Plan for Qantas premium carrier still up in the air
Little progress on proposed start-up to be launched in Singapore or KL
Published on Mar 3, 2012
By Karamjit Kaur, Aviation Correspondent
SIX months after Qantas said it intended to launch a new premium carrier in either Singapore or Kuala Lumpur, plans appear to have stalled.
Some industry watchers now say it is unlikely they will ever take off.
The Australian flag carrier had said at the time that the new carrier would boost its ailing international business. It would have its own name and brand but leverage on Qantas' strengths in areas such as aviation safety, customer experience, finance and marketing.
The start-up would operate within the region, and Qantas said then that it was looking to house the new entity possibly in Singapore or KL.
However, sources say, Qantas has not been able to convince the authorities here to give it the go-ahead.
Qantas had gone as far as to engage Ogilvy & Mather for the branding and marketing of the prospective new entity but recently pulled the plug on the project, The Straits Times learnt.
Neither the airline nor Ogilvy & Mather would comment when contacted.
A spokesman for the Civil Aviation Authority of Singapore (CAAS) said there has been 'informal dialogue' with Qantas to discuss Singapore's regulatory framework and general considerations in assessing any proposal to set up a Singapore-based carrier.
She did not divulge more but said that in assessing any application for a licence to start an airline in Singapore, the Transport Ministry and the CAAS will consider the operator's ability to provide safe public air transport 'as well as the extent to which it will bring value to Singapore's air hub'.
Industry watchers said that while Singapore maintains an open air policy, it does not necessarily mean that the more airlines there are, the better.
If a newcomer ends up just taking away existing market share from incumbents without growing the pie, Singapore does not gain.
Mr Shukor Yusof, an aviation analyst at Standard & Poor's Equity Research said: 'What's in it for Singapore to have Qantas based out of Changi? For one thing, the premium airline would compete directly with Singapore Airlines, which has already been experiencing weaker profits in its recent quarters.'
The opportunities are in the low-cost travel segment and not the premium market Qantas is eyeing, he said.
As for launching the start-up in Kuala Lumpur, Qantas does not seem to be interested. Mr Mohamed Yunus Charlie Charrington, director of the air transport division at Malaysia's Department of Civil Aviation, told The Straits Times recently that the Australian carrier has not been in touch with his office.
He said: 'We have not had any discussions with Qantas on this issue. Not even a phone call.'
Getting the green light from the Singapore authorities is not the only challenge for Qantas. The carrier, which is losing more than A$200 million (S$270 million) a year in its international operations, needs to review its business, industry watchers said. One option is to move part of its operations to Asia, where costs are about 20 per cent lower.
Being in the heart of the fastest-growing air travel market in the world will also help Qantas boost its business and bottom line, they said.
But unions back home are stopping the airline from doing this. They worry that an Asian-centred restructuring will result in jobs leaving Australia.
Their unhappiness led to a bitter industrial dispute which culminated in a decision by Qantas to ground its entire fleet last October. The 46-hour shutdown affected nearly 100,000 passengers around the world, including in Singapore.
The Australian Parliament is now considering a Bill put forward by independent Senator Nick Xenophon to tie Qantas to Australia.
The airline's chief, Mr Alan Joyce, has warned that if the Bill - which aims to force Qantas to keep its headquarters and the majority of its maintenance, flight operations and training in Australia - is passed, it will pose a 'major threat' to the airline's business and to jobs.
Even as it continues to battle the opposition, Qantas insists it has not dropped plans for a premium Asian start-up.
A spokesman told The Straits Times that the airline is not able to provide more details at this time because it is still in talks with potential partners.
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