Yield management and Dixon's failing
Here we are, further evidence that sacrificing yield, transferring assets and following a blind Oldmeadow wank strategy will deliver nothing. Dixon believes crew costs must be reduced in order for business to survive. For this to occur at the unionised Qantas, his strategy is to send new aircraft and routes going to jetstar. Funnily enough it is the premium product that actually delivers for the shareholder he claims to represent...
THE AUSTRALIAN 27 SEPT
"BUSINESS and first-class airline traffic out of the Australasian region has grown sharply on many routes despite a continuing global trend of weak growth in premium cabins.
Figures released yesterday by the International Air Transport Association showed that with the exception of routes to Europe, where figures fell by more than 26 per cent, premium traffic from the southwest Pacific to most other regions was higher in July.
Traffic for the month was 28.8per cent higher on routes to Africa, 21.8 per cent up on routes within the region and 7.1 per cent greater on routes to the Middle East. It was also 13.1 per cent higher on routes to the Far East compared with the previous year.
Global growth for the month was 1 per cent, down from 1.9 per cent the previous month and significantly lower than a 4.6 per cent growth in economy traffic.
IATA said this continued a weak growth trend over the past four months and was due mainly to a sharp fall in premium traffic in Europe, which accounts for 28per cent of the world total.
Excluding the European routes, the global growth rate was 5.1 per cent.
There was also good news for airline profitability in that premium traffic revenues remained strong despite the low rate of overall traffic growth.
Premium traffic revenues grew an estimated 3.2 per cent in July, down from 5.4 per cent in June, but still ahead of the rate of volume growth.
"The global economic environment is still relatively positive for premium traffic demand, though it is subject to several risks," IATA said.
"The volatility in global stock markets in recent weeks has, so far, been confined to the financial sector but could affect growth in the wider economy -- and, therefore, premium demand -- if it leads to a fall in liquidity and higher cost of capital for firms.
"The current view is that borrowing difficulties could provide a brake upon growth, but will not end the expansion of the global economy and airline traffic seen in recent years," it said.
Macquarie Airports this week released figures showing traffic in August increased 8.2 per cent at Sydney Airport, and Qantas reported mainline domestic load factors for July of 85 per cent.
The group filled 83.8 per cent of its seats across all operations and saw yields rise almost 11 per cent for the month."
So here we are at mainline, with yield being the reason for the profit, not the volume. Yet our single track uneducated yobbo persists with a low yield model on the pretext that you can sell seats for anything you like, provided the business pays for little of its infastructure and allegedly lower crewing costs are achieved...
Wake up Geoff. and then bugger off