Tag Archives: Qantas

Follow your own Sheep, Airline Style

You do wonder what sort of credentials you need to run an Airline, it is very difficult, in fact it is one of the worse sort of businesses to do business, there are so many factors in the fact that can send you broke on a weekly basis, some can be the changeable climate of the traveling public, others are anything from hijackings to tsunamis, fuel shortages, volcanos, snow, pilot and ground staff strikes, computer catastrophic failures, bad press, engine explosions or the worse of all, the loss of aircraft, passengers and crew.

Airlines as a whole don’t make money, losing it is easy, making it is very difficult, so why do you want to be in this business, because it is glamorous, well maybe yes to a point, some call it the “bus service in the air”, which is a fair comment in todays highly regulated on time service environment, but there is something in that fact as flying is a still a wonderous thing to do even for people who hate it, nothing is more amazing than the fact you can circle half the globe and land within minutes of the scheduled timetable, and within the hours of a 24hour day, Sydney to London, in the time of only one day of your life, and for only $2000.00 is in anyone’s terms  a great deal.

With all these issues to face everyday you would want to minimize your losses by selecting routes that are profitable and useable, but there is a strange fact that sometimes in doing this, all reason goes out of the window, take for instance New Zealand.

Now New Zealand is a pretty country that is somewhere in the low South Pacific Ocean and at last count there was 4,315,800 people residing there, and of that  1,110, 456 of them visited Australia, and from Australia they have in the fact that 1,115,285 of them then returned the favour by going over there.

So that would seem like a pretty big market, plenty for everyone to have a slice of the travelling cake, however if you are in an airline management position this would seem to be a rainbow gold mine just waiting to be dug.

It is but a strange thing happened, for such a small country airlines have been swapping and changing around to the point that it is a lottery to seem which one will be ready for you at the airport when you get there!

Almost all have been non New Zealand Airlines and mostly come from big brother Australia, long forgotten Ansett ruled the roost for years with a massive 30% share of the cake, then Qantas in some form or the other took over the debris when the airline was grounded in 2001 and being renamed Qantas New Zealand, in 2003 Qantas created their successful LCC (low Cost Carrier) offshoot Jetstar which commenced New Zealand operations on the 1 December 2005  to Christchuch (CHC) and on the 10 June 2009 Jetstar commenced domestic New Zealand flights between Auckland, Wellington, Christchurch and Queenstown.

New Zealand has it’s own national airline called Air New Zealand which by all cases in the last decade has been a total basketcase, New Zealand as a market that is so very small for a large legacy carrier that has 6 Boeing 747-400’s always parked under the window, but under the stewardship of Rob Fyfe who was appointed in 2005 the airline has become the one to watch and now covers 27 domestic destinations and 26 international destinations, making money in a creative way which much like Singapore Airlines in Singapore, and in doing so out go the big thirsty B747’s and in come B777’s which are more suited to long thin routes, in other words good management.

Another upstart that tasted the New Zealand gold rush is Virgin Blue, based in Brisbane (BNE) , started in 2000, it had the good fortune in that Ansett dissolved right in front of them and created a market almost overnight, a LCC that was on the hunt soon dominated the Australian low-cost market and in 2003 a subsidiary of Virgin blue, Pacific Blue was heading over the Tasman Sea wanting some of the ready cash.

But in most cases you always found yourself on a Virgin Blue aircraft as the fleet was rotated around to cover the only few Pacific Blue Boeing 737’s flying, and Virgin then thought “well we are over there so why don’t we do domestic New Zealand as well”, well why not, it’s a free world.

So if you wanted a flight from Aussieland to Kiwi Land, then the choice is large, Qantas, Jetstar, Virgin Blue, Pacific Blue and not forgetting Air New Zealand, now on top of all that it is because New Zealand is where it is then most international carriers will terminate their service in either Auckland (AKL) or Christchurch (CHC), and in most case many have 5th freedoms of the air rights, which means that “they have the right to fly between two foreign countries during flights while the flight originates or ends in one’s own country”, so you can sway your way down to Sydney Airport, drop $210.00 into a Emirates passenger ticket and then rumble right along and taste the space and giantness of their double decker bus, the A380, well they are getting 90 of them so why not drop a few on the Trans Tasman route and pick a few shekels moving Australia to New Zealand or vice- versa, 460 seats is a lot to fill, Melbourne’s the same, In Brisbane you can jump on a Singapore Airlines Jet and swan over in style, and not on a cramped B737 or Airbus A320.

If there is then a saturated market it is New Zealand, with only two major ports (AKL/CHC), and as sheep following sheep its getting seriously crowded parking in Auckland with empty planes, so what happens, they lose mountains of money, and it becomes a poker game of who will hold out till the last, all of them holding their breath, fares go to bucket levels, almost coming down to stealing passengers at airports trying to board the competition, and it goes on for years, upping the frequency or adding even more ports (Gold Coast, Cairns) to get a leg over the others…..

So who gave up first…..Virgin Blue/Pacific Blue, “what the hell it’s not worth it”, so they decided that we will put our precious resources somewhere else…and that is?

Perth (PER), the resource boom of shipping the whole of Western Australia to either China or Japan is in full swing and a market just waiting to be exploited, did they learn from losing all that cash in New Zealand, “hell no”, as “thar’s gold in those W.A. Hills”

Virgin Blue decided to ship people over to W.A. wholesale, by buying a couple of large Airbus A330’s and going business class too.

Qantas not to be out done looks around and realises that Jetstar has few loose A332’s available and  so puts them on the same route, Jetstar meanwhile is a regular customer at Perth, so is Singapore  Airlines offshoot Tiger (one Dollar seats) Airlines, Strategic Airlines is also based there, Skywest too, in fact there is 12 domestic airlines based in Perth, and how many people live there?

1,659,000, less than New Zealand, in fact far less than New Zealand, oh and there are a few 5th Rights Carriers passing through there too, suicide!

And on it goes, Sheep following Sheep, Perth has not even been on the map for decades, if you wanted to fly there it cost less to fly to Hong Kong, Japan even, in fact the cheapest way was to fly to Singapore and backtrack to Perth, those were the days, going international to fly to a domestic port?

Soon it will be dollar dazzlers, free meals, face painting to fill empty seats…Suicide.

So here we go, which one will pull out first, Qantas, Nah!, Jetstar, Nah!, Virgin Blue, Nah! too much at stake, Tiger..well maybe but their numbers are low anyway.

So it’s going to be a blood bath, and coming to an airport near you.

Say, there is a good traffic going down to Antarctica, could be on a winner there, seasonal is the only problem, “could you land an Airbus A330 on the ice?”

Sheep following Sheep, Oh by the way Tiger Airlines are going to do a new route……going over the Tasman to New Zealand….

……”oh for Christ’s sake”

The jury is still out..on the Airbus A380….

AirFrance A380

Some milestones are hard to see clearly until many years pass and the verdict is finally in, but as the 2 year milestone of being in service for the Airbus A380 came around, it is still not clear of whether this machine and Airbus are in the clear.

to date  there are 20 A380s in service with three airlines – SIA, Emirates and Qantas -which have accumulated 75,000h, operated 8,000 flights and carried at least 2.5 million passengers, and firm orders for the A380 to 202 aircraft from 17 customers.

Sales have dropped to only 2 orders for 2009, and the many A380’s that have been ordered have been referred or given delayed deliveries, many commentators have said the double-decker is just too big and will lose money constantly and the severely delayed Boeing 787 was still the better way to go.

The two years in service report notes that the aircraft did have issues of reliability which is typical for like Emirates based in Dubai, their technical dispatch reliability benchmark is above 98.5%, and Tim Clark (Emirates CEO) says that while Airbus is guaranteeing 98.5% “we’re not there yet. We’re at 97%, sometimes 96%.

Most faults have been through oversensitive sensors (moisture contamination was another pain) that go off and create a no-go fault warning and a (return to gate), Airbus have worked quickly to rectify the situation and most warnings are now nulled as they adjusted the computer algorithms for failure detection as to not be so sensitive, main gear steering system (MEL) caused some concerns too, the trailing axle of the two six-wheel centre bogies is articulated to avoid tyre scrub on the inside wheels, and the wedge that must lock the steering in place for take-off has proved problematic, again a fix has been sorted and the problems solved, a nose wheel problem on a Qantas service to London stranded the machine on the runway and had to towed to the gate for disembarkation and finally two in-flight shutdown of the Trent 900 engine were “non-basic”, which means the engine’s basic design was not at fault.

It feels like a long bad list but all new aircraft (and remember the A380 is a generational design) have such new operational problems and in fact the list is very small, the real problem is that if the aircraft is not serviceable is then what do you do with nearly 500 passengers!, luckily it hasn’t happened often, but when it does it creates a major logistical problem.

So what of the other factors, in this case the A380 has been a spectacular success, passengers just rave about the space, the quietness of the design and load factors are extremely high, pilots are gushing with praise for its flying characteristics and low turbulence factors (its noted that its like the Queen Mary 2 in the sky, it just plows on through) and the plane is more efficient than promised by the manufacturer (since when has that happened in the past), SIA generally cruises its A380s at M0.83-0.85, and the approach speed – for a landing weight close to the 397t maximum take-off of a 747-400 – is an impressively slow 130-135kt (240-250km/h). they found the faster you flew the more efficient the A380 became so in service the machine has not only delivered but is well above expectations and will get better again with improvements of weight reduction and engine upgrades coming after 2012.

On the ground it again has not proved to be problematic with its size and weight, turnaround times range from 90-110min, depending on route and operator. For example, Emirates does 90min turns at London Heathrow between the inbound EK001 and outbound EK002, which is impressive with such huge numbers (Passengers,Cargo & Catering) to cater for.

2010 will be the year that the Airbus A380 will be declared a success or failure, a major step forward in design and operations, unfortunately the GFC crisis was the worst situation to be faced by a machine designed to carry such high load factors (hence the delayed deliveries and few new orders) and could have, but didn’t turn it into a loss making albatross (a la Concorde), in fact its extremely high load factors bids it well in the future.

The reason that 2010 is significant is in the way Air France intends to introduce its first A380’s into service in December 2009 and Lufthansa in the Late1stQ 2010, unlike the 3 current airlines (Singapore/Qantas/Emirates) these European Carriers are going more for the higher seating configurations of 538-seat Air France and 550 seat Lufthansa, the Aircraft is already known to very efficient and now you have a considerable higher load factors and certainly higher yields and profit, the Boeing 747 was a game changer in price (seats per mile) in the early 70’s and the fares plummeted, that won’t happen here but it will give the two European airlines a significant advantage as with what Qantas is finding with its A380 SYD-LAX services against newcomer VAustralia, in fact Qantas is mulling over the fact of whether to pull back its yield losing 1st Class and Business class sections to go the from the current 450 seats to 500+, its 72 business class seating is a folly and change will certainly and must be forthcoming, but the point is it is doing the busines without the better (higher) configurations, Air France and Lufthansa will be doing so from the start of their operations, if it is a success the A380 will be declared a winner, if it flys with plenty of empty seats it could damage it’s too big for the market image beyond doubt, however if the new services are successful then the Airbus will certainly be declared a success and more orders will follow.

In most cases already the A380 is a spectacular success, but this too large a capacity is still lead weight around its neck and could hurt the design (and Sales), again with 787 still nowhere close to being in service, the A380 over the next 12 months could finally cement its position in the industry.

Another breakthrough is if an American Airline chooses the A380 to fly from the mainland to Asia (japan, China), Americans are very territorial and anything Boeing builds is far better than Airbus can build, but significantly today many Airbus products are flying in the mainland USA (A320/321, A330, A340) and the Americans are liking what they are flying on and with its capacity/yields/profit the A380 can make serious money on the Pacific Routes and if the Americans don’t use them someone else will.

The Airbus A380 is a game changer, hub to hub it has no peers except for the Boeing 777, but from mega city to mega city and fare wise it is a real profit machine, the Boeing 787 will still be a serious competitor but cheap fares and space are winners if you want to attract passengers and over the summer of 2010 with AirFrance/Lufthansa will prove that theory …..as the Airbus A380 has both the space and the case for cheaper airfares in spades.

How Long Can This Go On….Low Airfares

Sale Case

The losses are huge, big, enormous and it has hit every corner of the Travel Market and still it hurts, for the airlines it is Judgement day but for how long?

When Singapore Airlines are doing European specials you know life is bad, People will pay a premium to fly the smile high club so what hope is there for anyone else, British Airways have quickly dropped their premium route fare to nothing just to survive with an AUS$1444.00 fare SYD/LON, so Qantas will have to match that and these three airlines have been the big hitters on this route for decades so for them to drop it has to be the very last resort.

For Qantas their other Premium route SYD/LAX (los Angeles), has been decimated by V Australia’s close to as possible $1000.00 return fares, with United chopping fares as well for market share its going to be banging heads on the table in the offices at Mascot and not before time.

And suddenly as a break into a new market, Delta has already dealt in a sword in the ground deal of  AUD$982.00 from Syd with Air New Zealand’s counter offer of AUD $889.00 (including taxes) from Coolangatta is near as damn soil cheap as you can get.

This is a snapshot of just one aviation market in Oceania/Asia and it is being repeated though out many other markets in every part of the globe, the good side is that it has leveled fares that were overpriced on monopolised routes, Qantas’s SYD/LAX route fare $2000.00 was quite simply Sheriff of Nottingham territory and to have it halved showed the bonuses that flowed though the doors of the Geoff Dixon era, economic crisis or not that still had to happen.

So we are in the shit, so to speak and the few cashed up travellers are having a boom time, it can’t last and it won’t but it will not be all bad news.

The cheap fares are there because most Airlines are over productive with too many planes and the staff that runs them, as the airlines shred older inefficient aircraft they will create a newer tighter business, staff will go because you are not going to go and pickup and then go back to normal when the economy picks up again, today you need to be lean and efficient, and a good old shake out of the mattress will help the restructuring of almost every aspect of the Aviation Business so you can now throw out the old model and send in with the new as for the first time in its history except with a few bumps aviation is faced without its stunning growth year after year and so like any other business it will have to adapt to the current climate changes.

The cheap fares will last this year  but for the rest it should settle back down again which means many fares will rise as they have too because.

1. Airline restructuring will be completed.

2. Airlines are not public services they have to make money, break even at least.

That is the bad news…the good news is they won’t go nowhere near the old prices or will again, this is the new new for the business so SYD/LON should level out at AUS$1600-$1800 and SYD/LAX about AUS$1200 – $1300 which is still brilliant value, most domestic traffic will not push those AUS$1 a seat deals t0o hard and put on an average of AUS$20 per ticket price per sector, really low LCC (Low Cost Carriers) will have to improve their bottom lines as the likes of Ryanair (I’ll charge you), Easyjet et all, will not find profit in expansive growth anymore and will have to fall to the realities of the a real business model, and this is all in cattle class as even more changes will come in business class, but these prices do still depend on very stable Fuel costs going into 2010, if they rise then so will the fares by another 5% to 10%.

The only growth area will be in the International LCC (Low Cost Carriers), many have already failed in this new dimension to travel, but some pioneers are paving the trail like AirAsia and Jestar International but once the model is proven many others will quickly come abroad but don’t expect really stupid low international fares here, they will be cheaper than normal route fares but these carriers will want to survive and there is a boundary limit to how far down you can go down with fares as international travel is a completely different model to domestic and short haul travel (European) as you need infrastructure and personal at the other end of the route.

Another factor if it comes to pass is that many countries like Australia are being pressured to drop or reduce their heavy outbound and inbound airport taxes to encourage more traffic, and its these expensive government add-ons that can really make a biggest difference to an airfare price,and that is even domestically and should be curtailed as why should be the airlines that always have to shoulder the costs, these little termites are in many countries a bigger cancer than anything in a good tourism market and if the governments are scared of lost revenue then that is not the case as visitors will still spend more in the country if they are not robbed at the entry point.

..At the moment fares are too cheap and unsustainable and how long they will last is not very long, my guess is the Christmas/New Year 09 period and will not be as severely discounted going into 2010 as they were in 2009 and maybe a few excellent specials will still crop up in the traditionally really low periods, say March and Oct/Nov next year, so with an economic crisis or not airlines will not survive unless they do so, there is also a chance they could even rise sooner to stop the bleeding quicker and once one large influential carrier does so the rest will quickly follow, so the real push from next year for your dollar will be in super economy class with more leg room and better service and higher profitable fares for the carrier, the deals will be there but they will expect you to pay more for them so you win and you lose at the same time.

So if your going to fly on the cheap then fly now..and book quickly because fares will rise, but not enough to break your credit card limit…….

Updated 18th Nov 2009…..
I noted in the above issue that the fare to Europe would be AUS$1600.00 – $1800.00, the recent Fares for early 2010 are AUS$1685.00, and will be basically around AUS$1750.00 late 2010, but we are having the problem of very high fares coming  (USA/European Summer) to try to pull back some profit see current issue Airline passengers are back-so lets get back to work, as this is a cash in to pull back profit it won’t work except maybe in the early (May/June 2010) period, but it will scare more away than bring passengers back into their seats….

V Australia..About time?

Let the Pacific war begin

Let the Pacific war begin

V Australia in their opening up of the Pacific Routes from a monopoly which will have the greatest impact on Australian Aviation since Virgin Blue created the lower prices that stayed around for more than a few months (Impulse, Compass) , and will give Tourism Australia finally a reason to smile, Protectionism of this immensely profitable route will be a real head holding time for Qantas at Mascot, but the reality is Qantas has been a real thorn in the side of Australian Tourism in its approach of profitability on the Pacific Routes both ways, and shows that overly protecting a national Icon can really hurt the the very thing it upholds.

I was far more expensive to fly to Los Angeles and San Francisco than to go to London or Paris, with these gateway costs so high, a return fare to New York was astronomical, it was cheaper to get a around the world ticket than have a return fare to NYC, or fly to London and go across the Atlantic then return was the same price, in other words it was ridiculous.

Qantas has held the country to ransom and knew what it was doing, and the Politicians in Canberra are to take most of the blame in letting the Airline do so. Tourism Australia should have also banged it’s drum far louder than it did and showed more in its mettle in doing what was right and not what monopoly’s can get away with, but Australia has a history of such head in the sand approach, its Two Airline agreement reigned for years until it was finally buried.. again to the benefit of Qantas but not so to Ansett which went south, but since the demise of the policy the local Australian Aviation has thrived like no other with excellent LCC carriers and good fares, And Qantas even benefited too as Jetstar has been a success they could only dream of..

So why get in such a lava over all of this, well not only did Australians pay way over barrier than what they should like in the Two Airline Policy days, but In that it also made Australia a very expensive country to visit, it is far enough away from prime travel markets as it is, but this was keeping arrivals at far lower levels than they should have been and certainly for years and years this has cost Australian Tourism millions and millions in lost revenue to give Qantas a few extra bucks in the bank, in fact Qantas should apologise for its behaviour and give the Australian Traveller a better deal to make up for all its callousness and greed.

Qantas finally only when forced has the Airline has finally dropped its prices from Aus$ 2000 + to around $1200.00 return to counter V Australia’s prices to date of average $1199.00,(both include taxes) that is in some cases a $850.00 drop (or Profit which ever way you look at it), that is a big drop by any Airline standards, but the benefits for the country will now certainly be apparent, but is it a little too late, today with the economic crisis going at full speed the Americans don’t anymore have the spare cash to pop downunder, one benefit though is the exchange rate is well balanced in the USofA’s favour making Australia an excellent value destination, and it almost always tops the most “I want to go there” lists, But for Australians its a bugger of a bad deal, offset only by the cheaper fare.

Qantas has another problem is the 777’s V Australia is using is very competitive on the routes, only the newly minted A380 Airbus’s came just in time to save the day in efficiency and high load factors, Virgin’s product is usually very good too, there are always accolades on their service and the niceys they throw around, if Qantas only had their 747.400’s still running the line, Qantas would have had a small disaster on their hands, old equipment, old service, expensive to run over the same distance, the Airline would have lost money on every takeoff from Mascot if they had matched the new prices, the only saving grace would have been lower fuel costs, but even that would have helped V Australia more than Qantas..

LA – Sydney is first on the 27th February, Followed by LA-Brisbane April 8th, LA-Melbourne Follows in September, worse for Qantas is the Sydney – Johannesburg SA routes have also been applied for, another cash cow gone, so is all of this fair to Qantas?

The answer is no, they should have rationalised the routes years ago, they have to do it now because they simply have too, if the fares had been fair there would have been no competition needed to show the discrepancy of the high fares people have been paying, Qantas will of course state this or that reason of why the fare were slated so high, but the real reason is two fold, inefficient equipment and good profit, now they will be well behind the ball mostly on the Aus-SA route, with the Boeing 787 coming in sometime in the never never.

There is no doubt it will be a tough year for the boys at Mascot, but for everyone else and mostly for the country it should give V Australia a helping hand in doing something Qantas should have done years ago, give the country and its tourism industry a fair go price wise to one of the worlds largest travel markets, so …good onya mate!


1.52

Qantas…its time to be careful on domestic agents

flight-picture

There is no doubt that Qantas have given Australian Travel Agents a poor deal, mostly since the duo-poly of the 90’s system died, Qantas thinks they can do whatever they like, when they like it and stuff everybody else..up to now this approach has done wonders, for Qantas, for shareholders and for profits, but this is not a good tactic in the long run, Tourism is one of the most volatile businesses in the world and now Qantas are really going to have to work harder than ever to compete in the slow periods forecasted in 09/10, and it will need every ally it can muster to the cause, but at the moment there is a huge chasm between two sections of the Australian Travel Industry that should be working together for the best of the Industry and not dividing it, both sides rely on each other, but Qantas has to realise the precarious position it holds, If Travel Agents and Wholesalers continue to slip away, the benefiters are certainly  Emirates, Singapore Airlines, Virgin (VAustralia), Etihad et all who are going to embrace the extra business with open arms, business once lost will be harder to win back if ever, And Qantas’s biggest cash cows, the Kangaroo Route via Singapore is seriously going to be threatened by Dubai and other middle Eastern hubs and its Pacific Routes by V Australia’s cheaper fares and Delta’s reemergence in Sydney, I am sure that Australian Travel Agents will be more than happy to book clients on these new (hopefully profitable) deals, Also another problem is Qantas’s other cash cow, business travel that will be also flat lined as well over this period or even longer while relying on Jetstar to carry the domestic flag, and there is no doubt that the internet has made agency commissions a thing of the past, but the Airline has to understand that Travel Agents are still its lifeblood, it’s cheap advertising of its products, it’s silent salesmen and women, working together will strengthen our industry, make us both money, and bring new ideas to the table to expand our sales and products to the world either through the internet or direct sales,  Qantas can lose or will, this last cash cow and the faith of a large Industry workforce like it will the other sections of its business, but if they want to compete and stop the cascading drift of business overseas its time for a new approach to the Industry.