Performance against our Strategic Pillars
Delivering against our six strategic pillars and measurement against our balanced scorecard.
We measure performance against the delivery of our key strategic pillars using a balanced scorecard of key financial and non-financial metrics, namely:
- Return on invested capital at a Group and segment level
- EBIT Compound Annual Growth Rate for Loyalty
- Gross annual benefits from Transformation
- Employee engagement
- Net Promoter Score
- Progress on innovation across product, service and operations.
Overview of our six strategic pillars:
FY19 progress on the balance scorecard is provided below.
Operating segment Underlying EBIT
In addition to the Group financial metrics, we measure the performance of our key operating segments using Underlying EBIT. The Group’s domestic airlines (Qantas and Jetstar) and Loyalty business underpin our earnings as we continue to build earnings resilience into our international flying operations.
Measured as Underlying EBIT.
Maximising our leading domestic position
dual brand approach of Qantas and Jetstar saw the Group maintain a leadership position in the Australian domestic market in FY19. Network and frequency advantages over our competitors as well as our continued investment in customer experience helped drive this performance.
Qantas extended its lead in the corporate market and grew share of the small-to-medium business market. The continued recovery in the resources sector helped to offset demand weakness in other areas, such as finance and telecommunications.
Jetstar sold about two thirds of its fares domestically and internationally for less than $100 in the price-sensitive leisure market.
Continued capacity discipline helped to strengthen earnings for Qantas and Jetstar, even in a higher fuel price environment.
In FY19, Qantas Domestic benefitted from the continued recovery in the resources market, with revenue increasing by approximately $50 million compared to FY18.
Capacity discipline in the domestic market supported near record earnings for both the Qantas and Jetstar brands, even in a higher fuel price environment.
We continue to invest in the rollout of fast and free domestic Wi-Fi and upgrading our network of lounges.
Building a resilient Qantas International
We have continued to structurally transform Qantas International to build its earnings resilience.
During FY19 we took delivery of a further three Boeing 787-9 Dreamliners. Combined with the additional order for a further six, the Dreamliner fleet will grow to 14 by the end of 2020, allowing us to accelerate the retirement of our remaining 747 aircraft.
The Dreamliner is a game-changer for Qantas International. It provides greater flying range, substantial cost efficiency and high levels of passenger comfort. Its capabilities have allowed us to change the structure of our network and use our geography to our advantage.
A prime example is the new Perth–London route, flown by the Dreamliner. It is the first (and only) non-stop passenger service to link Australia with Europe and quickly became the route with the highest levels of customer satisfaction, the highest load factor and Unit Revenue on our network. The London services have become profitable for the first time in 10 years.
Work on Project Sunrise – which aims to unlock direct flights from the east coast of Australia to London and New York by 2022 – is continuing. Boeing’s 777X and Airbus’ A350 are under evaluation along with work on customer experience and fatigue management for crew. A final yes/no decision on Project Sunrise will be made by the end of calendar 2019. It will only go ahead if it meets our strict business case hurdles.
A mid-life cabin upgrade of our A380 fleet commenced in the first half of 2019, with the first aircraft to be in service from September 2019.
We continued to improve our customer proposition with new alliances, including receiving Anti-Trust Immunity for the American Airlines Joint Business.
Aligning Qantas and Jetstar with Asia's growth
More than 50 per cent of the Qantas Group’s international capacity is focused on Asia, with Qantas and Jetstar flying to key destinations including Bali, Singapore, Tokyo, Osaka, Shanghai, Beijing and Hong Kong.
Jetstar-branded airlines based in Asia operate almost 60 aircraft. These airlines give the Group a capital-light presence in key markets.
Jetstar Japan, which has entered its seventh year of operation with 25 aircraft, delivered a record Australian Dollar profit.
Jetstar Pacific remained profitable. Jetstar Asia’s financial result was impacted by high fuel costs, foreign exchange headwinds and a significant increase in airport charges and taxes in Singapore.
Investing in Customer, Brand and Digital
The Qantas Group aims to be the first choice for customers in every market we serve. Across our airline brands (Qantas and Jetstar) and the world-leading Qantas Loyalty programs, our investment in customer, product and service has translated into a clear premium over our competitors.
During FY19, we kept investing to maintain this advantage, including:
- Cabin upgrades for QantasLink Turboprops and completing the Cabin Enhancement Program for Jetstar’s A320s and A321s.
- New upgraded lounges, including the new First Lounge and Business Lounge upgrade in Singapore, Business, Melbourne Domestic and Tamworth to support demand for premium travel.
- The rollout of inflight Wi-Fi for customers as well as for operational use by crew is substantially complete.
- Launched the digital Qantas Distribution Platform to improve customer experience with trade partners.
- Enhanced Jetstar’s ancillary offering through new products and payment options, dynamic pricing and growth of Club Jetstar.
Diversification and growth at Qantas Loyalty
Qantas Loyalty continues to provide a stable earnings stream while increasing customer retention for the Group overall.
Key to the strength of Loyalty remains demand for Qantas Points. Their ability to shape consumer behaviour (as people pursue earning points) drives value for more than 500 program partners, ranging from supermarkets and restaurants to energy retailers and some 50 airlines.
Our Business Rewards Program enables companies to earn Qantas Points on typical expenses ranging from stationery to accounting services, as well as access flight discounts. It continues to increase the airline’s share of small-to-medium business travel.
More than 35 per cent of Australian consumer credit cards earned Qantas Points in FY19 and growth in these cards outpaced the market.
This strength has extended to Loyalty’s new ventures, like health insurance and financial services, where the ability to earn Qantas Points is a key point of difference to competitors.
Membership of the core Frequent Flyer program grew by nearly 5 per cent to 12.9 million – the equivalent of approximately half the Australian population.
Qantas Loyalty will continue to innovate and diversify for stable, non-cyclical earnings without exposure to oil prices to target average annual growth of 7–10 per cent through to FY22.
Focus on People, Culture and Leadership
The experience our people have working at the Qantas Group is crucial to our success in delivering a safe and reliable service for our customers. In 2019, Qantas was named the most attractive place to work in Australia in global recruitment firm Randstad’s Employer Brand Research. Some current initiatives include:
- Investment in a new Listening Strategy and digital platform to measure engagement across the Qantas Group and unlock further analytics and insights, to deliver an enhanced employee experience.
- Development of the People Experience Strategy designed to provide fit-for-purpose solutions while also driving innovation in our ways of working.
- Continuing to build an inclusive employee experience, diversity in our organisation and ways of working and demonstrating external leadership by leading in Australia and the aviation industry. As of 30 June 2019, women represent 35.9% of senior management roles and 1.4% of our Qantas Group Australian workforce identify as Aboriginal and Torres Strait Islander.
- We have announced two Qantas Group Pilot Academy locations - Toowoomba and Mackay. Starting from September 2019, this approach will provide a secure pipeline of pilots for Qantas Group Airlines
Continuous commitment to Safety, Environment and Community
We continue to strengthen our high operational standards, commitment to transparency and social licence to operate. In FY19 the Qantas Group made significant gains in our ongoing commitment to safety, environment and community.
Our number one priority, including:
- Continued focus on highest levels of operational safety standards.
- Strong improvement in workplace safety in our Regional Airlines and in the Airports area of Qantas Airlines, a traditionally manually intensive work environment.
- Improving security outcomes by operating within a security framework that is proportionate, agile and responsive to changing risks across our network.
See more about our safety commitments, targets and key initiatives.
Supporting communities and engaging our people, including:
- Targeting 3% of annual spend with Indigenous suppliers
- Supported Uluru Statement from the Heart campaign for constitutional reform
- Committed to $10m annual investment on flight discounts for residents in remote regional towns
- Raised $3m in drought relief for farmers and communities
- Launched new grants program, delivering $5 million to regional Australia over 5 years
- Supporting Australian based suppliers.
See more about our community commitments, targets and key initiatives.
Our non-negotiable commitment to environmental sustainability, including:
- 2.2 per cent fuel efficiency improvement (compared to FY18) the greatest improvement in efficiency since 2009.
- Operated the world’s first zero waste flight.
- Continued to grow the world’s largest carbon offsetting program, with a customer offsetting their flight every 59 seconds and more than 30 business partners carbon offsetting through Qantas Future Planet.
- Aligning our climate change-related disclosures with the Taskforce on Climate Related Financial Disclosures (TCFD).
See more about our environment commitments, targets and key initiatives.
Disclaimer: 1. Commitment to procure 3% of contestable spend per annum by the end of FY24.
Disclaimer: 2. Raised by Qantas Group and Qantas Group customers.