- Qantas abondons 65% “line in the sand” strategy
- Natural market share for Qantas Group in focus
- Removal of 25% and 35% limits in Qantas Sale Act changes little
- Divestment of Frequent Flyer a “double-edged sword”
- Frequent Flyer earnt A$1.3 billion in past 4.5 years; Qantas Dom Intl A$188 mln
- Qantas’s domestic RPK share slipped to 63.5% in FY14 YTD from 65.3%
- “Sydney Connect” requires Asia expansion
- “Sydney Connect” can give Qantas significant advantage
- Qantas should set stop-loss positions on Jetstar associates
- Virgin Australia’s corporate share grew to 27%: Morgan Stanley
- Cost control biggest challenge facing Virgin Australia
In its 94-year history, there are few defining moments that could rival the current set of daunting challenges facing Qantas. 2,000 jobs were already let go at the end of June as part of a A$2 billion cost-cutting programme, including 223 pilots who faced the axe for the first time in more than 40 years and 97 engineering jobs in Sydney and Melbourne. A capacity dogfight in the once lucrative domestic marketplace has left its domestic unit bruised, yields have fallen to a decade-low and net loss for FY2013/14 may well break the A$1 billion barrier swelled by one-off redundancy costs.
All these can be traced back to a bitter struggle for the dominance of the Australian skies, where Qantas, as a higher-cost incumbent, has been losing market shares to a belligerent rival, Virgin Australia, which has transformed itself from a low-cost carrier (LCC) as Virgin Blue to a full-service carrier, adding frequencies and deploying Airbus A330-200 widebody aircraft on transcontinental flights to Perth. In the process, Virgin has gobbled up a 60% stake in the beleaguered LCC Tigerair Australia and acquired Skywest Airlines to tap into the high-growth fly-in fly-out (FIFO) market.
In response, Qantas initially held firm to a 65% line-in-the-sand strategy, putting in 2 extra flights as a group alongside Jetstar for every additional flight that Virgin adds, in a bid to maintain a 65% capacity share excluding other regional players.
This not only took a toll on its domestic load factor, which plunged by 2.6 percentage points to 73.4% in the first 11 months of FY14 versus 76.1% in the prior year period and deviated significantly from its 5-year average of 79.6%, but was also poised to drag its yield down yet further. This puts Qantas Domestic’s profitability into question, which produced a A$57 million earnings before interest and tax (EBIT) in FY14 first-half. Other operating metrics deteriorated as well, with a 2.3% fall in passenger traffic from 26.1 billion revenue passenger kilometres (RPKs) to 25.5 billion RPKs on the back of a 1.4% decline in passenger number to 1.8 million, compounded by a 1.8% addition of capacity at 34.8 billion available seat kilometres (ASKs) from 34.3 billion ASKs in the prior corresponding period.
In contrast, Virgin Australia has witnessed a 4.9% surge in traffic to 18.7 billion RPKs from 17.9 billion RPKs in the same period, with a 4.2% increase in the number of passengers carried to 16 million from 15.3 million. Coupled with a slower 1.9% growth in capacity to 24.2 billion ASKs from 23.8 billion ASKs in the year-earlier period, its load factor increased by 2.2 percentage points year-over-year to 77.3%.
As a result, it is apparent that Qantas has lost market share to Virgin, which has made considerable inroads especially in the corporate market, such as a new 3-year contract with BHP Billiton in Western Australia. Investment bank Morgan Stanley puts Virgin’s gain in corporate share in 2013 at 4% with a 27% total corporate share, whereas Qantas’s and Jetstar’s are at 54% and 14%, respectively.
The loss of market share is particularly pronounced when measured in passenger traffic, where Qantas Group – Qantas Domestic, Jetstar Domestic and QantasLink combined held a 63.5% share by RPK in the first 11 months of FY14, down from the 65.3% share it had held in the prior corresponding period. Capacity share by ASK fell marginally from 64.8% to 64.2%, as was its share by passenger number which dropped from 62.7% a year ago to 62.4% in FY14 year-to-date.
The market share of Virgin Group – Virgin Domestic, Tigerair Australia and Skywest combined, soared to 36.5% from 34.7% in year-ago period by RPK, and to 37.6% from 37.3% by passenger number. Even when measured in capacity, Virgin Group’s share grew to 35.8% from 35.2%.
Though this masks a more significant shift in market share at the top-end segment, as Aspire Aviation‘s compilation of these airlines’ operating statistics shows 55.7% and 44.3% of travellers chose to fly on Qantas and Virgin Australia in FY14 year-to-date, respectively. The prior-year period break-up was 57% Qantas and 43% Virgin. In terms of passenger traffic, Qantas lost around 1.7% of RPK share to Virgin, which saw its share dip to 57.7% from 59.4% whereas the latter’s grew to 42.3% from 40.6%.
Operational gains rationalisation
Faced with sliding market shares, it is increasingly clear that the 65% line-in-the-sand strategy is not sustainable. In a May 21st investor update, Qantas announced a ceasefire and that group domestic capacity will remain flat in the first 3 months of FY2014/15.
“What we are seeing overall, our share of the corporate market, our revenue share, is stable at over 80% for corporates. Our overall market share is around 63% in the domestic market – it varies up and down. We have never been focused on… our issue has never been… I think people have misinterpreted where we were with the 65% market share,” Qantas chief executive Alan Joyce concedes.
An overdue rationalisation following the fading mining boom, in addition to operational changes that will yield cost savings and efficiencies, is helping instil confidence in the financial market that Qantas will at long last make good on its promises of putting itself on a solid footing.
“We believe Qantas is on the right track to improve profitability in the medium term and we are now more confident that the quantum of cost savings can be achieved,” JP Morgan said in a note to clients on 23rd July.
Examples include Qantas suspending the Darwin-Nhulunbuy route from August 17 onwards as the closure of a Rio Tinto alumina refinery leaves flights only around 50-60% full and Virgin discontinuing the thrice-weekly Perth-Exmouth service from October 13 onwards, citing the airline cannot “sustain unacceptable losses”.
“The intra-WA [Western Australia] statistics show demand is down by something like 16%. So there have been significant drops in that part of the market and we have to adjust our capacity and services,” Joyce told the Australian Financial Review (AFR).
Over the next few months, in the meantime, passengers will see operational and network changes that constitute A$600 million of the A$2 billion cost savings identified in its restructuring programme. An exit on the loss-making Perth-Singapore route on May 12 freed up an Airbus A330-300 which enabled it to down-gauge its daily Brisbane-Singapore flight and retire an ageing 747-400. Another 747-400 will be retired in the FY15 second-quarter by increasing domestic utilisation and down-gauging one of its twice-daily Sydney-Singapore flights to the A330-300.
Moreover, Qantas will retime QF9/10 Melbourne-Dubai-London flights to not only improve connection opportunities within 4 hours of landing in Dubai from 4 destinations to 17 one-stop destinations, this will also free up an A380 to retire another 747-400 jumbo and be deployed on the 13,804km Sydney-Dallas Fort Worth (DFW) route, the world’s longest trumping Delta’s 13,582km-long 777-200LR flights from Atlanta to Johannesburg and Emirates’ 13,420km-long A380 flights between Dubai and Los Angeles. In doing so, this will eliminate the Brisbane technical stop on return flights due to strong headwinds in the Pacific Ocean.
This will see Qantas add 10% of capacity and introduce the First Class product on the route beginning September 29th, while down-gauging some Sydney-Hong Kong flights from the A380 to a reconfigured 747-400 featuring the Marc Newson interior. By end-FY16, only 9 refurbished 747-400s will remain in its fleet, which translates into more than a A$100 million annual cost saving.
More importantly, Qantas will phase out 6 Boeing 767-300s before year-end and the remaining 6 by March 2015, therefore simplifying its domestic fleet to just 2 types, with the A330-200 focusing on transcontinental flights and the 737-800 on East Coast flights between Sydney, Melbourne and Brisbane, thus reaping A$55 million of annual saving from significantly reduced maintenance, pilots and cabin crew pool.
A majority of its 737-800 fleet will also have 6 seats added as part of a refurbishment to 38 examples that are not equipped with the Boeing Sky Interior and seat-back audio/video on demand (AVOD) in-flight entertainment system (IFE). The retrofit will commence in mid-2015 and be complete within 12 months, after which the aircraft will feature 3% higher capacity with a total of 174 seats while offering QStreaming in-flight connectivity onboard these earlier examples.
Strategic review Qantas Sale Act: what changes materially?
Besides the pilots cut in which 152 pilots will be retrained on other aircraft while establishing a new A380 base in Melbourne and a new 737 base in Adelaide, in addition to the 475 jobs axed as Qantas consolidates its call centres in Hobart and closes its sub-scale Melbourne and Brisbane facilities, a larger question looms over whether it will partially float its crown jewel – its Frequent Flyer division that has been consistently profitable over the past 4.5 years with a A$1.307 billion pre-tax earning versus only the A$188 million recorded at its Qantas Domestic and International units.
Yet partially floating its A$2.5 billion Frequent Flyer strategic business unit (SBU) could turn out to be a double-edged sword and by chief executive Alan Joyce’s own admission, “a complex issue”. While it is true that doing so may unlock shareholder value, where “the parts are greater than the sums”, and boost Qantas’s cash balance, thereby strengthening its war-chest, it will also reduce Qantas Group’s future earnings potential.
It is because the Frequent Flyer unit, now boasting 10 million strong members and the Acquire business loyalty programme which counts 35,000 small and medium-sized enterprises (SMEs) as its members that turns daily business expenses with partners such as QBE Insurance, GIO, Westpac, Deloitte Private, etc, into points, has been acting as a “shock absorber”, dramatically reducing the volatility of Qantas Group’s earnings. In the past 5.5 years, Qantas Domestic and International have turned in losses of varying degrees thrice on a combined basis, with the latter of which being especially susceptible to external circumstances, whereas Frequent Flyer has turned in a steady streak of profits.
Qantas’s biggest shareholder, Melbourne-based Balanced Equity Management, which holds 17.48% of its shares along with its US-based parent Franklin Templeton, up from 16.42% previously, has opposed such plans in the past but remains open-minded if work-arounds to the aforementioned problems can be found.
Now that Qantas made a A$450 million early repayment of debt due in FY15 following of a A$300 million issue of unsecured or junk bond due May 2022 and another A$400 million one due June 2021, thereby significantly extending its debt maturity profile and reducing the amount of repayment due in FY16 to A$281 million from A$555 million, Aspire Aviation remains sceptical on the merits of such a floating plan.
On the other hand, industry observers have been touting a potential stake sale in Qantas following the abolition of the 25% and 35% limits in the 1992 legislation Qantas Sale Act (QSA), the former of which restricts any airline’s shareholding in the airline to 25% and the latter combined airlines’ shareholdings to 35%.
“Qantas will still operate under restrictions that do not apply to any other Australian airline, but will have greater capacity to attract new investment,” Australian deputy prime minister Warren Truss said.
“It’s positive that there’s general agreement that Qantas is disadvantaged by the sale act and that change is needed. While removing all restrictions that apply only to Qantas remains our preference for levelling the playing field, changing the 25 and 35% limits would represent an improvement on the status quo,” Qantas commented.
A first step towards increasing foreign shareholding in Qantas will be splitting its domestic and international units while issuing new shares, since some 38% of Qantas’s shares are already held by foreign institutional investors, thus leaving only a 11% room under the current shareholding structure, albeit those units have been reporting financial results separately.
Though mimicking Virgin Australia’s shareholding structure, thereby complying with the country’s Air Navigation Act with Virgin Australia International Holdings Pty Ltd remaining 51% Australian-owned but its domestic unit almost 80% foreign-owned, including 25.99% by Air New Zealand (ANZ), 22.17% by Singapore Airlines (SIA), 21.24% by Etihad and 10% by UK billionaire Richard Branson’s Virgin Group, does not guarantee financial success.
Its alliance partner Emirates, for instance, is not seeking to ‘swoop‘ on Qantas, as is its new codeshare partner China Southern Airlines, with which travel on code-shared routes such as flights from Guangzhou to Xiamen, Kunming, Fuzhou and Urumqi began on 1st May.
“As we stated when the partnership began. neither airline is looking to take an equity stake in the other,” Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum told the Australian Financial Review (AFR).
Indeed, Emirates has benefitted the most from the Qantas/Emirates alliance that saw more than 360,000 additional Australians visiting Dubai while gaining access to 55 domestic Australian destinations with nearly 5,000 weekly flights. Its “benefit-transfer model” for trunk routes to/from Dubai and Australia as well as trans-Tasman services for sharing incremental profits and commission-based model for all other non-trunk routes are structured in a way that favours Emirates’ significantly larger scale, including longer flights to the 31 new one-stop destinations in North Africa/Middle East and 33 in Europe, despite being “metal neutral” on the common routes on which both operate.
Above all, questions have to be asked on the reason why the same test that applies on Qantas International, namely returning to profitability before any expansion plan, does not apply on its Jetstar subsidiaries in Asia, including Jetstar Japan, Jetstar Hong Kong, Jetstar Pacific and even Jetstar Asia. Otherwise opening the door for increased foreign shareholding in Qantas will merely fund its existing, unsuccessful strategy that put it in this difficult position in the first place.
Best plan for Asia: “Sydney Connect” or Jetstar?
Make no mistake, there are unquestionably growth opportunities in Asia such as Japan has a domestic aviation market 4 times the size of Australia’s with a low-cost penetration rate of 5% that has grown for the first time in 6 years by 8.7% in 2013. Its finances will now hopefully improve following the establishment of a second base at 24-hour Osaka Kansai International Airport, thereby significantly improving the utilisation of its 18 A320s and boosting the number of daily flights by 20% from 76 to 94.
But such high hopes are often a mismatch with the tough reality.
Jetstar Japan, for instance, received a cash injection of ¥11 billion last year from Qantas and Japan Airlines (JAL) and is operating in a marketplace with a plethora of low-cost carriers (LCCs) such as Tokyo Narita-based Spring Airlines Japan and Vanilla Air, AirAsia Japan that is purported to be based in Nagoya with e-commerce giant Rakuten which will own 18% of AirAsia’s second crack of the market. Osaka Kansai is also a stronghold for Peach Air which is profitable, although Jetstar Japan commands a 3% passenger share in Japan, versus Peach’s and Vanilla’s 2% and 1%, respectively (“ANA aims to soar on the wings within“, 29th May, 14). A collapse of Skymark Airlines whose order for 6 A380s was cancelled by Airbus and is facing significant uncertainties of being a “going concern” would benefit Jetstar Japan the most which is next in line after Skymark’s 7% passenger share.
Vietnam-based Jetstar Pacific of which Qantas owns a minority 30% stake has just received a US$35.7 million capital injection, with Qantas forgiving a US$10.7 million debt leading to no cash outflow for the Australian carrier. Singapore-based Jetstar Asia has halted growth owing to a significant overcapacity issue and is understood to continue to receive firm support from its parent despite speculations of an acquisition of Qantas’s 49% stake by Lion Air.
Jetstar Hong Kong, which failed to get off the ground despite an initial ambition of having a 6%-7% capacity share within 3 years of commencing operations with a fleet of 18 aircraft, appears to be living on borrowed time. China Eastern Airlines (CEA), its 33.3% shareholder, has granted a US$60 million loan to the start-up which is estimated to be losing A$3 million a month for financing costs and parking fees for its grounded aircraft in Toulouse, France. It has already sold 3 of its 9 Airbus A320s in its fleet and is considering the sale of another 3 aircraft. Its commencement of operations, originally slated for mid-2013, then late-2013, appears indefinitely on hold, as Hong Kong’s air transport licensing authority (ATLA) halted the approval of any air operator’s certificate (AOC) application pending a clarification of its principal place of business clause.
A stop-loss position and a payback period should Qantas decide to press ahead with these Jetstar investments, appear warranted to justify sinking more and more of investors’ money into such endeavours, especially given the increasing prospect for Jetstar Hong Kong of being a futile overseas misadventure. After all, an airline cannot keep championing its promising potential indefinitely while staying on the ground, which also neglects the opportunity cost of better spending the locked-up capital of US$66 million and producing real returns for investors.
Such foregone opportunities include not least the Frequent Flyer’s update of its information technology (IT) system. These loss-making Jetstar investments are also coming at an expense of the much-needed Qantas International fleet renewal. The argument of sinking money into Jetstar associates that are unable to produce returns and have incurred losses over the years on the one hand while depriving Qantas International of a realistic chance to become profitable by flying the most fuel-efficient aircraft on the other, seems flawed.
Qantas has 50 options on the 787-9 Dreamliners that need to be firmed up for a FY17 first delivery with later deliveries through FY2020, whereas purchase rights stretch to FY2025. Aligning its future fleet to its future growth by cancelling its remaining order for 8 Airbus A380 superjumbos which it does not need and reinvesting the amount of pre-delivery payments (PDPs) on 787-9s instead will pave a solid foundation for an “Asian century”.
Crucially, Qantas International could expand its “Sydney Connect” service which is proving popular and offers a 1-night accommodation for passengers flying from Qantas’s expanded codeshare destinations with LATAM Airlines Group such as Rio de Janeiro, Sao Paulo, Lima, La Serena, Antofagasta and Punta Arenas to Sydney and then onwards to Singapore, Bangkok, Hong Kong, Shanghai, Manila and Jakarta.
“We’ve seen a significant increase in the number of South American travellers choosing to fly to Asia. By including a night’s hotel accommodation as part of the fare, we’re confident that our customers will find this pathway to Asia enjoyable, allowing them to arrive at their final destination well-rested,” Qantas executive manager international sales Stephen Thompson said.
With the underweight 8,300nm 280-seat 787-9, Qantas could launch the 8,309 miles and 8,414 miles direct flights to Sao Paulo and Rio de Janeiro, respectively, in addition to more Asian destinations such as Chengdu and Kunming in China. In doing so, this will give a significant advantage to Qantas’s “Sydney Connect” in Southeast Asia and East Asia, as the dominant one-stop carrier connecting Asia and Latin America, even using 330-minute extended twin engines operations (ETOPS) rule.
At present, passengers will have to make 2 stops or more in the US from Asia in order to reach Latin America, such as United’s 787-8 flights from Chengdu, China to San Francisco, then transiting at Houston Intercontinental before flying to Rio de Janeiro. In comparison, Qantas’s one-stop flight Chengdu-Sydney-Rio de Janeiro, should the flying kangaroo launch new flights to these end destinations, will be 13,817 miles long or a 24-hour 38-minute flight excluding connection time, superior with United’s 34.5-hour, 13,521-mile journey while eliminating the hassle of making 2 stop-overs.
For Shanghai Pudong, the 13,284 miles long “Sydney Connect” service takes 23-hour 41-minute flight time plus another 1.5 hours for connection, versus United’s Shanghai-San Francisco-Houston-Rio de Janeiro service that takes 32 hours and 10 minutes, including lay-over times.
The advantage for Qantas’s “Sydney Connect” widens considerably when Southeast Asia-Latin America is concerned. A hypothetical one-stop Singapore-Sydney-Rio de Janeiro flight will be 12,322 miles in total taking roughly 25 hours, consisting of a 8.5-hour journey from Singapore to Sydney and another 15-hour depending on travel direction plus 1.5 hour of connecting time, will be far more superior than American Airlines’ offering of a Singapore-Tokyo Narita-Miami-Rio de Janeiro flight that takes 36 hours and 20 minutes with 3 stops or United’s Singapore-Hong Kong-Chicago-Houston-Rio de Janeiro flights that takes 38 hours and 20 minutes.
All in all, “Sydney Connect” and Jetstar’s growth in Asia are not necessarily mutually exclusive, the key question is whether Qantas has the financial wherewithals to continuously fund Jetstar’s growth and take on losses, wage a domestic war with Virgin Australia and simultaneously develop “Sydney Connect” to its full potential in one fell swoop. Favouring Jetstar’s Asian offshoots over Qantas International with both producing negative returns over the years merits increased scrutiny over its capital allocation plan.
A cautionary tale
For all the talks of a Qantas recovery, it remains a cautionary tale and the progress that will be achieved is fragile. First of all, it remains to be seen if Qantas will find a new appetite for defending a new “line of the sand”, as Virgin’s planned expansion of 4% in the first quarter of FY2014/15 means further market share losses for the Qantas Group.
Should Qantas do so when its market share approaches 60%, it will undo the progress achieved so far and rid itself of the breathing space a hiatus in the capacity war affords it over the next 3 months. While its market share currently stands at 63.5% in terms of passenger traffic, the current pace of share gain by Virgin Australia implies a 60% traffic share for the Qantas Group is not inconceivable by the end of FY15.
Furthermore, as a Centre for Aviation (CAPA) report points out, the 10% capacity decline in Western Australia and transcontinental one from New South Wales to Western Australia will be offset by growth in Queensland, primarily driven by Tigerair Australia’s new base in Brisbane that saw it adding Brisbane-Adelaide and Sydney-Adelaide flights, base its 13th Airbus A320 there with another example on order.
The new war front of the Qantas/Virgin Australia is increasingly being played out in the low-cost and regional sectors, an indicator of which being the group share of Jetstar Domestic and Tigerair Australia. Jetstar accounts for 34.5% of Qantas Group’s passenger traffic in the first 11 months of FY14, versus 33% in the corresponding period in the prior financial year; whereas Tigerair’s traffic accounts for 16.2% of Virgin Group’s total, up from 13.8% a year ago.
Tigerair Australia has been growing aggressively, in particular, albeit off a low base since it remains around one-third the size of Jetstar Domestic. Tigerair Australia has gained around 3% of traffic share from Jetstar Domestic to 21.3% from 18.2%, as well as capacity share to 20.6% from 17.8%, according to Aspire Aviation‘s monthly Australian air market tracker.
Though Tigerair’s aggressive growth comes at the expense of profitability, with a S$33.8 million (A$29 million) operating loss in the April-June period, or A$2.2 million a week. Its operating loss for the FY14 second-half ending 31st June almost doubled to A$48 million from A$27.6 million a year ago. Once Virgin’s share of loss in the FY14 first-half of A$18.4 million is included, Virgin Australia will take a A$47.2 million hit from Tigerair alone. In fact, UBS forecasts a pre-tax loss of A$241 million for Virgin Australia, including a A$40 million share of loss from Tigerair Australia.
As Qantas Domestic’s profitability recovers, it would be interesting to see to what extent Jetstar’s pre-tax loss, at -A$18 million in FY14 first-half, negates Qantas’s improvement.
Meanwhile, Virgin Australia is still trying to liberalise regional routes, such as the controversial Brisbane-Roma-Charleville route, and Qantas is also launching new routes such as Sydney-Whitsundays, Hamilton Island, Hervey Bay and Brisbane-Port Macquarie and Miles, in addition to Melbourne-Coffs Harbour, therefore travellers can take comfort that competition between Qantas and Virgin is still going to be as lively and fierce as ever, although the facet of the competition may be focusing more on quality grounds such as Virgin Australia’s status match for high-flying public servants and Qantas’s controvertible frequent flyer programme change.
With domestic business class fares rising by 23.1% year-over-year in July, slashing unit costs to within 5% of Virgin Australia’s would ensure it retains flexibility in maximising its natural market share without compromising yields, although this maybe overly optimistic and a tall order that is difficult to achieve. Short on details, it is difficult to see why Qantas could feasibly narrow its cost gap with Virgin Australia by simplifying its domestic fleet to the types Virgin already operates, and adopting the single-aisle flying on East Coast – a practice already adopted by Virgin a long time ago in 2013, let alone lower maintenance cost and more flexible work rules at Virgin.
Internationally, there are signs the market is rationalising a bit, including Singapore Airlines (SIA) ceasing to fly the A380 between Singapore and Melbourne, while scaling back A380 flying to Sydney; Virgin Atlantic pulling out from the loss-making Hong Kong-Sydney route and Qantas down-gauging some A380 flights to the reconfigured 747-400, although Cathay Pacific is deploying the larger Boeing 777-300ER on one of its 4 daily flights on a daily basis by 1st February 2015 and beginning in early December on CX138/139 on Wednesday, Friday and Sunday, thereby adding 1,370 weekly seats on the trunk route.
Should Qantas International expand its network to realise the fullest potential of “Sydney Connect”, with the Badgerys Creek airport being a positive factor over the much longer term, it could halt its continuous decline with investments in a fleet renewal that will see it operate the latest, most fuel efficient 787-9 Dreamliners, albeit the odds are still in favour of sinking even more money in Jetstar’s associates in Asia rather than doing so given its track record.
As “Qantas is in severe financial difficulties” and is slated to post a A$794 million (US$738 million) pre-tax loss before redundancy costs, according to CIMB, the upcoming announcement of its worst annual result is fast shaping up to be an unprecedented defining moment for Qantas.
It is the survival of the fittest in nature, and it is no exception when it comes to the flying kangaroo in one of the world’s most liberalised and toughest aviation markets.
Qantas faces defining moment