View Full Version : Qantas Looks For Growth

2nd Aug 2007, 03:11
Qantas looks for growth, shows no plans for slowing down
Thursday, 2 August 2007


Qantas CEO Geoff Dixon has outlined the airline’s plans to be part of the ‘new growth paradigm’ which he said will see the current global air traffic of 2.2 billion double with a shift to new markets for the first time in history, developing the ‘biggest aviation story of the next 20 years’.

Speaking at the National Aviation Press Club yesterday, Mr Dixon said for the first time in history, the aviation industry’s centre of gravity was shifting to Asia, and predicted that within the next three years the Asia Pacific will be the largest single market, with a focus on China and India.

This is an historic opportunity for Qantas. We have a small timeslot – just a few years … to make ourselves an indispensable part of this growth story,” Mr Dixon said.

“The future at Qantas is all about managing dynamic growth and dramatic change. It is all about coping with the reshaping of the parameters of the global industry.”

Mr Dixon said the airline was ready for growth using its two brands of Jetstar and Qantas and investing in new generation aircraft and product.

“Jetstar is going to be the key vehicle for Qantas’ plans in Asia, a market where the new paradigm is most obvious and where we must find new ways to grow,” he said.

“Jetstar will work closely with our Asia-based investment partners, the Singapore-based low cost Intra-Asia Airlines, Jetstar Asia and Valuair, and Pacific Airlines in Vietnam’s fast growing aviation market of 85 million people.”

Mr Dixon said the group would be looking to take advantage of opportunities for growth in Asia organically, via acquisitions or through partnerships to ensure it is part of ‘the biggest aviation story of the next 20 years”.

The two brand strategy has worked for the group according to Mr Dixon, as being able to “serve customers right across the spectrum and to adapt quickly to changes in customer preferences, an important advantage”.

Jetstar is said to bring favourable returns on the cost of capital invested, with its operating profit before tax now over $100 million annually.

Mr Dixon said he was aware of the challenges ahead with Virgin starting up V Australia and now Tiger entering the domestic scene, but will remain to compete aggressively to protect its market share both on the home front and internationally.

“We have drawn the line in the domestic sand at 65 per cent and we will defend it.”

“Internationally, we also face new levels of competition with Virgin next year coming on the pacific, one of our most profitable routes.”

Mr Dixon said the US/Australia route contributes to less than 15 per cent of the airline’s profits, much lower than the previously speculated 30 per cent.

“We have never been complacent about our position in the marketplace. We are about to face a new round of competitive challenges and we will be vigorous combatants,” he said.

Mr Dixon said the arrival of the A380 and B787 from August 2008 will benefit both brands with continuous plans to increase it portfolio after spending $12.6 billion on new aircraft since 2000, and a further $25 billion on order.

Qantas’s Frequent Flyer programme is also set for a revamp, with the airline to offer ‘any seat’ redemption, introduce a Jetstar loyalty programme, and broaden its loyalty ‘earn and redeem’ partners.
Mr Dixon also said the group continues to look at “creative ways to maximise the value of our fleet”.

“This could involve alternative ownership structures, but implementation will not happen overnight. We will take our time to get it right,” he said.

He said the Group was looking at undertaking a capital management review to enable better management strategies with its corporate strategies and expectations from investors.

“We remain confident that there is significant further value to be unlocked in Qantas over the next 18 months,” Mr Dixon said.

“Underpinning all this activity is our ongoing commitment to lowering costs – an issue which is central to our continued growth.”