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Qantas FF program victim of $40m IT chop

Date

Matt O'Sullivan

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Improvements scheduled for Qantas' FF IT program has been cancelled.

Improvements scheduled for Qantas' FF IT program has been cancelled. Photo: Peter Braig

Qantas has shelved a project to replace a 26-year-old IT system that supports almost 10 million members of its frequent-flyer program because it would cost another $40 million to complete.

The decision highlights the pressure on Qantas to slash costs to retain a cash buffer and keep up the fight in the domestic market against a rejuvenated Virgin Australia.

Qantas has already forked out $20 million on the NewGen program begun in early 2010 to replace the existing frequent-flyer IT platform called Profile. The new system was originally due to be rolled out within 18 months.

Insiders have questioned the benefits of the work on the new program so far but Qantas said the old system had been enhanced by incorporating elements from NewGen. Contractors were kept on until October to ensure part of the new project was bolted on to the old Profile system.

Those full-time Qantas employees working on the new system have since been sent to other projects within the frequent-flyer business such as the Qantas Cash and Acquire programs.

Qantas insists that, despite its age, the ''existing system is running well with the enhancements we've made'', although it concedes that a ''new system is something we'll need to consider in the future''.

Staring at a first-half loss of up to $300 million, Qantas has outlined a plan to axe at least 1000 jobs within the next 12 months and strip out an extra $2 billion in costs over the next three years.

It also has a team of internal strategists working on a wide-ranging structural review, which will canvas the possibility of partial sales of assets such as the frequent flyer division and Jetstar. The airline has yet to decide whether it will bring in external advisers to work on the review.

Meanwhile, in an air travel IT incident, flights were delayed across Australia on Monday morning following technical problems affecting the air traffic control tower in Melbourne.

Melbourne Airport's website showed several flights by Qantas and Virgin Australia among those that experienced delays of around 30 to 45 minutes. That led to flights from Sydney to other destinations around Australia experiencing delays.

In an update at 12pm, Airservices said it had found a data fault in its digital tower technology system.

“We have identified the defect and the system has been reset,” Airservices said. “We will be closely monitoring the system throughout the afternoon to ensure it continues to operate normally.”

A spokeswoman for Airservices Australia said the control tower had lost power at one point, leading to all flights being temporarily suspended.

A Qantas captain addressing passengers on a delayed flight departing Melbourne Monday morning described the situation as "unprecedented".

"They tried to reboot the system a number of times without success," he said.

"They've gone back to a manual system for processing aircraft."

Flights returned to normal Monday afternoon.

- with Jamie Freed

5 comments

  • Replacing an IT system? Always expect disaster not improvement. Better off hanging on to what you have when it was made by people who knew what they were doing. IT geeks now are crap.

    Commenter
    PeterH
    Location
    Brisbane
    Date and time
    December 16, 2013, 8:13PM
    • With the present CTO I do not expect much will change from the present sticky tape and plasters solutions he is putting in. Half fiddling with a solution using contractors is a recipe for disaster (and a waste of money) as it rapidly becomes a monolith which is unsupportable and very difficult to modify to take account to programme changes. A very dangerous ticking bomb which WILL explode.

      Commenter
      Ade
      Location
      Sydney
      Date and time
      December 17, 2013, 11:08AM
      • Why would AJ want to spend $40 mil given its goind to be sold off as a going concern. QFF is a very average service like most FF schemes these days.

        Yes it could benefit from some additional $ spent but the priority of the company is to get bums on seats, and modenise the fleet. If any money is to be spent on IT it would be better invested on booking systems and better flight schedules and destinations.

        AJ has a hugh task to compete with the Asian airlines who's Governments pour 100's of billions into taking over flight routes around the world, so investing in these systems at the moment is not the highest priority.

        Get real!

        Commenter
        James
        Location
        Shangha
        Date and time
        December 17, 2013, 11:41AM
        • A 26-year-old IT system? I worked for Qantas back in 2000 and already then I heard stories about 'Profile' being a 20-year old system written in Fortran (a language suited to numeric computation and scientific computing now being used for simply adding up miles) that would need reverse-engineering to understand. Don't touch it was the message then.

          Commenter
          Alf
          Location
          Sydney
          Date and time
          December 17, 2013, 12:07PM
          • It's not the IT geeks' faults projects don't get implemented properly. More likely it's the management's expectations that a years' worth of work can be done in 6 months for half the price and then wonder why it goes tits up.

            Commenter
            Tash
            Location
            Ballarat
            Date and time
            January 01, 2014, 5:59PM
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