JQ Asia flying low...Whats next Tricky Dix

[Triple 7]

Qantas chief executive Geoff Dixon's dream of tapping into the burgeoning Asian airline market is turning into a financial black hole.

Three months after Qantas's 49 per cent-owned Jetstar Asia took its first flight from Singapore, the airline has conceded it may have to lease out half its fleet of eight Airbus A320s, which were due to be in operation by November.

The low-cost airline, which so far has cost Qantas $23.5 million, has been frustrated in its attempts to gain traffic rights into the key Indonesian and Chinese markets and is facing a challenge finding new destinations for its existing four jets.

Qantas spokesman Michael Sharp said Jetstar Asia "would look to lease out some of the [four extra] aircraft it ordered" if it did not gain additional traffic rights this year.

Jetstar Asia has pulled out of its Singapore to Pattaya, Thailand, run after just two months. It is understood the airline already has advertised within the industry to lease out the four remaining A320s due for delivery.

In addition to Taipei and Hong Kong, Jetstar Asia recently started services to Bangkok and is on the verge of gaining traffic rights into the Philippines using its existing four aircraft.

Industry sources have indicated the Chinese Government was not enamoured with Jetstar's decision to begin services to Taipei before finalising negotiations for landing rights with Beijing.

The airline is set to take delivery of its fifth leased A320 by May but has asked the aircraft's owner - International Lease Finance Corp in Los Angeles - to find another taker for the jet.

The four remaining jets have been leased from ILFC for five years and Jetstar may have to sub-lease them at a significant loss.

The new jets have relatively expensive fit-outs (and leasing conditions) which may make them difficult to sub-lease. Aside from the aircraft's leather interiors, they have the necessary technical specifications to gain extended-range twin-engine operations. This is a safety requirement that allows operators to fly beyond one hour of the nearest airfield.

Jetstar Asia's new chief executive, Ken Ryan, was unavailable for comment yesterday.

[Sunfish]

Told yer so.......

[flyingins]

You speak so often, Sunfish, that you had to get something approximately correct one day.

P.S - Even poorly educated guesses can sometimes resemble the truth.

[Sunfish]

Fly, I consistently and lucidly explained why this was a bad idea from day one.

My simple question was exactly what skill set was QF going to bring to Asia that did not already exist there and what was going to be J* Asia's defendable competitive advantage?

The answer, then and now, was a big fat zero.

The monetary cost at present is, I presume, negligible, the management time however is another thing.

Anyway, its off again to the air show.

[itchybum]

I don't remember you explaining anything lucidly.

[Ascent]

Maybe J*asia is meant to fail. These announcements have come out just in time to show the AU govt just how much access to Asia QF would have from SIN. :suspect:

[flyingins]

All I hear from you Sunfish, is "blah blah blah blah waffle waffle".

By constantly rabitting on in the fashion of an evangelical minister all you do is detract from the so-called lucidity of your own arguments.

Less IS more.

[Orville]

Maybe J*asia is meant to fail. These announcements have come out just in time to show the AU govt just how much access to Asia QF would have from SIN.

Accent, I hope your comment doesn't go un-noticed. This may well be the most truthful words spoken on the subject of J*a, and our company leaders may well be a lot smarter than we give them credit.

If we welcome competition on the U.S. route the loss in revenue will far out way the negligible loss this exercise will loose.

[Gnadenburg]

And if J*Asia does go under certainly hope those displaced crew looked after by the QF Group - pilots get jobs back home in QF & J*.

[cyclops camel]

4 A320's for OzJet.... Make 'em an offer Schotty!
;)

[ExcessData]

JQ Asia won't fail. Things are just sloooowwwer than anticipated.

You saw it here first!

:ok: :E

[surfside6]

....and you know this how?

[Sunfish]

Flyings, I have consistently asked the same question. What is J* Asia's competitive advantage?

NO ONE has answered this question aprt from managment speak BS.

[Sunfish]

Miriam, please check your PM's

[Beer Can Dreaming]

Please correct me if wrong, but isnt JetStar Asia 51% owned by Singaporean businessmen?

These Singaporean owners are very shrewd businessmen and would not put their eggs into any basket they knew was going to be a black hole.
So things are slow at the start.
Do we honestly expect it to be plain sailing and profits from the start???
The Tsunami thing was a tragedy that not only affected J* Asia but a number of carriers throughout the region.
The Indo's playing hard ball in order to protect their own carriers will be resolved in good time.

They have an outstanding lease deal from Airbus on their aircraft and are looking for new markets.

I am no supporter or employee of this company, but to kick it in the guts and predict their demise after only a few months is both immature and narrow minded.

An Australian company wants to be partners in a company making inroads into the burgeoning Asian market, and all of you guys want to lay around and see it fail.
At the same time you all sit back and are quite happy about Asian companies buying out Australian organisations, wanting unlimited routes through Australia and sending all of the profits offshore, while at the same time they refuse to allow our airlines the same deal out of Singapore because it would affect SQ.

To describe those knockers as narrow minded as I have is way off the mark come to think of it.
Foolish, ignorant or lacking education would be closer to the truth.

Not to mention the fact that a number of fellow aviators careers are involved.

Lets stop sticking in the knife guys and remember we are all in the same industry.
If they prosper then everyone comes out ahead one way or another.
If it were to fail, then we all are affected.

[sport]

Are you saying that the 'Asian Business Man' never makes mistakes like the 'dumb old australian'?

[Sunfish]

Bear Can, with respect, I'm not putting the knife in. I've consistently said from the start that I fail to see the strategic imperative in QF going into Asia.

I know all the stuff about "the burgeoning Asian Market". My 92 year old Dad who traded in the East since 1933 counts at least five times since then when "the burgeoning Asian Market" was going to reap millions of dollars for all concerned.

Do you remember the "Asian Tiger Economies" that were the darling of the world in the late 80's early 90's before they blew up in our faces? I had two personal friends who lost their entire businesses through Asian investments. Both of them lost their entire investment and one suicided.

I am not saying J*'s partners are anything but honourable men. What I am saying is that you need to get up very early in the morning if you want to make money in Asia. The dream of the masses of Asia all slavering for your product has been trundled out regularly to anyone who will listen for 80 years, however most European companies end up walking away sadder, poorer and wiser.

The only shining contradictions I can think of are the Swire Group, Arnold Otto Meyer (A german trading company) and I think Hagaermayer - and all of these have been around for well over 100 years - thats how long it takes to break in!

[Beer Can Dreaming]

Sunfish.

I hear what you are saying, but I meant what I said about the attitude of some contributors to this website.

Someone tries and makes a go of something, this time in Asia - and all the knockers come out of the woodwork predicting its imminent downfall and smiling with glee at the same time.

Asians, especially the Chinese think 30 odd years ahead and plan strategically around that ethos.
We cant think more than 5 or even three years!

When was the last time a 2 laned freeway (without a breakdown lane) was built in your area, only to be at capacity straight away upon opening?
Ever think to expand for the future and build the freeway with 3 or 4 lanes and a full breakdown lane? - no in most cases.

As for trading in the east, my mother worked as a corporations lawyer for both the Dutch East India company and The Swire Group from the 1950's up to the 1970's.

Companies like Jardine's and The Swire group had their routes in China since the opium wars and have expanded quite shrewdly in co-operation with the Chinese.

The point I am making is if an Australian company can make a profit by being partners in Asia, why the hell not make a go of it?
You have to start sometime, why not now?
Good on them for making the effort.

As for the strategic importance, Qantas has been operating throughout Asia for many many years and why not build on this experience for the future?

Afterall, dealing on a business level in these countries is half the effort and experience in doing so is absolutely mandatory.
Why limit yourself to one area alone?

The Asian Tiger economies (China in particular) will yet again rear up and bite with great force and the rest of the world will be falling over themselves to do business with them.

I also believe that currency speculators did have some hand in wiping out the value of some asian currencies, Malaysia in particular.
It explains why the Malaysians have put measures into place of stopping this happening ever again.

What really makes me laugh is contributors to this forum that quite gladly laugh at someone trying to make an effort.
At the same time these brain-dead knockers sit idly by and are quite glad to give say Singapore and Emirates free rights to operate throughout Australia whilst they have many restrictions imposed upon our operators out of Singapore and Dubai.

Emirates are increasingly putting pressure on their pilots wages wise and have all but wiped out the possibility of earning overtime.
This was done with no consent to pilots.
They just did it one day - so much for working with a contract.
What an honourable mob they must be!!
At the same time they have long term plans to recruit from India, Pakistan, Sri Lanka, the Philippines and other low wage countries to bring down wages even lower.

Dont expect to see that many expats working for Emirates in the longer term - and who will be the first to whinge like an old mole when Ozzie airlines lower wages to compete???

Think ahead people and think smart.

[Chocks Away]

Beer Can Dreaming:
Good points but I was of the impression (I don't do many good ones!:} ) that the Dubai market was an "open skies" one!?

[The Enema Bandit]

It is but they pick and choose. No LCC's allowed.

[Pete Conrad]

The A320's destined for Jetstar Asia will be flying the Tasman soon.

Thought I'd just start a rumour.

[Groaner]

Today's SMH reported a rumour from "industry pundits" that Qantas may pull the pin on Jetstar Asia in the next two months.

fwiw.

[Chimbu chuckles]

BCD I agree the beancounters would like to hire from the 3rd world and turf expensive western expats...they may find it more difficult than they think. The pool of experienced pilots from the Asian region, and I include West Asia, is not that big. Those with the qualifications, experience, skills and DESIRE to move around the world is smaller still. And things aviation are booming in their home countries...they don't need to move.

At the Asian airline where I work we have a largish % of local pilots who have very high standards and lots of experience in heavy, wide body, long haul ops...the have all been trained by the Brits and have UK ATPLs with all that implies...and they bemoan the recent downwards trends in T&Cs as much as their expat cousins. More than a few have been interviewed at various ME and Asian airlines that pay better and have been offered jobs but to date not one has resigned.

Asia and the sub continent can't crew the aeroplanes they have now let alone the ones on order...how many pilots do you really think they will supply to the remaining 'bastions' of western expat pilot employment?

I agree it's a pressure point but also believe events will overtake airline management in the expat world.

The shortage that has been looming for 10+ yrs was delayed by SARS and **** (The War Against Terrorism:E ) but it's starting to take form now.

The infrastructure that has supplied pilots to the western world and expat world (GA and the MIL) is a shadow of it's former self. All that's available to replace the shortfall is '3rd world' Airline Cadetships and the 3rd world Mil...not even close, in my opinion, to being enough.

Of course if a few of the airlines in Charter 11 in the USA actually fall over and spew 5000+ highly experienced Yanks onto the world market the looming shortage will evaporate instantly. Yanks don't do the expat thing in significant numbers and I believe the more likely scenario is that US airlines will restructure in Chapter 11 and the US system will survive and expand again...quite probably with pilots being paid a whole lot less than they have been but not enough less to send 1000s out to Asia and the ME.

Everything is a cycle...we have been seeing the downward cycle for most of the last 10+ yrs...I think things have bottomed out.

My glass half full view anyway:ok:

As to how long Jetstar Asia lasts? 3-6 mths tops.

[P51D]

Have just used J* Asia return SQ to HKG. Load factor on both trips at least 75%, very good service and professional. Biggest problem, unless you get emerg rows 12/13, is the 28" seat pitch -anyone over 6' in old measurement won't enjoy, I won't use them again for sectors beyond 1 hour and find Valuair a much better product.

For an earlier post the other investor with QF is Temasek Holdings, the SQ Govt investment arm and majority owner of SQ itself - the power plays in that part of the world are intriguing consdiering SQ also own Tiger.