Qantas looks to China boom

[Wirraway]

Tues "Melbourne Age"

Qantas looks to China boom
By Jane Williams
October 12, 2004

China, the powerhouse of East Asia, is expected to become the world's second-largest aviation market by 2020, Qantas chairman Margaret Jackson said yesterday.

Increased integration in East Asia would have a positive effect on demand for aviation services across the region, Ms Jackson told an Australia-Japan joint business conference in Melbourne.

"Demand for business-related air travel is growing as increasing trade links are forged . . . and the economic growth and prosperity flowing from greater integration is causing a surge in leisure travel," she said.

China would feature significantly in this and was already making major efforts to create aviation infrastructure for its booming economy.

The country was building 35 airports and had another 23 major aviation construction projects under way, she said.

"By 2020 China will be the second-largest aviation market in the world and the fourth-largest source of outbound tourists," Ms Jackson said.

She said low-cost carriers were poised to flourish in the region and Qantas had a $50 million stake in Jetstar Asia, which was expected to start flying by the end of the year.

"With 3 billion people, strong economic growth and any potential new point-to-point routes, this is an excellent opportunity for Qantas to capitalise on the effects of integration in the region," Ms Jackson said.

The Australian airline was also in the final stages of negotiating a 49 per cent shareholding in Thai Air Cargo, a joint venture company that will operate freight planes within Asia.

"The venture is an important part of the growth strategy for Qantas freight and provides access to a number of Asian markets," she told the conference.

- AAP

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[Sunfish]

Yes Margaret, but why would the Chinese allow Qantas to horn in on their domestic markets?

Do you really want Qantas to join the long list of Australian companies that have invested in Asia, only to get royally screwed by their business partners?

Exactly what competitive advantage does Qantas have that will allow it to successfully compete in Asia?

Is it people? (Regretfully not any more)

Is it money? (Nope)

Is it technology? (Nope)

Is it geography? (Nope)

Exactly what barriers to entry can Qantas raise to prevent competition in Asia markets? - (Well I guess we can try and suck up to the Government, thats always worked really well in Australia).

I know! Lets hire some of the brilliant managers from Telstra who invested and lost over a billion dollars in Pacific Century Cyberworks!

[TIMMEEEE]

Sunfish, a good comparison but at the end of the day hindsight is a wonderful thing.

As they say in business the worst thing you can do is to make no decision.

Sure, Telstra lost alot of dosh on PCCW but had the tech boom lasted longer or PCCW was able to materialise their goals then it would have earned Telstra a motza !!

Remember when BHP purchased Magma Copper in the USA (the largest copper supplier in the world) a few years back?
Shortly thereafter the world resource industry took a battering and copper prices reached 35 year lows.
BHP was forced to totally write down their $2 billion investment.

Or what about IBM's attitude that personal computers wouldnt amount to anything and they effectively gave Bill Gates the operating system that built his empire?

No plan is foolproof and some are downright foolhardy, but at the end of the day if the risks are costed then harm is minimised to the parent company.
Telstra, PCCW, BHP and IBM are still around but have learnt from their forays.
Hopefully this makes them stronger and more savvy next time around.

The most wasted words in the world are "if only we had......"
At least the masters at QF have a plan rather than sit idly by and watch opportunity fly out the window.

[Sunfish]

Timee, the whole focus of Boards these days is risk management and corporate governance. Application of these principals would have helped Telstra to reject the Hong Knogf investment andf dont even talk to me about magma copper.

[TIMMEEEE]

Sunfish, whats the problem with magma copper?

When I worked for BHP as a youngster our department head was actually the man that headed BHP and signed off on the Magma Copper deal.
Doesnt surprise me actually !

As for risk management, I suppose if you werent to take any risk then all board members could sit fat, dumb and happy knowing they'll be safe before the next take over attempt on their company.
Then the board members will whinge that their cushy jobs have faded into oblivion and then reminisce about the "good old days".

Every business venture is a risk but making sure those risks are worthwhile is where a shrewd board does well.

Talking of wasted money what was the Singapore Airlines write down after Air NZ was re-nationalised so to speak?

[Sunfish]

Timmeee, you poor b****rd. You should see what a mess your former boss has made in his new role! My guess is that the institution concerned is going to be cashless sometime next year.


My former Chairman at a certain company (I was CEO) bashed into me over five years the concept of risk management in a corporate entity. As for buying Magma copper, any competent management would know that future copper prices were a major risk and their should have been a strategy in place (like hedging) the instant the company was purchased to minimise the risk.

In addition Copper prices are incredibly volatile, almost as bad as Zinc.


But going back to basic business principles, I was taught by a very rich man that if you decide to expand overseas, you need to have a strategy not only to maintain control, but you must have a defendable competitive advantage in the overseas market.

This requires barriers to entry by new players as well as a defence against existing competitors.

These barriers can be regulatory, technological or financial.

I would argue that Qantas does not have any such defences - except possibly regulatory.

[quim]

Sunfish. When reading your posts, I can't help but wonder what drives you.

You state that you were a former "company CEO", and you were "taught by a rich man", and yet here you are mixing it up on pprune. Without much influential success, I might add.

So, logically, if you were a CEO taught by a rich man, you should be weealthy and successful, and effectively have no time for "poor b@stards" like Timmee, right?

Why are you here? We can only surmise that you were a failure as a CEO, and didn't listen to your rich friend. Therefore logically, your advice on matters of business, is substantially flawed.

You also seem to frequently "QF Bash". I dont like the man particularly, but Geoff Dixon could safely be assumed to be a far better CEO than you could ever dream to be. On that basis, my advice to you is to be just a little quieter than you currently are. ie Shut the hell up.....!

Have yourself a nice day.;)

[TIMMEEEE]

Sunfish old son.

You've got me thinking as well.
Why would a former CEO be mixing it here with us lowly aviation people?

With regards to the ex BHP CEO, I would have Geoff Dixon over big Jezza any day of the week.
Dixon has a shrewd business acumen coupled with street-fighter instincts, a lethal and effective combination.

As for the former, I watched him work his way up the ranks (yes, we all were mystified too) to GM at Port K and then rise on to the board at head office.

As for myself, I was a low life Metallurgy Degree trainee that worked in his dept under the guise of quality control!!
And yes, we all had thick skins and good senses of humour!

[HANOI]

Sunfish....as I said before...Do you belong here ?.

[Sunfish]

Quim I read your posts occasionally and they are in my opinion, uniformly offensive, as are Hanoi's. Both of you have zero to contribute and make no positive contributions to any Pprune discussions at all. Why not go back to your flight simulators and stop posing yourselves? Or do you just enjoy trolling ?

Timmee, I have yet to form the opinion that aviators are "lowly types" except in the cases of the aptly named Quim and Hanoi. I frequent Pprune to better understand whats happening in the aviation world both here and abroad and maybe get a few pointers for my own flying.


I'm sure you are right about Dixon. Maybe his China delusions will go away. At least you no longer have to put up with Jezza, who is still making a mess of things.

The terminology I use in my posts is designed to avoid running foul of moderators by naming names so yes, I am a bit obtuse at times.

Quim tries to get a rise out of me but is way off target.

The reason I'm here is because I've been interested in Aviation since I was a kid, after getting an engineering degree I worked for an oil company then Ansett's engineeering division, then got an MBA from the same organisation as Margaret Jackson, and into management of a variety of organisations, including a spell working with a Defence/Aerospace company, the State Government and CEO of a small but reasonably successful company.

For Quim, I'll put it simply I've always wanted to fly. I have a good and liesure related use in mind for it assuming I can meet the required standards.

I've never had the time to be able to learn to fly until now. I'm trying to fly about three times a week while I can. Money has never been the problem (sorry quim).

I'm thoroughly enjoying flying even if I do manage to scare myself witless every now and then. It demands development of a whole new skillset including quicker thinking and acting.

I may be an idiot as far as my flying skills go, in fact I am my own harshest critic, but that assessment does not translate into my career, of which I am reasonably proud. My comments on business and competitive advantage by the way, are hardly original, if anyone wants to look in any reasonable competent business strategy text, you will find exactly the same advice that I am giving. Companies frequently delude themselves about overseas expansion. It is so tempting for a whole variety of reasons. Years ago, British companies used to establish Australian subsidiaries just so that the MD could come out and watch the cricket, I kid you not.



I notice by the way in today's Financial Review that NAB is putting its Irish banking operation on the market - which suggests exactly the same outcome I would predict for Qantas's China essay. You don't go into overseas markets unless you have a defendable competitive advantage, otherwise you will be skinned, as many companies, not just Australian, have learned to their cost over the years.

No one here has explained exactly what the QANTAS competitive advantage in China is going to be in words of one or two syllables. By the way, managment doublespeak phrases like "Dynamic synergy with existing economies of scale" or "synchronisation of operational efficiencies" and suchlike do not count. Qantas institutional investors (if there are any?) should demand that the Board explain in very simple words, on one A4 sheet of paper, why this strategy is a winner, what the risks are and how they are to be minimised and managed. As far as I know, no one has yet done this.

Sunfish

[Mr.Buzzy]

Well said Sunfish...... Hope you enjoy the flying and unlike the few that you have mentioned, some of us still enjoy what we do and take little for granted.

bzbbzzbzbbzzzzzzzzzzzzzz.......

[quim2]

I frequent Pprune to better understand whats happening in the aviation world both here and abroad and maybe get a few pointers for my own flying.

WEll, sunfish, these are your words. Your sentiment is fair enough, but you do seem to have plenty of opinions given that you have almost zero experience in aviation, and given that you state that you are here to learn.

You have contradicted yourself, Mr CEO. Thanks for your resume BTW. We all feel better knowing it. NOT.:yuk: :yuk: :yuk:

[itchybum]

quim(2) and Timmeeeeeeeeehhh have got you there, Sunfish.

Unfortunately, you did yourself no favours with your "Professional Pilots" thread or the Aussies-Kidnapped-in-Iraq thread. Then you expect to taken in as someone with something sensible to say??

Enjoy the flying lessons and for idle aviation chat at your own level of comfort, may I recommend the aero-club bar.

[Sunfish]

Itchybum and Quim, I refer you to Socrates and the Theban plays: "Just because a fool says the sun is shining doesn't make it dark outside".

To put it another way sweeties, do any of you have any career experience OUTSIDE aviation?

By the way I stand by what I said about Iraq. The " tell all" books that should start coming out in a few years should be quite interesting. Do not even think of going there even if someone offers you $300,000 a year.

I would have thought you might have liked a few comments from the outside world, especially for some of you who want to take on the management of certain airlines.

Especially from a modest, intelligent, witty and perspicaceous Sunfish:}

However, if you want to run a mutual admiration forum, or sit around bitching about why management won't put you on a pedestal, or why Government won't do your bidding its up to you:ok:

[itchybum]

Yep that's what we want.... Seeya!

PS not many pilots finish up managing an airline.

[quim2]

Geez, oh dear. Sunfish, you just dont get it. This aint a p1ssing contest mate.

To answer your question, yes I do have significant experience outside of aviation. But I'm not going to play your game and bore everybody to death with my resume. 'Cos people dont bloody care.

They judge you on your comments on this forum, and yours my friend are very poor.

[Sunfish]

Well we will just have to disagree on that quimmy.

Itchy, your comment about not many pilots ending up managing airlines is a good one. RMA, I think, flew for a while. I'm not sure if Branson has a licence. Do you think pilots shouldn't end up managing airlines?

By the way what is your excuse for posting together with Itchy at this hour of the morning? (0617L here) Are you actually rostered on to fly aircraft or did you wet the bed?

I'm just about to walk the dog and go and do a little flying.

[itchybum]

How did you go with your problem regarding a clam-rubber?

(in the agony aunt forums.......)

[TIMMEEEE]

Cheers Sunfish and thanks.

Great to hear your doing a bit of flying and are keen to exercise and improve those skills.
With close to over 13,000 hrs I still learn little things on each and every flight no matter how mundane they may appear to the average punter.

With respect to expanding into China I believe they dont have any grand ideas, just the fact that there will be opportunities there in the future to fly to Europe via China and to resume OZ-China services.
Also there will be benefits which can be offset by increasing trade with China - especially freight bulstering profitability.

To totally ignore the Chinese market I believe would be foolhardy.

If they were proposing to set up an airline over there.............thats another kettle of steamed fish!!

[Sunfish]

Agree with you 100% Timee,