No-frills kangaroo ready to hop

[Wirraway]

Wed "Sydney Morning Herald"

No-frills kangaroo ready to hop
By Scott Rochfort
October 15, 2003

Qantas is expected to formally outline the launch of its own low-cost domestic airline as soon as tomorrow, in a bid to slash labour costs and counter Virgin Blue's burgeoning share of the domestic aviation market.

Since Qantas's chief executive Geoff Dixon first flagged the idea two months ago, speculation has mounted that the Flying Kangaroo will announce its low-cost plans before shareholders at its annual general meeting in Adelaide tomorrow.

With Qantas remaining tight-lipped on the make-up of the airline, the only point made clear is that, like its low-cost international carrier Australian Airlines, the domestic carrier will be operated as an independent business unit, with its own union agreements.

Speculation over the new airline, and Qantas's two-year plan to slash its cost base by $1 billion (half from labour), heightened yesterday after the airline sent another batch of middle to senior managers for ground handling training in Los Angeles.

Citigroup Smith Barney analyst Jason Smith said it was feasible the carrier could commence services within nine months.

"We think they are committed to the low-cost carrier," Mr Smith said, adding that the Qantas-offshoot would probably initially compete against Virgin on low-yielding leisure routes.

If the low-budget concept were successful, Mr Smith said, the airline could then expand into key business routes such as Sydney-Melbourne.

Aside from giving Qantas more bargaining power against the 14 unions with which it deals, Mr Smith said any announcement of a second low-cost domestic carrier could impede Virgin Blue's plans to list on the stock exchange early next year.

Mr Smith said the formation of any low-cost carrier would be justified "as long as it covers its cost of capital".

==========================================

[cunninglinguist]

From a reliable source:

quote " I am not interested in a core airline, I want a virtual airline " unquote.
Geoff Dixon , a few months ago, behind closed doors.

[Kaptin M]

"Hmmm, let`s see now, if we grab half a dozen aircraft we can start a whole NEW airline. A hundred mill ($$`s) should get us started - establishment costs, marketing, logo design...and think how many new MANAGERS we can appoint on bloated salaries. And If the low-budget concept were successful, the airline could then expand into key business routes such as Sydney-Melbourne."

What a joke! Bleed QF a bit more, and it won`t be around at all in another 5 years.

[Wirraway]

If You look around the world Kapt M you will find LCCs are
a fact of life, maybe you can enlighten us on how Mr Dixon
can compete effectivley against Virgin Blue when his costs
are some 25-30% higher, at the moment DJ is growing at
an awsome rate and the paying public seem to like the way
they do business, tell us how else he can stop them gaining
even more share than they have already.

Wirraway

[ExcessData]

Cunning:

Surely in that alleged 'quote' he's referring to the LCC, not the mainline? Show me an example of a successful 'core-based' LCC and I'll be very surprised. The only way they can keep overheads down with Skimpy (just as DJ do) is to 'virtualise' their airline, and make maximum use of third party providers.

Wirraway's hit the nail on the head. That said, Kap, they will have to be very, very careful with the likes of management structure etc to ensure that management overheads are kept to a bare minimum. Like that scene in "Apollo 13" in the simulator where they're turning off all non-essential electrical loads to get the total battery load down to 5A or whatever it was, the formation of a LCC is much the same. Say their business plan says that 'in order to compete with DJ, we need a unit cost of $4.99/unit, rather than DJ's unit cost of $5/unit' (imaginary numbers), they basically have to trim down all non-essential facets of their business until they achieve $4.99/unit. If they get to $5 or more, then it's simply a waste of time for all concerned (assuming they want to make a profit, otherwise $5 and no more would be just fine).

ED

[Poto]

Okay I ask the question so many have pondered on another thread. How will it be crewed?:confused:

[Kaptin M]

ExcessData highlights my concerns, Wirraway. It appears all too apparent that existing infrastucture is NOT used - Australian being a classic example - but rather the excuse to cut the majority of the workers` wages is really a poor cover for supporting MORE management of a new airline, and to afford promotion opportunities to middle level managers who have reached the highest position within QANTAS.

Have the public benefited by the introduction of Australian by way of lower airfares? Have the staff benefited?
The answer to both is NO - however Australian created many more ground management positions for former middle management, but at HIGHER salaries than they on before.

[Soulman]

Poto - I've heard something along the lines of 4000TT min, 737NG endorsement from a friend of a friend of mine. ;)

Like you said, it's been discussed in detail \ on here before - so that's probably your best bet.

Best of luck,

Soulman.

[Wirraway]

Poto

When this was discussed in another thread, most seemed to
think "Skimpy" will acquire new aircraft, Mr Dixon has said
other airlines that have tried an LCC off shoot have got it
wrong.

My take on this is a clean sheet of paper and all
staff will be hired fresh, if he transfers the aircraft from
domestic, obviously there will be a staff surplus in QF short
haul, if this occurred I can imagine that many ground staff
and F/As will have to be made redundant, and offered new
positions with "Skimpy" at the new pay level, trying to imagine
current QF F/As having to clean the aircraft on 30 min turns
at this pay level seems too hard, this could be why many newbies are on the short list at MAM.

Remember that DJ only have 80 odd employees per aircraft,
so to get to that level, check-in, Baggage handlers and F/As
and other staff would have to adjust dramatically, pilots is
anyones guess as to how it would be handled, tomorrow
should shed some light, then again maybe I'm wrong and it will get new planes
and "Skimpy" will compete against QF as well as Virgin.

Wirraway

[Pete Conrad]

One aeroplane type, one operator, one only QF LCC. Bye bye Impulse.

[jakethemuss]

Crewed by mainline Qantas pilots.
You fellas don't seem to listen.

[Wirraway]

One aeroplane type, one operator, one only QF LCC. Bye bye Impulse.

Pete, I would be game to bet a beer that Impulse will remain
seperate to "Skimpy"

Wirraway

[hoss]

"fifty bucks and my left nut" that the Impulse guys will crew it. Perhaps not a direct transfer over but I'm sure they will get preference(looked after) IF Qantas 'wind up' Impulse.


jakethemuss,

I don't know and maybe I'm not looking at this the same way as you but 'please explain' your reasoning.:ugh:

I just can't see the mainline guys giving up their conditions and benefits and having to start all over again at 'Skimpy'.

hoss :)

[Z Force]

Wirraway, don't forget that Virgin have less employees per aircraft than Qantas because they outsource so much of their work whereas Qantas does it all in house.

[apacau]

When National Jet get their junglejets the 717s will go. Lots of Impulse drivers and cabin crew screaming out for a job at Skimpy, those who arent flying the jungle jets or transferred to mainline that is.

[Aladdin]

I can feel another "GO" coming on!!!!!!

[Pete Conrad]

Your on Wirraway, but I can't see LCC's competing against one another. MOU says it all, crews to be hired off the street will have NG rating similar to Jetconnect.

Boeing last week said they were going to stop building the 717 in 2005, current orders mean that they are only building one per month.

Nup, bye bye Impulse.

Apacau, yes thats the going word.

[cunninglinguist]

Excess, I'm afraid he was talking about Qantas.

[Buster Hyman]

The name of the low cost carrier will be......



Ansett. :eek: ;)

[hoss]

So what happened to GO(BA)? In particular where did the crew come from and have they been looked after?

[funbags]

Here we go again all you Neville's.

We had this discussion with Australian Airlines and it was said then on this board that it would be crewed by current mainline pilots. No one believed that and alot believed that the ex Ansett blokes and Impulse guys would crew it. It was never going to happen.

This will be no different. Fullstop. Current mainline pilots will crew it. So can we stop dreaming that all of a sudden 100 737 jet jobs will eventuate. Some jobs may eventuate as a result of people moving up the chain within Qantas mainline - and they will be second officer slots on the A330 and 400. And that is a good thing.

[hoss]

Hate to say it, but if Skimpy is crewed by mainline crew maintaining current conditions and benefits then this Airline is going to have a very hard time competing on the 'Flight Operations front'.

[Vmo248]

..Air New Zealand?! :{

[bush mechanics]

Maybe if they didnt spend millions on there new uniform(australian designer label)and have the stuff made in asia.And by the way thanks for suporting the australian textile industry!!
They wouldnt have to shed staff.
The new low budget service could end up like the two skips on the side of the road near the alice airport.ROO STEW!!!!

[Keg]

hoss, you're kidding right?

A VERY reliable source within QF who also has some pretty good sources at DJ assures me (and I'd trust this bloke every day of the week and I know he's reading this!) that the cost structures between DJ and QF as far as tech crew costs are concerned are 'not that different'. If I could be bothered, I'd do the maths for you but I can't. I little 'give' and 'take' and some creative ways of doing business and I wouldn't be surprised if both AIPA and QF come to a pretty good arrangement.

Just to help me out though, can someone give me the yearly average hours for F/Os and Captains in DJ and I'll do a comparison based on some mates in QF.

[ditzyboy]

apacau -
NJS have just closed down their entire East Coast presence and are only hiring on contract. They have also indicated that they wish to wind down the Airline Ops business and focus on charter and freight.

Why wouldn't Impulse get the new Embraer jets? They have all the infrustructure already in place (crew and bases) at the locations these new jets would fly.
I ask you these questions seriously - not looking to argue. Just can't understand why NJS would close everything down and hire on contracts only just to start everything up and expand again. Why do it when all Impulse would have to do is renew their fleet (for regional ops - not the LCC)?

I believe the LCC will be under the Impulse umbrella somehow but remain a separate operation. Why would QF just say Impulse is the new LCC and swap the 'regional routes' over to NJS and their new wonder jets when they have the chance to start up a separate operation at significantly lower crew costs? I am sure QF could negotiate contracts much less than what the current Impulse crew are on. Just look at JetConnect!

This new LCC will not replace the current 717 regional network anytime soon. You can't fly all Y 737s BNE-ROK or MEL-LST frequently as you can the 717. Also the 717 is still very efficient in terms of aircraft and crew costs on such sectors as above. I agree the 717s will go - just not tomorrow or next year.

Hope the above makes sense. Just curious as to why QF would spend so much money on changing things that aren't broke. The 717 operation makes them heap$.

[UpperDeckRight]

It has been stated in QF cabin crew employee forums, that if the new LCC is to go ahead, that all employees, in every division, will be paid at rates 'considerably lower' than Virgin Blue .... would mainline techies want to take such a pay cut? I know cabin crew wouldnt voluntarily do it !

If it happens, it will be intersting to see what all the EBAs end up like, and whether it affects QF mainline shorthaul services.........

[Capt Claret]

Where do you get your info from?

NJS haven't told me or anyone I know that they want to wind down the airline side of things. As a contract service provider the east coast flying has reduced because the contracts were not renewed, not because NJS just decided to shut up shop.

Why won't NJS get the junglejets? They have all the infrastructure already in place ....

I think the reality is that until a decision is made by QF, no one knows who will get what, be it LCC or regional jets. What we read here is speculation, and understandably based on individual biases towards retaining employment.

[funbags]

Upper Deck Right - this was also said about Australian Airlines , and the only group within Qantas Mainline to crew this airline were the pilots. This will be no different with the new LCC. Conditions and pay will be comparable as they are in AA.

3% or thereabouts is the figure in the saving in tech crew costs, between a full service airline and a low cost one. ****** all.

[Douglas Mcdonnell]

Pete C you are a bitter little pr1ck. How long does it take to get a high capacity rpt AOC up and running?

I think you have missread QFs commitment to guys like yourself. Im sure they dont loose sleep at night worrying about what you feel or think. See you at gate 59!!!!!

[Pete Conrad]

Capt Claret, thats the illusion that Impulse are under, that they are the saviours of QF and that they are the only ones that can operate jets.

[Wirraway]

Thurs "The West Australian"

Qantas set for low-fare launch
By Geoffrey Thomas

QANTAS is expected to announce the launch of its new low cost/low fare airline at its annual meeting in Adelaide today.

First flagged two months ago by chief executive Geoff Dixon, the new holiday airline will operate a fleet of up to 20 all-economy class Boeing 737-800 or Airbus A321 aircraft.

The airline, which some insiders refer to as skimpy, will be modelled on Qantas' low cost international brand, Australian Airlines.

According to ABN AMRO airline analyst Bruce Low, Qantas has gained significant insight into the operation and structure of low cost carriers through buying Impulse Airlines two years ago and the establishment of Australian Airlines.

"Qantas appears to have come to the conclusion that it must do more to cut costs to compete with Virgin Blue," Mr Low said.

With the new airline to target domestic leisure routes, there may be some overlap with Qantas' regional subsidiary Qantaslink which operates 106-seat Boeing 717s and 75-85 seat BAe146 aircraft.

The new airline is part of Qantas' bid to cut its expenses by $1 billion over two years.

According to Mr Dixon, $800 million in cost savings have already been identified with $385 million from increased labour productivity, $200 million in fleet simplification overheads, $135 million through distribution initiatives and $80 million from refinement of the domestic product.

Qantas has also been striving to position itself and its fleet to meet widely varying market demands, from high yield traffic on routes to London and Los Angeles, to very low yield traffic from Sydney to Cairns or Melbourne to the Gold Coast.

This month Qantas unveiled its new business class skybeds and is in the final refit of its long haul fleet with seatback videos for all passengers.

Qantas shares yesterday jumped 10¢ to $3.62.

===========================================

[Buster Hyman]

So who takes credit for the name Skimpy???:D

[cunninglinguist]

I believe the fleet size of Impulse and NJS are similar ( no. of jets ).

If you listen to the " reliable " sources, NJS were just unlucky that they had 146s coming up for the end of their lease and Impulse did'nt. Also these same sources say that the 717 does not fit into QFs long term plans, it's not a regional jet and it's not a full size airliner ( a la 737 ). People have been bagging the 146, and saying that NJS is finished with QF since time in memoriam, well guess what........they are still there.

Ditzy, the main use for the jungle jet would be west coast, last time I looked, Impulse did'nt have too much infrastructure over there.

It's all speculation until Uncle Geoff makes a decision, but I can tell you that NJS' 10 year relationship with QF is far from on the rocks.

[apacau]

I've heard from good sources about Jungle jets for NJ. Emb190s to be precise. Just waiting for the big Q tick-off.

On that issue, I note in this month's ATW (p62) that there are 10 undisclosed orders for the EMB190 with 20 options. Could these be related (looks like the right sort of numbers) or am I reading FAR too much into this?

[ditzyboy]

Capt Claret -
My point was that it would be a huge cost for NJS to set up things on the East Coast again. Not impossible of course but I very big cost nontheless. Why not just use Impulse?

I am sure I have read that NJS was no longer interested in the Airline side of things. Infact two NJS employees said the same thing. I am not saying it is true but it was the feeling for a while (about a year ago?). I am sure I did see it in print somewhere. (Not from NJS though!)

cunning -
Then who or what would fly the regional jet routes on the East Coast? Yes I agree the 717 doesn't fit into QF's long term plans but that is not to say it is making them alot of money on the routes it flies. They don't seem in too much a hurry to get rid of them. And you are right. The 717 really isn't suited to the West.

Pete -
Please do not be so bitter. No one is provoking you to say such things. You just seem hell bent on upsetting or annoying people. Think what you wish but please refrain from such negativity. Please.

[Pigs Arse]

Qantas has made it quite clear in the last couple of months that it wants to simplify its fleets. The most successful carriers in the world. Ryan, Easy, SouthWestern, JetBlue, Virgin Blue all operate just one A/C type. Dixon is no dill and wants a dramatic reduction in QF's fleet types. 717 great on some routes but lacks flexibility on others (Q words not mine) and Boeing have already indicated that they will stop production soon. So when the leases are up on the 717 off they go barring a huge up swing in dom travel (the current reason more 767 200's aren't coke cans). The classics and 146 similar story. As for skimpy my guess it will be either main line or Jet connect. Mainline along similar lines of Aust Airlines or go for the jugular with the cheapest pilots going around any where, Jet connect. Impluse, NJ may get the Jungle if that ever comes. But that's just a guess. AIPA has its work cut out thats for sure.:\

[QF skywalker]

Ok so all the talk here is NJS and Impulse - you are forgetting two other QF subsidiaries namely eastern/sunstate sitting in the background with very solid and now increasingly combined infastructure..and....what's more appealing to QF is that the crews are even cheaper than impulse.

It would not be a crazy thought that the impulse 717 Jet operation is wound up, with impulse crews operating on the new skimpy services. EAA/Sunstate given Dh8-400's or even the jungle jets to operate MEL-LST, BNE-MKY etc.

There are other players in the field !

[ur2]

Just heard, that the type will be A321's.
Anyone know if that is true or not.

[Waste Gate]

I just can't see the mainline guys giving up their conditions and benefits and having to start all over again at 'Skimpy'

Hoss,

I think you're under some delusions about the conditions and benefits mainline guys get. I have a few friends working as 717 F/Os and read some info recently regarding F/O pay at Virgin. As a 767 F/O I bring home within $200.00 per fortnight of what these guys get.

Most of the so called "conditions" you're aluding to benefit the company more than they benefit me. It strikes me that many people base their impressions of Qantas Pilots on the old regime pre - privatisation when we got equal standown at home and only flew 400 hrs per year. Much has changed in the intervening years.

If I went to Australian, I'd get a pay rise, pay less tax on allowances, a simplified and (IMHO) fairer rostering system. The fact that Australian achieves cost savings of around 30 percent over its mainline parent confirms what most pilots have always known - that the cost savings are in infrastructure and support services, and not in what pilots actually get paid.

So if Geoff Dixon wants to set up a LCC airline then he has at his disposal a group of highly proficient and well trained tech crew to fly his aircraft at their current, economic, rates of pay. And they're all working for mainline.

:ok: :ok:

WG.

[Pimp Daddy]

Just heard, that the type will be A321's.
Anyone know if that is true or not.

One would think not due to the number of NGs already in the fleet and the 60 odd options Qantas hold from the initial NG buy, at fire sale prices.

The LCC can still share the mainline spares pool, and would probaby be better of for doing so.

[ftrplt]

Kaptin M said:

"Have the public benefited by the introduction of Australian by way of lower airfares? Have the staff benefited?
The answer to both is NO"

AO was never meant to result in lower fares, the objective was a lower cost base to allow a profit on routes that are/were historically marginal or loss making to Qantas. I have benefited, I get paid more and my roster is more stable than when I was in mainline.

You also said

"however Australian created many more ground management positions for former middle management, but at HIGHER salaries than they on before."

What facts do you have to prove this or is purely your speculative assessment?

[Douglas Mcdonnell]

Pete. You are obviously p1ssed off where you are. Your bitterness must be a real problem for all those around you. It is guys like you that initially stopped your outfit geting jets. Remember?

You make your own bed little matey. Dont you?

[longjohn]

I am really getting tired of certain pilots here trying to justify their award / pay system in terms of competitiveness.

If an inch thick award which takes a lawyer to fully comprehend and a team within the company to administer is efficient, then surely every start up would be asking for a copy.

The reality is that these pilots are well paid and enjoy even better conditions. If WE are to compete in the low cost game, then it must be on truly competitive terms, or else the company will simply look elsewhere.

I sincerely hope the union do not have the same attitude or else the flying will surely dissappear.

[jakethemuss]

You probably paid to work too..

Crewed by current Mainline pilots. End of story.

[Kubin rock climber]

Absolutly, current crews..........End of story............BTW cadets to go to Pearl, Air North and Eastern as of next course. :E

[Wirraway]

Fri "The Australian"

Qantas no-frills team for new airline
By Steve Creedy and Terry Plane
October 17, 2003

Qantas has recruited former executives from aggressive European no frills operator Ryanair to help it with ambitious plans to establish a low-cost carrier by next May.

The executives will work with the new airline's executive general manager, 37-year-old Alan Joyce, to establish the carrier as a separate business under its own brand.

Qantas is negotiating with Airbus, Boeing and aircraft lessors to buy Boeing 737-800 or A320 aircraft and expects to have at least 23 by mid-2005.

It will decide within six weeks about whether to establish the new airline using the former Impulse operations bought in 2001 or start an entirely new company.

"This will be a true low-cost carrier - lean, highly competitive and with the standards of safety and reliability associated with Qantas," Qantas chief executive Geoff Dixon said.

The new airline's aggressive growth strategy surprised analysts and industry observers.

"Twenty-three aircraft by 2005 is faster than Virgin's rate of expansion," said Centre for Asia Pacific Aviation managing director Peter Harbison.

Mr Harbison said it was inevitable that the new carrier would cannibalise existing Qantas operations. It was also bad news for Virgin Blue's planned float, expected later this year or early next year.

"That will not only make it difficult for Virgin to float but it will make it quite difficult for it to expand," he said.

But Mr Dixon did not believe the new carrier would take sales away from mainline operations, saying Qantas could "chew gum and walk at the same time".

He also denied the move was aimed at Virgin, saying he expected a 15 to 20 per cent growth in the leisure market.

"This is the biggest and fastest growing segment of the industry," he said. "It's not aimed at Virgin, it's aimed at growth."

Qantas said it would pick a location for its headquarters within six weeks but it would not be Sydney-based. It would also get Melbourne advertising agency Dewey & Horten to work on naming, branding and advertising.

Earlier, Qantas chairwoman Margaret Jackson said the board's approval of the low-cost carrier demonstrated Qantas's "ongoing commitment to ensure our ongoing competitiveness".

Ms Jackson said the airline's "Sustainable Future" program, which aimed to reduce costs by $1 billion over two years, had so far identified $800 million in cost savings, with $350 million targeted for this financial year.

Ways of achieving the savings included simplifying and reorganising the aircraft fleet through the progressive retirement of Boeing 767-200s, transferring A330s to international operations and flying one widebody aircraft type, the 767-300, on domestic operations.

Mr Dixon also revealed Qantas would reconsider its appeal against the Australian competition watchdog's rejection of its proposed alliance with Air New Zealand if it was also rejected by the New Zealand Commerce Commission next week.

==========================================

Fri "The Australian"

Virgin Blue float faces delay
By Byron Kaye
October 16, 2003

QANTAS Airways Ltd's decision to set up a low cost airline could delay the float of Richard Branson's Virgin Blue Airlines Pty Ltd by three months, according to analysts.

Australia's biggest airline revealed today its directors had approved the establishment of a discount domestic airline to take on Virgin Blue, with the new operation to be launched next May.

The announcement came just a few months before the partial float of Virgin Blue, loosely touted for the end of this year, and analysts said Virgin Blue could now be forced to rethink competition risks associated with the public offer.

"It probably pushes out the timing of what was already going to be a very accelerated float beyond Christmas (and) puts it probably late in the first quarter of next year at best," said Peter Harbison, managing director of research firm the Centre for Asia Pacific Aviation.

"The slender chance of getting it done before Christmas is probably knocked on the head by this."

He added the timing of the float was not critical, given Virgin was already cashflow positive and did not urgently need to raise new capital.

Shaw Stockbroking research director Scott Marshall said the news would impact the Virgin Blue's operations, and float, but not necessarily delay it.

"If the current prospectus assumes 30 per cent market share, then there will possibly be not a lot of impact on the Virgin forecasts," he said.

Virgin Blue's share of the domestic market is nearing 30 per cent, Mr Marshall said, a threshold Qantas does not want to see crossed.

"The only reason Qantas would launch a discount airline is to offer an alternative to Virgin, so yes of course it would have an impact on Virgin," he said.

"It's more a matter of how to establish the discount airline without impacting the rest of Qantas."

Virgin Blue spokesman David Huttner said: "If they are trying to imitate us, we appreciate the recognition that we have the much more sustainable business model.

"If Qantas believe that this would have any impact on our float plans they will be disappointed."

Qantas chief executive Geoff Dixon said the new carrier had nothing to do with the float of Virgin Blue.

"I can assure you that the board of Qantas and the management of Qantas don't sit down and make decisions just to try to spoil the float of another company," he said.

"I think Qantas is a pretty robust company...and I believe that we are capable though with our financial strength and with our board and management...to be able to compete with Virgin."

Mr Dixon described Virgin as a good competitor.

============================================

Fri "Sydney Morning Herald"

Qantas buys big for no frills fleet
By Scott Rochfort and Wendy Frew
October 17, 2003

Talk of a prolonged and bloody domestic airfare war intensified yesterday, after Qantas confirmed plans to launch its own budget domestic airline in May next year along with a massive order of new aircraft.

Amid speculation that yesterday's announcement was meant to spoil Virgin Blue's planned listing on the stock exchange, Qantas chief executive Geoff Dixon said:"This is not aimed at Virgin. It's aimed at growth."

Mr Dixon also scotched talk of a looming price war, saying: "I don't accept your premise that this is a discount price war. I don't know what Virgin will do; they are a pretty unpredictable competitor."

With the former Ansett and Aer Lingus executive Alan Joyce heading the new airline, analysts were surprised at the projected size of the new carrier, which Qantas said would have at least 23 aircraft by mid-2005. This compares with the estimated 80-odd Qantas planes now in use on domestic routes.

Amid projections such a fleet could snare 18 per cent of the domestic aviation market, resulting in a massive cannibalisation of Qantas's current domestic network, Mr Dixon said he didn't expect any job cuts or trouble from the unions, arguing the new airline would create growth and jobs.

Virgin controls an estimated 30 to 35 per cent of the domestic market.

Considering it has taken the growth-hungry Virgin more than three years to build its fleet to 35 B737s, some analysts remained circumspect over the prospects for the new carrier. Virgin's early growth spurt was aided by the collapse of Ansett.

Virgin also shrugged aside speculation it was thinking of buying another 11 aircraft on top of the 42 Boeing 737s it expects to have in the air by mid-2004.

Some analysts said such a move could lead to a severe over-capacity in the domestic market.

"We're always happy to look at new opportunities," said Virgin Blue's head of strategy, David Huttner.

It is understood the 11 new aircraft were cancelled orders, which one analyst said were being offered at a bargain basement price.

ABN Amro analyst Bruce Low said it was feasible Qantas could retire its ageing - and inefficient - fleet of 21 B737-300s while its new budget airline built up its fleet of A320 or B737-800s. The aircraft could cost up to $1.5 billion, unless the airline chose to lease the aircraft.

With Qantas still deliberating on whether to use the shell of the former budget airline Impulse it acquired in 2001 or establish a "greenfields" company, Mr Dixon said the new base of the yet-to-be-named airline would be chosen within six weeks.

Virgin's David Huttner said the new airline would not affect Virgin's operations or growth plans.

"It's clear that Qantas recognises that Virgin Blue has the most sustainable and profitable business model," Mr Huttner said.

Qantas shares fell 4c to $3.58 after hitting an eight-month high of $3.68 before the news.

===========================================

[slice]

ABN Amro analyst Bruce Low said it was feasible Qantas could retire its ageing - and inefficient - fleet of 21 B737-300s while its new budget airline built up its fleet of A320 or B737-800s.

Inefficient! - I presume that they are only becoming inefficient due to their age. I am sure no one has ever regarded the 737-300 as inefficient for its size/range class.:}

[Wirraway]

Slice

Makes sense to me and also an over capacity problem,
25 new aircraft for 'Skimpy' in, and the 21 old 737s out from SH gives
you an increase of only 4 aircraft, not much increase in capacity
overall at all.

Wirraway

[Pigs Arse]

Wiiraway
The only problem is that there are only ten of them left now. 737 300's that is.

[Bugsmasha]

I was having my medical renewal last week when the Doc started talking about an Impulse pilot who had recently been in. He said that he and his fellow workers were very concerned about their jobs. He said that a LCC was going to be started by QF and there was BUCKLEYS chance of Impulse crewing them as QF management were always having a go at Impulse's poor performance. He thought an overseas company from Europe would be involved in it.
Also, surely there isnt enough money to sustain an airline only on the leisure routes. Who does Dixon think he is kidding. They will take over the current mainline ops eventually.
Time WILL tell.:ok:

[Thylacine]

Responding to the information contained in the several media reports above about plans to launch a "greenfields" low cost operator one can only agree with Centre for Asia Pacific Aviation managing director Peter Harbison that QF is in mortal danger of cannibalising their own business and following BA's experience with Go.

Added to that if they go ahead with plans to purchase or lease up to 23 new aircraft and setting up a new corporate headquarters all I can see so far is duplication of overheads and infrastructure.

Impulse once heralded as its low cost vehicle it is now regarded as not low cost enough. If the reports are correct an even lower cost model crewed from existing employees using bought or leased new aircraft is going to be the model to counter the inroads of DJ into their market share. But where are the cost savings going to come from?

At present supposed low yielding "leisure" passengers travel on both "low cost" Impulse and main line Qantas flights or a combination of both to reach their destination. They either pay top dollar if they travel at short notice or at peak times or get the opportunities to buy the limited number of "early bird" or promotional fares that effectively fill up otherwise empty seats. Yield management sees to it that aircraft depart with the best mix of passengers and maximise returns.

Take away those so called low yield passengers and put them onto a new "low cost" operation and as far as I can see all you have achieved is duplicated your costs not reduced them. Business passengers will not have to step over rucksacks and sit next to someone reading the Lonely Planet Guide but the number of "mainline" Qantas services would presumably be reduced since they have diverted a reasonable percentage of their customers onto a so called low cost alternative. Why not just separate the "Y" class passengers and make them pay for the in-flight extras as they do on DJ, while giving the others a full service option?

Presumably there are going to be some 737-7-800 and the balance of the 300 fleet available from the QF mainline fleet that will become surplus to requirements. Unless there is an expectation that there is going to be an exponential growth in the overall market of air travellers going to the leisure destinations and or a similar growth in full fare business travellers to replace those lost to the new "low cost" carrier there is going to be a considerable over capacity which of course could be the card QF is playing.

On the face of it, it all shows a considerable lack of foresight to dismantle Impulse as some threads suggest to merely replace it with another "low cost" operation after investing heavily in introducing a new aircraft type and training flight and technical crews to then have a sudden revelation that "Whoops! we have got the wrong model guys", scrap it and start all over again. In essence I suspect the Qantas corporate culture has no real understanding of the meaning or the implementation of the concept of anything "low cost". Stick to your knitting Geoff.

It is all akin to shuffling the deckchairs on the Titanic.

[penash]

QANTAS chief executive Geoff Dixon yesterday hosed down predictions of an airfare bloodbath after the company's decision to go ahead with plans for a low-fare domestic airline.


Geoff Dixon at the press conference yesterday announcing the new Qantas venture / Martin Jacka.


Mr Dixon said the new value-based airline would be "low-cost but not cheap" when it is launched next May.

"We're not starting something to lose money, we're starting something to make money," he said after the company's annual meeting in Adelaide yesterday. "This will be a serious carrier that will be here to stay."

Qantas aims to quickly expand the new airline and predicts it will have at least 23 Airbus A320 or Boeing 737-800 aircraft by mid-2005.

Mr Dixon's comments suggest the new airline could follow the model set by Qantas's low-cost international offshoot Australian Airlines, which does not offer significantly lower fares but uses its reduced cost base to compete on marginal routes.

Such a model would allow Qantas to expand its reach while reducing labour costs and limiting growth by competitor Virgin Blue. But Centre for Asia Pacific Aviation managing director Peter Harbison believes there will still be "a real feast" of low fares as Qantas moves to establish the airline.

"This is an interesting strategy that's bigger than I thought and they are really going to grow ... fast," he said.

Operational details of the new carrier were skimpy yesterday and Mr Dixon would not say where the airline would fly.

He said a decision on where it would be based would be made within six weeks but it would not be Sydney.

A meeting today at Melbourne advertising agency Dewey and Horten would consider six possible names for the carrier.

Asked if three airlines could survive in the Australian market given the demise of Ansett, Mr Dixon said Ansett had been severely overstaffed and suffered an "out of whack" cost structure.

"Qantas is much leaner, Virgin Blue is very lean and the business we're going to start is very lean," he said.

Tourism authorities yesterday welcomed the new carrier, saying it would help bring more tourism dollars.

[Capt Basil Brush]

Sounds like desperate last ditch measures from QF to lower costs.

Dixon may have another card up his sleeve that he has not yet revealled, and he knows when he does - it will upset a lot of people. (ie unions)

[Kaptin M]

"Speculation over the new airline, and Qantas's two-year plan to slash its cost base by $1 billion (HALF FROM LABOUR).."

Huloooo?? Is anybody home???

And to then award himself a "something million dollar bonus" for f#@*king EVERYONE else!!

[Mr Seatback 2]

All this going on, and a 717 sim being built in Brisbane by FSB and another company.

A classic case of jumping the gun? Or simply right hand not talking to the left?

Interesting times ahead guys.

Thylacine - I like your logic. But then again, logic has never been a strong point in Qantas' favour. Just saw a photo of a J class cabin with the new skybeds...the config is 2-3-2. The dreaded middle seat would appear to have made an appearance. IRRESPECTIVE of the fact that neither BA or SQ have middle seats in J, QF goes ALLLL out and then takes 2 steps back. :hmm:

I can't wait to hear what else they bungle up with during the next 6 weeks. And god help us all when the LCC is launched...there's BOUND to be something they've missed!

Not that I'm cynical or anything...:E

[Wirraway]

Sat "Weekend Australian"

Qantas hopes to fly with ten arms
By Steve Creedy
October 18, 2003

Qantas yesterday forged ahead with a corporate restructure which will split the airline into 10 businesses as the market reacted uncertainly to news the airline would launch a domestic low-cost carrier next May.

Qantas closed down 3c at $3.55 after falling as much as 7c as investors grappled with sparse details about the new carrier.

The previously flagged reorganisation divides the group into four flying-related businesses, two servicing the flying operations and four associated enterprises such as Qantas Catering and Qantas Holidays.

It aims to make each unit accountable for its performance and contribution to the Qantas Group under the guidance of a corporate centre which will focus on issues such as governance, investments and group strategies.

"The reorganisation will deliver a range of major benefits, including increased accountability, greater speed and quality of decision making, and improved return on assets," said chief executive Geoff Dixon.

New additions to the senior executives include low-cost carrier chief Alan Joyce, executive general manager technical operations and maintenance David Cox and the new head of Australian Airlines, Andrea Staines.

Mr Cox replaces 34-year Qantas veteran David Forsyth, who is leaving the company in December for personal reasons, while Ms Staines replaces Denis Adams, who takes charge of a portfolio of associated Qantas businesses.

The restructure also puts chief financial officer Peter Gregg in charge of corporate strategy and makes executive general manager sales and marketing John Borghetti responsible for core domestic and international airline operations.

Other executive members are Grant Fenn (airports and catering), Narendra Kumar (regional airlines), Paul Edwards (fleet, network and alliances), Kevin Brown (people) and Fiona Balfour (chief information officer and Qantas business services).

The restructuring details emerged as doubts were raised yesterday about how many additional aircraft Qantas would need for its new carrier.

Qantas said on Thursday the new airline would fly at least 23 aircraft by mid-2005 but there was speculation yesterday this could include 14 Boeing 717s already operated by its Impulse Airlines subsidiary.

A decision about whether to start the airline using Impulse or as a greenfield operation is due to be made within six weeks.

"They're not going to put 23 new aircraft in the market - that would be a less than sensible idea," said Macquarie Equities analyst Ian Myles. "I think they will use 14 717s, they'll use eight new 737-800s and they'll use one from the existing fleet."

Virgin Blue, seen as a target for the new carrier, said yesterday it was unconcerned about the move because its business model was built on a three-airline environment.

===========================================

Sat "Sydney Morning Herald"

Flying Kangaroo could be turning cannibal
By Scott Rochfort
October 18, 2003

Qantas's plan to launch a no-frills airline has raised concerns that it risks cannibalising its existing main-line domestic network and moving higher-yielding passengers down the value chain.

The airline hasn't offered much detail on the make-up of the carrier, which is yet to be named, and the market remained hesitant yesterday on the strategy to attack Virgin's 30 to 35 per cent market share. Qantas shares eased 3c on Friday to $3.55.

Some investors were unsettled by the experience of other carriers such as KLM, British Airways, Air Canada and SAS in launching low-cost carriers.

ABN Amro's Bruce Low said Qantas would have to ensure passengers lost to its mainline business went to its own low-cost operation and not Virgin.

To do this, the Qantas offshoot would have to offer fares equal to or lower than Virgin's, Mr Low said.

There are forecasts the new airline could take up 20 per cent of the domestic market, owing to its larger-than-expected projected fleet of 23 aircraft by mid-2005.

Mr Low said the shrinkage in the existing business could leave that airline with less market share but the same infrastructure and costs.

In a note to clients, Mr Low said:"Qantas would need to be careful not to be seen to be purposely shrinking the mainline operation", given the illegality of "shrinking one business to grow a replacement business with less attractive labour agreements for staff".

But Macquarie Equities analyst Ian Myles said the problem could be overcome by Qantas drawing people from its domestic business into its growing international business.

Ian Thomas, of the Centre for Asia Pacific Aviation, said Qantas seemed to be following the growing holiday market in a bid to make its low-yielding leisure routes profitable.

"It's going to be a substantial operation," Mr Thomas said. "It's something that they can scale up or scale down depending on its success. But there is the classic risk that [Qantas] could push passengers downstream to low fares."

As part of its two-year strategy to cut $1 billion in costs, Qantas also announced the formation of 10 separately accountable business units on Friday. Sales and marketing manager John Borghetti was named the new head of Qantas Airlines, which covers the mainline domestic and international operations.

Other units include the new airline, Australian Airlines, Qantaslink, Engineering Services, Airports and Catering, Freight, Qantas Holidays, Defence Services and Qantas Consulting.

==========================================

Dow Jones

Qantas Raises Possibility Of Listing Business Ops
By Helen Ubels
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Qantas Airways Ltd. acknowledged Friday that a restructuring now underway will make it easier for the Australian carrier to break off parts of its business and list them on the stock market.

Although that doesn't seem to be the plan for the time being, Chief Executive Geoff Dixon conceded that the restructure does make the "floating" of different units a possibility.

"It always has been the case, but certainly after we finish our restructure all of them could be quite easily floated off," Dixon told Australian Broadcast Corp. television.

"We could float off the regional airline, we could float off Australian Airlines, we could float off our catering division, we could float off Qantas Holidays."

"All of those are very good businesses, but I've got to tell you they are very integral to our business plan," he said.

Feeling the heat from flourishing domestic budget carrier Virgin Blue and increased competition on the busy trans-Tasman route, Qantas confirmed Thursday plans to launch a domestic budget airline while continuing to pursue an alliance with Air New Zealand Ltd. despite a hostile regulatory response.

Under its so-called Sustainable Future program, the airline is looking to strip A$1 billion from its cost base over the next two years.

In tandem with these efforts, its restructure will see the creation of 10 business units in pursuit of improved accountability and returns on assets.

John Borghetti, the 48-year-old head of sales and marketing at Qantas, has been named executive general manager of the core domestic and international airline. This big promotion potentially sets Borghetti up as a rival to Chief Financial Officer Peter Gregg as a future chief executive candidate.

Qantas' nine other business units include another three flying divisions, engineering, airports/catering and four associated operations covering freight, holidays, defense services and consulting.

"An increase in autonomy for each business will be coupled with a strong focus on performance targets," said Dixon in a statement.

"The new structure will also increase the growth opportunities of noncore businesses such as freight and Qantas Holidays," he said.

Costs Versus Cannibalization

Analysts said Qantas needs to update its model if it is to survive the onslaught of new, more agile competitors.

"At least they're looking at ways they can become a little bit leaner and a little bit more responsive to the way the environment is changing," said Bruce Low, an analyst with ABN AMRO.

"Certainly Qantas has realized that the way the model used to be...is just not a sustainable thing. The whole market is changing - you've got low cost carriers coming in and...to keep plugging on and keep doing what they're doing is just a recipe for disaster," he said.

But the decision to launch a low cost domestic carrier has left some analysts pondering the extent to which the new carrier will steal away Qantas customers.

"The great unknown remains Qantas' ability to insulate its premium brand to minimize cannibalization by the low cost carrier," Credit Suisse First Boston said in a note to clients.

Though the company plans to improve its premium brand service to further differentiate it from the new carrier, more information is needed on strategy to evaluate the company's growth profile, the broking house said.

Qantas is keeping much information about the new airline, including its name, under wraps. What is known is that the launch is planned for May using the operations of a low cost carrier, Impulse, that it bought in May 2001.

Purchases of new aircraft are expected to build its fleet to 23 by mid-2005, Qantas said.

Investors needn't panic that the airline is going to flood the market with excess capacity, noted an analyst with another broking house.

"The bulk of the planes we think are in fact the Impulse planes...and there's only eight new planes. They're not about to go and absolutely cannibalize themselves for the sake of fighting Virgin Blue," he said.

The analyst played down the prospect of Qantas separately listing any of its units.

"They've got bigger issues to think about," and the company has some land and terminal assets that could be sold if it really wants to raise cash, he noted.

On the Australian Stock Exchange, Qantas shares slipped three cents to A$3.55. The broader market ended fractionally lower.

============================================

[TAY 611]

low cost is just that...Low cost. Watch out you QF mainline guys the blow torch is being turned up on you very shortly..
It may be Jet connect (yep those cheap Kiwi's again) that will be the new operator and they will be pleased with their new NG's or Airbus. :D
NJS was purchased by FRA to get their hands on the Surveillance operation. They openly said, at that time, that they wern't in the airline business. So their future doesn't look too bright either (though good for the surveillance people). :}
Impulse, sorry guys, but you simply have the wrong type of Boeing. It was an impulse inititive that QF bought out to get you out of the competition. Though it looks like a nice plane and by all accounts is, the 717 is dead in Australia:sad:
The Embraer may be a nice plane but it aint going to compete with Virgin NG 73's that are an accepted/percieved industry norm. ;)
Either way its gonna play out like a splatter movie so watch your step and keep your heads cool (powder dry) as your futures have allready been carefully planned well in advance.:cool:

[Wirraway]

ABC News Online

Qld bids for Qantas low-cost base

Queensland is in talks with Qantas for it to establish the headquarters of its new low-cost domestic airline in the state.

A spokesman for Premier Peter Beattie says negotiations with the Qantas implementation team have already started.

Qantas has said the new airline will not be based in Sydney and that it will decide on a location along with a new name soon.

The Queensland Government says full consideration and respect will be given to existing airline relationships in any negotiations.

Virgin Blue is already based in Brisbane.

==========================================

The World Today (ABC) - Friday, 17 October , 2003 12:42:50
Reporter: Stephen Long

ELIZABETH JACKSON: It's all go at Qantas. Yesterday, our major airline announced that it would launch a new budget domestic carrier, in May. And today, it's released details of a plan, which it flagged earlier this year, to divide the company into 10 separate businesses, all of which could potentially be floated as separate companies in the future.

Geoff Dixon, Qantas Chief, told the ABC today that he's adamant that the new airline will fly, but the critics aren't convinced.

Our Finance Correspondent Stephen Long reports.

STEPHEN LONG: Budget airlines aimed at the leisure traveller are the growth area of the market. And that's where Geoff Dixon's pitching the new spin-off airline to be launched in May.

Analysts such as Ian Thomas at the Centre for Asia Pacific Aviation see this as a recognition that there's not much growth left in the premium end of the market.

IAN THOMAS: I mean, really, Qantas is saying that the higher end of its market, in other words the premium end, is essentially a mature market, which doesn't really exhibit a great deal more growth.

STEPHEN LONG: Internationally, low cost budget carriers, such as RyanAir in the UK and South West Airlines in the US, are the success stories of aviation. Established carriers have struggled to compete with their low operating and labour costs, and their ultra low fares.

Qantas isn't the first major carrier to try to copy their formula. Ian Thomas says there's a series of mainstream carriers who've spun off low cost leisure airlines, and wacky names seem to be compulsory.

IAN THOMAS: Delta, for example, has one called "Song". SAS, the Scandinavian airline has one called "Snowflake". And Air Canada's operating one called "Zip".

STEPHEN LONG: These airlines have something else in common apart from their wacky names – they've all achieve at best, limited success. British Airways launched then sold off Go, which succeeded, but largely by cannibalising BA's own market.

Geoff Dixon's adamant Qantas has done its homework and won't make the same mistake.

GEOFF DIXON: This airline will be successful in its own right and indeed, if it cannibalises Qantas it will be on the margins.

STEPHEN LONG: In Europe, airlines such as RyanAir offer fares as low as a few pounds.

Geoff Dixon won't be drawn about how low the airfares will be on Qantas's new budget carrier, but he says there'll be no fat in the costs.

GEOFF DIXON: This will be a quality airline, it's going to have no frills certainly, it's going to be the bare basics of a low cost carrier, but it will have good and modern aircraft, it will have well trained staff, it will go out of decent airports, but from then on it will be as cheaply as… as lean as you can possibly put in the air.

STEPHEN LONG: Meanwhile, Qantas released plans today, to separate the company into 10 businesses, with engineering, flight catering, holidays and other services hived off from the core business of flying.

Geoff Dixon says it's designed to promote greater accountability and efficiency.
He's denied union claims Qantas intends to force the businesses to compete with outside contractors to maintain their relationship with Qantas. But he hasn't ruled out the possibility that any of these businesses could be floated off separately in the future.

GEOFF DIXON: In the restructure we've announced today, everything could be floated off. We could float off the regional airline, we could float off Australian airlines, we could float off our catering division, we could float off Qantas holidays.

All of those are very good businesses, but I've got to tell you they're very integral to our business plan. We're one of the few airlines in the world who have decided to be fully integrated, that we have a multiplicity of businesses that hang off the main core business – that is, flying. But right now, and always has been the case, but certainly after we finished our restructure, all of them could be quite easily floated off.

===========================================

[Watchdog]

So Pete Conrad .... what have you got to say now? :8

[onya]

F**k it sh1ts me. Couldn't agree with you more Kap M. Wouldn't it be nice if CEO's and like where put on the same pay as the drivers. Tipping we'd see a rather aggressive increase in the pay scales. They're all ****s. (rhymes with name for a small boat).:yuk:

[Flying Tiger]

30,000 employees, annual turnover of billions of dollars, worldwide operations that run 24/7/365, capital infrastructure of billions of dollars that requires constant re-investment, profit margins that are less than 5 cents in the dollar even in a good year - tough business, and one that definitely requires management of the highest quality.

Dixon has been voted Australia's best CEO. To my mind, his greatest quality is that he can see the writing on the wall and is prepared to make a hard decision and take action before the red ink begins to flow.

Its very easy to knock but the comments on this forum indicate a lack of understanding of any commercial enterprise, let alone a major international airline.

To my mind, if anything, Dixon and his team are underpaid rather than overpaid.

What is a CEO worth? Maybe the many of you who'll disagree with me could provide a figure and then a justifiable basis on which you calculate it.

Standing by for the usual spray of invective and vitriol, not to mention quotation marks...

[ExcessData]

Gotta agree with Tiger here (who, it should be reiterated, is talking about top, not middle level management).

Without a good leader, the whole company can go down screaming more quickly than you can say 'boo'. Underpinned by a strong balance sheet (a hallmark of the current QF CEO), however, it has a lot more room to evolve organically, rather than as a last-ditch effort to save all or some parts of its business from that 'red ink' (the latter situation certainly doesn't apply to Qantas at this time, despite the inroads made by Virgin).

My armchair take on the LCC would be that, relative to the overall scale of QAN's operations, it's really only a drop in the ocean, and if things don't go to plan (I'm sure they will though - don't think for a minute that they havent had a significant number of analysts and experts crunching every possible contingency, especially in lieu of the risks involved ('Go' et al)) they could probably revert to the status quo fairly seamlessly, with minimal overall losses.

Who knows, though.

[point76]

As far as Jetconnect as a LCC I'm surprised on-one has mentioned the Ansett conection there.The Chief pilot and the majority of pilots are ex-Ansett drivers,some of aircraft are even ex-AN .They,ve all learned to adapt to LCC salaries ,no staff travel.no Super etc and most would love to be home .
Food for thought anyway!

[Kaptin M]

Pray tell, Flying Tiger, where are these clever ideas that Mr Dixon can lay claim to, as being uniquely his?
Rather than uniting QANTAS employees, he is dividing them, indicating - imo - an INability to be able to successfully negotiate with his charges.
Instead he has chosen the easy way out. Break QANTAS up into small parcels (creating many more management positions along the way), to get out of current employee work contracts and conditions, ala point76's post..."LCC salaries ,no staff travel.no Super etc".
In a sentence "Screw the employees", whilst continuing to richly reward yourself.

The lcc concept is apparently a COPY of Brett Godfrey's Virgin Blue - and NOT a Geoff Dixon "special".
Given the funds to which he has access there are probably at least a dozen or more other people who could make the same "bold move and hard decisions".
Hard for whom?
The soon-to-be unemployeds??!!

IMO the QF staff deserve better than they're going to get - but Dixon appears unable or unwilling to spend time on trying to do the right thing.

[Flying Tiger]

Er, Kap M, not quite sure where you get the idea that I was claiming Dixon had produced any type of unique proposal. Maybe your usual prolific use of quotation marks is the only way you can prevent yourself from misrepresenting others.

You appear to be rooted in a far more genteel, post war, pre-deregulation era when the proliferation of state owned carriers and excessive regulation led to airlines with huge, bloated bureaucracies and endemic inefficiencies. Naturally, this resulted in enormous salaries and generous conditions for pilots, flight attendants and other employees. This was a worldwide phenomenon.

The breaking down of these barriers in a more liberalised environment has beem retarded buy infrastructure constraints which have prevented the LCC's from developing the critical mass required to force rapid change in the market.

This has been solved overseas by the use of secondary airports, but the lack of such facilities in Australia meant that an LCC could only prosper by the demise of an incumbent. Sadly this was Ansett.

But now with a robust, efficient and ambitious competitor, Qantas has no option but to be proactive and be the driver of change before its too late. Anyone with commercial nous will tell you that a $500m profit on turnover of over $20b, with future capital commitments of greater than $10b, is simply not enough. The only way to sustain such borrowings is to increase the share price, and hence the market capitalisation, to a point where financial institutions are prepared to provide finance on terms which allow the airline to commercially facilitate the investment.

To prosper in such an environment and produce the results required, you must have strong, capable management who are paid absolute top dollar. Geoff Dixon is a long way from the highest paid CEO in Australia but has been voted number 1 by his peers. We are getting him for a steal and I say double his pay.

I can see the writing on the wall and I'm off to work for one of Q's LCC's as soon as possible.

Your implication that inefficient conditions and salaries can be retained whilst at the same time staving off competition and continuing growth is somewhat counter intuitive.

Please take the time to advise us all of how exactly you would deal with the changing situation in the market and exactly how you would negotiate with the 14 unions to address this issue.

Your solutions are keenly anticipated.

[bitter balance]

Kaptin M, the problem with your synopsis is that Geoff Dixon has been vigorously targeting middle management in his restructure. He has numerous times identified the bureaucracy at QF as being the biggest impediment to change. You know, those "water lilies" you are always on about?

Geoff Dixon is not there to work for his employees, nor is Brett Godfrey or any other CEO is Australia. They work for the board and by extension the shareholders. Brett Godfrey's employers are obviously very happy with him. Geoff Dixon's employers are also clearly very happy with him.

You can't just base your arguments on ideology. Reality has a habit of dismissing dogma.

[U2]

I'm not in the airlines industry..so please criticise me!


But the way I see the future for the Australian airline industry is that it will go the way of G.A.


The good thing is that there will be growth amid economic uncertainies. Like G.A, the airline industry may be able to cope with economic ups and downs in the future.

It will be great for the industry, new equipment and more jobs. It will be bad for the current employee's as pay will ultimately go down. It's a trade-off more jobs and more turn-over equals less fat-bastard jobs (i.e overpaid). On the down side the unions may perish as pilots and engineers get lower wages. Lets face it, when YOU buy an airline ticket you don't know if the pilot or engineer who pilots/maintains the aircraft is a veteren or a newcommer. That's because your pilot will be the one who passed the checkride and who was the cheapest. You get what you pay for. The people who will make the honey money are the managers and the shareholders.


To counteract the ultimate wage decrease for operational personel (pilots, enginneers, flight attendants, ground crew, ops crew) then the unions and members will have to unite or lose out. Before too long aviation personnel will be more like contractors than employees. If the current airline personnel and unions got talking then maybe you could stop the changing trends...amidst market forces. If it haden't been for 9/11, terrorism and S.A.R.S then maybe we would still have a two airlines premium market, but it's now going the way of the supermarkets....big and cheap.


On the other hand there will be more growth and more jobs. It will be great for the travelling public. Look at the fares now. It's finally cheaper to fly than to drive, it's also faster and saves YOU the stress of driving.

Since I'm in G.A it doesn't really bother me which way it goes...that word again ..go. For the guys and girls at the top, you'd better start excercising...cause in the near future your going to have to be flexible.


My thoughts


U2

[PAX]

Just a few thoughts, mostly along the lines of what is a LCC and where can the savings be made:

- management salaries (yep I agree here)
- tech crew salaries (also here)
- cabin crew salaries (more later on this one)
- efficient aircraft fleet
- not many other places (as fuel, leases, fees, etc are not neg)

Pigs Arse talked about multiple types. As far as I can see the big Q is currently heading down the AN path from Sir Peter days...almost one of everything!! This is just not efficient due:
- type ratings (tech, and engineering)
- crewing (due type rating problems/ costs)
- and as Pimp Daddy suggested spares, etc, etc

Tech crew. The tech crew will be either "new" LCC employees if the management team can dream up a way to keep mainline crew from having a heart attack, otherwise I find it difficult to believe that QF mainline tech crew will be operating.

Cabin Crew. TAY 611, you have hit the nail on the head with this one. Incorporate the LCC in NZ (even as JetConnect) and you can have one less cabin crew per aircraft!! Now we are starting to talk savings; salary, super, annual leave, sickleave, overnights, overnight allowances, roster costs, etc, etc

To get it right QF has to use the existing management (and all other infrastructure) for the LCC, not duplicate.

Interesting: Alan Joyce at 37 is about the same age as Brett Godfrey when DJ started.

Also, Douglas Mcdonnell, what exactly is a "high capacity OAC". As far as I know there is only an AOC, they just happen to have high capacity aircraft on the register.

[ferris]

Flying Tiger
You might get more sympathy about the 'worth' argument if it was a 2-way street. What upsets me most about executive remuneration is the lack of downside. How do I get a gig where when things are going well (and by going well, I mean you could just be lucky- like have your biggest competitor fall over- or you just go on the cost-cutting merry go 'round, not actually adding value or making decisions that grow the business, just pulling down others pay and conditions) I get people lining up to tell me how good I am and how I should get double the money? Then if I stuff it up, destroying not only shareholder value but the lives and livelyhoods of countless others, I get a great, big, fat cheque to pay out my contract and see me on my way (to the next company ripe for the pillaging)?

Australia used to walk in the middle ground between, say, the US and the UK (in IR terms). We lean ever closer to the US these days. Read a Michael Moore book and see if that's what you want.

Call me cynical, but isn't starting an "all new, low-cost, totally seperate company" just a lot of smoke and mirrors for re-writing (downwards) your EBAs, corporate culture, etc, in one foul swoop? The funny part is some people actually seem glad for these 'opportunities'. If they called a spade a spade and said; "we are going to sack a lot of the staff at short haul, and hire some new faces at half the pay and doing twice the jobs" would people still be so glad?
It seems so.

[Kaptin M]

bitter balance you raise an interesting point with your statement, "Geoff Dixon is not there to work for his employees... for the board and by extension the shareholders.".
Interestingly enough, I had intended to raise this very issue when I next posted, by asking, "To whom should Mr Dixon weight his responsibilities - the QF employees, or the shareholders?"

So exactly who ARE the shareholders?
Can they be defined as one constant, defined group? Or are they an ever changing, indistinct, multiplex?
Do shareholders have any loyalty to a company? Or are they basically, purely reward/profit driven?
Are shareholders individually able to directly influence the base source of revenue for the company on a day to day basis?
Would a 100% turnover of shareholders in say a 12 month period, affect the earning potential for QF during that time?

Now ask the same questions, replacing "shareholders" with "employees".

Let's be quite honest - 1 or 2 p!ssed off Mum & Dad shareholders are not going to have ANY effect on a company the size of QANTAS - the same cannot be said of employees.

QANTAS employees are, right now, feeling insecure - and this is being reflected in Virgin Blue's increasing market share.
An analogy I'd like to make, which I feel fits the current QF shake-up, is that as Dixon cuts up the QANTAS cake into smaller pieces, a few crumbs are lost each time - these crumbs end up on VB's plate.
Each smaller piece of cake now exposes more area (than the original whole) which is vulnerable to attack.

Flight crew and maintenance staff are easily identifiable, per aircraft, fixed costs, eg. 1xB737 = 2 pilots, 3 cabin crew, 1 LAME, minimum, thereby making easily identifiable "targets" in any cost-cutting. Other ground staff such as check-in, loaders, schedulers, etc, are able to be shared over several aircraft and are hence less easily cost definitive.
Even less so are non-revenue producing office staff, whose cost to the company can be written off across the entire fleet.

Anyway, one step at a time.
Where should Dixon's responsibilities primarily be channeled?
IMO, he is acting AGAINST QANTAS' best interests by screwing the staff - but with a million or two $$'s more under his belt from performance bonuses, will he really care by the time the sh!t hits the fan?

[jakethemuss]

Will be crewed by current Mainline crews and new hires will be second officers. You are still not listening.

[Traffic]

There is not one CEO of a major airline today that does not devote a moment of each day wondering what to do about the LCC amoebas springing up in their midst.

By announcing Quokka Airlines, QF has publicly admitted it is rattled and willing to accept the inevitable cannibalisation of the main brand as the quickest way to cut some cost out of the business.

IMHO, going for a separate LCC model is an admission that management, instead of being full of ideas, is actually out of ideas and basically lacks the intestinal fortitude to negotiate creative solutions to stretch the brand rather than cannibalise it.

As someone suggested, sophisticated yield management has been around for yonks and taking sandwiches out of the rear cabin is hardly rocket science. So what then is really driving this?

Quite simply, this is the quickest and easiest way to drive down unit labour costs. It is not the best way but simply the easiest.

History has shown that none of the so-called majors has been successful using the strategy being proposed. The jury may still be out on Delta's attempt but I don't rate their chances any better than some of the Europeans.

As for Quokka, it is the easy way to put some air in the PR tyres and make it look as though there is some creative thinking going on...no matter how destructive it may end up being to the brand in the longer term.

Most would accept that there will be continued downward pressure on working conditions across the industry for the foreseeable future. My question to the QF board is; why baste the whole turkey in such a distasteful sauce and make even more of the kitchen hands and patrons choose the chicken? Actually KapM's crumb analogy was pretty good.

VB must be quietly pleased with this development and will no doubt be doing some homework on what kind of business class seats to install on selected routes.

Perhaps it could be time to put my QF Frequent Flyer card next to my Ansett one....in my son's toy box.

[bitter balance]

Kaptin, I'm sure Geoff Dixon includes his staff in his decision making but when weighing his responsibilities they clearly have to be to the people who employ him. How can CEOs answer primarily to their employees? CEOs by definition must make decisions that will sometimes piss their employees off. That's their job.

I appreciate its a hypothetical but a 100% turnover of shareholders in 12 months would by definition damage QF immensely, if not terminally. If all of your shareholders sell their shares is this likely to increase the share price or decrease it? A large drop in the share price is going to threaten the company's existence more than staff turnover, particularly in such a capital intensive industry.

Lets look at QF's shareholders. A large majority of QF shares are held by fund managers and institutional investors. i.e. share market professionals. They do not measure a company's success by how happy the employees are. They are looking for hard financial data. If Geoff Dixon produces two plans - one for a radical restructure to reduce expenditure by $1 billion and the other a long term plan to reduce staff turnover (and not respond to a competitors attack on the QF cost base) - which one will they go for? Which one would they back to maintain or improve the share price?

Do you make investments to ensure the recipients of your capital are happy or do you set out to make a return? If its the former PM me and I can put you on to some great ventures ;)

BTW - if you are judging companies by their staff morale maybe you wouldn't be ranking VB too far ahead of QF at the moment.

[sandpit]

Although I agree a good CEO should be well remunerated, I don't know that I agree that the employee's can't be a top priority.

Anyone who has read "Peanuts" which is the story of Southwest in the US, will know that employee's are THE top priority of management, on the basis that happy and fulfilled employees will work harder and look after customers better and make decisions based on the best interests of the company. And Southwest is now the largest (in numbers of pax) airline in the world and also the most consistently profitable.

Maybe there is a lesson there.....

[slice]

Jakethemuss - and if Q renegs on any agreement they have made?? Would mainline really strike over the issue? If not what else can mainline do - with Jetconnect, Impulse, Ex Ansett and God knows who else lining up for the seats?

It is just that you seem to be awfully confident an organisation that seems to be gearing up for a showdown with Unions generally (re: LAX) will honour whatever agreements they have made(they may well do of course, but these are still turbulent times for Aus/NZ aviation). Given the way the last Pilots'strike ended up, if push comes to shove would the crew be prepared to go out over this issue??

Wait and see I guess!

[Gnadenburg]

If Dicko uses mainline crews for this operation he is a big teddy bear!

A seperate pilot group would offer many advantages and to suggest that the new airline is a low cost model, would surely demand this.

A ruthless CEO would make use of the following:

1- Pilot's paying for their endorsements as opposed to the double whammy of training a S/O onto the new type and training someone to replace the S/O.

2- A company tool to break industrial unrest at the extreme, or toward the other end, have ruthless EBA bargaining powers. Qantas likes this.

3- A contract having little semblance, in any shape or form, to present mainline perks- staff travel, bonuses, yearly service increments etc.

4- Possible cultural problems of cross polinisation of long haul crews into a budget domestic model.

5- Business models love the start afresh attitude. Catchcry stuff for those who have played boardroom bu$$sh$t bingo!

Good luck guys, but it doesn't make sense to use QF Mainline Crews.

No sooky pilot responses, just hard and cold facts as to why or what advantages there are to using QF crews. When the above seems cheaper.

[hoss]

Just how I have been thinking, it all makes too much sense:ok: .

[Three Bars]

Gnads,

Even being QF mainline, I don't know anything more than anybody else here. The Company have obviously thought a lot about it and AIPA may have added their two cents worth, but basically it's all very close to the chest.

But when you're talking about whether to use mainline pilots or not, have a look at what happened with Australian. Originally we were told that it would be all new aircraft, but instead they painted up exisiting airframes for the new venture. They also used mainline crews operating to the Australian contract. Why? Well to me it seems to be that if it all gets too hard (or unprofitable) they can just close up shop, respray the planes and tell the boys to wear their mainline uniforms to work tomorrow.

The new LCC thing could be started up the same way. It would make a lot of sense to use 737s, which are already operated by SH and then phase out the old 737-300s (probably to Jetconnect's trans-Tasman operation). By offering slightly reduced pay levels for captains and FOs, they would find plenty of takers to take these slots - resulting in the required labour cost savings. As unsavoury as this proposition is to many members of AIPA, this method of business at least ensured that Australian pilots were from the mainline. New hire cabin crew and ground staff working under much tighter contract conditions would be where the main savings would come from.

Their respective unions also wore this scenario for the formation of Australian airlines, since no existing mainline jobs were lost. It could work again in this instance.

Now I'm not saying that I particularly agree with any of this. But QF's problem, in my opinion, is that people expect to get the old QF service level (from ten years ago - booze, entertainment, movies, meals etc) for the Virgin Blue price. Attempts by QF to save money in product delivery and compete directly with VB are seen by the public as a deterioration in the QF product and provide any even bigger incentive to travel with VB. This has led, in my opinion, in QF seeing the need to form a new carrier that can compete head-on.

I hope that it will not be a disaster! I hope that it will make QF more profitable! I hope that it will be crewed by mainline pilots! But mostly, I hope it gives those smug little smarties in VB management a real kick up the butt!

[linepilot]

Gnadenburg,
All good points but why did GD go with mainline boys and girls when he started AO operations?Must have had a good reason!

[jakethemuss]

"Operated to the same Safety levels as Qantas"

There is a lot in that statement that others are not seeing.

It's about standards and known qualities. You don't get that with off the street hires.

It will be crewed by Mainline pilots. New joiners will be QF S/O's.

[Kaptin M]

Factually speaking, jake, how many pax do you really think base the purchase of their ticket on QF's "Safety level"? SFA to none, would be my guess.
Pax priorities are price and/or schedule first. The airlines "safety level" is a long way down the track - unless of course one of the airlines being considered has had a previously extremely poor Safety record eg. Korean & Garuda.

It's about standards and known qualities. You don't get that with off the street hires. Weren't the majority of QF pilots "off the street hires" at some time, knocked into the QANTAS mindset during training?
Any new off the street hires would similarly be processed through the QF system, initially, by QF trainers and checkers.
A few lcc's (eg. Cathay Cargo, Air Japan, Freedom) have gone down this road - "off the streeters" trained by the incumbent mainliners, but paid substantially less, until sufficient numbers of new hires then totally replace the mainliners.
At a future date this cheaper labour is then trickle fed back into the mainline.
Could this be Dixon's plans for the Impulse pilots??

[jakethemuss]

Sorry M,

I have learnt not to deal in conspiracy theories, only what I know to be true.

Pilots will come from Mainline as career progression.

End of story.

[longjohn]

Jake,

you raise an interesting point.

If new joiners are to be QF S/O's does this mean that they will be taking a pay drop to be F/O's in Skimpy? Given the Australian experience, how many will jump at this 'opportunity'?

Or, are you saying that new joiners will be S/O intake pilots off the street selected to join the LCC. If so, presumably they will be selected for the LCC based on experience i.e. an ex Ansett 737 driver would be a logical choice. However, if in the LCC they are to be paid lower wages than mainline, then these new LCC F/O's will be paid substantially less than their less experienced comrades sitting in the back seat.

Or perhaps, the experienced new hires will be sent to the -400 while the inexperienced new hire s/o's go to the LCC. How then does this enhance safety?

I do not see this purest form you are proposing as a solution (except for those seeking early promotion).

A more cost conscious and logical solution needs to be employed. I agree that using a structure of mainline crews provides the ability to grow and cover shortages ala Australian Cairns basings, however, I think AIPA and the company will need to look outside the square in order to create a long term solutionto the crewing of this airline.

IMHO whilst using QF crews as a basis, the LCC will need to look to its own direct recruitment. Even if these pilots are coralled within the LCC unless and until they are selected into mainline sic.

[Douglas Mcdonnell]

Come on Jake. What about the runway over run?

None of the subsids have had that " happen to them". I must be missing something here. The indoctrination seems to work oh so well!!

Pete Conrad are you out there? Looking forward to your next informative post. DM

[Going Boeing]

All my sources confirm that jakethemuss, funbags and keg are correct in that the LCC will have QF Techcrew so those that wish to fly with this airline send in your CV's to QF. The rates of pay will be low so expect a very quick transition from S/O to the front seat in the new airline. You would have good career progression prospects as your seniority improves and thus would not languish on the same aircraft type flying the same routes for the rest of your career.

The Airline model that they are looking at is the "Impulse" model (which doesn't mean the AirConnex pilots will be flying the aircraft).

My interpretation of GD's intentions is that he has tried for a few years to negotiate with unions about removing restrictive work practices without success so he is now prepared to sacrifice some of the domestic operation to the proposed "low cost/no frills carrier". He particularly is targeting Short Haul Flight Attendants and Ramp staff to have them multi skilled (on lower wages) as at Virgin Blue. There will be a "Transmission of Buisness" from domestic mainline to the new airline and it will be interesting to see how the concerned unions and QF management battle this out in the Industrial Relations Court. In the long term I could see QF mainline becoming a purely international airline again with the new LCC taking over the entire domestic arena.

A lot of pain for a large number of people, but with market forces as they currently are, I don't see any way of preventing these major changes.

GB

[Life as a journey]

Muss

You're dreamin' about the safety angle old son.

Many good pilots with enough experience to matter have been inducted into numerous quality airlines, worldwide, with no detrimental effect to safety standards of the new or established airline that took them on.

True, a small percentage of such pilots retain a firm hold on their Linus blanket ex-SOP's with annoying and dated "we did it this way in X" comments.

Rarely lasts long.

Fact is, there are many quality drivers around who are willing and able to come home.

Whether Skippy (sounds more professional than Skimpy, don't you think?) takes advantage of that is something I am certainly not privy to.

Are you? Be honest now.

As for decrying 'outsiders' as less safe than Qantas pilots, that's a proven fable.

Compare Cathay Cargo's safety record with Cathay Pacific's.

The former was crewed by new-hires direct into the LHS on start-up as ASL, and that hasn't affected mainline's safety record at all.

Another glaring fact is that Australian are finding it very hard to crew the planes that are required in their business growth plans.

Failure to attract the right candidates is going to see outside recruitment. The former is a safety issue, straight from the horse's mouth, and so it rests with the hiring staff to pick the right people, then train them to Q's way of doing things. Not much to it really, though some would like to think so.

If you add Australian's requirements to Skippy's, with its minimum 23 airframes in a 12 month period, you've got a lot of pilots needed, just like the Cathay Cargo start-up ASL.

Not meaning to be nasty, but dream on; mainline ain't looking good for either the continued Australian growth or for Skippy's start-up requirements.

But hey, I've been wrong before. The proof of the pudding is in the eating, so we'll just have to wait and see.

This is an Outsider's opinion.

[jakethemuss]

As I said, I deal in what I know to be true.

I have not slagged off at anyone Douglas about records but I suggest you take a look inward. Don't go there.

Journey man, I am much closer to this than you would possibly know.

It will be crewed by Mainline pilots. Life is a negotiation.

Sometimes self acclaimed professionals act in such an unprofessional manner.

P.S. Australian will not be hiring off the street.

[Life as a journey]

Mine is a vested interest, as I'd like the opportunity to crew the Skippy or Australian planes.

Doubtless, if you are so placed you know more than me, but I'm willing to hold my breath.

By the way, no hard feelings are there Jake?

What's all this about self-acclaimed professionals?

[Gnadenburg]

Advantages continued.

6- QF Low Cost crewed independantly (F/As and pilots) raises the paper value of the airline,aiding independant capital raising in a few years or increasing the price if it is flogged off to assist struggling mainline businesses. Don't laugh!

7- Another Airbus deal of the century for leased 321s'. The expertise on the market far greater than within QF. 89ers have introduced these aircraft into leading airlines around the world for the last 15years, are in senior positions and may want to come home in a fashion similar to VB. There are hundreds of other Australian pilots crewing these aircraft abroad as well as the exAnsett expertise.

Jake the Muss

Your wages are partially under pressure because QF recruits with some disregard to experience. This is contrary to market forces and leaves a pool ofexperience for the Jetconnects and Pacific Blues, aswell a pool further abroad.

Direct Entry pilots would go some way addressing the market, creating a dearth in some areas, as opposed to the usual QF practice of training many inexperienced (hours and endorsement wise) and accentuating market forces.

[Big Jan]

Ok Jake
QF mainline WILL be crewing the new LCC and they are the greatest pilots in the world.I think we get it after 5 posts.
And of course you are Geoff's right hand man.
:bored: :bored: :bored:

[fornique8]

Jetconnect FOM used to read:

"Jetconnect had applied to CASA for an International AOC"

Latest ammendment reads:

"Jetconnect now holds an International AOC issued by CASA"

Why would they bother unless there was a valid reason?

Who is to say that the new LLC will be based around one operator. ie. Impulse. The entire operation could be made up by using a number of operators under contractual agreement.

Either way, I would suggest there are people in higher places loaded with a fist full of Vaseline ready to give us all another good reaming.

My guess is there's a big fist full coming your way Jake.

:ok:

[ozflyboy]

Yes, yes guys and girls, I know - slightly off the topic - but possibly quite close.

Can anyone (maybe Jake or Pete) tell us what will happen to the 300-odd Cabin Crew shortlisters currenly still waiting? Will they be used to crew Skimpy - or will they call for off the street (or MAM) recruits?

Long Haul guys - are YOU in need of more crew in the near future, or did we spend all of that money and time (almost 12 months ago now) heading interstate for nothing?

With our renewal of the waitlist time approaching very quickly once again, things aren't lookin good....or are they??

Any info greatly appreciated guys!

:cool:

[thumpa]

ozflyboy

You are in the wrong forum. Please leave now!

[ur2]

um, Jake are you including those fellas involved in the BBK thingy in that list of highly trained and quality professionals that are so well thought of throughout the avaition world ?

[The The]

GD on 2UE Friday afternoon. The LCC will NOT be staffed from existing Qantas operations, pilots, F/A's, ground staff. He said there are plenty of retrenched and eager new starts looking for an opportunity.

[Life as a journey]

Who was on 2UE? Pardon my ignorance, but I didn't hear it. Was it Dixon?

[Pigs Arse]

Sorry Gandenburg but just can see the the A320 being apart of the deal. Why introduce yet another type into the fleet it will start to look more and more like AN. No spares, crews new sims, training dept the list just goes on. Its a furfy to get Boeing back to the table. A320 your dreamin. Who crews the 800's well thats any ones guess. I personally lean toward mainline still as I think AIPA will burn bridges to make sure that they will. But then again I thought that they were going to get A320's back when AN fell over. Something about where Qantas wanted their Jumbo's parked changed their minds.
Ozflyboy sorry but new recruits for skimpy, as for long haul hang in there as I see more slots in the future.
:cool:
As a great man once said arrrrg Pigs Arse

[Buster Hyman]

Okay, here's the fleet chaps.

INTL : 744 / A380 / A330

DOM : 738 / 739X (launch customer)

Sorry, no A320's or 717's & the 767's are going too.

Next topic please! ;)

[Wirraway]

AAP

17:43 AEST Sun 19 Oct 2003

No sell-offs: Qantas

Qantas Airways Ltd has ruled out spinning off parts of its business, for now anyway, despite a series of measures to cut costs and stay competitive.

"We have no intention at this point to be floating any of our businesses off," chairman Margaret Jackson told the Nine Network's Business Sunday program.

But she would not rule out such a move in future.

"It doesn't mean that sometime in the future your intention changes or circumstances change, or opportunities emerge, but at the moment we are very happy with the mix of businesses that we have," she said.

"We think there is some great opportunities for growth in those businesses."

Australia's dominant airline last week said it would launch a low cost airline next May, to take on domestic rival Virgin Blue Airlines Pty Ltd.

It also outlined a strategy to cut costs by $1 billion over the next two years, involving splitting the company into 10 operating units with separate leadership.

Analysts said both moves were sound defensive measures, largely influenced by the growing market share of Virgin Blue, which now has about 30 per cent of the domestic market.

But analysts were also disappointed the airline gave scant detail on how it planned to execute the strategy.

Ms Jackson denied the head-on challenge to Virgin Blue was not an act of "desperation".

"I don't think it (has) a hint of desperation," she said.

"It is just us looking at the market, looking at what we can do to service the market better, what can we do to underpin tourism in Australia.

"Starting a low cost carrier, what we know is that people are sensitive to price and we believe that we might be able to also stimulate the demand for travel."

Qantas shares fell three cents to $3.55 on Friday.

============================================

[Gnadenburg]

A321 was mentioned as an option. OK, you go the Boeing route.

Advantages continued.

8- 737NG operation. Poach poorly paid but critical staff from your competition who are attempting to start up-Pacific Blue. Hint, but don't put on paper, Long Haul transfers for pilots in the future.

QF recruited KD CRJ drivers which created crewing problems and added to that little mess. Makes good business sense to a ruthless CEO.

9- A totally seperate company, pilots included, adds espirit de corp. Like the family atmosphere Virgin Blue had before the gloss wore off. This, with the new company image, will bring a welcome change from some of the ingrained and cancerous bad attitudes you see on current QF sevices.

[Wirraway]

Weekend "Australian Financial Review"

Turbulence Ahead for Qantas's Low - Cost Carrier

Qantas's decision to launch a low- cost carrier could spark industrial action from unions as well as spell a cannibalisation of its existing domestic operations, market watchers warned on Friday.

Qantas said on Thursday it would launch a new domestic carrier by May next year. The new airline has not yet been named, although Qantas met on Friday with appointed ad agency Dewey & Horton to table six suggested monikers. The airline will have 23 aircraft by mid-2005 and will primarily service leisure routes not currently profitable for Qantas.

Qantas chief executive Geoff Dixon maintained at the carrier's annual general meeting the new airline would not affect Qantas's existing domestic operations, saying having a third domestic carrier would grow Australia's leisure travel market by 20 per cent.

However, other industry players beg to differ.

``Undoubtedly this will put pressure on Qantas as a mainline carrier,'' Centre for Asia Pacific Aviation managing director Peter Harbison said.

``It's a serious risk because 23 aircraft represents roughly half of their current domestic fleet so there has to be some cannibalisation.''

Virgin Blue chief executive Brett Godfrey also said there was a ``huge potential risk in the execution, including cannibalisation of Qantas's own market and further disenfranchising of their own staff''.

Currently Richard Branson's Virgin Blue commands 30 per cent of the domestic market.

Others, meanwhile, pointed to the failure of other full service airlines' low-cost carrier spin-offs.

Those airlines whose low-cost carriers have struggled include Air Canada with Tango, Continental with Continental Lite, KLM with Buzz, US Airways with MetroJet, United Airlines with Shuttle and British Airway's Go.

Another risk associated with establishing a low-cost carrier is the threat of industrial action from unions.

Qantas has not released its staffing plans for the low-cost carrier yet but industry watchers said the airline could face union action if, for example, it tried to get existing staff to transfer to the new airline on lower pay.

Representatives from the ACTU and the Australian Services Union said on Friday they were monitoring the situation and waiting for more details on employment plans from Qantas.

Mr Dixon said Qantas did not expect any trouble from unions and that the new airline would create ``considerably more jobs in the industry''.

===========================================

"Business Sunday" (transcript)

UP IN THE AIR
19 October 2003

Helen McCombie

"… if you look at the last two or three years, the management team and the board at Qantas we’ve actually got a lot of decisions right."

A new low-cost version of Qantas, aimed at the about-to-float Virgin, plus continuing uncertainty over the Air New Zealand alliance and reports of senior managers being trained in the US in ground management and plane-handling techniques ... there is a lot going on for the country's major airline.

This week's annual meeting in Adelaide saw shareholders questioning the airline's direction.

Chairman Margaret Jackson was there to answer their questions. She speaks to Helen McCombie.


MARGARET JACKSON, CHAIRMAN, QANTAS: But if you look at the global world I think here is a structural change in aviation. I mean the growth in low cost carriers over recent years has been about 20 per cent per annum, and the full service airlines have grown at about four per cent per annum. So there is a structural shift and if you look at what is happening with the consumer is that they are very, very price sensitive. So we have to acknowledge that structural change that has occurred in the world. I think we capture and that we are a very focussed, can be a very focussed airline operator. So we’ve got Australian airlines, we’ve now got a history of a year since the start up of Australian Airlines. That started just about the time of SARS so that was pretty tricky but it is now doing very well, we also operate all of the regional operations so we’ve had the history of operating regional and we now think it is time to look at low cost operator.

HELEN McCOMBIE: It didn’t work for BA though, why will it work for Qantas?

MARGARET JACKSON: Well we think we have got the advantage of being able to look around the world and see where it has worked and where it has worked and why it hasn’t worked, and obviously not repeating some of the mistakes that other carriers have undertaken. And I think if you look at the last two or three years, the management team and the board at Qantas we’ve actually got a lot of decisions right. So we think we are very good at analysing, we’re very good at making good strategic decisions and hopefully we will get it right.

HELEN McCOMBIE: You will have to acknowledge there is some risk, you think it is worth the risk?

MARGARET JACKSON: Well we’ve think we have got the risk anyway, whether we have the full service or start a low cost as well, so if the risk exists how are we going to face that risk and we think this is our best bet.

HELEN McCOMBIE: There is a hint of desperation? You can’t stop Virgin so you will join them?

MARGARET JACKSON: Well I don’t think it is a hint of desperation. I think it is just us looking at the market, looking at what we can do to service the market better, what can we do to underpin tourism in Australia because you look at the impact of all of these events over the last few years, September the 11th, Bali and particularly SARS, quite dramatic impact on the tourist industry in Australia, from inbound and indeed travel around Australia. So we think that starting a low cost carrier, what we know is that people are sensitive to price and we believe that we might be able to also stimulate the demand for travel.

HELEN McCOMBIE: Isn’t there a big delusion here of the basic strength of Qantas?

MARGARET JACKSON: Well I think one of the strengths of Qantas is actually in our diversity and our ability to take on new challenges in a managed way and to try and reinvent ourselves and if you look at the history of Qantas that is what we have always done. Just a small example which not everyone remembers is Qantas actually invented business class in the world, and took it to the world in 1979, and then the rest of the world followed us. So there is lots of things in our history where we have been very innovative and brave, and we have always had very high standards.

HELEN McCOMBIE: How can the board run three different airlines?

MARGARET JACKSON: Well we’re actually talking about four airlines. Full service international and domestic, the regional operations, low cost and Australian Airlines. So today we have announced a reorganisation and each of those businesses will actually have its own head and in the reorganisation what we are hoping for is greater accountability, greater focus by the various heads.

HELEN McCOMBIE: That reorganisation, that restructure, that’s all about cost cutting?

MARGARET JACKSON: Cost cutting is one of the issues, what it is is that we have a business that is very dependent on capital, we spent a lot of money on aircraft, on lounges. What we want to make sure is that we remain very focussed on getting a return on that capital and one of the difficulties we have had in the network business. It is very difficult to then have clear accountability on that capital and the return on that capital so one of the reasons for the reorganisations is to increase the focus on the return on capital, to look at ways to do things in a more efficient manner, to increase the accountability and decision making speed of our management team. So we are hoping that we are going to empower the organisation even more than we have in the past.

HELEN McCOMBIE: And the reorganisation is also about succession planning?

MARGARET JACKSON: Yes, always in large corporations you need to think about succession planning and I think there is some really delightful things in the reorganisation. We now have two women reporting directory to Jeff Dixon. We have all bar two of the direct reports to Jeff Dixon are under 50 and we have three executives who are new to the management team and three who are under 40, so I think we have got a very energetic, lively and talented group of people.

HELEN McCOMBIE: And you do need a new Jeff?

MARGARET JACKSON: Well we don’t need a new Jeff yet but one day we will.

HELEN McCOMBIE: But that is not so long in the future?

MARGARET JACKSON: Well Jeff’s mid-term through a contract. I think by any standards externally or internally we all would say that Jeff is doing a fabulous job, we’re very lucky to have an outstanding CEO like Jeff but he is backed by a fabulous management team, and sometime in the future we will evolve and Jeff will go on and do something else at an appropriate time but when that is I can’t say and neither can Jeff.

HELEN McCOMBIE; There is also speculation that some of these units could be floated off, you are considering that?

MARGARET JACKSON: No we have no intention at this point to be floating any of our businesses off.


HELEN McCOMBIE: So not catering or Qantas Holidays or eventually Australian and even this new low cost airline?

MARGARET JACKSON: Well at the moment we have no intention but it doesn’t mean that sometime in the future your intention changes or circumstances change, or opportunities emerge, but at the moment we are very happy with the mix of businesses that we have, the flying businesses, the support businesses and indeed you mentioned catering and freight. We think there is some great opportunities for growth in those businesses.

==========================================

[Keg]

Gnade, AO seems to be doing quite well with their 'culture' using QF mainline techies.

People salivating at getting a job or an upgrade onto jets I can understand, people salivating at QF mainline crews getting 'done over' I find baffling. If QF pilots(in whatever form) pay goes down there is only one direction for EVERY other pilots job in the country!!

Talk about cutting off your nose to spite your face. :confused:

[Wirraway]

YOU KNOW IT'S A "NO FRILLS" AIRLINE WHEN ...

...they don't sell tickets, they sell chances.

...all the insurance machines in the terminal are sold out.

...before the flight, the passengers get together and elect a pilot.

...if you kiss the wing for luck before boarding, it kisses you back.

...you cannot board the plane unless you have the exact change.

...before you took off, the stewardess tells you to fasten your Velcro.

...the Captain asks all the passengers to chip in a little for gas.

...when they pull the steps away, the plane starts rocking.

...the Captain yells at the ground crew to get the cows off the runway.

...you ask the Captain how often their planes crash and he sez, "Just once."

...no movie. Don't need one. Your life keeps flashing before your eyes

...you see a man with a gun, but he's demanding to be let off the plane.

...all the planes have both a bathroom and a chapel.


http://www.cartoonstock.com/lowres/amc0316l.jpg

============================================

[slice]

Keg - so true about salaries, but I am wondering if AIPA have a battle strategy given the seismic shifts that seem to be going on in the industry generally? Some posters here have indicated that the association hierarchy may have become a bit complacent on this type of issue? (or just numb from too many trips to LA LA land!:E )

[CaptCloudbuster]

Jake,

Please stop pretending to know what’s going to happen. You are sounding like a jumped up tosser. I am a FO with AO and a financial member of AIPA. I just checked the AIPA web site and still no info as to who will definitely be crewing the new Skimpy. You can't possibly know what you purport and if you really had an inside running on things you certainly. wouldn’t be posting on here
:uhoh:

[Wirraway]

http://www.businessweekly.co.uk/

20 October 2003
Latest News In Academia

Warning on low fares airlines

A potential over-supply of airline seats could take some of Europe's scheduled low-cost carriers under, according to new research from Cranfield University’s Air Transport Group.

The report highlights the differences between the business models of the two most successful European no-frills airlines, EasyJet and Ryanair, and analyses the economic performance of over 20 of Europe’s charter and no-frills scheduled operators, benchmarking these against low-cost carriers in the US.

Although the no-frills sector has "revolutionised short-haul air travel in the UK and Western Europe", as the sector matures, it is feared that some of the airlines will struggle to survive.

The rapid growth of low-cost scheduled carriers in Europe is in sharp contrast to the charter airlines who have seen traffic stagnate or even decline.

The report is titled: 'Market analysis of Europe’s low-cost airlines: an examination of trends in the economics and operating characteristics of Europe’s charter and no-frills scheduled airlines' and follows on from the first Cranfield report, published at the beginning of 2000.

"In our first report we speculated that no-frills scheduled carriers would account for 12 per cent and 15 per cent of the intra-EU air market by 2010," said Dr George Williams, senior lecturer in air transport and co-writer of the report.

"But, like most forecasters, we underestimated the scale of transformation that has been occurring in the provision of short haul service in Europe. We now believe this market share will be achieved four to five years earlier.

"The air transport sector in Europe has been totally transformed as a result of the activities of no-frills airlines and the implications for full service providers have been dramatic.

"Around 40 per cent of passengers travelling within the UK and between the UK and European Economic Area countries now use low-cost scheduled airlines. In all, there are now some 500 routes in Europe served by 20 no-frills carriers."

============================================

A repost from August from
"Sydney Morning Herald"

Soaring budget airlines are no flight of fancy
By Kirsty Needham, Consumer Writer
August 22, 2003

http://www.smh.com.au/ffxImage/urlpicture_id_1061434992681_2003/08/21/nat_qantas_dixon.jpg
Pack your bags, and lunch . . . Qantas's Geoff Dixon at a news conference yesterday to announce the plan to launch a no-frills airline. Photo: David Moir

Plans by Qantas to introduce a low-cost domestic airline to compete with Virgin Blue come as no-frills airlines revolutionise air travel worldwide.

With no tickets, seat allocation, frequent flyer points, refunds or free meals, and turn-around of aircraft within 30 minutes, the services can seem more like a bus shuttle.

According to the website lowcostairlines.org, there are 34 no-frills airlines in Europe, 13 in the United States and five in Asia, and the list is growing.

Air New Zealand introduced a no-frills service to Australia last week, due to begin in October.

Passengers have been warned to "bring a good book" because there will be no free newspapers and magazines. Children's meals and infant supplies also will not be available. The cheapest "use it or lose it" fares mean passengers who miss their flight have to pay for another ticket. No changes can be made to fares.

Since Air New Zealand started a domestic no-frills service a year ago, passenger numbers had risen 23 per cent, the airline said.

In the United States, Delta Air Lines introduced its Song service in April, with self-service kiosk check-in or the option of passengers checking in at home up to a day in advance and printing their own boarding pass. Free soft drinks and water are available, but passengers pay for food.

No-frills JetBlue and budget pioneer Southwest were reported to be the only US airlines to make a profit last year. JetBlue enjoyed passenger growth of 71 per cent.

In Europe, passenger numbers on ticketless, foodless easyJet rose 75 per cent last year with a service that sells one-way fares online, and does not offer refunds or alterations.

A downside for passengers is that many low-cost airlines avoid hefty landing fees by choosing small airports that may be far from the destination city. In Europe, Ryanair has attracted complaints because its flights to Frankfurt land in Hahn, about 100 kilometres from Frankfurt.

Flight Centre's managing director, Graham Turner, said the international experience showed there was a big opportunity for new-style airlines to make money.

Regardless of whether they had to pay for food, consumers would book with discount airlines if they met basic requirements on leg room, and the food was edible, Mr Turner said.

"Many so-called full-service carriers have coffee that is undrinkable," he said.

But he questioned whether the Qantas proposal was "mutton dressed up as lamb".

"It has to be a new model, not the old Qantas model without the unions."

Qantas frequent flyers travelling on Australian Airlines - its Asian "low-cost carrier" - have found themselves refused entry to Qantas Club lounges.

Qantas said that apart from this, and restrictions on earning points, the service on Australian Airlines was no different to that on regular Qantas flight.

Analysts believe Qantas will be more ruthless in reducing onboard and other services on a domestic discount carrier.

The founder of frequentflyer.com.au, Clifford Reichlin, said it was likely a no-frills Qantas domestic airline would not cater to frequent flyers.

"Competition is always a good thing, provided they lower their cost structure to offer competition on fares. Otherwise they will recoup it somewhere else. Qantas travel will become premium paid."

==========================================

[Skyhawk XP]

My tip for the new airline

Base location may be MEL

Main Office may be at 88 Franklin St the former home
of TAA/Australian

The main ex AN maintenance facility may be acquired

Discussions may be taking place with the Victorian
Government and Korda Mentha

[Wirraway]

Here's a good move Mr Dixon from "The Bulletin" Sept 3, would
save you on middle managment costs for sure and give the
pilots the chance to show you how to really run a No-frills airline.

......Airasia achieves these savings by asking pilots to train staff in everything from first aid to baggage handling (on the premise that pilots are smart and versatile)............

Wirraway :D

"The Bulletin"
September 3, 2003

NO FRILLS TAKES FLIGHT
Cheap air travel is the surefire way to put seats on seats - but who will rule in Asia, the state or the entrepreneurs? By SONIA KOLESNIKOV-JESSOP

When AirAsia started flying out of Kuala Lumpur two years ago, it quickly became the cheapest of the cheap, the lowest-cost airline in the world. AirAsia says it spends only 2.5 cents to fly one passenger one kilometer, compared to 4.5 cents for Ryanair and 7.5 cents for Southwest – the discount leaders of Europe and America.

Airasia achieves these savings by asking pilots to train staff in everything from first aid to baggage handling (on the premise that pilots are smart and versatile). Cabin attendants do double duty, cleaning planes and selling drinks on commission. It's a "big fallacy" to think no-frills means just cutting out free drinks, says CEO Tony Fernandes, who has been known to work the check-in counter. You've got to "change the airline culture."

Even that may not be enough for no-frills entrepreneurs. The discount revolution has been slow to arrive in Asia, where governments still control most major airlines and have offered a grudging welcome to new competitors. Last year discount carriers accounted for less than 1 percent of passenger traffic in Asia (excluding Australia and Japan), compared with about 25 percent in the United States and 10 percent in Europe. While Southwest recently became the largest airline in the United States, AirAsia is a small success, with 7 planes and profits of $US5.3 million last year. Now, in a frontal assault on AirAsia and other private upstarts like Cebu Pacific in the Philippines and Bangkok Airways, state-owned carriers like Singapore Airlines, Thai Airways and Qantas are considering their own no-frills spinoffs. "Most of the airlines in Asia are big monopolies; they have always had it their way and they don't like any whiff of competition," says Fernandes. "The unknown is causing this mass hysteria."

It may seem that major airlines can't lose this war, with the state on their side. Asian governments have yet to embrace the wave of deregulation that made it possible for entrepreneurs like Tony Ryan to become major players in the West. There is no Asian equivalent of Ryanair, which flies all over Europe, because Asian states have been much slower to open their airports to all comers. Asian discounters are for the most part limited to domestic flights. Yet when Malaysia Airlines last year launched a fare war against AirAsia, the government stopped it, saying it wanted both to survive. Fernandes says for majors to fly without frills is like Ritz-Carlton competing with the YMCA. "Business sense will prevail," he says.

It will be hard to make the no-frills formula work Asia wide. In Europe and the United States, the strategy includes hiring nonunion staff, using one (often narrow-body) aircraft model to cut maintenance costs, flying short routes (less than two hours) to reduce turnaround times, landing only at secondary airports, selling tickets online to avoid middlemen and eliminating frills like hot food. In Asia, labor is already inexpensive, most regional hops are longer than two hours, secondary airports are not cheap and consumers are less likely to buy online. Asian majors already cram cheap seats into the back of wide body jets, creating a budget "plane within the plane." All this makes it near impossible for discounters to gain cost advantages on routes in Asia, says Richard Stirland, director general of the Association of Asia Pacific Airlines.

So why are the majors testing the down market? In the West, no-frills airlines are luring millions of customers who have never flown before, and Asia has an even larger untapped market – one that no airline executive dares ignore. Analyst Peter Harbison says Asian governments are opening up "possibly faster than many imagine," lowering airport charges and other barriers in response to SARS and the recent downturn in air travel. Singapore and Thailand will decide "fairly soon" on whether to launch a new budget carrier based in Chiang Mai, Thailand, says Singapore Trade Minister George Yeo. And while one former deputy chairman of Singapore Airlines recently warned that aviation history is "littered" with no-frills failures, another is leading a new start-up, ValuAir. None of this scares AirAsia, which is gearing up for regional flights, perhaps next year. Fernandes insists, "We can always beat the big guys on cost." He won't say how, but pretty soon, he'll have a chance to prove it.

With Lorien Holland in Kuala Lumpur

© 2003 Newsweek, Inc.

===========================================

[Douglas Mcdonnell]

Good job Wirraway. Informative posts are worth their weight in gold these days.

Could QF be aiming at less of a union orientated set up for the LCC?

[Gnadenburg]

Keg

An emotional response. It gets worse when somebody says "there goes your command" as a Skimpy jet is taxiing by. Seen similar in a past life.

Hardly salivitating, playing Devil's Advocate with a couple of posters-Jake etc- as to what advantages there were in using mainline crews. I put myself in the hypothetical shoes of a ruthless CEO, proposed a few advantages, and would be happy to be shot down by anything but sooky pilot emotion.

You mentioned AO doing quite well with cross polinisation of QF Long Haul culture. OK. As a ruthless CEO I would look into that. But I will probably use the following as argument to sway the "team".

How did we handle growth when feeding on the Ansett carcass? How can we do it cheaper?

We need pilots and quickly. We want experienced people and don't want to be crippled by training problems (Kendalls).Nor do we feel it neccessary or desirable to go what was anecedotally, the VB route. Where unexpected rapid expansion left them with a pool of inexperience to promote. We want exacting QF standards which are affordable.

Advantages Continued.

10-What would the market provide the ruthless CEO? Captains, First Officers, Training Airmen and managers from both types. There will be no training hickups and upgrading of very experienced 321/737 F/Os down the track will counter the looming experienced pilot shortage. Reinforcing the double whammy cost of upgrading F/O's or S/O's.

And finally Keg, from my perspective, I hope it gets of the ground and utilises experienced pilots off the street. I have no interest in Skimpy but I do have an interest in the market. I witnessed the full 18 months the market took to absorb exAN & KD jet pilots whilst QF continued with cadet programmes.

That affected your pay and conditions subliminally! The threat was VB. The wealth of experience enabled the ease of starting Jetconnect and Pacific Blue. Now witness the pay pressure!

And with my interest in market forces I hope it is the NG.

[Keg]

Sorry Gnade, didn't mean to imply that YOU were salivating but there have been posts by other players in this discussion that were exactly that. We may not have seen eye to eye on certain issues in the past but I respect where you are coming from!

I certainly don't disagree with your sentiments regarding the hiring of crews. That said, there are some cadets out there at the moment who haven't been employed due to this 'down turn'. I'm certainly not a part of the 'there goes your command' brigade. I'm unlikely to go for Skimpy even if QF crews fly it due to the commuting issue and moving the family out of Sydney.

Anyway, I go back to my previous post. QF drivers pay goes down,, there is little hope of the bottom end of the market going up!

[Wirraway]

CNN

Pay-per-use in vogue on the road
Nick Easen
CNN

(CNN) -- User-pays is a growing global trend in the biz travel arena, whether you want to send a fax, drink in an airport lounge or order in-flight food.

While corporations cut travel budgets and the value-based airline sector booms, cost-conscious executives are finding it easier to budget when they only pay for what they use.

Pay-per-use lounges, a relatively new concept, have been attracting a lot of attention especially in Brisbane and Sydney, Australia.

Here a casual fee of $3 allows you to relax, surf the Net, watch a free movie or play on a Sony Playstation -- apparently all the rage among grown men with executive stress.

"These lounges are proving to be a popular option with business guests," Amanda Bolger from Virgin Blue told CNN.

"If you don't want to use it, it doesn't have an impact on the price of your air fare," she adds.

Traditionally airlines have bundled lounge and in-flight services for business and first class travelers in a bid to attract premium prices for tickets and attract the high-end traveler.

Yet with travel budgets under increasing scrutiny, executives are appreciating the greater transparency, were costs are unraveled and they can choose which services to use.

"Business travelers have no problem paying for a service, but they now like to have that option," adds Bolger.

Virgin Blue's pay-per-use lounges have been so popular that they plan to roll out another in Melbourne and at other airports across Australia.

Their formula for success is likely to be mirrored by Qantas, who plans to introduce a competing domestic airline along the same lines as Virgin Blue.

Delta Air Lines introduced its no-frills Song service this April in the US. Free soft drinks and water are available in-flight, but passengers pay for food -- as they do on EasyJet in Europe.

User-pay conveniences such as lounges, business services, and in-flight food are a sound investment for no-frills airlines, as people only use what they need.

If there is increasing or decreasing demand then it is easier to alter the services on offer.

Whereas the major global airlines have made huge investment on premium lounges, staffing and services that are maintained whether business is boom or bust.

According to the website http://www.lowcostairlines.org/ there are 34 no-frills airlines in Europe, 13 in the United States and five in the Asia-Pacific region, and the list is on the rise.

Experts say these are the airlines that are likely to spearhead pay-per-use travel services in the future.

==========================================

http://www.lowcostairlines.org/ Which I have just had a quick
look at, seems to have a lot of inside information on how these No-frills-LCCs work.

Wirraway

[Ramboflyer 1]

Youre all missing the point,
Its a separate company same as virgin is separate the shareholders will be the same as QF but it is a separate entitiy.
It may even be 50% owned by a third party (Air NZ).
It will certainly be Airbus aircraft they will have pilots to fill all the seats without any endorsements required , that is low cost, the AN sim centre is for sale with an A320 Sim and so is the maintenance base, tooled for airbus maintenance ,great to share with Air NZ now they operate A320.
The A321 freighter due out soon could be integrated to take out AAE flying .
How many mainline guys from QF left to go to VB for a command , i would guess none so why would they go to skimpy for the same deal a quick fix for a command.
You QF guys still have the best jobs and are so ungrateful for what you have chances of 747 commands one day what the hell do you want , if you need a command now go to Emirates otherwise bide your time , dont throw your careers away on a lcc.
In 10 years the LCC may not be required QF mainline will always be there.
b:E

[Wizofoz]

Rambo,

You're thoughts are always interesting, if not always that coherent, but PLEASE either get a book on punctuation and grammar, or else get someone who went to high-school to proof read your posts!!

[Wirraway]

Tues "Sydney Morning Herald"

Dixon wants to do his own damage
By Stephen Bartholomeusz
October 21, 2003

Qantas chairman Margaret Jackson denied at the weekend that the airline's decision to launch its own low-cost airline was an act of desperation.

Whether or not Qantas is desperate, however, the decision to start a new domestic airline is a recognition of defeat.

Despite the frenetic pace of change within Qantas as Geoff Dixon responds to the challenge posed by Virgin Blue, there isn't an instance anywhere in the world of a full-service carrier being able to arrest the erosion of its market share by launching a well-run value-based airline (VBA).

Dixon knows that the very nature of a full-service airline, while it confers some competitive advantages, makes it impossible for him to compete profitably and arrest the inexorable shift of market share to Virgin Blue.

While he is attempting to address the legacy issues that handicap Qantas - the heavily unionised nature of his workforce, the multiplicity of unions and terms and conditions of employment and employment practices that have been built up over generations - even if the unions were completely co-operative the cost structures of a full-service airline will always be more complex and higher than those of a VBA.

The more share Virgin Blue attracts - and it is at about 30 per cent of the market and rising - the more it undermines the economics of Qantas's business.

While Qantas has a stranglehold on higher-value business, the economics of airlines are sensitive to volumes - Qantas won't survive as a domestic airline carrying only business travellers but it needs a full-service domestic network to support its international operations.

With domestic travel increasingly being commoditised, Dixon has no choice but to slash costs and try to slow the erosion of market share.

While it is a risky strategy, his low-cost airline could help him do both. The bonus, if the strategy works, is that it might enshrine the domestic duopoly.

If and when Virgin Blue is floated later this year, a lot of attention will be devoted to its profitability and prospects.

The Virgin team took an $11 million seed investment and turned it into a $1.4 billion-plus airline in three years: there is some risk that someone else might decide it's worth taking a crack at a market shared by a full-service carrier and a very profitable VBA with, for a VBA, some frills.

Dixon and Virgin Blue are engaged in reasonably civilised competition. Neither would want the complication and the disruption of a third player, particularly as the latest entrant tends to dictate the terms of engagement.

Thus a Qantas VBA is a way to head off that threat while complicating Virgin Blue's float by creating question marks about its future ability to dictate pricing and strip share from Qantas.

It is also a way for Qantas to participate in the fastest growing market segment, domestic tourism and leisure, and perhaps expand it.

Virgin Blue has made the segment highly price-sensitive - and therefore Qantas's full service offering confers little competitive benefit the profitability of those services is undermined.

Qantas is going to try to do something no other full-service carrier has been able to do - launch a discount carrier without cannibalising its own businesses.

Its ally, British Airways, got the first part of that equation right when it launched Go. But Go was too successful and undermined the sensitive network effects that characterise major carriers like BA and Qantas. It was sold.

Any new VBA or low-cost entrant to this market will damage Qantas, given that a network carrier has to maintain at least minimum schedules throughout its network. Plus the Qantas unions will monitor the launch intensely to ensure Qantas doesn't use the new airline to smash current work practices and workplace agreements.

Given that Qantas's existing volumes pour over the high-cost structures required to run full service network carriers, any volume losses will have a leveraged impact on the profitability of Qantas's domestic operations. Dixon will have to achieve his planned $1 billion reduction in Qantas's cost base over the next two years, if not more, to create space for the impact of his VBA.

It is that need to maintain an entire network, including sub-economic routes, which is the point of vulnerability that the VBA point-to-point carriers exploit.

Presumably Dixon has decided that if he is going to be cherry-picked by a low-cost player, he'd prefer some of the volume losses to go to an airline he owns rather than exclusively to Virgin Blue.

He would be hoping for profitable diversion of Qantas volume onto the lower-cost platform - Virgin Blue's costs are 25-30 per cent below Qantas's and Qantas would presumably hope to create an airline with a cost base at least comparable to Virgin Blue's.

No doubt Dixon also plans to use the new airline to deploy new lower-cost aircraft and accelerate the retirement of his fleet of Boeing 737-300s. While Qantas has said the new airline will have about 23 aircraft flying by mid-2005, it hasn't outlined the implications for the size or deployment of the Qantas-badged fleet.

To be successful, Qantas's VBA will need to be operationally independent of its parent and its historical structures and practices but strategically in tune. Dixon will want to finesse the overlaps in routes and schedules to minimise the damage done to the network business and focus as much of the competitive impact as he can on Virgin Blue.

Given that no one has successfully co-managed a full-service carrier and a VBA within the same stable, the challenge to Qantas shouldn't be underestimated.

It would have been even less palatable for Virgin Blue to continue to erode Qantas's market share until all it had left was a diminishing rump of price-insensitive customers.

===========================================

[Gnadenburg]

Keg

It has always been important to me that QF pilots keep their conditions. It affects the international market in a number of ways- 1) Don't want a proportion of QF drivers seeking bucks on the international market and 2) Foreign airlines survey the conditions of pilots in reputable airlines such as QF to play the market.

I shake my head at the short sighted nature of some of these contributors aswell- handles such as the Roo Rooter etc- who will only be done over themselves eventually.

Advantages Continued

11) State Government payroll concessions etc with the 200 pilots and 100 middle management locally based leading the charge.

12) A slow boxing of the ACTU into a corner which will eventually result in the knockout punch! " But you did this for Virgin Blue and conceded here". Will probably only work with an arms length approach from mainline. As a ruthless CEO I would play on the heart strings of Combert and state this an opportunity for displaced and former airline employees-AN/KD etc.

The knockout punch will be a slow but eventual alignment of QF employees to the market VB and the New Zealanders creating.

As a prophecy, we through professional foolishness, only a few years ahead of what will be dished upon the "lazy and overpaid" baggage handlers.


Rambo

The 707 beckons!

[Watchdog]

Rambo,

The selection of a particular aircraft type over another because there are endorsed pilots readily available? Are you kidding?
A business doesn't revolve around pilots, in fact we are simply no different in a business plan than say, engines...eg. 1 plane - 2 engines, 2 pilots etc. Pilots are a tiny part of the equation of operating costs, support etc
:cool:

[EPIRB]

Personally, I'd say it would have to be 737's as QF has a large supply of them and options on even more. Why go Airbus if they the infrastucture is already there to support 737's? But then I'm like the rest of you, not an expert, only offering my opinion.

[Pete Conrad]

Sorry DM, been away for over a week on a trip. This doesn't affect me, I like to sit back and watch what happens, but as far as smug goes. Your airline was one of the ones that started cheap labour in the aviation industry here, so if you feel proud and smug that you have a job flying a 717, you hold that thought, it may get you through the next three years, but when QF ditch the 717 in the same way that NJS and the 146's got ditched you just remember back to how much of a wally you were.

I like how your mob have this illusion QF will hang on to you. I don't work in he QF group, in fact shortly to Asia for me, so like I said, you hold the thought that your mob are here to stay. If I was you though I would not sling mud at mainline QF about them having a Runway overrun, when publicly you guys have been singled out for retracting flap instead of gear after takeoff, nearly landing on a highway etc.

You want informative, I promise to wave farewell to you when taxiing out at Sydney looking down on your 717 DM, my contract is for 3 years, hopefully by the time I come back to Oz, you guys would have gone.

[Douglas Mcdonnell]

Dear oh Dear pete. Some people just never learn. I didnt think anyone actually gave a rats a$$ as to what or where you fly.

Sounds like flying school stuff. Im sure there will be plenty of shopping malls in asia to cruise around (in uniform) on your days off.

See you when you get back little matey!

[Pete Conrad]

LOL, your right, where you work is like a flying school.

[Douglas Mcdonnell]

Jee you are bitter pete. Now whats brought all of this on matey?

By the way I was not slinging mud regarding the over run. No one is perfect except you Pete.

[Pete Conrad]

Let it go DM, I have more important things to do than justify anything I say. If you want to push the issue, go right ahead, you insult your own intelligence if you think I'm going to feed your self righteousness. If I was you, I wouldn't walk around thinking your home and hosed where you work. I aint bitter at VQ, I don't care enough about them to give a rats, I had no desire to work for them prior to getting 717's, never applied.

Now how about you go do something constructive instead of waiting by the computer on a daily basis to see if I post something on pprune.

[thumpa]

Crikey

It must be hard being a w6anker ya whole life:confused:

[Buster Hyman]

Geez. A lot of heat on a Dunnunda thread & nobody has mentioned '89 yet....DOH!


:} :ouch:

[Ramboflyer 1]

My opinion only,
Airbus will have containerized freight, can carry for AAE and probably Patricks .
If Skimpy goes Airbus the QF Pilots will not have much of a case for crewing it. ( Although somebody should start a poll to see how many QF Pilots would give up mainline for a permanent position in a LCC ).
A320 very different to VB ,will not look like a copy of the VB model.
Probably wont be red either.
The 737s on order will no doubt replace the 767 eventually and will all be used by mainline with the natural passenger growth there is not excess aircraft on order if there was QF would not be looking at Airbus and boeing for a new order of 23 aircraft they would already be on there way.
The funniest thing this must have floored the management at SQ when Dixon announced it he is certainly no dill.:ok:

[BLO MOI]

As to whether a Mainline driver would transfer to LCC? It would depend on a number of factors, pay, conditions, freeze....if it's anything like the Aust. A/L deal, I for one will be in like flynn!!
We have options on a number of 738s, not sure on how many left , but i reckon about 23!!, just seems too easy to get the next batch painted blue or watever and throw a contract at the mainline drivers...again only my opinion

[Wizofoz]

Hi Rambo,

Skimpy are supposedly getting a couple of Ryan-air execs to show them the light when it comes to an LCC.

One key part of the model- They don't carry freight. They don't carry pets. They don't even check baggage through on multi-stage flights (where ever possible they don't DO multi stage flights!)

The 737 has been weapon of choise for every LCC with the exception of Jet Blue, who needed the range and started pre NG.

easyJet have gone 'Bus only because they got the sweetheart deal of the century (I believe 50% off on 120 A319s). I don't think that kind of deal will come around again.

I'm not ruling A320s out, but it sounds like they want to pretty slavishly follow the LCC model e.g. Southwest, Ryan and easy, in which case the 73 would seem to be the front runner.

[Watchdog]

Pete Conrad,

GROW UP - you sound like my 9 year old son playing in his sandpit. :{ :{ :{ :{

[QF Librarian]

Has anyone considered the possibility that if QF mainline drivers do get the nod and the conditions are not attractive financially for current mainline FO's, commands at the LCC could theoretically be sourced from current SO's. :p

OK "Ready, Aim, Fir........."

[Wizofoz]

QF Lib,

As a number of QF S/Os are highly experienced ex AN F/Os and Capts, why not? There would have to be a minimum experience level, but there are plenty in the ranks who would satisfy it.

[QF Librarian]

Wizo

Just the answer I wanted to hear. Puts me in the running.:ok:

[Pete Conrad]

Thumpa, I think I saw a thread here last week, something about a 717 heavy landing? thumpa by name, thumpa by ability?

I think there is another thread regarding QF washing it's hands of QFLink? Wouldn't that be a shame if it was VQ?

Just lighting the fuse boys, just lighting the fuse.......LOL!!!!

[Gnadenburg]

Oz & Librarian.

No way. It is a double whammy to upgrade you and then replace you. A ruthless CEO appreciates your skills and past experience right where they are!

Advantages Continued.

13- An NG/321 purchase should come with some Training Credits. By recruiting endorsed pilots on sell these credits to eager beavers joining the likes of Pacific Blue(spending their next 5 years of savings) and then poach them(with promises of mainline advancement).

Alternatively, train up new joining F/O's with a requirment they have or must pay for their endorsement. The Training Credit will provide the training and the young new joiner has just handed over his first 6 months pay.

None of the above, borrowed concepts from Virgin Blue Flight management, would be possible with the transferring of mainline crews.

[thumpa]

You got a complex?

[Col. Walter E. Kurtz]

Airbus will perform the proverbial 'blo job' in order to close the deal.

Skimpy recruitment could do us all a favour and dump the psychometrics and look at the experience, skill and potential of applicants instead.

Not to mention the HSC.

[Ramboflyer 1]

Maybe QF will put all the EX Taa guys through the psyche tests and if they havnt got HSC or dont pass the tests theyll have to be thrown to Skimpy to make way for some more high school graduates who can pass, and in QF eyes will make better pilots one day.
IT has to be 100% QF crews if you want bidding rights back to mainline otherwise if any strays get in theyll have to have the same deal.
Speaking of deals EK is still a better deal.

[Wizofoz]

Are Gnadenburg, you haven't been listening to Jake! Only QF mainline pilots know how to fly aeroplanes! Where have you been?

Your points are all agreed with, my reply to QF Lib was purely based on an "If".

By the way QF Lib, what was your last AN type and base?

[SOPS]

:O The pysche tests are really cool and important. The tests "told" me I could never fly a large airliner, and certainly NOT in airspace that QF flies, .... well its what I do every day, and still have managed 12 years later not to kill myself:)

[Gnadenburg]

As a ruthless CEO the Psyche tests are very important!

They surreptitiously deliver me pilots, through psychological weighting, who have a higher sense of duty and would never strike! The older pilots, who were not initiated by these means, too busy lining their own nests at the top end to present a corporate problem.

As a ruthless CEO, in using the pilot market against my non-strikers, I realise the riff raff LCC could bring. The solution being their contract and the natural divisiveness and rivalry of Australian pilots. I have seen more unity amongst multi-cultural taxi drivers on a Sydney cab rank!


All else failing I would look across the Tasman just as my land owning and drinking buddies at Wagga Wagga did with the shearers.

[QF Librarian]

Wizo,

Plastic fantastic in PER

QF Librarian

[Kaptin M]

Hate to say it Keg (btw check your PM`s....ooopps sorry, just checked mine after posting, doh!! :ouch: ), but if there`s the slightest opportunity for the breed of today`s pilots to score a shiney new (or used) jet job with an airline, they`ll grab it with both hands regardless of remuneration and contractual conditions, and with complete disregard for the incumbents and any flow on effect.

Betchya if you ran an ad for A320/737 Capts on $50k pa, based in Oz, you`d be deluged with qualified applicants.

Little by little, Dixon is carving QANTAS flying up and farming it out to lower paid employees - meanwhile, AIPA keeps reassuring its members that everything is under control.
It is - but not their`s!!

[Wirraway]

AFX News

Corrigan welcomes Qantas competition for Virgin Blue

The ceo of Virgin Blue part owner Patrick Corp, Chris Corrigan, has welcomed Qantas’ decision to launch a rival low-cost carrier.

”We’re willing to take on competition from whomever,” Corrigan told AFX News.

“We’ve always been very pro-competition and pretty keen to take Qantas on in whatever guise they want to work in.”

At the Qantas AGM in Adelaide last week, the airline’s chief executive, Geoff Dixon, announced the as-yet-unnamed budget arm would start flights from May 2004.

The new airline would have a fleet of 23 by mid-2005.

But Corrigan was dismissive of the new airline’s chances of winning market share from Virgin Blue.

“I’d point out to you that if Qantas do start a low-cost carrier, they’re primarily going to be competing against themselves, no matter how you cut the cake,” he said.

Patrick Corp bought a $260 million, 50 per cent stake in Virgin Blue last year.

Corrigan would not comment on speculation from some analysts that Qantas' decision to launch the discount airline could affect the timing of Virgin Blue's plan to float, which has been planned for the end of this year.

"Clearly that's in the Virgin group’s hands, and they're working to their own timetable," he said.

============================================

[QF Librarian]

Kaptain M has got one thing right. Geoff Dixon could pick any figure eg $50kpa and he would still be swamped with applicants. The thin edge of the wedge is getting thicker.:(

[Ramboflyer 1]

Just remember its been 2 years now Most 320 drivers have jobs elswhere so they do have a choice, at 50K they would be swamped but most guys would not accept . 10 years o/seas or another 25 years in Australia to earn the same cash.
:E

[ferfarksache]

It amazes me that you people can waste 10 pages/146 posts when QF have already made it clear that the 'new' LCC will be either Qlink (impluse) or a completely new operation.

Now given that QF actually own the Impulse 717 operation, unlike NJS, and the Qlink 717 operation is already an LCC, why wouldn't QF just retrain those aircrew onto the 800NGs (most likely) and phase out the 717s over the next few years?

There won't be any mainline pilots given slots at Qlink because it defeats Dixon's purpose. They will recruit their own crews as Impulse did before. Most, or all, of the endorsement training expenses will be part of the aircraft deal. Not that that is a biggy at Qlink anyway as at least they don't require (yet) for pilots to pay for their own endorsement.

The good news is there will be jobs for both experienced guys and young pilots on their way up. The pay won't be mainline but neither will it be Jetconnect slave wages.

why ferfarksache do you overcomplicate things?

[Red Hot Chili Pepper]

VB have come along and totally redrawn the aviation landscape in Oz. An fell over and are now a faded memory.

QF will adjust to the new way of doing things or they will also struggle.

This may mean delayed upgrades for mainline pilots but they will always have a job and will always retain the salaries they have. Despite Eazy, Ryan, Shuttle by United etc, mainline pilots at BA, LH, DL and AA still get paid the same wage.

As far as I can tell, the opinion of some QF posters here is that we (pilots outside QF) should refuse to work for QF LCC as it will harm the pay and COS of pilots in Oz (ie – QF pilots)

This is ludicrous.

[Rostov]

pete conrad.
I am glad you are moving away. I had a laugh at you, then I felt a bit sad for you. You are one of the privilaged few that can openly state that you would enjoy watching people loose there jobs. Men and women with families and house repayments. Do us all a favour and change your handle as I really dont believe you could get thru any interview for contract or not as you are far to excitable and transperant.:ok: imagine the thumb is my middle finger and pete it's just for you.

[Wirraway]

Thurs "Sydney Morning Herald"

Qantas stepping boldly into space
By Alan Kohler
October 23, 2003

Qantas's description of its planned reorganisation the other day said that Alan Joyce, the man who will run the new low-cost airline, had been involved with Aer Lingus's low-cost airline strategy.

What it didn't mention is that the Irish carrier's low-cost airline strategy didn't exactly work and that Aer Lingus is still struggling to compete against its nemesis, Ryan Air. In fact, it is right now embroiled in a nasty cabin crew strike over wages that led to 26 flights being cancelled today, stranding thousands of passengers at Shannon Airport.

Perhaps Alan Joyce learnt from Aer Lingus's mistakes and won't repeat them at Qantas.

Not that the Irish have a mortgage on messing up discount airlines - there's been an entire lexicon of such failures around the world.

Air Canada tried "Zip", Delta Airlines "Song", SAS "Snowflake", KLM "Buzz" and British Airways went with "Go". In each case, the full service airline tried to tackle a successful discount start-up by launching its own low-cost airline.

And in each case it didn't Go, lacked Zip and Buzz, and didn't have a Song or, indeed, a Snowflake's chance in hell.

At the same time as flagging its own, as yet unnamed attempt (Hop? Or perhaps Quokka?), Geoff Dixon has launched a McKinsey & Co-led restructure of Qantas into seven separate business units, plus four service companies, each of which will be autonomous and accountable for its bottom line.

This was possibly designed to cope with the need for full cost separation of the new low-cost subsidiary, although that is not entirely clear. Qantas says it hasn't yet worked out how the new airline will be costed - whether it will have to pay full price for internal Qantas shared services like IT and HR, or whether it will get a subsidised free ride so it can compete effectively with Virgin Blue, which has a lower cost base than Qantas.

This is the nub of the problem for CEO Geoff Dixon and the issue that has tripped up every other incumbent carrier trying to deal with cut-price competition. Dixon has been able to put it off because, until Virgin Blue arrived, all his cut-price competitors were undercapitalised and went broke - and so did his full service competitor, Ansett.

But there are big global forces at work here and Geoff Dixon is far from alone in trying to face them.

As it happens, a McKinsey director in New York, Lowell Bryan, gave a briefing to a small group in Australia yesterday about what the firm sees as the big issues now for corporations. Although neither he nor anyone else at McKinsey will talk about a specific client, Bryan's main point was that the key challenge facing corporations today is the over-capacity resulting from massive over-investment during the 1990s, while at the same time satisfying the demand from institutional investors for short-term performance.

Companies were able to use excess profits in their domestic markets to subsidise expansion into new markets. Now they are facing over-capacity and commoditisation of their products, associated with "white knuckle" global competition.

Many firms, he said, needed a "capacity exit strategy" while at the same time trying to ensure line managers make this quarter's earnings targets. That is leading to increased autonomy in the business units.

In the 1970s and '80s, inefficiencies were often buried inside large conglomerates and hidden by super profits produced by oligopoly pricing.

Now those super profits have gone and companies need to "atomise" their businesses so they can get better control of costs and hold managers more accountable. The trouble is although there is now no free ride from either economic growth or monopoly rent, sharemarket analysis is much more demanding than ever before, requiring short-term profits to be maintained while the "capacity exit strategy" is implemented.

Bryan listed several global industries that were in chronic over-capacity: chemicals, pulp and paper, steel and airlines.

He didn't say so, but that doesn't apply to Australia because the "capacity exit strategy" was the demise of Ansett. But for Qantas there is definitely "white knuckle" competition now.

Splitting Qantas into seven autonomous businesses turns it into a holding company that can more efficiently allocate capital between the businesses.

Apart from the nightmare of having a total of 17 direct reports, the risk for Geoff Dixon is that he will spend all his time counting money instead of making it - what Lowell Bryan called, in another context, "harvesting the franchise".

It's hard to work out whether the Qantas board is being courageous or desperate.

===========================================

[Three Bars]

Red Hot Chili Pepper,

Why do you find the QF pilot position ludicrous?

A previous lengthy debate raged on this forum on this topic about two months ago. The feeling of some posters then was that QF pilots should wage an industrial campaign against lower wages for new entrants, at the same time as the new entrants were happy to join at grossly reduced wages, and possibly even paying for their own endorsements!

Why would QF pilots want to get involved in such a campaign if they knew that their own jobs (in the event of an industrial meltdown) would be quickly taken by other such "eager beavers"?

Imagine if you were to join the LCC, and then in the future, other pilots were employed under even lower wages than yours? Would you feel your pay level to be under threat? Would you then feel the way that we do now? If industry does revolve around supply and demand, pilot conditions will only improve when the various companies cannot find enough qualified pilots around who are prepared to work for crap!

[Traffic]

Alan Kohler provides an interesting commentary on whether the glass is half full or half empty. There is no conclusion which is an insight in itself.

After all the anaysis QF is still diving into murky water hugging the twin philosophies of 'we have to do something' and 'time will tell'.

The key issue in atomising the group as proposed, is the management of conflict of interests which could inhibit the ability of management to allocate capital more efficiently.

In order to achieve full-cost separation Geoff Dixon will have to be brutal in addressing the issue of corporate overheads. He must allow all the business units to build their own cost structures and this could well mean a substantial increase in unit overhead costs in the core business/holding company. Expect major pushback in this area.

One side effect of this break up, assuming QF is true to its word on independence of the 7 sisters and the 4 cousins, is that in order to reap its benefits QF has to dilute its critical mass.

Harvesting a franchise is well and good but continued harvesting requires long term committment to soil management.

Courage or desperation? I think a bit of both.

[BLO MOI]

Regarding who will eventually fly the LCC, QF Mainine 737 Tng Section are already involved in Discussions as whether they have the Training Capacity to do the job............

[2daddies]

I have no doubt that they are discussing it, Blo Moi. The cost savings of training staff in-house must be significant, even with type-ratings packaged in with new aircraft.

The question is: are they preparing to train present mainline crews or outside, yet-to-be-nominated people? Or both?

Perhaps if the LCC is to be crewed by mainline you might also start to hear the 747 & 767 training departments start to work out how to cover their respective shortfalls as pilots of all ranks move across to Skimpy. Simultaneously, shouldn't HR start making noise about resuming recruitment from the street?

Also, bear in mind that if it was a simle transfer of mainline 737 crews to a new arm (a la Australian's 767 ops) there really shouldn't be an overly cumbersome training requirement at all - they're already trained.

23 new aircraft in 12 months. Assuming 10 pilots per aeroplane (9.4 is a number i've heard) that's either 230 mainline crew, 230 new-hires or a mixture of the present Qantaslink 717 crews and maybe 90 additional pilots for the new type (mainline or off-the-street?)

Whichever way, it is a lot of pilots and someone is going to have to train them. Just because the 737 training dept. is trying to work out how to do it, does that mean that it HAS to be mainline?

I wish I knew now, but only time will tell.

[fartsock]

Traffic,

Best post I have read on this forum for about two years.

QF loses significant economies of scale and operational flexibility by segmenting the airline.

It significantly increases the number of non-operational admin staff because of the need for each business unit to have functionality in the myriad of disciplines that are required for a safe and commercially efficient high capacity airline operation.

In essence - more blunts, on bigger bonuses at the expense of the revenue producing technical aircrews conditions.

[Red Hot Chili Pepper]

Kohler’s article is full of errors.

“Air Canada tried "Zip", Delta Airlines "Song", SAS "Snowflake", KLM "Buzz" and British Airways went with "Go". In each case, the full service airline tried to tackle a successful discount start-up by launching its own low-cost airline. And in each case it didn't Go, lacked Zip and Buzz, and didn't have a Song or, indeed, a Snowflake's chance in hell.”

Wrong.

Zip, Song and Snowflake are still in operation and are growing. A startup should have enough funding to let the red ink flow for up to 3 years before turning a profit, according to David Neeleman of Morris Air, West Jet and Jetblue, and others in the know.

Mr Kohler should check his facts.

Three Bars,

I think it is ludicrous for QF pilots to expect others in the industry to refuse a job offer from QF LCC (or VB or Impulse) because it will put QF pilots wages “under threat”.

Being employed in Oz and enjoying the sun on your back and the salt spray in your face, you assume the only yardstick left in the industry is Money. It isn’t.

I am not an “eager beaver”. I am an experienced ex AN driver, maybe older and wiser than you, maybe not. I am currently employed overseas and although I have enjoyed the experience of flying in a different part of the world, I have had my fill and am keen to come back to my country – employment prospects permitting.

I don’t really care who I fly for – I was an Ansett pilot through and through and as such I have exhausted all of my corporate spirit on the company I loved. I am just a driver for hire and would fly a coal barge if it paid enough to put food on the table and a surfboard under my feet. In Oz.

I hope QF LCC pay a king’s ransom and raise the pay and conditions of all pilots downunder – QF included. But I take offence at suggestions that I should sit on the sidelines and watch in fear of threatening the lifestyle of people who have never even experienced the real world of aviation – it sucks out there.

[Skyhawk XP]

Aero Lloyd in Germany has just ceased operations and filed for insolvency. A total of 21 A320-200's and A321-200's are available and maybe c h e a p.

[Kaptin M]

IMHAHO, G.D. is in this totally for himself - after all, isn't this the way we have been "cultured" to think for the past 14 years? (There ya go, Buster!!)
When you have squeezed the lemon for as much as you can wring from it as a whole, then dice it up, and squeeze each piece individually!

Airlines are no longer being run as a "single unit", but have tended to become divided into separate units - catering, maintenance, cleaning, etc. - which IN FACT is cr@p, because each is reliant upon the individual success of each company flight, to ensure their overall continuation, when in fact the failure of ANY of these individual units would have ZERO effect on the immediate revenue production of the company.

In other words, the division of a major airline into separate income/expenditure responsible units, is an exercise in futility and monetary MIS-management!!

The creation of a superficial "low cost" (read low-salary for the majority) company, by a larger parent company, will result in eventual failure for both.

[Buster Hyman]

It wouldn't have meant as much if it didn't come from you Kaptin !!:rolleyes: :ok:

Interesting how the breaking of airlines' into groups has come, almost, full circle.

Sir Reg tried diversification to stave off the vultures like Abeles, and in the end, it attracted a bigger vulture to have a crack at the business, just to get ATV 10! One wonders if this is not just another way that history is repeating itself?

[amos2]

I'm an ex Ansett pilot like you Chili Pepper...

I left in 89'...

what about you?

[Red Hot Chili Pepper]

I left when the doors were closed and the lights were turned out Amos.

[Wirraway]

Fri "The Australian"

Hard lessons as Concorde exits
Robert Gottliebsen
October 24, 2003

When the Concorde flies between London and New York for the last time today, it signals the failure of an air service that was based entirely on demand from upmarket passengers.

Yet in theory it should have worked because, based on what happens in the Australian market, traditionally around 2.5 per cent of the passengers provide about a fifth of the revenue.

While Concorde has shown that it is difficult to rely solely on business and other upmarket travel, a string of global discount operators have shown that you can do the reverse and make money offering a commoditised, low-priced airline service.

So it is no coincidence that, as the Concorde heads to the museums, Qantas is not only planning a discount airline but is recruiting executives from Ryanair, which in Europe provides a discount service that makes Australia's Virgin Blue look like it's running the Concorde.

Ryanair's expertise is stripping out all but the basic essentials of airline travel. But, as so often happens in Australia, the future structure of the airline industry will revolve around the enterprise agreements of each of the players.

Many other industries, including banks and manufacturers, are also shaped by the enterprise agreements that companies negotiate with their staff.

In the last century, Qantas and Ansett operated from the same enterprise agreement. What changed airlines in Australia was the ability of Virgin to secure a totally new enterprise agreement.

Under this agreement, counter staff could be swung into helping people board the aircraft and cleaning it. The first officer would be prepared to assist cleaning if it was necessary to get the aircraft away on time.

This flexibility is the essence of a discount airline. But Virgin claims that it also enables it to achieve a far greater "on time" score.

At the moment, Qantas dominates the 2.5 per cent of airline travellers who generate a fifth of the revenue by providing an array of value-added services. But the surveys are showing that, while the add-on services are very welcome, what the business passenger needs more than anything else is on-time travel.

And, when labour agreements are not flexible and the former upmarket competitor Ansett is out of the game, it inevitably leads to planes being delayed or cancelled - particularly during a cost-reduction phase.

Virgin must see its on-time record as its greatest potential opportunity to seek business travellers. The great danger to Virgin is that as it increases market share so its people will look enviously across at the Qantas work practices. Qantas has more people doing what is essentially the same job. Inevitably the gap will narrow.

But a Ryanair-style discount airline will require work practices and systems that are even more flexible than Virgin's. If such an agreement is reached, it will make the next Virgin enterprise bargaining session - due in about two years - a lot easier.

Whether Qantas can succeed in the discount airline business will depend on whether it can arrange a totally different enterprise agreement. But, of course, in the next few years it is going to be much easier for New Zealand aircraft to operate in Australian skies and vice versa.

In New Zealand, Qantas has the sort of enterprise agreement that it will need in Australia, and it is conceivable that, if Australian talks fail, the discounter could be based across the Tasman.

What Concorde showed was that an airline needs each flight to be filled with people from various segments of the passenger market. For domestic airlines the risk is that the service is going to be commoditised as discount fares become a bigger and bigger part of the industry - at least in the short-haul business.

Robert Gottliebsen writes for The Australian and hosts Business Daily on ABC Asia Pacific TV.

=========================================

[Col. Walter E. Kurtz]

Why should prospective new recruits to a QF LCC reject a jet job at what in most cases could mean a substantial increase in pay and conditions so as to protect mainline pay and conditions?

After all, mainline doesn't seem to be doing too much about it themselves except for being up to their neck in ****e and saying 'don't make waves'.

See the thread "Erosion of Pay and conditions - what are we doing about it' and see how many QF pilots addressed this issue.

Les miserables are at the gate - for less than you are getting paid now.

[OverRun]

Not quite sure how Gottliebsen did his calculations, and got "2.5% of the passengers provide about a fifth of the revenue".

Lets take a QF international and a QF domestic example to check it out. First international:

SYD-LHR = 17016 kms great circle; say about 34000 return kms. For simplicity, two classes of pax: business class @ $A8500 return and discount economy @ $1700. BTW it doesn't change much if a more complex mix is used. Gottliebsen had "2.5 per cent of the passengers provide about a fifth of the revenue" which I interpret as 2.5% in business class. Business class runs @ 25 Oz cents per pax-km. Discount economy @ 5 cents per pax-km. So per 100 pax, the 2.5 business pax provide 0.625 cents per km, and the 97.5 economy pax provide 4.870 cents per km. All up, that's 5.495 cents per km, and the business class provides 11%. The figure might be conservative, because when the corporate deals are put in, the business class fare drops to 21-22 cents per pax-km. Maybe my interpretation was wrong, and he meant 2.5% in first class. Well, change the mix to be 2.5% in first class, 70% load factor in business and 85% load factor in Y class; with one of the 14F/79J/265Y 747-438 Longreach aircraft. F is $A12345 return. The 2.5% in first class are still only 12% of the revenue.

Now domestic: SYD-MEL; say about 1410 return kms. Two classes of pax: business class @ $A474 return and various discount economy @ $200. Gottliebsen had "2.5 per cent of the passengers provide about a fifth of the revenue" which I interpret as 2.5% in business class. Business class runs @ 33.6 Oz cents per pax-km. Discount economy @ 14.2 cents per pax-km. So per 100 pax, the 2.5 business pax provide 0.839 cents per km, and the 97.5 economy pax provide 13.810 cents per km. All up, that's 14.649 cents per km, and the business class provides 6%. Again the figure is conservative, because when the corporate deals are put in, the business class fare drops to 26-28 cents per pax-km.

Nowhere is business class (or first class) providing a fifth of the revenue. The business class argument is a smokescreen in Australia for the more complex drivers behind the fundamental business change that Qantas are driving for with the LCC. Possible flight crew cost change is another smokescreen, and IMHO is one that won't be pushed too hard. These aren't the things which are the major cost differentiators between mainline and low-cost operation for any airline, and the QF LCC agenda is focused elsewhere.

[Kaptin M]

Well Col., after your last post above, I suggest that you delete the entire thread titled, "Erosion of Pay and conditions - what are we doing about it" - as you have effectively answered it yourself! :uhoh:

And OverRun has aptly demonstrated why beancounters are effectively screwing every airline they are allowed to get their hands on!
The mindset of accountants working for airlines appears to be capable of ONLY treating an airline as another transport business, and hence they work in miles or kms as the basis for their calculations of cost structure, as if the aircraft were a taxi, truck, or bus.
Is it any wonder that so many companies are being sent to the wall BECAUSE of this ignorance.
As an example, OverRun, fewer miles (achieved by track shortening, as is sometimes offered by ATC) may NOT necessarily result in a cost saving in aircraft operation (depending upon the decision of the pilots) - and as a matter of fact may even INCREASE costs. However to people who think of aircraft as simply another form of transportation, this concept is probably quite inconceivable. :sad:

[amos2]

Interesting figures OverRun but I would check those Business class fares to Mel. Last time I bought a flexi fare economy ticket it cost me $450!

Business class more like $900 I would suggest!

[SHRAGS]

Hows this for a scenario:

'Skimpy' is started up using Impulse model and AOC, the existing 14 717's and drivers. This is toped up by 9 new 738s crewed by mailine pilots.

Over 12 months the 717's are phased out and replaced by new 738's which come from the original QF capital expenditure of 6 billion. These are crewed by mainline, and the surplus Impulse drivers slot into mainline as S/O's.

Upside:
QF has existing 737 pilots ready to go as well as training infastructure. Impulse gives them the start up as well as AOC and excellent business model.

Mainline pilots keep the career prospects for junior pilots and the surplus drivers due to 'cannibilised flying' have a place to go. The "goodwill" of ALL mainline pilots is maintained as I believe that from the 744 down they are all concerned about this LCC issue and what will happen to Captains kids as well as being the 'the thin edge of the wedge'.

Impulse drivers get to swan around the world for a couple of years making about the same money, if not more for some, before getting back into a window seat. More importantly, they get job security that they have not had before.

Just a bit of lateral thinking.............:8

[Bargearse]

I think you'll have a hard time gettin' that scenario past the other Qantaslink boys and girls (Eastern and Sunnies) SHRAGS

[Cactus Jack]

Good thought SHRAGS, but doubtful I think.

I know of several guys flying the 717's who have been turned down by QF for a job, even twice for a couple of them!

So, for that reason, I don't think the company will come into giving instant mainline employment to those guys, despite the fact that they are technically employed by qf already....

[hoss]

Sorry SHRAGS but I also think yours is an unlikely outcome.

Like I said on page 1 "fifty bucks and my left nut" that Impulse will play a part with regard to crewing Skimpy. However, I omitted that I also think Jetconnect will have a big part to play as well. From my research on Jetconnect they have a strong experience base to work with( heaps of ex AN737 pilots). If QF Flight Operations does not recognise the potential of this from Jetconnect it will have wasted a great resource.

If Skimpy is even going to stand half a chance at success, it is going to have to be a 'lean and mean outfit'. "Out with" the staff travel, superannuation, LSL, bonuses, and all the other frills that go with the present. "In with" the pay for your endorsement(and yes I would imagine the Impulse crews will have to do this as well) , heaps of overnights with crappy allowances, minimum rest and working harder than ever before.

That is why I doubt the mainline guys are going to want to even bid for it, if they get a chance to.

[Hugh Jarse]

Hoss, remember my analogy the other day? Bet your wife, bet your job, but never bet your balls:}
If Skimpy is even going to stand half a chance at success, it is going to have to be a 'lean and mean outfit'. "Out with" the staff travel, superannuation, LSL, bonuses, and all the other frills that go with the present.
Superannuation is a legal obligation by employers in Australia. Dunno about INZiD however.

Bargearse, I don't think the QF decision has anything to do with EAA/Sunstate. Remember we are all seperate business units. Nobody "owns" the flying. Sure, It'll be disappointing to be bypassed yet again, but QF will do whatever they see fit.

Had lunch with a couple of Impulse dudes the other day and it does sound like they are in the box seat. Expect an announcement in the next couple of weeks.

[Jet_A_Knight]

Does that mean that all the ex-Impulse 190 crews who retain 'seniority' in Impulse are the walk up starts for recruitment to Skimpy or will they look to the 'street'?

[OBNO]

If the decision come shortly to crew the LCC with new crews outside of the Q Mainline . What is AIPA's position on this?

[Hugh Jarse]

It doesn't appear that AIPA has a position on anything......Until it starts to affect the B744 pilots.......

[B772]

Is Trevors son still with Impulse or has he hopped across to the real QF

[Wirraway]

Detroit News

Low-fare airlines' prices challenge major carriers
Discount lines take 28% of U.S. tickets
By Joel J. Smith / The Detroit News

When Melanie Golden was looking to buy an airline ticket to fly to San Diego to attend a friend's wedding, she had three criteria for selecting her carrier: price, price and price.

"I chose Southwest," said Golden, 31, of Plymouth, a recent Walsh College graduate. "I couldn't find a ticket any cheaper. Every airplane is basically the same. One seat fits all. I don't care whose logo is on the plane. I just want a cheap ticket."

Golden is like hundreds of thousands of other cost-conscious travelers nationwide. Whenever possible, they're ignoring big name carriers with pricey tickets in favor of low-cost, no-frill airlines.

Travel on discount airlines is soaring at the expense of the major carriers. About 28 percent of all domestic tickets are now purchased from low-fare carriers, while just 13 years ago that number was less than 3 percent.

Major airlines recognize the threat imposed by the discounters and are struggling to dramatically lower their operating costs before they lose more customers.

Richard Anderson, CEO of Northwest Airlines, said that Northwest is forced to cut operating costs so the airline can afford to match low-fare airlines or risk losing more passengers.

"Low-cost carriers are having an ever-increasing impact on our fares," Anderson wrote in an employee newspaper. "Just as many people today are more likely to go out of their way to shop at chain discount stores such as Wal-Mart or Costco, so are our customers prepared to trade some of the conveniences of network carriers for the lower prices of discount carriers."

"As a general rule, we need to meet low-cost competitor prices or lose business," Anderson wrote.

Northwest, which handles 75 percent of the passengers at Detroit Metropolitan Airport, is particularly concerned because 70 percent of its domestic routes also are served by at least one low-cost carrier.

The flying public certainly has benefited from the influx of low-fare carriers. When Spirit Airlines began offering a nonstop flight between Detroit and Los Angeles a year ago, it forced Northwest to drop its last-minute purchase price from $418 to $198.

The same thing happened when Spirit began service to Myrtle Beach, S.C. Without a weekend stay, Northwest's price was $545, but today it's less than half that price.

"There's an increasing threat of the growing low-cost market share and the pricing pressure that causes," said Doug Steenland, Northwest's president. "The challenge is going to be for the network carriers to get their costs in line so they can be fully price-competitive with low-cost carriers. When that happens, I think you'll see a stall in the growth of low-cost carriers."

Not everyone believes the big airlines can match the discounters' operating costs.

"The major airlines will never be able to get their costs as low as the discount carriers," said Darryl Jenkins, director of George Washington University's Aviation Institute in Washington, D.C. "You can only reinvent yourself so much.

"The sleeping giants are the low-fare carriers that are starting out and don't have to work with all the restrictions that the legacy carriers are faced with," Jenkins said. "This won't be a pretty battle."

Currently, Metro Airport is dominated by Northwest, which operates its largest hub there through a new $1.2 billion terminal and has more than 500 daily departures.

But Metro also has three low-fare carriers operating daily flights: Spirit, Southwest and America West. Others, such as Jet Blue and Frontier, are considering operations there. Spirit is the second biggest carrier at Metro, handling about 5.4 percent of the passenger traffic; Southwest is third with 2.8 percent.

Spirit is growing rapidly in Detroit, expecting to double its size in the next five years. Passenger traffic has jumped nearly 20 percent in the last 12 months, while Northwest and its affiliates have grown less than 5 percent.

"We're growing and doing very well," said Ned Homfeld, chairman of Spirit Airlines, which originally started in Detroit, but now is based near Ft. Lauderdale, Fla. "We are as good as the majors. We want to give consumers a product that meets or exceeds that of the major carriers. They now see they have to compete with us."

Some critics argue that once the major airlines finish cutting costs and can compete one-on-one with the discounters that the low-fare carriers will be the losers.

"What people have missed is they think Northwest is this great big dinosaur that is just sitting there letting people eat them," said Michael Boyd, president of the Boyd Group, an aviation consulting firm in Evergreen, Colo. "That's not true. Northwest is a lot more efficient today than it was two years ago."

Northwest has implemented $1.4 billion in cost cuts so far by closing up facilities, laying off more than 5,000 employees and cutting back on some routes.

With such budget-trimming moves, "The low-fare carriers market share could very well level off and shrink," Boyd said. "You're going to see that because the Northwests of the world are going to come back swinging."

Spirit's Homfeld disagrees.

"I don't think the low-cost carriers will be driven out of the industry," he said. "The low-cost carriers have grown and matured and have a strong foothold now. We have a good product and it's not as simple as just pushing us out."

Southwest officials believe the only way major airlines can compete with discount carriers is to drastically cut operating costs, something that would face stiff opposition from the labor front.

Northwest is an example of that. Last spring, the airline announced it was seeking $950 million in concessions from its seven labor unions, hopefully by early summer. To date, no concessions have been approved.

"The major carriers are just going to have to cut their costs because customers are voting with their pocketbooks," said Gary Kelly, executive vice president and chief financial officer at Southwest, which has been operating 32 years.

"We would be foolish to think our competitors will continue with very high costs. We have to be prepared for that," Kelly said. "But in a sense, we will be better with improved competition from the majors. It will cause us to be motivated to improve ourselves even more."

Currently, operating costs for the top six major airlines -- Northwest, American, Continental, Delta, United and US Airways -- averages about 10 cents per available seat mile. The same cost average for seven discount carriers is about 25 percent lower or 7.4 cents an available seat mile.

Bernie Han, Northwest's chief financial officer, said that 40 percent of the cost per available seat mile (CASM) is made up of employee wages and benefits. The remaining 60 percent consists of other operating costs, such as fuel, aircraft facilities, maintenance and travel agent commissions.

==========================================

[Wirraway]

Mon "The Australian"

No-frills do not fly well with a full deal
By Steve Creedy
October 27, 2003

No-frills airlines are here to stay but full-service carriers are becoming smarter about ways to deal with them, British Airways chief executive Rod Eddington says.

While the budget airline phenomenon has been a boon for the consumer, the BA boss doubts the wisdom of full-service airlines starting low-cost airline offshoots.

In an interview with The Australian, Mr Eddington declined to comment on plans by partner Qantas to start a low-cost carrier next year. But he reiterated the stance taken when he sold British Airways low-cost Go subsidiary to Easyjet.

"We sold Go because I put a simple proposition, which was that no full-service network carrier had ever successfully been able to operate a full service network airline and a no-frills carrier in the same market," he said.

"Plenty have tried. Most recently KLM sold Buzz and Air Canada, who set up several, including Tango and Jazz, went bankrupt.

"So a simple observation: no one's ever done it."

Mr Eddington, whose airline has endured an explosive growth in low-fare carriers in one of the world's most aggressive markets, said Go had confused BA's customers and staff.

The low-cost offshoot had also prevented a vigorous competitive response to low-cost competitors by mainline BA.

He said BA's short-haul business had been losing £300 million a year when he arrived at the airline but executives had seen Go as its main response.

"We're much smarter now about how we compete with the no-frills carriers," he said. "We have greater use of the web, we've completely changed our pricing distribution strategy and we've been much smarter about what we do and how we do it."

The BA chief said the British carrier had pioneered what he regarded as the sensible full-service response to no-frills carriers.

The carrier had pulled off low-yielding routes in favour of those with a reasonable mix of premium and leisure traffic.

It had also replaced widebody aircraft on shorthaul routes with smaller Airbus A319 and A320 aircraft flying high frequencies to drive business travel.

"And then use the net intelligently to sell the back of the aeroplane," he said. "Unashamedly learn some of the lessons from the no-frills carriers."

Mr Eddington said BA's lower fares had been well received but it also meant the airline had to lower costs because yields were thinner.

The airline was taking a million pounds a year out of its cost base but did not expect to ever match those of the no-frills competitors.

However, travellers would continue to pay a premium to travel on a full-service network and advantages such as Heathrow departures, pre-assigned seating and backup aircraft.

"The question is how big a premium will they pay and are your respective cost bases such that you can earn a living off that premium," he said. "You've got to get your costs aligned in an intelligent, sensible way."

Steve Creedy travelled to London courtesy of BA.

===========================================

[Douglas Mcdonnell]

Wondering why Eastern and Sunstate have not been involved thus far. I think if QF are trying to get away from an entrenched culture that the regionals would be a great source of potential.

Does AIPA know that QF actually operates other aircraft than the 747?

[WaldoPepper]

It's simple to see why the turbo prop regionals are not included. We can't fly jets. They are way too fast for us.

[ALLBLACK]

Flew on QF few days ago , service was better and good value for money ,


Prop

[Chocks Away]

Good one Waldo :ok: but I think that may go over some peoples heads and taken in true belief.
Should have it as a "quote" , as that's how I've heard it from them.:}
To overlook constantly their own fully QF S.O.P.'d and Sim'd (and Entry Level Tested @ Easterns) Turbo-Prop Regional brothers is at their own peril. Many having changed guernseys already and are actively looking elsewhere, not to mention being already at the starting gate for this new LCC puppy.:=

[Dambuster]

Forget about using the 717's as they lack the range/flexibility of the 737s.
Secondly you can forget about Qantas 'opening the floodgates' to say,employees of Impulse as they protect their pilot recruitment criteria as surely as the nazi's tried to protect their so-called "aryian superiority".
Last point is that if guys have to resign from QF to join this LCC whats stopping QF selling it off a few years down the track?

[Going Boeing]

Hugh Jarse - I normally enjoy reading your posts but your inference that AIPA only looks after B744 pilots shows an ignorance of the facts. The role of a professional organisation is to 1. Preserve jobs for its members, 2. Preserve conditions for its members and then 3. Improve conditions for its members. Examples of AIPA adhering to these principles are:-

The last two EBA's have significantly addressed a lot of the rostering problems that B767 crews have suffered for a number of years.

The A330 has been introduced with a large amount of flexibility between short haul & long haul awards with a good pay structure (more than B747 classic).

When Australian Airlines was being developed, AIPA acted to preserve jobs for its members resulting in pay and conditions on AA's B767's that are very appealing to many QF pilots and continued promotion opportunities.

Significant gains on the B737 (especially for F/O's) have been achieved in recent EBA's despite management insistance on "convergence" with DJ B737 costs. Also, jobs on the B737 were saved when pressure from AIPA caused GD to purchase B737-800's in lieu of A320's flown by cheaper non QF pilots (rumoured to have been NJS).

Perhaps it is this last issue which caused you to be bitter about AIPA. Their actions to preserve jobs for their members caused you to miss out on flying a shiny new A320. If NJS, Impulse, Eastern, Sunstate pilots were able to be members of AIPA you would see the full resources of AIPA working for them also.

Look forward to your usual balanced posts. GB

[T53C]

The whispers seem to be more and more of Impulse to be the 'new' LCC. Probably very wrong but how I see it,

QantasLink Turboprops - EAA/S'state DHC8-2/300 (Fleet renewal)
QantasLink Jets - NJS 146/possibly ERJ 170's
LCC - Impulse 738/A320
Mainline - A330/767/747/737
Aussie - 767
Jetconnect - 737

:confused: :rolleyes:

Seems that the Impulse guys are keeping their cards close to their chest. Whats the rumours on the inside of the 'pulse'?? :ok:

[spinout]

Qantas are a funny lot; they reject people saying they don’t meet their standards, then purchase the company paint the planes in Qantas colors and say they are ok to fly jets for that company but not the real one. Dont forget these pilots were once turbo prop pilots also so yes turbo prop pilots can fly jets.

I understand that many attempts have been made by the regionals to join AIPA but have been turned away for what ever reason, I bet if the LCC grows out of Impulse AIPA will be there in a hurry.

Is it true that the AFAP and AIPA are merging?
:cool:

[Douglas Mcdonnell]

Somewhere out there someone has lost the plot. Who said jets are hard to fly. You will find that the average piston twin with vapor locks and dodgy equipment is the hardest gear to fly.

It gets easier as you go!!

Cheers DM. P.S pete have you " left for Asia " yet?

[Hugh Jarse]

Gidday Going Boeing,

It seems that AIPA are doing their job according to your evidence. However, my remarks are based upon a combination of discussions with friends and former work colleagues who now fly B737/767, and what I read on Qrewroom. I realise people who post on BBS's often are having an "internet whine", but it seems not everyone is convinced AIPA is going far enough to protect (in particular) the incumbents against companies such as JitConnict, etc. I'm not having a go, just expressing my observations over the last couple of years.Perhaps it is this last issue which caused you to be bitter about AIPA. Their actions to preserve jobs for their members caused you to miss out on flying a shiny new A320. If NJS, Impulse, Eastern, Sunstate pilots were able to be members of AIPA you would see the full resources of AIPA working for them also. Not quite true, GB. I'm under no misapprehensions what career path I have in my current employ, after several years of repeated disappointments :E. We were never in the running for 'French Chainsaws'.

Regionals being represented by AIPA? You'd be surprised how often thar topic is raised in the crew room...

Have a good day:ok:

[Going Boeing]

Thanks Hugh

I understand that one of the reasons that AIPA does not represent the regional pilots (illegal to poach them) is that most of the AFAP's income is from QantasLink pilots and thus the AFAP would be decimated if they were to lose these pilots. A merger between the two organisations is impossible because of litigation outstanding from the "Great War". Personally, I would like all QF pilots represented by the one organisation as it would reduce QF managements ability to divide and conquer.

Apologies to all for going off topic. GB

[jakethemuss]

The only reason the QF Regional Pilots are not covered by AIPA is that they, as a group, have not approached AIPA for representation.

AIPA cannot approach them under section 118 law as it would be deemed poaching and significantly bolster the coffers of the AFAP under legal challenge.

If the Regional Pilots as a group decide they want a career path into mainline and are prepared to sort out their seniority issues as a cohesive group, then I am sure AIPA would be delighted to take them on board.

It's the only way forward and must happen IMHO.

[Pete Conrad]

DM - Keep an ear out :-)

[Chris Higgins]

Fly jets in the States, used to work and live in Australia...

"We must all hang together, or surely, each of us will hang."

-Benjamin Franklin


The days of THE pilots dispute seem to linger as more than a distant memory in all that read these posts. There was a captain at Qantas, named Geoff Westwood that believed that union representation between the international brotherhood should remain separate to that of domestic. At the time, the employers were very divided in their assumed roles of service to the general public, a case that no longer exists.


Somehow, the Australian workforce must take back control of the skies! Pay for training and other forms of indentured servitude that have long plagued GA are now spreading like a cancer in the airline ranks. This will, in time, take it's toll on contract negotiations and even safety as compromises on standards follow the power of the almighty dollar.


Since airline deregulation in the United States, more than 130 airlines have gone out of business!! Unless the Australian workforce takes control of the level of business ethics that upstart operators must abide by, you too, may find yourself ineligible to apply for a home mortgage when the bank finds out that you have worked for three bankrupt employers in the last five years.


The Air Line Pilots Association, (yes I do know how to spell "airline") has been a complete failure at reaching across the ranks of the industry. We have had airlines who were owned by the same employer vote in a different union because they felt at such contrary views over conflicts of interest concerning "regional" routes or "mainline" routes.

In the end, the regional jet has forced many mainline pilots to accept large pay cuts and the endless supply of pilot factories in Florida have turned out even more "airline pilots", some who are featured in Flying Magazine advertisements saying they couldn't even fly eighteen months prior. The consequences of these actions may not be known for many years until it comes time to upgrade.

If you want a sustainable lifestyle as a pilot, you simply must be unionised. You must not allow pay-for-training to undermine your collective bargaining abilities. You must change with the times and embrace both domestic and international sides of the industry, so that you can stand with one voice against a common foe.

The enemy should not be us. The enemy should be corporate greed, that compromises the job security of it's employees and the safety of the general public at large.


Cheers,

Chris

[woftam]

Well said Chris!
And so true.
:ok:

[Wirraway]

news.com.au

Qantas eyes Asian take-off
October 31, 2003

LOW-COST airlines have a good chance of succeeding in Asia because of rapid urbanisation in the region, Qantas chief executive Geoff Dixon said yesterday in Singapore.

"Asia has some of the largest and fastest growing urban concentrations in the world, with 130 cities having a population of more than one million," Dixon said during a lunch speech organised by the Asia Pacific Aviation Media Association.

"The population ... geographic, and income characteristics of the region are ideally suited to the development of low-cost carriers," he said.

Compared with Europe and North America, Asia was a late starter in the no-frills airlines business, with Malaysia-based AirAsia about the only carrier that had managed to successfully carve out a niche in the market.

Qantas recently announced it would launch a domestic low-cost carrier next year.

Dixon said he believed the budget airline model would eventually succeed in Asia.

"While it may not yet be universally accepted in the Asia Pacific region that low-cost point-to-point airlines are the way of the future, we at Qantas certainly foresee a day when they will be a powerful force in this part of the world, particularly on shorter haul, international routes," Dixon said.

Singapore Airlines has said it would not convert its regional SilkAir into a no-frills carrier, and was due to announce before the end of the year whether it would launch a separate budget airline.

============================================

[loungelizard]

Ahhh, Going Boeing, thou should remember that AIPA was definately only for the 400 brothers until not long ago they got the wiff that 73/76 and classic were all about to resign from the union because of their lack of services but still accepting the money out of the ol paypacket each and every month.
"Well now, this is not part of the script, we may actually have to start supporting the rest of the boys and girls". That is the only reason AIPA got off their incompetent a@se and did all you seem to suggest.!!! They were about to lose a sh*t load of business.

[Douglas Mcdonnell]

Who said the 737 was a guarantee?

Airbus are trying very hard with super cheap deals.

Gday Pete. Hows "Asia" ?

[Wirraway]

An interesting post on 'Cabin Crew' from Peanut Pusher who
seems to be in the know:

http://www.pprune.org/forums/showthread.php?s=&threadid=106146&perpage=15&pagenumber=5

Sorry for the delay...I have another life away from pprune
Ok, I will do my best in point form to answer some questions posted during my absence.
* Yes, I'am concerned for short haul flying as it stands.
* Yes, I think there will be job losses over a long period of time.
* Yes, MAM will conduct some classes in the new year or earlier to cover the new dropping of hours for s/h as of Jan 2004. Currently there is not enough casuals in SYD or MEL to cover the estimated amount of hours released.
*BNE or ADL is still the favorite for the new LCC withh both state governments pitching hard.
*Many decissions are still to be made as Service Development has just got it's first brief this week.
*People on the short list will be used if crew are required especially language speakers. There is no current requirement for fulltime crew
*Three names are doing the executive rounds at the moment, all sound good. Board approval in Nov.
*Am I worried for my long term employment. yes, in it's current state and the money I earn.
*All LCC recruitment will be run by seperate company same as Australian, who run there own show with there own selection standard "lets not go back there"
*MAM casuals will probaly get preference in new LCC recruitment process.
*Do I think the BNE s/h base will be around in 5 years, No but thats just me looking at the business model unfolding in front of me.
*Do I think there will be progression into s/h for linkers, No I think it's a thing of the past as there will be no where to progress to in 3 years. They are looking to shrink not inflate s/h in current enviroment.
*L/H union is already talking about the removal of divisional transfers as there will be no where to transfer to the way things are playing out.
*Sorry for any short listers that have been waiting for so long, the market has changed so much in the last 12 months with Virgin going from 12% to 30% so the qantas expasion plans a year ago don't mirror the cost model of compertition today.

I must be careful how much I give away here as people are openly asking me at work if I'am Peanut Pusher. It's not hard to work out once you start putting some info I put up for your information plus my profile. Once I breech the confidence of people who give me inside info as they come across it, I'll loose there contact forever.
Then you cop a spray for being busy and actually working, so you then ask yourself "is it worth getting in trouble from both sides of this fence" ? , I think you know the answer

Good bye & good luck to everybody, hope to see you in the air
Remember never give up on your dreams

[Pete Conrad]

DM - your point is? May see you up that way in a few years when the 717's go. :-)

[Wirraway]

http://www.citywire.co.uk/

Ryanair unstoppable
Published: 09:52 GMT, Mon 3 Nov 2003
By Rodney Hobson, Larger Companies Correspondent

Low fare airline Ryanair continues to confound the sceptics and as long as chief executive Michael O'Leary can turn any adversity into positive publicity it will thrive.

Results for the half year to September have beaten expectations with a 16% rise in pre-tax profits to €176 million (£120 million). Traffic was up 45%, which does draw attention to the one concern: O’Leary admits that fares are being driven lower.

In the latest period Ryanair fares were 12% lower, so total revenue, up 28%, failed to keep pace with the 32% rise in costs. Still, 11.3 million passengers were carried compared with 7.8 million in the same period last year.

O’Leary said the record profits had been achieved in ‘adverse market conditions across Europe‘. His low fares model ‘delivers extraordinary growth and exceptional profitability in an industry more often characterised by losses’.

The war in Iraq, high oil prices and the sluggish European economy were all overcome with panache. Ryanair has taken delivery of 18 new Boeing aircraft, acquired, restructured and relaunched Buzz, opened two new bases and launched over 50 new routes.

Some routes, mainly from Stansted and Stockholm, have under performed but this will be dealt with in decisive Ryanair fashion. We can expect those that fail to come up to scratch to be ditched early next year. Ryanair now has so many destinations, and is talking to 50 more airports about setting up new routes, that it can mix and match to maximise passenger numbers.

Citywire Verdict

Ryanair continues to set the agenda for the airline industry in Europe and we can expect further rapid progress. There is no reason to fear that the airline will over extend itself as it copes with expansion without any signs of strain so far.

Chief executive Michael O’Leary has put quite a few backs up but he fights his corner and is likely to succeed in beating down the bureaucrats in Brussels, where his subsidy at Charleroi is still under investigation, and in Ireland, which is exasperating him by its slow progress towards freer competition.

Life is tough in the industry but if the weak go to the wall they will not include Ryanair. Progress may not be so spectacular in the rest of the financial year, but then again O’Leary has managed to beat forecasts often enough to suggest that he can do it again.

©2003 Citywire

=========================================
London "Evening Standard"

Ryanair set to overtake BA
Robert Lea, Evening Standard
3 November 2003

UDGET airline Ryanair will be flying more passengers around the UK and Europe than British Airways by Christmas, its chief executive claimed today.

'Of course we will be overtaking BA,' said Michael O'Leary. 'We have already overtaken them in the UK and as for Europe - that depends on the rate at which BA remains in decline.'

Ryanair today reported 45% growth in passengers to 11.3m in the six months to the end of September and latest figures show that it is within a couple of thousand passengers a day of overhauling BA.

However, Ryanair's passenger growth is overshadowed by ever-thinning profit margins. In addition, the rate of profits growth has stalled.

At the interim stage, including the £4.1m exceptional costs of taking over Buzz, rising route costs and the interest charges on its new Boeing aircraft, pre-tax profits rose 11% to e187m (£128m).

O'Leary said the carrier was continuing to grow despite what he believes is 'a concerted campaign of dirty tricks' by traditional full-service airlines.

This is culminating in a European Commission investigation - expected to end this month - into taxpayer-fuelled incentives paid to get Ryanair to fly to Charleroi, near Brussels.

But it has also included challenges to Ryanair's arrangements at other publicly-owned airports including Strasbourg and Pau in France, Niederhein in Germany, Aarhus in Denmark and Haugesund in Norway.

Meanwhile, holidays and weekend breaks for owners of second homes in France were under threat, after the airline warned some of its routes will be cut because they are not making money.

'Some of our new routes from Stansted this summer to the low countries and one or two French destinations have under-performed,' said O'Leary.

'Unless there is significant improvement in load factors [passenger numbers] through the winter, then we will replace a small number of these with alternative destinations and services.'

O'Leary refused to name the airports but those in France include Brest, Clermont-Ferrand and St Etienne.

Low countries services facing the axe may include Ostend-Bruges and Maastricht. 'The simple fact is that some of the airports we are flying to are not just giving the service that we want or that our passengers expect,' added O'Leary.

The arrival of budget airlines resulted in a huge growth in the number of people buying holiday homes. Thousands have bought properties as advertisements for homes in the south-west of France promise: 'Ryanair, 40 minutes'.

In recent months Ryanair has opened up new routes between Stansted and Baden-Baden in Germany, and between Bournemouth and Girona. Last month its new routes included Stansted to Tampere in Finland, Prestwick to Gothenburg and from Birmingham to both Murcia and Girona.

©2003 Associated Newspapers Ltd. All rights

==========================================

[Wirraway]

Dale Carey usually reliable, has posted on the Sydney board
that 'Skimpy' has decided on the A320, this would kill my prediction that Boeing would get the nod.

Source: http://www.vpmag.com/yssy/viewtopic.php?t=4814

Wirraway

[Venture_Executive]

If Qantas' No-Frills airline is choosing the A320, with CFM56-5 power plants, that would be the right choice of aircraft for the Australian market. However, the risk for Qantas is that it may significantly lower yield for its full service domestic operation, where it is utilising its 737s. The risk is that it may never attract customers back to a full service and may, in fact, give their high value customers more choice to change. I think Qantas is taking quite a risk but then it is their call. Wasn't Qantas proposing mega-carriers as the right way to go?

At least with A320 it could use the old Ansett facility at Melbourne for a maintenance base as it has docking already suited to A320 and 737. In addition, it could do contract work for Air New Zealand on their A320s there. But what of their engine types?

Either way it would be interesting to see how Qantas organises its manpower for the new carrier. To make the savings it wants to it would be better off going for a 737 fleet and transferring its exisitng domestic manpower to the airline purely on the basis that no new licenses are required for flight and ground crew.

It's an interesting problem. I wish them luck.

[Buster Hyman]

I wouldn't be too concerned Wirraway, my "source" gave me the nod for a Boeing fleet, as I posted earlier.:ok:

[clearone]

Interesting website!!

http://www.pacificsouthwestengineering.com.au

:suspect:

[rmm]

Maybe it is the A320's after all,

http://www.atwonline.com/indexfull.cfm?newsid=3608

[Wirraway]

Good find RMM, maybe Geoffrey Thomas can throw some more
light on this for us.

Airbus set to scoop Qantas order for low-fare lift
Dateline: Wednesday November 05, 2003

Qantas appears to have selected the A320/A321 family for its new low-cost airline, dubbed Skimpy internally.

In a tight delivery program, the airline wants to take up to 20 aircraft by mid-2004. While the type will be new to Qantas Group, the low-cost unit will subcontract many of its functions.

ANZ has just taken delivery of the first of 15 A320s and has lower labor costs than Qantas. The New Zealand carrier already is performing maintenance and refit for Qantas on its 747s. There is also a pool of A320 pilots still unemployed after the collapse of Ansett, while others who have secured employment offshore would like to return to Australia.

Qantas is keen to have a point of difference to low-cost rival Virgin Blue, which operates the 737-800, as Boeing cannot deliver its proposed 737-900X, which has economics closer to the A321, until late 2005.

Qantas officials said the bidding process is not finished and a decision will not be announced until late next week. But insiders tell ATWOnline that Boeing will have to perform magic to rescue the order as "the Airbus deal is outstanding."--Geoffrey Thomas

===========================================

[Chocks Away]

Yeh RMM,
that atwonline is "a ball-tearer", top site.:ok:

[Cactus Jack]

GB, I'm rather interested and not just a little perturbed by your statement that AIPA pressured GD into buying the 738. Where on earth did that one come from?

And most of us DO still believe that the association is 744 pilots for 744 pilots, even despite the recent election results. The change is simply too late, the horse has already bolted.

And just out of interest, where is skimpy planning on parking these new airplanes? Where are these new gates going to be? Because our terminals are chokkas throughout the network already, without another 20 odd aircraft....

[Gnadenburg]

"Pool of unemployed Ansett A320 Drivers"-

Don't forget the other pool Geoffrey! Australia is an exporter of airline pilots.

Australian pilots have help build up the operations of many Airbus operators abroad. They are current, some hold senior management and training positions and number in the hundreds!

The market could provide Dixon with as much Australian expertise in Airbus as he wants!

[ur2]

Buster,
Looks like your "sourse" is spot on again. :(

[Keg]

CJ, the president of AIPA at the time was in no uncertain terms that the very night before the announcement, A320s and NJS had the inside run for the order. Even as late as the morning of!

I wouldn't class it as 'AIPA pressure' but rather pressure from various members from the AIPA COM that got the gig our way. It is the same hard work that got us AO and hopefully will be the same hard work that gets us this one as well.

[Pimp Daddy]

Venture_Executive said:
At least with A320 it could use the old Ansett facility at Melbourne for a maintenance base as it has docking already suited to A320 and 737. In addition, it could do contract work for Air New Zealand on their A320s there. But what of their engine types?


I think you may have that statement back to front - more like Air NZ will be doing contract work for Qantas.

Anyway - isn't the old Ansett hanger still occupied by the Korda Mentha retirement fund?

[Agent Mulder]

Nasty rumour of a trustee pilot body doing a deal with the big q on the lcc which if true will see the end of them as big brother has bigger pockets and can fund the war from many fronts. Don't be stupid cockies, you will lose.

[longjohn]

Yes, I am aware of this also.

As I understand it, the Big Boss of Big Brother basically alienated them to the extent that they felt it was their only option i.e. Big Boss says 'expect the deal to go with us and if you are lucky you will be retrenched and made an S/O' (if you pass selection of course).

Something about keeping friends close.., oh and perhaps reaping what you sow........

Sooner or later Big Brother will wake up and smell the roses, the taxpaxer is no longer boss, it is the year 2003 we pagan mere mortals do not worship the occupant of a jumbos LH seat.

[Zed]

Mulder,

If the Cockies do get the LCC and big brother wants a war, it will be with GD and the big Q, not the Cockies. Deeper pockets then big brother I would guess.

As longjohn said the group had no other option. With big brother playing right into GD's and the big Q's plan of devide and conquer. The Cockies should have been in big brothers house long ago.

Time will tell all.

[slice]

Regarless of who crews the LCC, will this mean the end of the 717 in the QLink fleet ?

[thumpa]

Why don't all u clowns wait and see. You will be not be surprised.

[Buster Hyman]

ur2

You've read more into the article than I did! I didn't see it say a confirmed order anywhere! Besides, my "sourse" (as you spelled) is normally pretty accurate, a bit weird I suppose, but normally pretty accurate!:ok:

Anyway, I enjoy a good bit of conversational speculation, even if thumpa doesn't.:rolleyes:

Chocks away.

If you like the website, were you aware that you can get the magazine free if you are in the aviation industry? Comes out every month & is more comprehensive, Internationally, than the local mags!

[Pete Conrad]

thumpa enjoying conversational speculation? that'll be the day!!! All he does is post obnoxious retorts coz he works for Impulse. Because he works for Impulse he thinks he's pretty good you see, but he sits there with his rose coloured goggles and thumby up bummy...............can you feel it thumpa?

Were all clowns apart from thumpa??? turn it up peanut, if it wasn't for Impulse, you and your mates wouldn't have a job in aviation.

[Suffering Sucataash]

Peter

I think the word is reflection......

All he does is post obnoxious retorts

Enough said :}

[Douglas Mcdonnell]

Pete. Talk about the pot calling the kettle back. Your last dozen or so posts have ridiculed, and bad mouthed Impulse guys. All this from a person who has never worked at the pulse. So why the interest. I dont concern myself with the going ons at JAL or Swiss air for example. There is certainly more to you than meets the eye.

Bitter and twisted yes. Working for a major in Asia. Dosent sound like it. Get a life little matey. Your unfortunate slanging only highlights your ignorance toward others. I think most people on this forum have had enough of D1ck Heads like you.

[Pete Conrad]

No DM, you don't do you? bitter and twisted? no, you guys at the "pulse" like to sit back and be all pious don't you? you guys were the ones that brought in "if I can't get a job at a real airline, I'll go and get a 1900 rating" and buy myself a job.

listen to me matey, where as a very small amount in your outfit may have the required skill, that being ex 89 guys that can fly an aeroplane, the likes of you and thumpa would be the remainder.

And don't get hypocritical on me pal, you sit back and post flame waiting for me to post, so quite frankly, you aint much better than me are you when it comes to posting crap on pprune.

About Asia? your point being?

It's called a rumour network DM, if you can't handle a bit sh1tstirring amongst all the serious stuff, then that aint my problem.

[Cap10 Caveman]

Congratulations Pete Conrad, you've successfully taken yet another thread off topic. :*

[thumpa]

Gee Pete
Didn't ya mumy love ya. Tale a chill pill matey. About buying an airline job. I think the Impulse boys did better getting an endoresment for $8000 which was introduced because Ansett AND Qantas was bleeding them of their drivers, then a few years later they throw in a 717 endoresemnt. Please don't have a go at the Virgin boys now. But I reckon a 737 endoresment plus accomodation must have been around the $2000+ mark.

But you do have this little rather sick infactuation with Impulse. Did they turn you down once. Now don't lie. Hope you have a nice weekend.:ok:

[Rostov]

I thought you were going to asia?
And had better things to do?
OK pete its time to log off the aero club computer now and talk about important issue's like, white with one thanks bozo!!:cool:

[Douglas Mcdonnell]

Come on now uncle pete. Youve been handing out your fair share of stick in the last little while. Your last post seemed a little " Jaded".

Dont tell me that you cant take a little critisism now and then? My point about your asia job is that you sound like a weekend warrior. Bitter at those who get to fly without paying for it. The job in asia wouldnt be packing noodles now would it?

Why worry about something that doesnt effect you? I would suggest you stop going to the airport fence and take some personal time petey.

Back to the issue. Recently I have heard that Airbus has gone in hard with offers that outstrip boeing by a long way. The deal should be done this week as to which aircraft it is.

[Pete Conrad]

Caveman,thumpa,rostov and DM - take a look at yourselves - and I've thrown the thread off? LOL!!!!!!

Well, if I've done that, then the lot of you are not much better than me are you? If I've thrown the thread, which I didn't, then whats your excuse for replying to me and keeping the whole thing going?

Are you sure you guys don't have some menagerie going? LOL!!!

thumpa, you better take a look at your spelling mate - did the lather of sweat you and your butt plug produced while writing that one cause the sweat to get in your eye? C'mon mate - I'll be honest - I didn't apply to Nopulse - I wasn't going to lower my standards......you guys are a bomb!! LOL!!!!!

[Douglas Mcdonnell]

I think its time you left the thread pete.

[thumpa]

Unnecessary.

W

[Pete Conrad]

Inappropriate!

W

[Poto]

I would have thought there was a pool of ex-Ansett, now QF A320 experienced pilots looking for Command/FO upgrades also.
:)

[Wirraway]

Hope the D&G readers of these posts don't mind if I post
how a few of the overseas LCC's are working as it may serve
as a primer of things to come here, if there are objections I
will immediatly cease to post such items.

thanks
Wirraway



Song beating cost estimates, eyes more planes
By Julie MacIntosh

NEW YORK, Nov 6 (Reuters) - Song, Delta Air Lines' lower-cost subsidiary, is beating unit cost projections and expects to announce plans to take more aircraft from its parent within weeks, Song's president said on Thursday.

Song, launched as a unit of Atlanta-based Delta in April, encountered skepticism from analysts and investors who wondered whether it could stay aloft while operating under Delta's heavy cost structure.

John Selvaggio, Song's president, said in an interview that Song's unit costs still begin with a "7" -- as in seven cents per available seat mile -- but include "very significant overhead from Delta."

Delta's pilot union is reviewing this week the airline's proposal for an unspecified amount of cuts that would reduce Delta's industry-leading pilot costs.

Any cuts on behalf of Delta pilots would ring true for Song's as well because its pilots operate under the same contract. But Selvaggio said Song gets better use of pilots than its parent because Song pilots fly more hours.

Nearly all U.S. airlines, still staggering from two years of sharp financial losses and depressed travel demand, have made cost-cutting their mantra in order to stay solvent.

Song's unit costs are coming in under plan, and Selvaggio said the carrier, which has a fleet of 36 199-seat Boeing 757s, is gearing up to take on more airplanes.

A spokesman for Song said it would use reconfigured 757s from Delta's current fleet for the foreseeable future.

Boeing Co. which builds the 757, said last month that it would halt production of the model late next year.

============================================
thedenverchanel.com

Is 'Ted' United's Low Cost Carrier?
Mysterious Marketing Campaign Creating Buzz
UPDATED: 9:46 a.m. MST November 7, 2003

DENVER -- The Rocky Mountain News reported that a mystery man named "Ted," who bought lunch for strangers and spelled his name in sod in a farmer's 240-acre field north of Denver, is a creation of United Airlines' new low-cost carrier.

The newspaper said that one Web site used in the campaign and a second that's not yet launched are linked to United.

United spokesman Jeff Green wouldn't confirm "Ted" was the company's creation.

United's low-cost carrier will be based at Denver International Airport. It's part of the Chicago-based company's effort to emerge from Chapter 11 bankruptcy.

United is expected to announce the new carrier's launch in the next few weeks.

In the meantime, the mysterious marketing campaign -- complete with blue and orange stickers, T-shirts, signs and other giveaways -- has created a bit of buzz in the Mile High City. Ted, taken from the last three letters in United's name, conjures an image of a carefree, blue jeans and T-shirt-wearing crowd -- the same young crowd that United wants to attract to its new low-fare carrier, marketing experts said.

With "Ted," United is hoping to steal passengers away from rival Frontier, which has been extremely successful as a low-cost carrier.

United's low-fare airline will serve predominantly leisure markets and feature a simplified fare structure with low-cost business and leisure fare options. The fleet for the new airline will launch in February 2004 with 4 Airbus 320 aircraft in Denver, and expand to 40 A320s by the end of 2004, 19 of which will be based in Denver.

From Denver, the airline will fly to Reno, Nev., Las Vegas, Phoenix, New Orleans, Tampa, Fla, Ontario, Calif., and Orlando, Fla. Additional destinations will be announced at a later date.

Tickets will go on sale sometime in November.

===========================================

[RaTa]

Interesting to see Song pilots (Pete's post) get the same pay as Delta but fly more hours, I doubt that it will happen here though. :(

If Qf get A320/321 aircraft as Geoffrey Thomas's article suggests, then Qf will look like Ansett on steroids with the amount of different types! Oh I forgot they will all be in different little companies under the one umbrella, as if that will make a difference! :hmm:

[Pete Conrad]

Well, it's interesting to hear that AirNZ's soon to be 4 A320's are looking like achieving 10% of the 11% growth they were looking for by years end. Figures I'm sure QF would be looking at.

At the end of the day, and it's been said before, QF need to rationalise the fleet.

I'm sure the A320 would fit the bill for QF and I hope that the ex AN guys get a guernsey to fly it.

RaTA, why bother with so many little companies, QF could have but one LCC with a fleet of A320 and A319 with CCQ you could do away with the current arrangement and Impulse combined so you have,

A380/747-400 International
A330-200/300 trancontinental and international
A320/A321/A319 doing what 767 and 737 AND Nopulse, err err Impulse do now.

I'm sure the bean counters are looking at the Airbus family, look at the trend in Asia? China Airlines, China eastern, SQ, Dragonair, CX etc etc.

Then just leave the Regionals to their own devices - bigger and better prop, or EMB170, sound ok?

thumpa, any usefull comment? or are you up to your brown eyes in peat?

[Wirraway]

Dow Jones Monday November 10, 5:56 PM AEDT

Discount Carriers Now Thick On The Ground
By Helen Ubels and Lilly Vitorovich
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--To the irritation of Qantas that is now planning its own no-frills operation, Virgin Blue has grabbed more than 28% of the domestic market. It also has achieved a healthy level of profitability by targeting its low cost model on the nation's busiest routes and particularly the east coast where it has nearly 40%.

Virgin Blue is forecasting a 52% rise in sales to nearly A$1.39 billion in the year ending March 31, 2004 and a 39% rise in net profit to A$150 million from A$108 million in fiscal 2003.

No dividend is expected in fiscal 2004, and beyond that a dividend will be at the discretion of the board, it said.

Based on the indicative range, the offer price represents a price-to-earnings multiple of between 12.8 and 15.4 times 2004 earnings.

Virgin Blue's IPO will be the first of many in the Asia-Pacific region, according to the Center for Asia Pacific Aviation, predicting a transformation of the region's aviation industry over the coming six months.

"By mid-2004, most national airlines in Southeast Asia will be operating a low cost subsidiary," it said, adding that Thai Airways International PCL and Qantas are already developing their budget offshoots.

Singapore Airlines Ltd. and Philippine Airlines Inc. are studying whether to follow suit, while Air New Zealand Ltd. has already unveiled its Freedom Air subsidiary.

--------------------------------------------------------------------------------
Copyright © 2002 Dow Jones & Company Inc. All rights reserved.

[Douglas Mcdonnell]

I notice you seem to be pushing the downfall of Impulse again conrad. You have never told us or explained why you hate all the guys there and wish to see them out of work?

I dont think Ive ever seen such a blatant disregard for others well being before on this forum. I notice you have never given any details as to who you work for. The cynical bystander would draw a conclusion that you probably dont fly airliners for a living.

Im guessing by your churlish posts that you are younger tacker. It allways amazes me that guys never grow up in the industry. Do you really think people care as to who you fly for and what you fly.

You are a shamefull person at best! I think after this thread has finally finnished, most posters will have had enough of your negativity and take the rest of your posts with the many grains of salt that they obviously deserve.

[Pete Conrad]

DM,DM,DM - between your noodle packing, thumpa's fossicking with peat bogs,rostov's aero club tea order and cavemans club weilding, you guys could start an early learning center!

DM - I could care less, your point is?? please post something to get the thread back on track DM instead of bleating poor Impulse.

Like I said - your point is? It's a rumour network DM, I have my say like everybody else, it's your personal choice whether you choose to read what I write, and your personal choice as to whether you can't help yourself but reply, as you always do, much to the consternation of yourself only- build a bridge and get over it.

Whats the story - us at AN had to endure attitude after the collapse, so don't talk to me about lack of compassion pal- I don't feel the need to tell you where I work, or where I possibly will end up,so why don't you concern yourself with other matters.

Your pitifull attempt to try and fish for where I work, even saying I don't fly is pathetic, at the end of the day, I've probably been flying longer than you - you'll never know will you?

Now, does someone have any real ideas as to what the choice of aircraft thats going to the LCC?

YAWN!!!!!!!!

[Big Jan]

Oh , so you are a sc@b !
It all makes sense now peat.
:yuk:

[Watchdog]

Pete Conrad,

I see you've set aside this special time to humiliate yourself in public, yet again.


(PS. I'll try being nicer if you'll try being smarter)



:8 :p

[balance]

DM, whilst I'm not convinced that Pete doesn't in fact wish you guys any ill will, it is always good to stop and look at things from anothers shoes.

Think about it; you guys at Impulse are actively promoting a reduction in pay and conditions Australia wide. The Management and Pilots at Airconnex have offered their services to the new LCC at their current rate of pay. Thats way less than even Virgin. More than JitCinnict and PB, I'll grant you, but still it is a substantial reduction from mainline.

Personally, I am not really fussed either way about the current Impulse operation. I certainly would not enjoy seeing you guys out of a job. But do try to see things from the other point of view. Those in mainline are about to watch their fiercly protected pay and conditions undermined yet again and believe it or not, it does affect us all..

Perhaps the Impulse Pilots Group should be attemting to improve their lot, rather than spread this plague of a reduction in conditions....

Just a thought. Please take it in the good spirit in which it was meant.

[Keg]

Fair dinkum, you'd reckon that at least Impulse would've offered to do it for the SAME as Virgin but to offer for less? You guys need to have a good hard look at your representation!!

Game on.

[SHRAGS]

Impulse drivers........

Don't sell yourselves short. LCC do have a history of paying the pilots well (Southwest and Ryanair work hard, but are well paid). Savings come from the structure, 3% from pilots.

Don't be forced into a deal you will regret VERY quickly (believe me, gloss rubs off) on the odd chance it will work at all. Bad advice and pressure from managers with NO IDEA is not the way to cut a deal.

Don't panic, be smart.

All the best..............

[Gnadenburg]

If true this is a disgraceful effort by the Impulse pilots.

Once I can understand-undercutting with paid endorsements and woeful pay.

Saved by QF( I was happy to see you guys keep your jobs even though you undercut).

But twice, when unneccessary, unforgivable!

Impulse pilots have been very, very fortunate. Please return something to the industry.

[longjohn]

It would seem that the consensus is swinging towards the LCC being crewed by Impulse pilots.

I too think this is the most likely scenario, howeever, as I have said previously (or did I think), it will be a composite crewing arrangement.

I can understand perfectly why the Impulse guys are trying like hell to get the flying, they are not fighting for terms and conditions, they are fighting for job security, something those at Qantas (and we at Ansett used to) take for granted.

AIPA have the ability to resolve this issue in a satisfactory manner, get the wages right and keep the Impulse pilots involved whilst retaining the flying within mainline.

The only other option is for QF pilots to flex industrial muscle, they have it, it would work and now is perhaps the best time, but ultimately I believe this is highly unlikely. Sadly, AIPA and its members have been indoctrinated into negotiation rather than confrontation.

[Chocks Away]

If the previous info is true : The Nopulse pilots need to have a good hard look at themselves in a room full of mirrors! :yuk: ...

Impulse pilots have been very, very fortunate. Please return something to the industry Here Here!:ok:

...right now, all they seem to be about to do, is get us all closer to that old truckin' uniform of their previous boss McGowan.

Once a prostitute...

[Rostov]

So what exactly are these pay and conditions that are supposed to be so woeful? From my angle it's like saying yeah thats shocking but what are you exactly talking about?
Numbers and conditions please.

[Watchdog]

I too think the IPG has been naive in agreeing (the IPG doesn't get the rank and file pilots' input when developing proposals) to fly a heavier type for the same $. It has to be voted in for by the pilots yet and I hope that the majority have enough spine and defeat the proposal. Regrettably, as the majority are have previously bent over for Mr McG and taken it, they will probably accept the deal in fear of losing their jobs. AIPA should have let them join when QF grabbed them for a united force. :sad:

[Agent Mulder]

The pilots have to want to join AIPA.. It's not about AIPA letting them join. I suggest all regional QF pilots get together real soon and approach AIPA for coverage...

[Keg]

Rostov, the pay and conditions are exactly what they are on now. Carry an extra fifty to sixty pax and don't get an extra cent. To be honest, I can understand the Impulse guys being concerned as to their future but gee, what a way to go about it. Again I say that they could have asked for DJ pay and conditions, still been in front of where they are now and probably still have an offer that under cuts the mainline offer.

It makes me want to up our AIPA dues a couple of per cent or so each, undercut the Impulse offer and have the union make up the difference to normal QF wages a la Cathay and the 49 (or thereabouts!) a couple of years back. Hang on, that would be seen as 'stupid' by many Impulse pilots wouldn't it? No more stupid than carrying 50% more pax for the same dollars! :rolleyes:

[cunninglinguist]

" Flex their industrial muscle ", gee, was someone out of the country 14 years ago ?, go right ahead, the comedy channel has been a bit lacking of late anyway.

Whilst I do not condone what Impulse are doing, I think you might find that if they work as hard as the Virgins they will be on the same or more money ( due to O/T ), and not have to pay for the endorsement.

You blokes are just one big happy family are'nt you !?, it's not the Impulse pilots fault that their management is trying to back door you, do you really think they are going to try and stop ( even if they could ) whatever deal their management is trying to cut ? I can see it now :

IMP PG rep. : " I'm sorry Mr *****, the pilots have got together and decided we don't want to fly the A320, especially if it will in any way hurt our mainline brothers "

Mr.**** : " OK, thats fine , we'll just let mainline do it, no point in stirring the pot eh "

** big group hug between Mr.*****, I PG rep and AIPA pres. **



Good old AIPA hey, where are they when the regionals are getting sh1t on from a great height ??, sipping their grange thats where, oh, and I can tell a good story or 2 about how they've " looked after " their own also.:yuk:

Sorry guys, I think you might find the honeymoon is approaching the home straight, $220 per hour ? you did'nt think that would last forever, did you ?

[Mr Nightmare]

Obviously Cunninglinguist,

You have a serious chip on your shoulder!

You start of stating that you do not condone what the idiots at Impulse are trying to do then you launch an outright attack on AIPA and its members.

For a pilot you are a daft prick arent you?

This is a serious threat to the profession which has the potential to undermine pay and conditions to the point of making it a worthless occupation.

Pilots have got to be the most industrialy ignorant group of workers that this country has ever seen.

Professionals dont undercut one another.

Its a good thing that I dont give a **** either way!

[The Enema Bandit]

So industrially what does this mean about Impulse pilots?