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Problems at Qantas threaten to damage Brand Australia

March 31, 2014 Corporate, Headline News No Comments Email Email

egtmedia59Qantas, Australia’s most valuable airline brand, has slipped further down the rankings of Australia’s brands, from 14th position to 17th, which may be bad news for Australian tourism generally.

Problems with Qantas can potentially hurt Brand Australia, according to brand value assessor Brand Finance. The company has just released its Brand Finance Australia 100, which puts the combined value of Australia’s Top 100 brands at AUD 117 billion. The survey also shows that Flight Centre is by far the most improved travel industry brand in Australia, having leapt straight into the Top 100 from nowhere to take 23rd place. It’s the only travel company (other than airlines) to make the list.

In a frank assessment, Brand Finance says Qantas flies the flag for Australia internationally as national carrier. The airline is the first point of contact many visitors have with Australia and its tail fins advertise Australia’s importance to travellers at airports around the world. Any failure of Qantas would have a significant impact on attracting tourism, skilled people and investment to Australia, the report states.

Qantas A380 over SydneyThe report places Qantas as the 17th most valuable brand in Australia in 2014, down from 14th last year. It gives the airline a brand rating of AA+, the same as in 2013.

Brands are assigned a rating between AAA (very strong) to DDD (failing) in a format similar to a credit rating.  The most valuable brands in Australia, according to the report, are respectively Woolworths, Telstra and BHP Billiton.

The value of the Qantas brand is placed at USD 1.3 billion, down from USD 1.357 billion in 2013, a fall of 4.2%.

Qantas’ arch rival Virgin Australia receives a AA+ brand rating – same as Qantas and a notch above the AA rating Virgin Austraia received last year. But Virgin Australia also fell in the overall rankings, from 20th most valuable brand in Australia in 2013 to 22nd in 2014. The gap between Qantas and Virgin Australia has narrowed from six points last year to five points this year. The value of the Virgin Australia brand is placed at USD 913 million, up from USD 891 million in 2013 – a 2.7% improvement.

Just after Virgin Australia in the rankings comes Flight Centre, which has made a spectacular debut, leaping from nowhere into 23rd place. It receives an A+ brand rating and the value of its brand is placed at USD 868 million.

Brand Finance also compiles country rankings. Brand Australia, the brand for the whole country, climbed into 10th place last year, from 12th the previous year. Brand Australia was valued in 2013 at USD 1257 billion.

In a sad irony, last year’s fastest upward mover in national brand value was Malaysia, which is now being buffeted by fallout from the Malaysia Airlines flight MH370 tragedy.

Last year, Brand Finance noted: “Malaysia is this year’s fastest mover, its brand value is up 48% on 2012. Reasons for its rapid climb up the nation brand rankings (it has risen two places just this year) include its growing status as a hub for Islamic banking and growing demand for commodities such as palm oil, driven by an increasing and increasingly wealthy world population. Malaysia’s ambitious ‘Wawasan’ or ‘Vision’ 2020 goal, to reach developed nation status by 2020, had looked to have been faltering, however in the last year Prime Minister Najib Razak said progress towards the target is firmly back on track, with GDP per capita set to reach the milestone USD 15,000 by 2018, two years ahead of target.”

Brand Finance, headquartered in London, is a major and respected operator. It opened its first international offices in the USA, Singapore and Australia in 2000 and now has a global network of offices and partners in 20 countries worldwide.

In calculating brand value, Brand Finance uses a number of methodologies. Royalty relief methodology is used to determine the value of the brand in relation to the royalty rate that would be payable for its use if it were owned by a third party. The royalty rate is applied to future revenue to determine an earnings stream that is attributable to the brand. The brand earnings stream is then discounted back to a net present value.

Brand ratings are calculated using Brand Strength analysis, which benchmarks the strength, risk and future potential of a brand relative to its competitors on a scale ranging from AAA to D. It is conceptually similar to a credit rating. The data used to calculate the ratings is taken from a variety of sources including Bloomberg, annual reports and proprietary research by Brand Finance.

To look at Australia’s total brand rankings, access: http://brandirectory.com/league_tables/table/australia-100-2014

Written by Peter Needham

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