Back to QF's Asian strategy and how it is supposed to make them lots of money. Asia is touted as this wonderful place with astronomical growth. Growing middle class and what not.
The Asian Growth story is a lovely story to spin to the media, especially if you are a listed stock. My company makes most of its money in the West, but it's not a nice story to tell the media when you appear before them and say "well despite the negative press you read about Italy, the USA and Europe, it generates more profits for us than our Asian operations ever will".
The fact of the matter is, only 20 million Indian nationals have an income of US$2000 or more per month. That's less than 2% of India. 90% of Indonesians haven't stepped onto a plane. The only markets in Asia with a sizeable middle class able to fly (besides Japan and Korea) are SIN and HKG. But SIN and HKG are small with tiny domestic populations. Now how jetstar japan would turn out with 4 shareholders and having to appease all 4 of them.... God only knows. With a small home population of 5 million, SIN handles nearly 50 million pax. How much more could SIN feasibly handle?
Airfares, especially international airfares, out of Australia, are among the highest in the world. This is why SIA and CX focus huge amounts of capacity flying into Australia rather than their own backyards.
The SIA Group with Scoot will fly 5 widebodies a day to Sydney, including 2 A380s, 1 773, 1 A330 and 1 772ER. That's more capacity than SIA has to most cities in South East Asia, except Jakarta.
SIA Group has more capacity to Sydney than Bangkok. More capacity to Brisbane than Penang. More capacity to Perth than Guangzhou, more capacity to Adelaide than Surabaya (which is the second largest city in "booming" Indonesia) and almost more capacity to Melbourne than Manila.
SIA would happily divert their widebody aircraft to Sydney and Melbourne, and let Jetstar/Tiger fight over serving Ho Chi Minh City 4 times a day at their $90 return fares. Or KUL at their usual $0 base return fares, and Manila with fares at $100 return or less sometimes.
The 777s and A330s better serve SIA to and from Australia, where they can extract some of the highest yields known in the industry.
Qantas happily withdraws from its home market and wants to enter routes such as SIN-KUL, SIN-MNL and SIN-SGN to earn $60 return from pax, whereas SQ uses their aircraft to SYD and extracts $12,000 return fares in First Class from Sydney onwards to Europe and limits their exposure in South East Asia to a few trunk routes, relegating most of the region to Silk Air.
Who's the winner here?