Australian demise announced today
Taildragger, you have got it bass ackwards. Qantas can play with J* International, Australian etc., precisely because it has an effective monopoly on capacity. In an unregulated market, the idea of a "low cost" brand of the same airline would create market confusion.
ie: Is j* as safe as Qantas?.
Is J* International different because of the food/seat pitch/baggage conditions?
In other words, why does Qantas have a low cost brand? What is missing? Is it the expereince of the pilots? What have they "cut" to give a lower fare?
In other words, you get cognitive dissonance. Ie: What is the difference between flying with Qantas and fkying with Jetstar?
ie: Is j* as safe as Qantas?.
Is J* International different because of the food/seat pitch/baggage conditions?
In other words, why does Qantas have a low cost brand? What is missing? Is it the expereince of the pilots? What have they "cut" to give a lower fare?
In other words, you get cognitive dissonance. Ie: What is the difference between flying with Qantas and fkying with Jetstar?
Sunfish
Agreed.
In the unusual conditions of the Aussie domestic market, many sectors tend towards monopoly or a cosy duopoly (viz Corrigan's ambitions for VB).
In this arguably less than healthy environment, GD can escape the reality that companies become inefficient with time (higher costs & inefficient working practices which gather like moss on the proverbial rolling stone) by simply transferring the lower yield part of the biz to a new organisation which has no such economic baggage. In business terms, this process of replacing a high cost base with a blank sheet (rather than by attempting more drastic measures such as industrial confrontation or Chaper 11 slate cleaning) can't be faulted. Elsewhere in the developed world, the sheer volume of new entrants & low cost competition tends to confound such schemes (eg BA/Go,Delta/Song) but in the Oz domestic market it seems to work - perhaps because with only 2 majors, the public don't have much difficulty in getting the proposition that J* is just QF at a better price.
In terms of the international scene, Australia is inevitably a low yield market- with a population of only 20m, business traffic is limited and traffic growth has to come from encouraging leisure visits at fares which can bear little relationship to the distances involved. Most European carriers have already voted with their feet (and we are seeing BA gradually doing the same - why fly to MEL or SYD when the RPK to SIN of HKG may be better?) and have abandoned the volume sector to the deep pockets of the prestige-driven mid-East carriers. QF can't do the same and drop out of its home market, so the J* option might be a "least-worst" option. This forum obviously looks at the issue from a pilot employment/reward perspective, but even in this narrow context one can still ask whether it is better for employment for QF to match low yield with low costs, or to just become a smaller top-end carrier whose destinations and frequencies are governed by the existence and size of premium fare business traffic (& abandon the rest to the mid East & Asian carriers). The natural tendency would be for employment to be exported to the cheapest (or most subsidised) labour force - one only has to look at the virtual extinction of local manufacturing and its replacement by imports - so where's the alternative?
Agreed.
In the unusual conditions of the Aussie domestic market, many sectors tend towards monopoly or a cosy duopoly (viz Corrigan's ambitions for VB).
In this arguably less than healthy environment, GD can escape the reality that companies become inefficient with time (higher costs & inefficient working practices which gather like moss on the proverbial rolling stone) by simply transferring the lower yield part of the biz to a new organisation which has no such economic baggage. In business terms, this process of replacing a high cost base with a blank sheet (rather than by attempting more drastic measures such as industrial confrontation or Chaper 11 slate cleaning) can't be faulted. Elsewhere in the developed world, the sheer volume of new entrants & low cost competition tends to confound such schemes (eg BA/Go,Delta/Song) but in the Oz domestic market it seems to work - perhaps because with only 2 majors, the public don't have much difficulty in getting the proposition that J* is just QF at a better price.
In terms of the international scene, Australia is inevitably a low yield market- with a population of only 20m, business traffic is limited and traffic growth has to come from encouraging leisure visits at fares which can bear little relationship to the distances involved. Most European carriers have already voted with their feet (and we are seeing BA gradually doing the same - why fly to MEL or SYD when the RPK to SIN of HKG may be better?) and have abandoned the volume sector to the deep pockets of the prestige-driven mid-East carriers. QF can't do the same and drop out of its home market, so the J* option might be a "least-worst" option. This forum obviously looks at the issue from a pilot employment/reward perspective, but even in this narrow context one can still ask whether it is better for employment for QF to match low yield with low costs, or to just become a smaller top-end carrier whose destinations and frequencies are governed by the existence and size of premium fare business traffic (& abandon the rest to the mid East & Asian carriers). The natural tendency would be for employment to be exported to the cheapest (or most subsidised) labour force - one only has to look at the virtual extinction of local manufacturing and its replacement by imports - so where's the alternative?
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Sunny,
My point was replying to QFI's point about market penetration in Europe - s/he mentioned "a European tarmac". I specifically steered clear of cost base issues (except to say that if you can lower your cost base, you can charge lower fares for the same margin).
As for eroding the main brand - there have been several LCCs started by mainliners over here.
So, if it charges competitive fares, Jet* on "a European tarmac" can survive. I'm not saying it WILL - just that the European air travel market appears to be rather more accommodating to start-ups than the Australian market. Barely a month goes by without some new tail being spied at EGLL or EGKK (let alone EGSS).
My point was replying to QFI's point about market penetration in Europe - s/he mentioned "a European tarmac". I specifically steered clear of cost base issues (except to say that if you can lower your cost base, you can charge lower fares for the same margin).
As for eroding the main brand - there have been several LCCs started by mainliners over here.
So, if it charges competitive fares, Jet* on "a European tarmac" can survive. I'm not saying it WILL - just that the European air travel market appears to be rather more accommodating to start-ups than the Australian market. Barely a month goes by without some new tail being spied at EGLL or EGKK (let alone EGSS).
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My point about cost was aimed at the inability of AO to generate sufficient yield despite the lower cost. Not only did the margin fall the revenue did too. As such I alluded to the reality of the thin route. Whilst it is possible that the J* product ex Australia may work, I think it will struggle in a market with plenty or other carriers. It struck me the lack of ability of AO and indeed J* Asia to grab a foothold. I also believe that underpinning the business plan is a denial of the elasticity of leisiure travel. I think the assumptions are very loaded for the business case. With repsect to the legality or otherwise, my sources tell me there are a number of rubbery measures being applied to strengthen the business dynamic. It is this point which leads me to consider how errant their thinking is. If they fudge on the legals....
I also question the demographic..i am not so sure our market of retirees will want a discount carrier on their much awaited retirement.
We are seeing the same assumptions with J* Asia. Yet our management are so tunnel visioned, they dont understand the model is flawed at the outset. My point in essence, if slick marketing and a flexible cost base work AO or J* asia would be doing it.
There are no magic bullets...
If in fact J* is a poriftable start up. Show me an audited set of accounts. P/L Bal sheets etc
The lack of solid information means that for a period the losses can be hidden and shifted....but longer term is the case is rubbery it will fold into mainline which after all is the established business providing the capital for these "adventures"
I feel sorry for my colleagues in AO. It's funny how management just walk away and a news release is all we get
I also question the demographic..i am not so sure our market of retirees will want a discount carrier on their much awaited retirement.
We are seeing the same assumptions with J* Asia. Yet our management are so tunnel visioned, they dont understand the model is flawed at the outset. My point in essence, if slick marketing and a flexible cost base work AO or J* asia would be doing it.
There are no magic bullets...
If in fact J* is a poriftable start up. Show me an audited set of accounts. P/L Bal sheets etc
The lack of solid information means that for a period the losses can be hidden and shifted....but longer term is the case is rubbery it will fold into mainline which after all is the established business providing the capital for these "adventures"
I feel sorry for my colleagues in AO. It's funny how management just walk away and a news release is all we get
Last edited by QFinsider; 12th Apr 2006 at 03:38.
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QFinsider
Totally agree QF.But I think we constantly miss the bigger picture GOD has planned. JQ has become the penultimate IR tool. Its serves one main purpose and that’s to drive our crew costs down. The punters don’t care who is up front, and a full service Y or J seat to CDG or wherever, is just that. They don’t care if it’s QF, EK, SQ, CX and now JQ. That’s why people still fly Korean.
Once these guys are online with the 330, why not use them to fly QF 330 as well. ANA do this currenlty with a mix of contract crews and mainline for example. Remember this insanity; these guys took 100K pay cut to do the same job. I’m sorry if I'm negative, but why use us when they do it for 40% less?
The lack of solid information means that for a period the losses can be hidden and shifted....but longer term is the case is rubbery it will fold into mainline which after all is the established business providing the capital for these "adventures"
Once these guys are online with the 330, why not use them to fly QF 330 as well. ANA do this currenlty with a mix of contract crews and mainline for example. Remember this insanity; these guys took 100K pay cut to do the same job. I’m sorry if I'm negative, but why use us when they do it for 40% less?
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I am an AO flight attendant and am very worried about the future. The fact that the "brand" has gone doesn't concern me at all, we knew for a long time that something was going to happen with us and the change was nothing unexpected. What does worry me is we "haven't" been absorbed but continue as we are still employed by Australian providing wet lease to QF. What does that mean? Why are Qantas paying to lease their own aircraft, cabin crew and pilots? Are they just trying to keep the peace by not making 300 cabin crew redundant? The pilots are fine, they slip back into QF but maybe it's because of the pilot issue we didn't succeed. Our pilots are still on QF pay, not good for a start up entrant where as I believe JStar Int have a different agreement. AO was a great company and will remain that until we are given the "move on" at the end of 2007 when our EBA expires. What happens then? To all the QF crew bitching about us undercutting their conditions what would you do? If you are offered a flying job are you going to turn it down? Probably not. QF havent hired cabin crew for years so from a personal point of view count your selves very lucky that you have what you have. Don't think for a moment that we would'nt rather be where you are, it just wasn't going to happen when we were employed, so we took flying jobs that were available, at AO. In the end we still do the same job, no one is better than anyone else, our coffee tastes the same as yours.
What happens in the future is unsure but we have a great bunch of crew here in Cairns, infact we won the SkyTrax award for best cabin crew. I hope that is taken into account when or if they offer positions within QF.
My main concern now is what will happen to us, do we have a future or not?
What happens in the future is unsure but we have a great bunch of crew here in Cairns, infact we won the SkyTrax award for best cabin crew. I hope that is taken into account when or if they offer positions within QF.
My main concern now is what will happen to us, do we have a future or not?
Originally Posted by missleadfoot
The pilots are fine, they slip back into QF but maybe it's because of the pilot issue we didn't succeed. Our pilots are still on QF pay
Ahh Australia, the land where we cut down the tall poppies and delight in playing the politics of envy. I've just returned from a trip and witnessed the delight of our AO cabin crew revelling in their new found status as the "benchmark" for cabin crew T & C's in Australia... well wake up girlfriend.... who's to say some other worker like Jitconnect on 20 odd thousand won't be the next "benchmark" in a few years time....
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Does anyone else find this offensive, or not, especially at Easter?
Happy Easter Darth Dixon
Happy Easter Darth Dixon
