Domestic and international issues for Qantas

Karon Snowdon

Last Updated: Tue, 22 Sep 2009 10:25:00 +1000

Australian airline Qantas has attracted criticism for its apparent generosity to former chief executive Geoff Dixon.

Mr Dixon retired in November last year and took home almost $US10 million for just nine months work.

The revelation in the company's annual report has it scrambling to explain the payout at a time when executive pay scales are under scrutiny.

The size of Geoff Dixon's pay brought criticism from shareholders facing falling returns and unions facing job cuts.

But Qantas brushed those concerns aside saying in a statement Mr Dixon's payments were in line with employment agreements.

The fuss will be a short term blip in the bigger picture for Qantas.

In his annual report the airline's chairman Leigh Clifford notes the estimated $9b collectively lost by the world's airlines in this calendar year.

And if the financial crisis has not been good for airlines generally, it's been hell for Japan's major carrier Japan Airlines (JAL).

A global shakeup

The struggling Japanese company is in desperate need of cash - the Chief Operating Officer at the Centre for Asia Pacific Aviation, Derek Sadubin, says it needs between two to three billion dollars.

Mr Sadubin has told Radio Australia saving JAL will involve the biggest shakeout of Asian aviation in a decade - one Qantas can't afford to ignore.

"The US government and the Japanese Government are negotiating an open skies agreement whereby a lot of restrictions on airlines flying into those markets and beyond could be removed," he said.

"If you can open up the Japanese market you can really unlock the potential in North Asia and if you unlock that potential in North Asia you've opened one of the biggest aviation markets in the next 20 years and that's why there's considerable buyer interest."

Japan Airlines has recorded a $1b loss for its first quarter with a full year loss - its fourth in five years - inevitable.

The new Japanese Government can't afford, politically, to bail it out so it's looking for a partner and is in talks with America's Delta Air and Air France of the Skyteam Alliance.

Their competition in the air partnership stakes is Oneworld, of which JAL is a member along with the other main players Qantas, Amercian Airlines and British Airways.

Derek Sadubin says Delta has more to offer the Japanese.

"Everyone is saying the existing alliance partners should have the upper hand but at the end of the day Japan Airlines needs a lot of money and I think the money will talk," he said.

"But anything can happen in this environment and if the decision within the grouping is it's too important to lose JAL then Qantas and its bankers may have to come to the party as well. It's really going to shake down over the next three to four weeks."

Derek Sadubin says at stake is not only the survival of JAL and its huge market potential - in 2006 it carried 58 million passengers.

But he says it will also put pressure on China and Korea to relax their market controls.

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