I've abbreviated the article;
A lesson in how to fly by the seat of your pants
- July 15, 2008
- Page 1 of 2
And despite the news on Virgin Blue, Qantas is the big story. Notwithstanding oil price pressure and incipient signs of easing demand, the airline is operationally in turmoil.
Looking at yesterday's flight data alone: QF1 to London, scheduled to leave on Saturday at 5pm, left yesterday at 8.20am. QF 127 to Hong Kong, due out on Sunday at 10.45am, left at 2pm yesterday. QF73 to San Francisco, due out at 1.55pm on Sunday, left at 6pm yesterday.
QF62 to Johannesburg, scheduled to leave at 10am, left at 4pm. QF11 to Los Angeles, due out at 1.20pm, was rescheduled to leave at 10.15 last night (fingers crossed). QF73 to San Francisco, due out at 1.55pm, has been delayed until 10.15 this morning and QF5 to Frankfurt via Singapore was scheduled for 3.55pm was delayed till 8.30 last night. That's just one day's worth.
The impact on bookings is anyone's guess but the cost of the delays is huge, in staff costs, extra transport, meals and hotel rooms. On Friday night in Los Angeles, the airline had to put up 700 people in hotels after two 747 flights were canned. There is even gossip on the airline chat forums about pilots being flown first class to Bangkok on Emirates to ensure they got there on time.
Even before Qantas engineers jacked up and refused to work overtime a few weeks ago, the on-time performance was sketchy. Thankfully, domestic routes are holding up well, although there are signs the slowdown is biting. About 35 domestic flights were cancelled yesterday.
On overseas routes, however, some flights that were bulging at full capacity six months ago are now closer to break even. Thursday's QF1 was showing 66 economy seats, 32 business seats and one first-class spot vacant as of time of publication yesterday. QF31 had 48, 17 and five seats vacant in those respective classes.
While the trans-Pacific slots are holding up well, Europe is coming off. Should economic conditions deteriorate further - and that's a good bet - so will Qantas yields and load factors. This means there are not a lot of reasons to buy the airline right now. Further, when its long-serving chief executive Geoff Dixon departs, his successor is likely to swing the axe, as they do.
Given that the fleet, ex-Jetstar, is a tad old by the standard of its top-flight peers (9-11 years), and given some of the accounting treatments, the pain could be palpable. Thanks to capitalised development costs on software and the like, the airline's bottom line has been inflated by more than 10 per cent for years. Also, rather than the traditional three- to five-year accounting treatment for aircraft carrying values, Qantas employs a unique asset impairment approach that spans up to 20 years.
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