Qantas transformation plan boosts customer advocacy

Rachael Micallef
By Rachael Micallef | 24 August 2016

Qantas has seen a boost in customer advocacy following its much mooted transformation program, which has also seen the airline record the best full year profit result in its 95-year history.

Qantas reported an underlying profit before tax of $1.53 billion for the 12 months to 30 June, a 57% improvement on FY2015.

The financial improvement is a result of its recent transformation program which it says has unlocked $1.66 bn in permanent costs and revenue benefits since it was put in place in early 2014.

Importantly, the transformation program has also seen an impact on Qantas' net promoter score (NPS), with the airline stating record levels of customer advocacy as a result of a targeted investment in service and product. This is across the suite of products held by the company including Qantas Domestic, Qantas International and Qantas Loyalty, with NPS noted as an “ongoing” target for the business.

For Qantas Domestic, the airline noted its NPS increased five percentage points to a record result for the business, following an investment in its B737 and A330 cabin upgrades. It's revenue decreased to $5.7bn from $5.8 bn in the previous year however underlying EBIT increased to $578 million.

CEO Alan Joyce says the result speaks to the success of the transformation program.

“Combined earnings across Qantas and Jetstar’s domestic operations reached $820 million, an improvement of 30% on last year,” Joyce says. “That shows the strength of the Group’s dual brand model, even in mixed market conditions with the ongoing economic transition.

“It’s a unique advantage that we’ve built up over many years - and we maximised that advantage in financial year 2016.

Similarly for its Qantas International business, NPS increased following its improvement to all 10 A330-300 cabins, while revenue also jumped to $5.6 bn from $5.5 bn in FY15.

Qantas Loyalty reported record customer advocacy after program enhancements. In April, it allowed new parents who take six months out of the workforce to retain their Qantas frequent flyer status.

Earlier this week, Qantas Loyalty also unveiled a new loyalty deal with Woolworths, following consumer push back after the original scheme was changed in October.

It allows members to earn rewards on every dollar they spend in Woolworths, including the option to convert Woolworths points to Qantas Frequent Flyer points at a rate of 870 Qantas Points to 2000 Woolworths Points.

Qantas Loyalty reported underlying EBIT of $346 million, while revenue increased 6.7% to $1.45bn.

Similarly its Jetstar business saw an increase in EBIT from $230 million in FY15 to $452 million in FY16, as well as a boost in its customer experience.

“Jetstar’s focus on driving customer advocacy and ancillary revenue growth continued with investment in innovative service training and digital sales.,” the report says. “A re-design of jetstar.com, including data-driven ancillary product offering, has enhanced the customer experience.”

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