News and Views
Not plane sailing for Qantas
5 September 2008
When a company is considering profound operational changes, it can benefit from also considering any associated risks to its reputation.
Qantas' recent decision to outsource maintenance services overseas and reduce labour costs is a good case in point.
Qantas' decision was taken primarily to strengthen its position in an industry under significant financial pressure from rising fuel costs.
From a reputational perspective, the inherent risk of this decision was a danger of being perceived to be putting profits ahead of safety.
Considering Qantas relies on a reputation as the safest airline in the world, this was potentially a significant issue.
‘Compromising safety' was indeed the argument run by unions, who have made great efforts to raise concerns that Qantas' actions could lead to degraded safety.
Then in July and August 2008 a series of mishaps hit Qantas' planes, and the airline's risk transformed into a full scale issue.
Media interest focused on claims it was ‘compromising safety' and a negative perception formed.
As this negative perception grew the apparent veracity of Qantas' claims, that the mishaps were not connected to its operational changes, lost traction.
Negative perceptions were reinforced as hundreds of media articles were published through July and August.
Currently, every incident involving a Qantas plane is being interpreted through this ‘perception prism'.
Arguably Qantas' reputation has suffered a serious blow, which could affect its financial performance in future.
Giving due consideration to potential risks to an organisation's reputation before making major operational decisions will - at least - help prepare for challenges to be faced.
With a proper assessment of these risks organisations can modify decisions or put a strategy in place to avoid potential issues or mitigate their impact.
In Qantas' case, outsourcing maintenance services and reducing labour costs were always valid options; however, a more pre-emptive communication strategy to manage the potential risks arising from these decisions may have better protected its reputation.