Wirraway
3rd Jun 2004, 15:27
Fri "The Australian"
Australian will grow, route and branch
By Steve Creedy
June 04, 2004
AUSTRALIAN Airlines expects to add at least an aircraft a year over the next three years as it expands its network and boosts frequencies on existing routes.
Largely forgotten in the fuss over Jetstar's launch, the Qantas all-economy international leisure airline is quietly bouncing back from last year's SARS epidemic, which at one stage forced it to ground the equivalent of 2.5 of its four aircraft.
The SARS crisis prompted Australian to bring forward flights aimed at outbound tourism - such as Melbourne-Bali, Sydney-Bali and Sydney-Sabah - and it has almost doubled its route network in the past year.
A fifth aircraft joined its fleet of distinctive ochre Boeing 767-300s last October and it plans to add a sixth aircraft next year, boosting capacity by 20 per cent.
Last month, it began flying between Darwin and Singapore, complementing Qantas flights and allowing it to connect with travellers from Asia and Europe.
It also announced it was adding a 13th port and its first seasonal destination, the Japanese city of Sapporo.
The addition means the airline flies 19 weekly services from four cities in Japan to Australian holiday destinations Cairns, Darwin, Sydney and the Gold Coast.
Australian began life 18 months ago as a means of allowing Qantas to service leisure routes that were proving marginal for the mainline international carrier.
It was part of Qantas's move to segment its flying, and this also led to last month's launch of low-cost domestic offshoot Jetstar.
Australian Airlines employs 425 people in Cairns and estimates that it directly and indirectly contributes $800 million to the Queensland economy.
It expects this to blow out to more than $1 billion as it expands next year.
Chief executive Andrea Staines expects that kind of growth to continue. She said the Cairns-based full-service carrier was well placed in a "sensible niche", with untapped leisure routes still awaiting discovery.
"Say, going out three years, which is about as far as we think on an annual basis ... at the moment we're looking at adding an aircraft at least each of those years," Ms Staines said.
"And when you add an aircraft, for us that's adding a new route or two and/or increasing frequencies.
"So it's what I'd call steady growth."
Ms Staines agreed that last year had been tough but said that being part of the Qantas group gave Australian a buffer against the downturn.
"On the other hand, we never had to go back to Qantas for more money," she said.
"So we didn't ever go through our initial loan on the balance sheet - we ran the business as absolutely tightly as we could.
"We were making money on budget through March of last year, and April, May, June we just bunkered down, basically."
Fares remained below pre-SARS levels, but Ms Staines said the airline was filling enough seats to remain profitable, with load factors "in the high 60s to low 70s".
In general, she said, loads had recovered to almost pre-SARS levels but yields remained a challenge, with fares up to 25 per cent below normal, depending on the route. "There's what I would call a SARS hangover worldwide on international leisure yields," she said.
"The industry needed to implement lower fares to get the world travelling again and we're still working our way through getting them back up to where we need them to be."
Although Ms Staines is watching closely the explosion of no-frills airlines in Southeast Asia, she does not see them as a direct threat.
She said the no-frills airlines were following the traditional low-cost carrier model focused on smaller aircraft operating short-haul, high-frequency, fast turnaround flights between major Asian cities.
"At the moment, none of them are looking to fly to Australia, because it's too small a market - the short-haul cities that are in range," she said.
"And so we really aren't overlapping. We continue to fly five to 8.5 hours, packaging holiday traffic where our market research tells us people are prepared to pay for the full-service provision."
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Australian will grow, route and branch
By Steve Creedy
June 04, 2004
AUSTRALIAN Airlines expects to add at least an aircraft a year over the next three years as it expands its network and boosts frequencies on existing routes.
Largely forgotten in the fuss over Jetstar's launch, the Qantas all-economy international leisure airline is quietly bouncing back from last year's SARS epidemic, which at one stage forced it to ground the equivalent of 2.5 of its four aircraft.
The SARS crisis prompted Australian to bring forward flights aimed at outbound tourism - such as Melbourne-Bali, Sydney-Bali and Sydney-Sabah - and it has almost doubled its route network in the past year.
A fifth aircraft joined its fleet of distinctive ochre Boeing 767-300s last October and it plans to add a sixth aircraft next year, boosting capacity by 20 per cent.
Last month, it began flying between Darwin and Singapore, complementing Qantas flights and allowing it to connect with travellers from Asia and Europe.
It also announced it was adding a 13th port and its first seasonal destination, the Japanese city of Sapporo.
The addition means the airline flies 19 weekly services from four cities in Japan to Australian holiday destinations Cairns, Darwin, Sydney and the Gold Coast.
Australian began life 18 months ago as a means of allowing Qantas to service leisure routes that were proving marginal for the mainline international carrier.
It was part of Qantas's move to segment its flying, and this also led to last month's launch of low-cost domestic offshoot Jetstar.
Australian Airlines employs 425 people in Cairns and estimates that it directly and indirectly contributes $800 million to the Queensland economy.
It expects this to blow out to more than $1 billion as it expands next year.
Chief executive Andrea Staines expects that kind of growth to continue. She said the Cairns-based full-service carrier was well placed in a "sensible niche", with untapped leisure routes still awaiting discovery.
"Say, going out three years, which is about as far as we think on an annual basis ... at the moment we're looking at adding an aircraft at least each of those years," Ms Staines said.
"And when you add an aircraft, for us that's adding a new route or two and/or increasing frequencies.
"So it's what I'd call steady growth."
Ms Staines agreed that last year had been tough but said that being part of the Qantas group gave Australian a buffer against the downturn.
"On the other hand, we never had to go back to Qantas for more money," she said.
"So we didn't ever go through our initial loan on the balance sheet - we ran the business as absolutely tightly as we could.
"We were making money on budget through March of last year, and April, May, June we just bunkered down, basically."
Fares remained below pre-SARS levels, but Ms Staines said the airline was filling enough seats to remain profitable, with load factors "in the high 60s to low 70s".
In general, she said, loads had recovered to almost pre-SARS levels but yields remained a challenge, with fares up to 25 per cent below normal, depending on the route. "There's what I would call a SARS hangover worldwide on international leisure yields," she said.
"The industry needed to implement lower fares to get the world travelling again and we're still working our way through getting them back up to where we need them to be."
Although Ms Staines is watching closely the explosion of no-frills airlines in Southeast Asia, she does not see them as a direct threat.
She said the no-frills airlines were following the traditional low-cost carrier model focused on smaller aircraft operating short-haul, high-frequency, fast turnaround flights between major Asian cities.
"At the moment, none of them are looking to fly to Australia, because it's too small a market - the short-haul cities that are in range," she said.
"And so we really aren't overlapping. We continue to fly five to 8.5 hours, packaging holiday traffic where our market research tells us people are prepared to pay for the full-service provision."
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