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Qantas burned its goodwill with price gouging; now ACCC court action will trash the brand
Welcome to an end-of-week update from Unmade.
Today: Why the ACCC intervention will tip Qantas’s teetering brand over the edge. And we launch our REmade Awards call for entries.
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REmade Awards entries go live
Unmade today launches its first awards program: The REmade Awards for retail media.
In their first year, the REmade Awards will start modestly, with just four categories - Retail Media Leader; Retail Media Rising Star; Retail Media Innovation; and Retail Media Collaboration.
Entries are welcomed from anyone working in the emerging space of retail media.
The normal closing date is September 21, while late entries will be accepted until September 26. (yes, we know that’s a bit tight - sorry!)
The shortlist will be announced at the REmade conference in October, with the winners announced in November.
Qantas: Just because you can, doesn’t mean you should
Tim Burrowes writes:
This time, it feels different.
The hits against Qantas have kept on coming. Now the courts will be involved.
Less than four years ago, in November 2019, I cheerfully championed Qantas as Mumbella’s Brand of the Decade. It wasn’t even that hard a decision. The airline was well run, effective in how it told its story (remind me why the media went along with the multiple announcements of the Project Sunrise direct flights to London?); and the brand personality said much about being Australian. It felt like the company deserved its profits.
The more I got to know the brand, the more impressed I was.
My point of view was earned the hard way. When we were running Mumbrella Asia, I was flying to Singapore six or seven times a year, along with a couple of northern hemisphere trips too. I’ve been a Platinum One customer since then. P1 is the top tier that can be earned through flying. It takes a lot of that to make Platinum One - the equivalent of 360 economy class flights per year between Sydney and Melbourne.
I’m also (in a very small way) a Qantas shareholder.
So I’m reasonably well qualified to this point of view: I despise the behaviour of the Qantas management since the pandemic.
Over the last two years, those on the management floors of Qantas failed to ask the question that can save brands from disaster: We can, but should we?
That, incidentally, is what would have saved PWC if the question had been asked when the consultancy decided to use its confidential government briefings on international tax avoidance to help international clients avoid tax.
Yes, there have been rumblings about Qantas nearly two years. In April 2022, things looked rocky, with lost luggage becoming a running joke and the Qantas call centre unable to cope with the number of customers. But the observers I spoke to at the time had the same view: It could be one more PR problem that could be handled.
This time it’s about trust.
The temperature rose for Qantas throughout August.
It took the Australian Financial Review’s Rear Window columnist Joe Aston to start the pot boiling.
Back on August 2, Aston revealed that the son of Prime Minister Anthony Albanese had been granted membership of the most elite club in Australia: The Qantas Chairman’s Lounge.
Unless you know what to look for, you won’t even notice The Chairman’s Lounge. Look out for a smoked glass door labelled “Private”, somewhere near the entry to the Qantas Club and Business Lounge. While the five star restaurant experience on the ground is part of the perk, it’s the free upgrades and VVIP treatment that makes it so hard for the business and political elite to turn down the CL membership invitation.
MPs are automatically offered membership, along with bosses with influence over big company travel budgets.
If you heard about the 23-year-old son of a country’s leader being offered such a perk from a business, you’d expect it to be from a corrupt country.
Which is in itself an issue. Why on earth hasn’t it been a scandal for years that politicians mostly accept this gift when offered?
One awkwardness, is that the bosses of media companies share in the love. A few years back (when it was still run by Fairfax Media) I heard the amusing story of how somebody at the top of The Age had snaffled a Chairman’s Lounge membership much to the displeasure of a board member who wanted it for themselves.
This week, we asked Australia’s big news operators about their policies for accepting or declining Chairman’s Club membership. We sent them all the same, simple question: What is your policy on whether editorial staff or on air talent can accept membership of the Qantas Chairman’s Lounge?
Nine told us “We don't have an overarching staff policy when it comes to Nine staff belonging to Clubs (including sporting organisations/frequent flyer programs) and we view it as a private matter.”
The ABC declined to comment but pointed us to its gift register which does not show any members of staff declaring a membership.
News Corp professed not to understand the question, and after we clarified it via a number of email exchanges, pointed us to its Standards of Business Conduct Policy which states that gifts or hospitality cannot be accepted “unless they have a business purpose”. Make of that what you will.
Seven West Media said: “All news producers, reporters and presenters at Seven adhere to impartiality guidelines. Our people must declare any commercial partnerships in advance and any potential conflict of interest must be immediately disclosed. We always maintain the highest standards of editorial integrity and always strive for balanced reporting.”
I can share that last year, while David Koch was still with Seven’s Sunrise, I watched him and co-host Natalie Barr disappear through the door of the Chairman’s Lounge in Sydney.
The Guardian: “No one from The Guardian has ever been offered membership”.
Scire (owner of Capital Brief) told us: “It's against our editorial policy for journalists to accept corporate gifts of that nature. And no one in the newsroom is a member.”
You can decide for yourself which of the above gave a straight answer.
But the factor that propelled Aston’s Chairman’s Lounge revelation into the stratosphere was the timing. It had just emerged that Albanese had made a captain’s call on blocking Qatar Airways from putting on an extra 28 flights per week into Australia, a move which would have driven down the price of International flights for customers.
It took a few days to percolate, but gradually, it became a bigger political story. Here was a supposedly pro-competition, pro-consumer government doing a big favour to a listed company that would mean consumers would pay more for their flights.
A few days later, came Qantas’s annual financial results. Profits had risen to an unprecedented and unjustifiable $2.5bn. Constraining supply, and using that to drive up profits, had become price gouging.
This is a risk for the big supermarket brands too. Recent days have seen activists tampering with slogans inside Coles and Woolworths stores. That comes on the back of the supermarkets also announce huge jumps in profitability. And of course contributed to Australia’s painful inflation number.
The same has gone for Qantas. It put up prices way beyond where it needed to in order to cover cost inflation, and indeed contributed to the rising cost of living. Indirectly, anyone paying more for their mortgages because interest rates went up to counter inflation, have the likes of Qantas and the supermarkets to thank.
But that’s capitalism.
Last week came a justifiably uncomfortable appearance in front of the Senate Select Committee for Alan Joyce and his lieutenants. They squirmed as they attempted to justify their plan to cancel flight credits at the end of this year, and attempted to evade the question of exactly how many were outstanding. They caved on that yesterday.
Yesterday though, came a hammer blow for Qantas.
The ACCC has launched action in the Federal Court against Qantas alleging misleading or deceptive conduct. The allegation is easy to understand: Qantas took money from passengers, for at least 8,000 flights which it had already decided to cancel. By the time it informed passengers - up to 47 days later - the price of tickets had rocketed for those who needed to rebook.
Read the ACCC press release. It’ll make your blood boil.
As the Chanticleer column puts it in the AFR today: “Qantas has lost Australia’s trust”.
Consumers are no longer in a frame of mind to give Qantas the benefit of the doubt.
In much the same way it took a while for the PWC scandal to seep into public consciousness, the same is happening here. Price gouging is bad enough, but the ACCC allegations makes the Qantas management look like crooks.
When you feel like you’ve already been taken for a fool, the new allegations start to look like a pattern of behaviour where management simply lost their moral compass.
The ACCC case will rumble for months, and haunt Qantas for years.
Additional reporting: Seja Al Zaidi
Unmade Index improves for a second day
Seja Al Zaidi writes:
It was another mildly positive day on the Unmade Index, creeping another 0.63% into the green to land at 633.9 points.
A strong performance from Domain led the board. It rose 2.12%, while the radio rivals followed, with Southern Cross Austereo and ARN Media posting a respective 1.97% and 1.80% lift in share price.
Pureprofile’s price bumped upwards by 6.67% after filing its official full year numbers. There were no surprises as it had already released the preliminary information back in July.
Meanwhile SEG, owner of SEN Radio Network, and The Market Herald both released their results in the very final hours of results season, which official closed yesterday. SEN’s dropped in the final hour of trading while TMH’s came after the market closed.
Ooh Media had the biggest fall of the day - dropping 1.35% - followed by Enero Group, with a minor decline of 0.32%.
Time to leave you to your Friday.
I’ll be back with Best of the Week tomorrow.
Have a great day.
Publisher - Unmade