Dubliner plans to develop both the premium airline and its low-cost subsidiary, writes Ciarán Hancock, Business Affairs Correspondent

On July 22nd, Dubliner Alan Joyce made a two-hour presentation to the board of Australian airline Qantas in Sydney on his vision for the future of the company.

Joyce, who headed Qantas's low-cost subsidiary Jetstar, blew them away.

Afterwards, they told the Irishman that he had beaten off competition from two other heavyweight internal candidates and was the preferred candidate to succeed Geoff Dixon in November as chief executive of the world's 10-biggest airline.

There was just one condition - he had to keep it to himself until last Monday morning, when the Qantas board formally approved his appointment and announced it to the Australian stock exchange.

"I had my brother and his wife and kids down for the weekend, so they were the only people who knew," he told The Irish Times yesterday from his base in Melbourne.

Joyce will shadow Dixon until the airline's annual meeting in November when he will take over the controls.

The job is something of a double-edged sword. On the one hand, Joyce gets to run Australia's premier airline on a basic salary of more than 2.4 million Australian dollars. Qantas has two billion Australian dollars in the bank to help it weather the current economic storm and has placed large orders with Boeing and Airbus to overhaul its fleet and make it one of the most efficient in the skies.

On the flip side, he is taking over at a time when the airline is looking to cut 1,500 jobs from its 34,000-strong workforce while rasing fares and trimming its schedule to cope with the challenge of sky-high oil prices.

And it has had two high-profile safety incidents with its aircraft in the past week.

The airline's share price fell by 15 per cent on the day Joyce was named chief executive in waiting.

However, he is confident that Qantas will come out the other side successfully.

"We've always been good at reacting to changes in the marketplace," he said. "When September 11th happened and Sars happened, we maintained profitability all the way through by taking immediate action. I think we're comfortable that we're taking the right actions to maintain the airline in profitability."

Every $1 increase in the price of a barrel of oil hits Qantas's bottom line by $38 million. But Joyce said 72 per cent of its fuel was hedged at $118 a barrel, giving the Aussie airline some shelter from spiralling oil prices.

"Qantas has been very good at hedging policies, so for the year just gone [12 months to the end of June 2008], it will meet analysts' forecasts," he said. "We are not going to be in the same position as Aer Lingus and Ryanair [which have both said they'll be lucky to break even this year]."

Is the era of cheap air travel over? "There are a lot of people claiming the death knell of it but I'm not sure that will be the case," he said. "The gyrations of fuel prices in the last two weeks has seen oil drop by about $20 - who knows where it could end up.

"The great position that we're in at Qantas is that we have a bet on black and red. We're a full service carrier [ Qantas] and a low-cost carrier [ Jetstar]. We can watch the market develop and decide which one we grow and which one we scale back a bit."

Qantas could even be on the prowl for acquisitions, with Joyce forecasting a bout of airline mergers.

"We're of the view that consolidation will occur. You've seen that this week with British Airways and Iberia tying up," he said. "There could be opportunities in the future that we could look at and with the high oil price they could occur."

Joyce comes from working-class stock. His father was a postman before taking a job at the now closed Gallagher cigarette factory in Tallaght. His mother was a cleaner in the local sports complex. They both still live in the family home in Springfield, Tallaght.

Joyce graduated from Trinity College before gravitating to the airline industry. He spent eight years with Aer Lingus before heading down under in 1996 to join the now-defunct Ansett airline.

About a year before Ansett collapsed, its chief executive Rod Eddington was offered the top job at BA. Before exiting, Eddington phoned his old mucker Geoff Dixon and suggested he hire Joyce.

"I was lucky that I got the recommendation from Rod and that Geoff listened to it," Joyce said candidly.

That was 2001. Three years later Joyce was at the controls for the launch of Jetstar, Qantas's low-cost offshoot inspired by Ryanair.

Jetstar was profitable from the start and now carries more than 10 million passengers. Having started with domestic routes in Australia, it is now the biggest airline carrier from there to Japan and operates routes to New Zealand, Malaysia, Bali, Indonesia and Singapore.

"It's made money every year from the start," Joyce said proudly. "In essence, it's around the size of Aer Lingus."

Ironically, Joyce could have had the Aer Lingus top job when Willie Walsh quit in 2005. "I was in the mix for it," he said. "It didn't get to a job offer because I pulled out and stayed in Australia with the Jetstar job.

"With family back in Dublin that was probably the biggest draw but, at the end of the day, I decided that the opportunities here were probably going to be greater. I'm glad I stayed."

Analysts will be glad to hear that Joyce plans to retain Jetstar and Qantas as separate brands. "The biggest thing we'll see is a continuation of the brands," he said. "There were rumours going around that I would look at converting Qantas into a low-cost carrier and nothing could be further from the truth. If anything, I think we will invest more in the Qantas product."

With Dublin airport's new Terminal Two being built with long-haul carriers in mind, would Joyce consider launching a Qantas service from Sydney to his home city?

"At the moment with the current fuel price it wouldn't be on our radar screen," he admitted. "I would have thought it could be more of a Jetstar market when it gets its [ new Boeing] 787s. Jetstar is looking at European operations from 2010, probably starting with southern Europe. When it gets the 787-9 it could be a possibility to fly to Ireland and northern Europe."