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<v Speaker 1>today the victims say they can identify the person who

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<v Speaker 1>took a tip off from a New York Times reporter

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<v Speaker 1>and set about revealing their identities. Working from home could

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<v Speaker 1>become a legal right for clerical workers and it could

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<v Speaker 1>be a game changer for employees in other industries. The

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<v Speaker 1>Fair Work Commission will conduct a major review of the

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<v Speaker 1>industry award, with hearings said to kick off in September.

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<v Speaker 1>Those stories alive right now at the Australian dot com.

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<v Speaker 1>Dora You Quantus made a squeak over two billion dollars

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<v Speaker 1>in profit and is spending two hundred and thirty million

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<v Speaker 1>dollars finding our lost bags and improving the food. So

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<v Speaker 1>will it be enough to reignite our love affair with

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<v Speaker 1>the flying kangaroo. That's today's story.

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<v Speaker 2>Lovely city and never lost a matter.

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<v Speaker 1>Eric, like me, you would have grown up in the

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<v Speaker 1>era of beautiful Quantus ads. Quantas had acchoir. They really

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<v Speaker 1>tugged at our heartstrings, didn't they and established this as

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<v Speaker 1>a brand that Australians really loved.

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<v Speaker 2>That's right. And now fast forward today where we're upset

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<v Speaker 2>about our planes been delayed or our bags being lost,

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<v Speaker 2>and that sense of uplift has vanished with the winds.

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<v Speaker 2>So this is all the job that new chief executive

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<v Speaker 2>Vanessa Hudson, who took over from Alan Joyce in a

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<v Speaker 2>fair bit of turmoil at the end of last year.

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<v Speaker 1>Eric Johnston is an associate editor of The Australian and

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<v Speaker 1>our Business Expert.

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<v Speaker 2>It's her job to try and bring that bling back

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<v Speaker 2>to Quantas, to try and bring that feeling back to Quantas,

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<v Speaker 2>and they've already started doing that in some ways. And

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<v Speaker 2>you would have seen some of the ads during the

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<v Speaker 2>Olympics that played that that's been a while of money

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<v Speaker 2>about the emotions, trying to bring some of the emotion back.

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<v Speaker 1>Excuse me, everybody, but I just have your attentions please.

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<v Speaker 2>This is Matthew Send off for the Powis Olympics. We're

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<v Speaker 2>all behind you. There's a good luck to you. But

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<v Speaker 2>it goes deeper than that and quantas. On Thursday, they

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<v Speaker 2>released their full year results. Now this is important because

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<v Speaker 2>it was the first set of results for Vanessa Hudson.

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<v Speaker 2>She was the former CFO, the chief financial officer and

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<v Speaker 2>promoted to the chief executive officer. Her task is to

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<v Speaker 2>not only win back customers, but also to win over

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<v Speaker 2>employees and also try and keep shareholders on site. Now

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<v Speaker 2>that's all those three parties pulling in different directions. That's

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<v Speaker 2>going to be a tough ask. But there was one

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<v Speaker 2>number that stood out of the results apart, and I'll

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<v Speaker 2>go into some of the other numbers in a bit,

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<v Speaker 2>there was one number that just stood out to me.

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<v Speaker 2>Thirty two percent reduction in mishandled bag. So it's this

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<v Speaker 2>low hanging fruit to Vanessa Hudson has got to start

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<v Speaker 2>picking to start winning over customers again. Yeah.

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<v Speaker 1>In fact, COUNTUS revealed it has spent more than two

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<v Speaker 1>hundred and thirty million dollars improving what they call customer

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<v Speaker 1>pain points. It's really evident that Vanessa Hudson grasped from

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<v Speaker 1>the beginning that this was her main job, isn't it.

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<v Speaker 2>Yeah, Alan Joways ran the airline for shareholders. He was

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<v Speaker 2>the investor's friend. He was able to really hack into costs,

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<v Speaker 2>take billions of dollars out of the cost space. He

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<v Speaker 2>ran it fairly tight in terms of investment, didn't invest

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<v Speaker 2>in new planes, ran the old planes as hard as

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<v Speaker 2>I could within a margin of safety of course, obviously.

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<v Speaker 2>So he was winning over investors delivering these huge profits,

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<v Speaker 2>but in doing so really got customers and also employees offside.

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<v Speaker 2>So Vanessa Hudson gets some bigger waiting for her bonus

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<v Speaker 2>on customer satisfaction and things like reputational issues and so on.

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<v Speaker 2>So that means that she's really motivated now to make

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<v Speaker 2>sure that she's winning over customers.

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<v Speaker 1>Quantus has started closely measuring customer satisfaction, and they're claiming

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<v Speaker 1>people like them more, a twenty two percent lift in

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<v Speaker 1>their net promoter score and twelve points up on reputation.

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<v Speaker 1>Thursday's results also showed staff attrition had fallen from almost

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<v Speaker 1>nine percent to six percent, so people are quitting less.

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<v Speaker 1>Now let's talk about the numbers, Eric, and I'm hoping

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<v Speaker 1>you can explain them for me. Quantus delivered a two

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<v Speaker 1>point zero eight billion dollar underlying profit for the year,

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<v Speaker 1>and that's down a little bit from the previous year's

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<v Speaker 1>profit of two point four to seven billion. But there's

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<v Speaker 1>what seems to me to be an interesting contrast. Underlying

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<v Speaker 1>earnings were nearly sixteen percent, but revenue was up ten percent.

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<v Speaker 1>Can you unpack all that for me and explain what

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<v Speaker 1>it all means.

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<v Speaker 2>So, what we're seeing here that although more money is

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<v Speaker 2>coming in the door, less of it is sticking around.

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<v Speaker 2>And the reason is that all these initiatives that Vanessa

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<v Speaker 2>HUDs says is doing is more costly. She's got to

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<v Speaker 2>spend a lot more money to win over customers, to

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<v Speaker 2>put wine back into to the service, or the sweet

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<v Speaker 2>biscuit ram and the dry biscuit. That all that comes

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<v Speaker 2>at a cost. It's a really big costly thing when

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<v Speaker 2>you when it accumulates over a huge network. There's another thing,

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<v Speaker 2>and she's doing a lot to win over her own workers.

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<v Speaker 1>Quantus offers bonuses for staff to stay and they're committed

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<v Speaker 1>to sixty million dollars to enact the federal government's same job,

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<v Speaker 1>same pay reforms. That means a contract cabin crew member

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<v Speaker 1>will now be paid the same as a Quantus staffer.

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<v Speaker 1>Quantus dealt with its negotiations with the union quickly, something

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<v Speaker 1>Eric says was a signal to the unions that Vanessa

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<v Speaker 1>huh And is choosing her battles and something else is

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<v Speaker 1>making us all feel a little kinder. Prices are coming down,

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<v Speaker 1>thanks in part to the arrival of airlines like Singapore

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<v Speaker 1>Airlines and Emirates all flying out of Australia into international destinations.

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<v Speaker 2>This comes at a time when there's more capacity coming

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<v Speaker 2>to the Australian aviation market too. So international carriers, Singapore Airlines,

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<v Speaker 2>your Emirates, they're all sort of trying to jockey to

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<v Speaker 2>fly bigger planes here and they're there child jocking for

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<v Speaker 2>more to what capacity? Do have to try and get

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<v Speaker 2>more entry points too?

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<v Speaker 1>Or someone to Australia In the UK and US right now,

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<v Speaker 1>a controversy is raging about how airlines, particularly budget carriers,

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<v Speaker 1>treat their passengers. In particular, should parents be able to

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<v Speaker 1>sit next to their young children? There are the woman

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<v Speaker 1>who refused to give up her airplane seat for a

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<v Speaker 1>mom who was in distress. In Australia, We'd say, of course,

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<v Speaker 1>the answer is but on budget carriers, which require passengers

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<v Speaker 1>to pay extra for particular seats. Some families are faced

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<v Speaker 1>with the fear of being separated from little kids on

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<v Speaker 1>a flight.

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<v Speaker 2>It's such a tough industry, such a tough industry to

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<v Speaker 2>work in, and there's one There was one famous aviation

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<v Speaker 2>CEO who once quipped, don't forget the olives.

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<v Speaker 1>The point of that is you can land all the

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<v Speaker 1>planes safely but still enrage the customers if you don't

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<v Speaker 1>get everything right.

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<v Speaker 2>It's really capital intensive. You've spend so much money to

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<v Speaker 2>get these things moving around. We as traveling public, demand

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<v Speaker 2>a more personalized service. We do that with we expected

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<v Speaker 2>when we order things on Amazon, we expected when we

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<v Speaker 2>go to the supermarket. Aviation has tried to step up

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<v Speaker 2>to the market that and many times it has failed

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<v Speaker 2>to do that. That's the challenge that it's got to

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<v Speaker 2>continue being a mass tran an option but offering a

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<v Speaker 2>personalized service.

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<v Speaker 1>Coming up? Can Vanessa Hudson rescue this battered brand. Subscribers

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<v Speaker 1>to The Australian a first to hear breaking news from

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<v Speaker 1>the business world, Join us at the Australian dot com

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<v Speaker 1>dot au. It's a lot cheaper than a packet of

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<v Speaker 1>ice cold peanuts and a glass of warm Chardonnay on

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<v Speaker 1>a plane. We'll be back after this break. I've often

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<v Speaker 1>wondered if in retrospect we would consider Alan Joyce as

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<v Speaker 1>a kind of business genius who kept Quantus flying after

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<v Speaker 1>the pandemic, who ripped a huge amount of cost out

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<v Speaker 1>of the business, who was pretty ruthless in some of

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<v Speaker 1>the decisions that he made, or if we would think, actually,

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<v Speaker 1>he destroyed this airline's brand. How do you think history

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<v Speaker 1>judging Joyce?

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<v Speaker 2>He was there far too long as a CEO. Fifteen years.

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<v Speaker 2>It's too long for a publicly listed company. In recent weeks,

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<v Speaker 2>we've seen a board review come out and would take

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<v Speaker 2>look and so we're crawing back nine million dollars of

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<v Speaker 2>Alan Joyce's bonus from his last year. Now, he did

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<v Speaker 2>get a fair bit amount in previous years, so I

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<v Speaker 2>don't think he will be crying poor. He did transform

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<v Speaker 2>expectations around Quantus, because the Quantus ads to circle back

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<v Speaker 2>where we started. That was of an era of less competition.

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<v Speaker 2>There weren't discount carriers in the world. That was, ticket

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<v Speaker 2>prices were high, less flexibility was in the system, so

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<v Speaker 2>the margins were much higher. So they could afford that.

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<v Speaker 2>We couldn't afford to fly like that, but they were

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<v Speaker 2>certainly as a different era. Alan Joyce came. He actually

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<v Speaker 2>worked at Ryanair and came to Quantas. He's made genius.

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<v Speaker 2>When he started at Quantus was his mathematician. He's a

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<v Speaker 2>trained as actually a rocket scientist. His mate genius was

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<v Speaker 2>figuring out more efficient waves and routes to fly the

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<v Speaker 2>aeroplanes that on the margins saved on fuel on every flight.

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<v Speaker 2>But you add that up through the network again, suddenly

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<v Speaker 2>marginal increases is quite significant in terms of savings. He

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<v Speaker 2>built up jet Star, started jet Star under the former

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<v Speaker 2>CEO Jeff Dixon. Now in today's results fast forward to today,

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<v Speaker 2>Suddenly Jetstar was a really strong performer. It really appeals

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<v Speaker 2>to this type of environment that Australia is in at

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<v Speaker 2>the moment. Everyone is saving their pennies at cost of

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<v Speaker 2>living is such a big issue. But he managed to

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<v Speaker 2>do what many many major airlines, main brand airlines that

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<v Speaker 2>haven't been able to do. And he's able to have

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<v Speaker 2>this low cost airlines sit within the same structure as

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<v Speaker 2>a full freight mainline airline. So presh Shareways has tried it.

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<v Speaker 2>They didn't work for them. Luftans has tried it didn't

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<v Speaker 2>work for them even and I've tried it. But perhaps

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<v Speaker 2>history over time will look at it and say he

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<v Speaker 2>stayed too long and it was the airline that needed replenishment.

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<v Speaker 1>Vanessa Hudson came in and one of her first acts

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<v Speaker 1>was to apologize to people and to the flying public

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<v Speaker 1>and to the Quantus staff and say, I'm going to

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<v Speaker 1>be different. Do you think she's capable of rebuilding Quants

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<v Speaker 1>to back where it was as a really beloved Australian brand.

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<v Speaker 2>It can be done. So all of us that have

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<v Speaker 2>been overseas and it's the middle of the night, we

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<v Speaker 2>don't know where we are, and then suddenly we're walking

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<v Speaker 2>through an airport and we see a Quantus tail somewhere.

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<v Speaker 2>You know, the old heartstrings of cool. She doesn't have

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<v Speaker 2>to win over people. She just has to make sure

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<v Speaker 2>that Conus doesn't push people away. Now she's fighting in

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<v Speaker 2>a really tough market. So you've got the Middle Eastern

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<v Speaker 2>airlines em Roots and the Antyads and they run on

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<v Speaker 2>a different cost structure too, so they're really competitive and

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<v Speaker 2>they're offering full service and new araplanes. Vanessa Hudson and

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<v Speaker 2>these are decisions made many years ago, but she's now

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<v Speaker 2>getting the beneficiary she's benefiting from getting all these brand

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<v Speaker 2>new eraplanes. Now these were signed off by Allen Joyce

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<v Speaker 2>in the midst of COVID. It was a long term

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<v Speaker 2>decision that's now starting to come to fruition. You walk

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<v Speaker 2>on a brand new plane, you think, oh, this is okay,

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<v Speaker 2>this is good as opposed to a fifteen or twenty

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<v Speaker 2>year old old war horse. But that also these new

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<v Speaker 2>planes make a big difference too. They're much more efficient

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<v Speaker 2>to run. They don't need to don't need to run

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<v Speaker 2>as many staff around them, you don't need to. The

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<v Speaker 2>engineering costs come right down as well. So Vanessa Hudson's

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<v Speaker 2>trick is to not push people away, to win them

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<v Speaker 2>over and don't lose their bags.

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<v Speaker 1>Eric Johnston is an associate editor with The Australian. Thanks

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<v Speaker 1>for joining us on the front this week. Our team

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<v Speaker 1>is Kristin Amiot, Jasper lik LEAs Temmaglue, Josh Burton, Tiffany

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<v Speaker 1>de mac and may Claire Harvey.