Jet* and Japan..A Failure

[Ace Wasabe]

No one in the Qantas Group appears to understand the Japanese Travel Market.
After attempting to crack the market with Australian Airlines the white flag was eventually hoisted.
Jet* is continuing to make the same mistakes.
The market is highly regulated with legislation in place to determine minimum pricing.
95% of travel in Japan is arranged through travel agents.They rely on commissions and incentives.
Jet*offers neither
Load factors,particularly from Nagoya,have been around50%..unsustainable.
Jet*will shortly withdraw from Nagoya and enter Tokyo.
This is an attempt to pick up expat travellers and backpackers from Europe.
The Japanese market also relates strongly to prestige..Jet* has none.
The Japanese market will not support a LCC.Those in the Qantas Group Marketing Department do not appear to have learnt anything.
Just like christianity this type of business will never catch on in Japan.
It is seen as a novel curiousity

[hiflying]

Interesting... Just out of interest, why doesn't QF mainline keep control of Japanese flights? If the market relates well to prestige, shouldn't QF do quite well? Does anybody know how Qantas does on SYD/BNE/MEL flights to Japan?

[eye_in_the_sky]

Quite a contrast, I have found the Jet* services to Osaka/Kansai to have quite reasonable load factors.

And yet this is part of Japan.

It's all about Choices. :)

[QFinsider]

As I posted earlier this year...
All J* flights catered ex Cairns..Who pays? And why?
If the model works and the product delivers, this is a furphy. Unfortunately the Japanese market isn't interested, there are too many full service choices providing a real alternative..

European passengers disgruntled, being thrown on J* flights from Singapore, having thought they booked QF...

The sad part is AO did try, it didn't work, the market is sensitive to the rip off. The J Star model is flawed, but the creative accounting hides the true nature of this Dixon disaster..
An amazing thing happens when you keep trying the same thing that didn't work the last X times you tried it..:ugh:

[ebt]

You're wrong Ace on what Jetstar offer agents. Jetstar have two sales offices in Japan to service the groups and travel agents market. They do remunerate agents and there are special incentives with the largest agents. JQ have gone about trying to do as well as possible to make this market work. Sure there are some changes which will have to be made along the way, but the market is far from a writeoff.

[blueloo]

eye_in_the_sky - yes it is all about choices - jetstar give you none - other carriers give you plenty of choices - for the same fare as jetstar with a full service carrier you can have a meal if you want (without paying extra) - if not its your choice! if you want a blanket you can have one (without paying extra) - its your choice. on international services you can have a drink without paying extra - its your choice!

[jetjockey7]

What is "a reasonable load Factor"?
For most airlines the breakeven load factor is around 70%.Get to 80% and you are making tons of cream.
Overall load factors on Jet* are nowhere near 60%.They are bleeding red ink.
As QF Insider suggests the losses are heavily masked.

[Ace Wasabe]

The Travel agencies are do not see Jet* as a prestige carrier,nor do their customers.
The Japanese traveller is very will informed.
They do not perceive Jet* well.
I spend a great deal of time in Japan and have yet to see any Jet* advertising.
This model will fail for the same reasons AO did.
Japanese travellers give their agents hell if the product falls below expectations.They are mindful of this when arranging bookings.
Believe me Jet*is on the nose.
Why else pull out of Nagoya?

[DEFCON4]

Load Factors ex Japan on QF Mainline are being hjammered by the exchange rate.
While J/C is pretty much full Y/C is running at around 55%
J/C is used by travellers originating in Europe as a means of securing a seat and avoiding SIN, BKK and HKG.
The service you receive in J/C on an Airbus 330/300 is superior to that of a jumbo.If local Japanese traffic was relied upon load factors in J/C would be around 50%.
The other Japanese ports..Osaka and Nagoya have never been serviced satisfactorily by QF.Old Equipment and poor scheduling being the main problems.
Qantas for too long took the Japanese market for granted and it is now paying the price.

[Short_Circuit]

It is simple to explain.

QF started J* as a tool to eventually rid it of the expensive workforce at QF.
Yes things at J* and QF will struggle until we see the evil plan succeed.

The 10 Year Plan

1/ Wind down QF and build up J*

2/ Close down QF sack all QF employees

3a/ Revamp J* as premium product & LCC with low cost employees

4/ Rename J* to QF with low cost employees to get Aussie population back onside.

Simple, it is happening right NOW! :oh: Just wait and see if Little Johnny gets back in (AWA's and no redundancy payments )

S_cct

[Wiley]

Sadly, I can find no fault in short circuit's logic, nor in his time line, and I do believe I made pretty much the same comment somewhere here on D&G some time ago and was howled down by Keg and other QF insiders for "not knowing what I was talking about".

I really hope short circuit and I are wrong, but it doesn't take a degree in rocket science to imagine what some of the converations around Dikko and Margaret's conference table will have been on the subject of staff costs these last few years.

[surfside6]

Agree with most of what you say but...
why close down AO?
AO had a cost base of around 30% less than mainline.
Regardless,duopolies(JAL and QF)are never effective or efficient particularly for the traveller.

[lowerlobe]

why close down AO?

I think because J* is even cheaper than AO and they wanted J* to operate the AO routes and make even more money for Darth and Co.

J* is AO MK II and the whole concept is to get the cost base as low as they can get it.

AO did not get the cost base low enough or rather they thought of ideas after the start of AO that were even lower.When J* was up and running they could no longer see the need for AO.

They (Darth and friends) worked on the group that designed Howard's IR laws and they know what legislation they need to achieve these kind of work practices.

[blueloo]

I understand Darth is no longer flavour of the month with new chairperson, and will be sitting out contract as a golden parachutey type thing. Needless to say, still getting payed bucketloads to screw everyone and ruin a company!

[Short_Circuit]

I think AO, as was Australian Asia (remember that one) was just to test the water on non competing routes and setup an infrastructure to introduce J*. AA was the first test that failed, J* worked, with support at first. It worked as now we move onto QF routes and beyond.


http://www.youtube.com/watch?v=zOPVdLcq79M (http://www.youtube.com/watch?v=zOPVdLcq79M)


As I have posted just a moment ago on another thread, I bid a fond
bon voyage to all who were here in the god old days.
:{

[surfside6]

Australia Asia Airlines was set up to appease the Mainline Chinese Government who were not happy about QF flying into Taiwan.
Individuals who do the same work as others but for less remuneration have a Kangaroo loose in the top paddock.
My good old days are now...I am happy with my remuneration and associated conditions.
I do, however, have an exit strategy

[aulglarse]

Somehow the rising AUD has dampened the Japanese inbound tourist market and JQ is to blame! What if the exchange rate was the other way around?

[surfside6]

The Exchange rate was favourable for the Japanese when AO was around.Didnt do much for their load factors

[Short_Circuit]

surfside6 I am always happy to be corrected and with thanks, (unless it

is a technical error) :O :} :ugh: :mad: (PS I love these little guys)

I have no idea what was going on those days, I must have a few loose

skippy’s loose up there, hop, hop, hop…. hick.. I fixed em and sent then

on their way back to Asia as they were red & white with Oz rego VH-OGA.

Australian Asian Airlines, C/O Cpt Allan Tyrell. How did he get that gig?

Where is he now? What happened to him & AAA.

Just another era that we may want to forget.

I agree that my pay is reasonable but conditions, support and future are

at an all time low. Hence the search for razor blades.

[Cunning_Stunt]

The first QF aircraft were 747-SP to fly in the " Aust Asia " callsign days. The flights were full. We used to call the tail signage Mr. Squiggle. My memory is that Ken Davenport was Chief Pilot

[Short_Circuit]

Stunning ,,,,
Amazing what damage alcohol does to the brain.
I can’t positively remember the SP in Squiggle.
But it rings a Bell.

[The Kavorka]

What a load of crap........

The JQ flights to Japan have been doing quite well with close to full loads a lot of the time....

[travel thickness]

Talk to the groundstaff and you will find that what YOU have said is a load of crap.Better Still, talk to the crew.

[Butterfield8]

Jet Star Reservations:"you want to go to Japan?Sure.When and where.We are wide open.
Full loads Huh ?
When NGO goes from the network print a retraction here on PPruNe Kavorka

[Mstr Caution]

Short Circuit

Regarding "your" ten year plan.

Can you explain why then, are Qantas mainline employing 500 pilots over the next 3 years only to make such employees redundant? Why bother with all the unnessary training costs?

Can you elaborate on the Jetstar plan to avoid the same fate as that happening to REX? The pilot shortage will not only be limited to Regional operators.

Why are cadets being placed at Qantas mainline & Qantas Link & not Jetstar Domestic or International and why is the mainline cadetship expanding?

Do you believe that a new QF CEO will embrace the two airline strategy to the same extent as GD?

[ebt]

Ace, not disagreeing that the Japanese market is based on prestige or that Jetstar is not perceived as a prestige carrier. At no point do they make that claim, and I did not insinuate that they were. I was merely pointing out that you were incorrect in your claim that they do not offer agents anything because it was factually incorrect.

I think the segment which Jetstar will target and eventually find success in is the younger Japanese market. Society in Japan has changed a lot and the youth of that market are becoming a lot more Wedst-centric and have now taken on leisure travel more like backpacking etc. If Jetstar can offer these people low fares to Australia then it will have a captive market. It won't happen overnight but it will probably will happen.

[The Professor]

"Can you explain why then, are Qantas mainline employing 500 pilots over the next 3 years only to make such employees redundant? Why bother with all the unnessary training costs?"

Have you guys not yet figured out the obvious.

QF can attract applicants to the mainline operation with relative ease compared to the lower paying Jetstar but there is nothing preventing them from forcing mainline pilots across to operate on Jetstar terms.

QF will utilize the alterations to IR laws to give mainline pilots a choice, take a seat in an orange aircraft or dont let the door hit you in the butt on the way out. It will be the easiest way to rationalize the highly inefficient cockpit crew at QF without industrial action.

As the detailed analysis of the APA bid stated, there is substantial value in the Jetstar model.

Jetstar will be the growth engine.

[Veruka Salt]

Spot on Professor,

Qantas mainline does not have a requirement for 500 Pilots over the next 3 years. - it's the wider "Qantas Group" that needs to recruit in large numbers.

New aircraft deliveries are mostly replacements for existing mainline aircraft; there is very minimal growth of the mainline business.

I hope no one actually bought Dixon's line that "every mainline pilot will have an opportunity to upgrade in the next 5yrs". For these upgrade opportunities to exist in mainline, the airline would have to double in size.

Instead, the mainline product is languishing as all efforts are devoted to Jetstar, which is clearly where these career opportunities lie. :yuk:

[murgatroid]

Back to the issue.

Is it Jetstar or is it:

1. Over 100yen to the dollar
2. Japanese package rip-offs - over inflated accom costs, Japanese owned tour operators and agents in Cairns, Japanese owned "shopping" tours in Cairns.

Perhaps the humble Japanese tourist is waking up to these rip-offs and going elsewhere!

As for the QF/J* debate, remember that QF has given poor service to the Japanese market for years. Old equipment (747 classics) and the failure of the all economy Australian Airlines has seen this market in decline for years.

Can J* turn it around? Unlikely!

[Pundit]

The more things change the more they stay the same. Qantas and JQ are so arrogant they are incapable of learning lessons from the past. (In JQ's case this also applies to safety, but that is another thread)

The Original source of the data below is the Australian Bureau of Statistics, via Tourism Australia. It is circa 2000.

For most Japanese, because of the language difficulty (most Japanese cannot speak English) and the tendency to be fond of full service, a package tour is the most common way to travel overseas. Normally everything is arranged: transport, accommodation, sight seeing, meals and a Japanese tour guide.

When the Japanese economy went into recession in 1996, the tourist market changed, but the Australian tourism industry has been very slow to react. Prior to 1996 most Japanese booked their airfare, accommodation and tours at the same time in Japan. At that time money was not the major issue, it was a convenient way to arrange a holiday.

With the recession, the Japanese tourist became more selective with their money. No longer were they willing to accept the fixed terms and high mark-ups of package tours.

By the year 2000 another important factor had arrived on the market, the Internet. Now the Japanese tourist could research their overseas holiday in detail before they left. They could compare the prices and options they were being offered through the package tours to those available in the local market. It is at this point that the Australian tourism market missed the opportunity to take advantage of the change in the market. Today there is relatively little information in Japanese about tourism destinations, tours and accommodation on web.

[Mstr Caution]

Professor

So let me get this right, Jet* will be needing crews to cater for growth or parking aircraft. They tell the QF guys see you later, or go drive an orange coloured aircraft. QF guys decline, cause they know Jet* are needing crew & that better T & C are available elsewhere.

Isn't that the reality of the situation?

[skychild]

There are few reference made in this thread re JQ pulling out of Nagoya.

Where has this info/rumour come from?

Can anyone confirm or is it pure speculation about JQ again?

[Angle of Attack]

Another point is that Jet* simply is not cheaper than other airlines, yes there are occasional cheapies but your still looking at around 1500-1700 return on Jet*. Malaysian and Korean, Thai and China Airlines etc. beat them hands down almost everytime, and it gives Japanese an opportunity to stop off in one of these countries on the way which are gaining popularity in the Japanese market.

Combined with this QF have treated the market badly in the past decade as another poster alluded to(the oldest crappiest equipment), then pulled out of everywhere except Tokyo to put in this new entity Australian which was then pulled and now Jet* comes in. Everyone in Japan knows the Qantas brands but the last 2 have completely confused them they don't know where they stand.

I know a few locals in the Japanese travel market and while everyone's $hit stinks Jet* is definitely in the rapidly gaining hate market for Japanese travellers.

I have predicted this around 6 months or more ago, and it is unfolding exactly as expected. Jet* is bleeding on the Japanese routes, maybe they will justify it to take over the Narita run, but if they do they will stuff the whole market.

[The Professor]

Caution - QF will not ask politely.

Some QF pilots may leave but many will accept the upgrade.

Most will realize that the only option will be O/S.

[Ace Wasabe]

Agree 1000%
Once Nagoya is removed from the Jet*Network the A/C will then be used to service NRT......further stuffing things up.

[QF skywalker]

No-one has said that JQI are pulling out of NGO. However, they have just dropped a service ex CNS now making it 4x weekly compared to daily and sometimes double daily that AO once flew.

Also many JQI ex CNS to NGO and KIX are operating as a triangular service which confirms loads are bad.

Also, AO never had bad loads on Japan. Always full. Except during SARS.

[ftrplt]

Also, AO never had bad loads on Japan. Always full. Except during SARS

Not true; AO triangulated FUK and KIX during the slow season, then pulled out of FUK eventually due poor yield (not loads)

[OchreOgre]

My wife was on the NGO flight the other day...Surrounded by ex-pat Japanese, all taking advantage of the thirty something dollar airfares to get back to Japan. The missus said the service was near non-existant. She will pobably go to NGO via Guam from now on, just as many others are doing now. Perhaps if QF had a once weekly service to NGO/KIX it would make things all better... NGO is becoming a "New Money" hub in Japan, with companies taking advantage of its central loation, and the flow on in wealth to the local population. The ex-pat Aussies in NGO/KIX tolerated AO, but they mostly go with CX or SQ now.

[Tropicalchief]

Jetstar averages around 100 pax per flight into Cairns from Osaka/Nagoya. When AO operated the flights average load was around 200. As I have mentioned on several occasions, the Japanese will not cop Jetstar. When AO was operating an average of about 1000 pax arrived per day on 4 flights from Japan (2 operated by QF) and 1 from SIN. That number is down to 600 arrivals per day. The Narita flights operated by QF are always well patronised, the others operated by Jetstar, from my observations, are a disaster.

[CaptCloudbuster]

:uhoh: the number of times we hear the J* flights to Japan climb straight to FL380 / FL400 departing Cairns would indicate poor loads....
Just think of the fuel they're saving compared to the QF/AO services though:}:rolleyes::mad:

[ratpoison]

Obviously, you know nothing about the A330 then. With almost a full load of pax on a 5.5 hour flight, FL380 is easily achieved.:cool:

[Keg]

As far as I can tell, NRT-CNS is about seven hours, not 5.5. Talking to my bus colleagues, if they're going to FL380 straight out of Japan for CNS then they're pretty empty.

[request deferred]

Actually JQI announced the triangulation service on NGO/KIX well before they started services ex Cairns, it hasn't 'just' happened at all.
AO loads to/from Japan were as a general rule poor except of course in Japanese holiday periods. FUK relied on school excursions to Oz but they had a habit of cancelling at the last moment.
A330 can achieve a much higher level at initial cruise weights than a 767....please base your ramblings on facts and not opinions.
The Japan market is tough, Japanese tend to follow the herd mentality ( no offense but it's true...thanks Ja'mie ) and the herd loves Hawaii. Complete package deals, an incredible amount of flights Japan/Hawaii = low prices, yen-$us is still roughly the same, Oz dollar has strengthened 30% in recent years, lots and lots of High-end USA Brand-name shopping, Japanese spoken everywhere and the Japs love it!! As an aside, flying Northwest wouldn't be any better than Jetstar, man those hosties are old ( again no offense but it's true ).
Asked my mates in Jetstar and they haven't heard any news re JQI taking CNS/NRT soon however as Dixon announced mid last year it will happen sometime '08 ( Oct? ), I suggest you watch the JQI delivery schedule carefully and see if they withdraw from any existing routes.....that's when we will know. How the 787 delay will affect timing is simply NOT known at this stage.
Cheers R.D.:)

[QFinsider]

Dixon=Yesterday

The numbers on J* don't add up
New Chair not a supporter of dilution of yield. Have you guys heard of Gordon Bethune? Look him up and see what happened at Continental...

The longer I live the more history I see repeat.
Australia is soo much the poor cousin, this two brand rubbish has been done to death overseas. The one trick pony will be consigned to history.

[neville_nobody]

It is also interesting to note that worldwide LCC are trying to morph into something akin to a legacy carrier. Jetblue, VirginBlue, Southwest are just some who are trying to bring in a higher business fare or business class to attract higher yield. Meanwhile Ryanair and Tiger are charging for excess luggage, seats next to each other and the like.

It will be interesting in 10 years time how many true LCC remain and how many have moved closer to the legacy carriers that they all claimed had unsustainable business models. LCC have won the battle but they may end up losing the war.

Interesting to see where Jetstar will wind up in this.

[Pundit]

http://cdn-www.airliners.net/photos/small/6/2/3/0485326.jpg (http://www.airliners.net/open.file?id=0485326&WxsIERv=Obrvat%20747FC-38&Wm=0&WdsYXMg=Nhfgenyvn%20Nfvn&QtODMg=Flqarl%20-%20Xvatfsbeq%20Fzvgu%20Vagreangvbany%20%28Znfpbg%29%20%28FLQ %20%2F%20LFFL%29&ERDLTkt=Nhfgenyvn%20-%20Arj%20Fbhgu%20Jnyrf&ktODMp=Frcgrzore%201994&BP=1&WNEb25u=Zbeevf%20Ovbaqv&xsIERvdWdsY=IU-RNO&MgTUQtODMgKE=N%20pynffvp%20jrnevat%20na%20hahfhny%20fpurzr&YXMgTUQtODMgKERD=4094&NEb25uZWxs=2004-01-07%2000%3A00%3A00&ODJ9dvCE=&O89Dcjdg=22672%2F537&static=yes&width=1260&height=862&sok=JURER%20%20%28nvepensg_trarevp%20%3D%20%27Obrvat%20747FC %27%29%20%20beqre%20ol%20cubgb_vq%20QRFP&photo_nr=1041&prev_id=0485797&next_id=0484123)

[Bushfiva]

There aren't all that many independent travellers in Japan, and those that are tend to head to Europe. Cairns, Hawaii and other locations within 8 hours of Japan are pretty much package tour destinations. Japanese package tours tend to be short duration: 3 to 5 nights. I think few people in Kanto will travel to Nagoya for a package departure. It's somewhat mroe accessible from Kansai. But the last leg from the shinkansen to the airport works against it mightily. Also, a shinkansen ride in both directions back to Kanto adds say 20% to the cost of the package. So the catchment area may be smaller than Nagoya would like to suggest it is.

Package tours are put together by the major travel agents, for example H.I.S. &JTB Corp. Hearsay suggests J* doesn't have much quality contact with the likes of H.I.S. and JTB Corp (the biggy, turnover USD 15 billion).

[mmmbop]

Ratpoison,

Obviously you know nothing about distances and flying times. 7.00 to 07.30 depending on the season. FL380 in the 330 with any sort of load ain't happening. The proof of no load is when less than 1 hr later they are asking for 400 going into Moresby.

Request referred -'AO loads as a general rule were poor'. What a crock of the proverbial. Never light, to any of the Japanese destinations serviced. Of course there were peak and off peak loads, but essentially the jets were pretty full.

M

[Capt Kremin]

FL400 as optimum on a -200 at ISA plus 10 is approx 175 tonnes. Do jetstar fly these international sectors using 202 tonnes max weight or 233T?

[request deferred]

AO loads in the last two years of operations were poor, hence it's closure. If they have been good then the airline wouldn't have been shut down. 120-150 pax on a 271 config a/c is not a good load. The last revenue seat factor published for AO 2005-2006 was 67.6%, continuing a downward trend. That's how it was, any other recollection is pure fantasy. QF domestic for example is currently running at 90%...that's a good load.
Let it go, it's gone :ugh:
Anyway, back to the original topic of Jetstar, how will the 787 delay affect them?

[Tropicalchief]

Osaka flight this morning, 130.

[B A Lert]

Some part of Jetstar is unwell. Having just looked at the Qantas Group numbers for Sept., I see that each business unit has improved is Revenue Seat Factor this year versus last year except for Jetstar: Jet* SF has declined 3.7%. Sep 07 compared with Sep06 shows a decline of 5.7 points while other business u nits grew. Interestingly, Jet* numbers are totalled (Domestic and International) whereas Qantas shows Domestic, International, and QantasLink.

[request deferred]

Well done B A Lert, here's an example of someone using facts to support their argument......Bravo :D

[B A Lert]

I believe that AO "failed" not so much because of poor loads but rather a cost base that was deemed to be too high. AIPA ensured that pilot pay was not cut below mainline levels while cabin crew weren't all that far behind their mainline brethren. Overlay these facts with some of the woes of the time (SARS, Bali bombings) combined with a generally poor management, you end up with a pretty good recipe for an enterprise not to succeed as well as it should.

[QFinsider]

The Genius of Joyce will steer it through to a different outcome this time...

If only the two lil people could see over the dashboard...:ugh:

[Taildragger67]

As has been stated, Aust Asia was set up to operate Taiwan flights. Other carriers (eg. BA and KLM) did similar. But it had to be a 'real' airline, with its own corporate structure, to appease the PRC authorities - hence it had its own CEO, CP, AOC, etc. but clearly could lease or charter aircraft in or out as required.

One thing in all of this... why the emphasis on bringing Japanese tourists into Australia? Why not market carrying Australian tourists, to Japan (and other parts of North Asia)? Get out of Tokyo or Osaka and Japan is no more expensive than western Europe (except for steak... :{). Good skiing in Hokkaido, some nice beaches in the south, lovely mountainous scenery in western Honshu... with the AUD at current levels, why hasn't anyone thought to market Japan as a destination to Aussies? :confused:

[DEFCON4]

Is run by overpaid myopic morons.These people attend cocktail parties and envelope openings,slap each other on the back...saying God we do a fantastic job.
Tourism Australia is a lucky dip.

[VH-JJW]

JQI IS profitable, even on Japan.

BAL - Whilst seat factor (do you mean load factors?) have declined, what were the RPK's vs ASK's for the same period?

Facts speak louder than rumours and the facts for Jetstar were supported by yesterdays Board announcement. Massive growth for Jetstar, more replacements for Qantas.

QF middle management may like to spin pilots stories about how 'they' would get rid of the terrible 'brand destroying' Jetstar. However, as long as Senior Management bonus payments are hinged to 'Group' performance, and provided Jetstar pulls its weight, it will stay and grow.

Now lets wait to see how many 787's Jetstar really get............

[QFinsider]

If J* int is profitable then show an audited set of accounts, as a stand alone entity. This crap that gets espoused from some corners here and by Q "mis-management" shows contempt for accounting convention.


Gifted assets, terminals, staff, check in desks etc
Fuel?
Aircraft costs?
Routes?


Sunfish said it earlier and I repeat...It is called CONTRIBUTION MARGIN. J* pays very little for what it gets in terms of everything from the parent, in the annual reports details remain scant and many think it contributes.
To paraphrase Gordon Bethune who inherited Continental from that idiot who Dixon models himself on.......

Costs are one part of the business, GROWING REVENUE takes talent. So let's charge em nothing and sell a seat for $x dollars cheaper than mainline".It's called paper profit, and the lack of full time aviation analysts means that most of the 26 year olds at these firms buy it.. It is called dilution of yield. What more could be expected from an uneducated yob from yesterday...

[Keg]

QF middle management may like to spin pilots stories about how 'they' would get rid of the terrible 'brand destroying' Jetstar.

Best to keep your mouth shut and be thought a dill than to hit the 'submit' button and remove all doubt. Who says that the stories aren't coming from senior management? I know that's where they've come from when I've heard them. Not all in the executive think J* is a winner.

[Eastwest Loco]

I am not amazed that onestar has hit a glass mountain with the Japanese market.

Back in the dim dark when F28's roamed the skies East West was big in the Japanese market. In our run-in to launching the product we put together a product which was similar to our previously bad news attempts and sent it to our ex TN man on the ground there. That from memory was Tad Terimoto but I stand for correction there.

He came back saying the product and brochure is great - but too cheap. Increase the price by 30% or the Japanese will not but it.

We did. It worked - and within 6 months we had in flight announcements in Japanese and English on the Queensland services ex Sydney. They loved us and the free champers. They just loved being acknowledged despite the premium fare and loaded package they were paying for. To the Jap market, perception is everything.

Price it cheap and it will be considered to be crap by the Japanese market. Maybe they have something there!!!!!!!

Jetstar and Japan should not apprear in the same sentence.

Wrong airline concept - wrong market. I know that - all wholesalers know that - where has the Mega Rat heirachy gone wrong? This is marketing 101.

Put mainline back across all ports and there may be a chance of holding their market. If not SQ will clean the floor with decent fares and full service over SIN. I cannot see it happening, but somewhere logic may prevail.

You can dress a whore in a lovely frock and introduce her to your Mum, but she will still slide off a bar stool despite your best intentions.


Best all

EWL

[VH-JJW]

Keg - That wet feeling in your pants is your so called 'senior' management sources pissing in your pocket. But you just keep on listening to them.:{

At the end of the day Money talks, bullcrap walks.

Unusual for you to get personal so early, bit sensitive on this one eh?

[flyingins]

My god you're all wasting your breath;

1) Jetstar will be crewed by Mainline. Full stop.
2) Jetstar will never go beyond 23 airframes.
3) Jetstar International will be a dismal failure.
4) Qantas is absorbing the costs of the abject mistake that was Jetstar.
5) Jetstar's Trans-Tasman loads are dismal - the route will close.
6) Jetstar's Japan loads are dismal - the routes will close.
7) Qantas upper-management is losing interest in Jetstar.

Seven consistent arguments made by many contributors over the last 4 years. All of them have either proved to be completely ill-informed dummy-spitting by those out-of-the-know who like to pretend that they're in it (1-3 & 5), or wanton speculation by those who would prefer such an outcome but can't actually support their opinions with facts (6 & 7).

In the case of point (4), of course Qantas is absorbing some of Jetstar's costs! It owns the bloody airline! It's as much an investment as it is a venture! Why wouldn't it help to support it? As for being an abject failure, perhaps the following quote will address that bit of conjecture. In fact, it should pretty well address all the other assertions as well;

" 68 A320/A321 aircraft, plus 40 options and purchase rights".

Not gloating. Just facts. In addition to the 31 B737-800 (plus 49 options) ordered for mainline (not to mention the B787, A330 & A380 orders), why don't we start looking at the glass as being half-full for a change and stop this insistent bleating about how the sky is falling in because it's taken on a lighter shade of orange?

You're pilots, not executives. If you really want to run the show go and get an MBA and run to Coward Street (or Bourke Street - up to you) at full-speed.

:ugh:

[Wingspar]

East West you're right,

The Japanese culture holds value in the quality of a product. They are almost proud when they state they've bought something expensive because generally higher prices equate to higher quality.

[AN Flyer]

flyingins - couldnt agree more mate. Well said. :D

[The Kavorka]

also well said.........

JQ is here to stay...like it or not!!!!!!

[surfside6]

No One questions that the illegitimate child of Dixon's is here to stay.
This thread is about its presence and success in Japan.
The market is lagely misunderstood by both mainline and Jet*management.
The attitude is "we will educate them"
Even worse it is totally misunderstood by Australian Tourism in general.
There is money to be made in Japan but some research needs to be done.
SingAir and Cathay have a handle on it....as does JAL(obviously)
If QF doesnt pull its finger out Japan will disappear from the network .
I travel to Japan frequently outside of work.
The QF product compared to JAL or Sing Air is rubbish.
I refuse to fly Jet* to Osaka and usually fly to SIN or HKG and then transit.
It saves time and money on buses trains and internal Japanese flights.
There are a lot of Aussies like me who do the same and dont fly Qantas

[DEFCON4]

A number of patterns in BP255 have mainline crews and aircraft transitting CNS both north and south to NRT.
These transits are from flights originating in both MEL and SYD

[Tropicalchief]

Narita is not the issue as the flights are operated by QF. The Osaka/ Nagoya flights are operated by JQI. The passenger loads are miserable given the capacity of a A330.. The JQI service to SIN via DRW is similarly unpopular. The Japanese would not buy a fake Rolex nor will they buy tickets on a fake airline.

[TMAK]

Tropicalchief,

your dislike of JQ and lack of facts are apparent yet again. JQI is currently carrying more pax to NGO/KIX than the QF 767 can muster at full load...and operates the route for less. Hence profit or no profit the nett result is better for the group.

Just how long before a big silver jet begins NRT?? I would guess (if I was a betting person...which Im not) that the answer is very similar to 'when do 787 start arriving'???

For Japanses groups doing a 3-4 day tour to CNS, SQ or MH etc is not an option...much longer flight time and cuts into half the trip...not a threat. Why do all the experts out there refuse to accept the damage is being done by the strong Oz dollar?? Aust is a high cost destination for Japanese at the moment. In time that will change Im sure.

As for DRW/SIN that is not operated by JQI, it is operated by 3K (Jetstar Asia) until end of Jan, then I hear a JQ A320 takes on the run. Assume it will be an extra a/c based up there in the far north.

Cheers

[Ace Wasabe]

Where do you get your information from?

[Eastwest Loco]

TMAK

I am not sure where you get your input on the Japanese psyche from, but if a product to Oz is perceived as cheap and nasty the they go to Hawaii, Las Vegas, New Zealand, Micronesia - wherever.

You are right that the SQ and MH "via" products do not interest the "few days off" traveller.

However if something is underpriced and treats its victims like bacteria if an aeroplane falls over it will lose clientelle both ends - at the coal face where it is sold and also after one bad experience and by word of mouth.

A pig in a floral creton frock in a yiddish market is still after all a pig.

The Aussie dollar is indeed reducing spending ability but not on the airfares as such. The fares are set in Yen ex Japan and at a comparitively high level when compared to the reverse journey. It is just the on ground spend that is in question, and most of the group tours pump their little charges into company owned stores and tell them the rest of us are evil and not to be dealt with.

The Jap market is paying way above what they should for what they get and will continue to do so. They will fly with JAL rather than onestar or go to Okinawa instead.

Best all

EWL

[TMAK]

ACE,

what facts are you referring? Have I stated something factual that is not common knowledge? Other than my open 'guess' for the future??

Cheers

[TMAK]

EWL,

agree on issues of inferior service, that applies everywhere in the world not just Japan.

But do you really think there is sizeable difference in product & service between JQI and the American carriers serving Japan-HNL market?
The other destinations you mention are also 'cheap' now compared to Australia. Maybe the Japanese market (especially the younger generation) are not as fickle. But agree many still are.

Keeping in mind these companies are running a business here and not a public transport service, a market like CNS is not that viable for most. Up there in CNS they have lost JAL, SQ, MH, GA and prob more Im not aware of over the past 5-10 years. And QF has dropped most of its routes due cost (some hidden as codeshares i.e HKG with CX). Years back when working in CNS I know the cargo market really sustained CX (the only noteable foreign carrier operating there regularly year round) and I am guessing cargo still drives it, as I note from schedule online still shares flights with BNE.

If the Japanese want to fly JAL's 20 year old 747 instead of brand new A330 I guess that is their choice. But if they want to come to Australia they have limited flights. So if the market was there for Aust, why is JAL no longer flying to BNE, CNS etc?? If the market was there and they are prepared to pay, then they would be flying to routes. Wouldnt they?

Have a good weekend.

Cheers

[Eastwest Loco]

I will indeed have a good weekend TMAK and hope you have the same.

I will be flying into BNE on QF and then on a chartered Q400 into LRE with other Qantas Platinum Agents for the annual dinner, the on Sunday from LRE to SYD on another charter - a 734.

Should be a heap of fun. So look out stars - if you are crewing those flights you will have the Loco Bloko on board.

As for the Jap market, you are correct in saying it is a thinnish route - however if any service failure occurs then face is lost and so is further load factor. The JQ mindset of "no plane - go away until we have one - no compensation or flight interruption manifest protection" will not wash.

Japan is a very specific market - more so than even the whineing septics.

I guess at least they in general fit the seat pitch OK.

Best regards

EWL

[resboy]

Implying there's a problem with the seat pitch because its a JQ aircraft?

It's a QF configured 332 :ugh:

[Eastwest Loco]

Guess I was resboy.

I am larger than the average bear, so that may have been unfair - have flown QF 332's when they first came in. Enjoyed the standard Airbus 2-4-2 config but found legroom a little under par.

Guess I have been spoiled by the legroom in the Dash 100/200 and 300 equipment out of here - particularly in row 4 on the 1's and 2's.

Best regards

EWL

[resboy]

Thanks EWL :ok:

[CaptCloudbuster]

TMAK Just how long before a big silver jet begins NRT?? I would guess (if I was a betting person...which Im not) that the answer is very similar to 'when do 787 start arriving'???

I reckon you'd lose your dough on that bet TMAK.;)
Word is the NIPPON Govt doesn't look too favourably on swapping slots in NRT.:ok:
All the favouritism given to Geoffs bastard child counts for diddley squat in the land of the rising sun:{
The Flying Roo will be servicing NRT NOT 1* :ok:

[QFinsider]

If the J* "product" is so appealing, then as an "investment" it would show a rate of return...

Details ARE ALWAYS so scant, no meaningful comparison of its CONTRIBUTION MARGIN be made.

The really sad part of the strategy is that it dilutes yield and hence profit. Persuing a low yield strategy forsakes potential revenues. Concentrating so hard on cost at the expense of all else (including mainline investment) is perpetuating the continued decline, ableit incrementally of a once great airline.

Even sadder the architects of this strategy deny it, get rich from it despite increasing amounts of evidence (as in Japan, NHL-MEL) that it simply doens't work!

[TMAK]

Capt....thats why Im not a betting type...but I hear from many in QF this is 'highly likely' on certain routes at least. Maybe a lot will depend what happens with the Japanese market (eg exchange rate) over the near future. Couldnt see it happening out of SYD though.


QF Insider...all the answers you seek are in the media release on the FY results. Plus if you are really an Insider you will have access to the rest.

EWL.. indeed enjoy the weekend. Remember when the 332 pitch is not the best (I face similare problems as you) there is always Star Class for INT flights.

Cheers

[QFinsider]

Oh I guess you are refering to the publicly available information.

There is little information there, that is the point. Contribution margin, nett of transfer pricing (which certainly isn't there) would be marginal if at all.

And it certainly isn't a case of being inside the company, all investors should actually be able to discern the "value" of an investment their company makes by reviewing the Financial accounts. As this information is totally lacking one can conclude that in fact the contribution this "asset" makes is at the margin. As many posters here allude to, the Japan market is falling apart, but you won't find that in a media relaease.......

[TMAK]

Hi QFInsider,

I think you are right, the Japanese market is falling apart, but most of the posts here suggest this is JQ fault and the poor decisions of QF execs. My guess is JQ is being moved to do these routes to ensure that they dont go altogether, as mainline is simply more expensive to justify operation and is causing losses on these routes. Maybe in years ahead as things change in exchange rates QF will go full stride into what may become a high yield route again. Hopefully so for all those QF crew that are worried about dropping those big allowances!

In fact the company has alluded to this market problem previously in public (cant recall how long ago) and many tourism industry groups have been doing the same. Its no secret and its out there.

Your point on rate of return is fair, but keep in mind the important rate of return is the profiit on that investment, not simply the revenue. Cost does play a big part in that. All those execs which we love and hate at diff times, have an invested interest to get the best return from each aircraft. So why would they simply give a/c to JQ if they werent getting a better return from it?? From memory the return from JQ was laid out in FY results so that will give some idea what their contribution was from the number of aircraft they (JQ) have...wouldnt it??

Cheers

[DEFCON4]

Allowances around thw world were big when the $A was weak.
That was in the mid nineties...those days are well and truly gone.
There appears to be misunderstanding in this thread about the Japanese market.
No one is blaming Jet* for the demise of the market.Its just that it is the incorrect business model to be peddling in Japan at this time.
What the airlines want to do and what the market expects are at odds.
The Japanese equate price with quality and prestige and that is what they expect.Jet*doesnt meet those expectations.
As the yen weakens and yields fall airlines (In particular QF)want to reduce their costs to maintain profitability by introducing LCC to the market.
This does not meet the market expectations.Ergo the model will fail(is failing) in Japan.

[meguro]

Has anyone travelled QF inbound to Australia? When the FA announces "Those passegers on Jetstar collect your luggage and make your own way to the domestic terminal" it is not exactly the sevice standard that people expect. Lufthansa, Austrian, BA, ANA, JAL, it is a pretty poor effort really. It means if you have a connecting flight you can basically get st...fed.

[Henry Winkler]

Meguro. Why? If you buy a ticket on Jetstar, you have to collect your baggage and recheck in. If you buy a ticket on a connecting Qantas flight (remember they are different airlines), your bags will be connected on the next flight and you can take the international transfer bus. If you bought a ticket on Jetstar, thats your tough luck. You get what you pay for. I'm amazed that they say anything at all about Jetstar.

[mmmbop]

TMAK,

You have just given me the best belly laugh in quite some time!

The loads to NGO and KIX are so good on 1* that they have cut the services!!!!!!

Ba ha ha ha you crack me up! Nothing like fiction getting in the way of a bit of fact.

M

ps On the 76 loads to KIX and NGO were consistently 229 pax.

pps. That means full load.

Cheers

M

[TMAK]

M,

Im glad I could ammuse you, but I cant see what was so funny. I read back through my posts...but I must be missing something?? Or are you just easily ammused? Please help me learn by pointing out what was fiction??

However your confidence in me being wrong must mean that you know what loads Jetstar is carrying? The 76 up to Japan were not always full...and the ones still operating are still not always full...the only good load is the one flight that is codeshare with JAL and all the punters have booked with JAL. Not QF.

Did some research for you, yesterday CNS-NGO was 230 and CNS-KIX 270. Your right I understand up in CNS that JQ dropped 2 services weekly but overall still offer more capacity than QF did as the aircraft has about 75 more seats on it.

So I guess my question is....if QF is doing so well to Japan...and demanding so much higher revenue...why are they not operating the route??

Or I am still making you laugh?? :ok:

Cheers

[TMAK]

meguro,

when you fly inbound to Oz from overseas everyone has to collect their bags and recheck after customs, unless you get very lucky on select routes where there is a QF or JQ INT flight about to operate a domestic sector between 2 INT terminals. This is regardless of which airline you are planning to travel domestically.

Domestically is where it becomes a pain, where you can thru check with QF but not JQ (not sure on Virgin...Tiger definately not). As Henry said..you get what you pay for. Nothing more and hopefully nothing less.

Cheers

[AN Flyer]

While this has nothing to do with the thread at hand, from what I can tell via holiday flights, the baggage sitation is this:

JQ Dom - no check-through to QF Dom
QF Dom - no check-through to JQ Dom
JQ Dom - no check-through to JQ Int
JQ Int - through check possible to JQ Int :ok:
JQ Int - through check possible to QF int (eg - HKT-SYD-AKL) :ok:
QF Dom - through check possible to JQ Int (eg - BNE-SYD-HNL) :ok:
QF Int - through check possible to JQ Int (eg - LHR-SIN-MEL-CHC)
JQ Int - through check possible to QF Dom, however all pax have to collect bags anyway, and clear customs as TMAK has said.

JQ Int - through check possible to other carriers (eg - Swiss, El Al, etc, MEL-BKK-TLV), or SYD-KIX-ZRH as long as your PNR is ticketed through with connecting sectors, and you stay in transit with -8 hour connection time.

Given the strict -30 cutoff for J* domestic, and the low cost limitations in which they operate, I would image the chaos and nightmare that would ensue should both QF group brands begin interlining baggage domestically ;-) (Which is why I'm guessing they DONT try)

[OchreOgre]

http://www.pprune.org/forums/showpost.php?p=3721112&postcount=22

[Trustworthy]

All this citicism of Jetstar trying to build markets that others have abandoned eg JPN for the good of aviation and the industry. What's the viable alternative?

[ftrplt]

On the 76 loads to KIX and NGO were consistently 229 pax.
pps. That means full load


AO 767's were 272 seats

(edit: 272, +/- 4; the exact number not really neccessary to make the point however)

[flitegirl]

AO 767s were 271 seats except VH-OGV - 268

[request deferred]

Word on the street is that Jet* is making an announcement re Cairns this Tuesday....more domestic services to Melbourne or is it the big Narita announcement? :oh:

[DEFCON4]

Narita....this has been on the cards for a while...but...it will be a further stuff up.
The Model will not work in Japan

[Eastwest Loco]

The JQ HNL services are being largely ignored by a large portion of the Australian market - ie: the professional surfers and the surf related manufacturing companies, whose executives and staff are generally well heeled and carrying boards.

You will often find that the QF 763s are full as a Primary School with the JQ services still loading at deep discounts.

Incompatibility with Global fares originating in the South West Pacific also has an effect.

The main reason they are avoiding JQ is the restrictive and blurred handling requirements of surf board coffins as part of the checked baggage, whereas the 2 piece system along with the extra allowance for Club Rat or Gold/Platinum FF members makes QF the only choice, along with the certainty of reaccommodation by flight interruption manifest or hotel if the aeroplane falls over.

Dropping the MEL service is logical as JQ can in theory uplift ex AVV to SYD and connect, feeding the SYD services.

That is of course if they allow it as a through connection which they do not from OOL - a stupid move seeing they offer through connections to ADL PER and BNE ignoring 2 core markets who are closest to AVV and OOL.

Even SYD originating traffic is avoiding them for the above reasons.

If Team Rat want to hold this market, the 743's would be better used there, as they will still fill them way ahead of a JQ 332.

My 2 bobs worth anyway.

Best all

EWL

[Capt Coco]

On what runs do JAL and Jet* compete again?!?!

I thought JAL no longer flew the KIX-Aussie run(BNE-SYD)...they codeshare on Jet*!!!

Jet* don't fly to NRT(yet).....NRT-BNE, NRT-SYD are the only runs JAL have down to Oz.

[Bankstown]

Announcement re:Cairns is the deployment of A321s on the MEL-CNS and MEL-OOL routes:
http://www.news.com.au/travel/story/0,26058,22821469-5014090,00.html

[Eastwest Loco]

Hi Bankstown

The SYD OOL and MEL OOL markets are another 2 screaming for more mainline seats running flights at very high load factors. OOL HNL and return is a huge on all QF services as the fares are near common rate, as are OOL LAX and beyond including Oneworld fares.

Maybe the group should keep the A321's for other routes and give the punters what they want. The ones that want their Club Rat (like me) and like full service carriers. I even love my little Ratlink flight out of DPO.

Looking at a sole use airport to develop in the deeper South East of Melbourne would be a very good way to draw more traffic. Lots of disposable income out there - far more than in the Western suburbs (on average at least).

It does however look that quite a lot of the group fighting fund is being used in tooling JQ up to meet the SQ group incursion.

Interesting times cometh.

As long as Pilots are in shortish supply, then you good guys and girls may actually get the break you have long deserved and some better conditions.

Bring it awnnnnnn:ok:

After the brilliant night in LRE weekend before last at the Qantas Platinum Agents dinner, and the magnificent way the whole thing was handled, maybe mainline is also acknowleding their top resellers. I am still gobsmacked at LRE and the logistical operation many good QF Staff undertook on a voluntary basis and pulled of with the precision of a moon landing. Brilliant job all of you. You have proved to me that the Airline still has a strong heart. :D:D:D

Best all

EWL

[Going Boeing]

The only reason that J* is making money on their Japan routes is because QF mainline has a contract leasing all the freight capacity on the flights. This is guaranteed income on every flight despite the fact that few flights carry any freight. This is just a way of subsidising and keeping the paperwork look right.
Also, Qantas catering divisions were instructed on what price they would tender for the J* intl contract - well below normal commercial rates and below cost.

[Eastwest Loco]

I was unaware of the freight contract Going Boeing, but freight will always yield more than passenger. Very good point.

You do not have to be full upstairs to make a good living with a full belly locker.

Best regards

EWL

[QFinsider]

GB,
There are many facets of the J* business that are puzzling and the lack of transparency in the accounts only hightens my interest. I suspect the industrial aims of J* make it almost impossible to see any real numbers. I do hear persistent rumours about members of the executive not convinced about J*/J* Asia/J* Int however it appears the elephant scrotum wins the day.
Many elements of the group are paid below market rates for "services contracted" to J*. It begs the question of transfer pricing??


Freight
Catering
Maintenance
IT support
Flight Planning
Personnel transfers
Ground Handling
Fuel
Spares
Aircraft purchases
Simulator training
EP and Cabin crew training




If these transactions were disclosed, both from a taxation and accounting perspective we could more accurately gauge the contribution margin. My hunch is that it performs well below the spin eminating from the mouth of Joyce or Dixon.

[What The]

That may be true.

But it saves your arse.

The facts of the matter are this.

If JQ did not exist within QF someone would have set it up. It would then not be protecting the high yield parent business but stealing business away. Qantas would be forced to compete or die.

With their high cost base (look at manpower costs v revenue as a % in annual report) the only way to compete successfully would have been to aggressively cut costs or bleed red ink.

One is business saving, the other is certain death.

Qantas adopted the strategy they did, which is a very good one IMHO, and were gifted the rates of pay by a naive and industrially raw group who had endured years of McGowen. Anything was better than that!

JQ has saved a lot of mainline QF jobs which would have been cut had QF attempted to directly compete with any new LCC.

I don't think there is anyone who thinks that the strategy adopted is bad, however there are a lot of people who are sick of JQ being used as a benchmark for future T&C's. Tightness in the employment market will determine whether or not the current T&C's on offer at JQ are in the ballpark.

AJ is naive in the extreme if his LCC model relies on one group of employees and their wages. What he fears is the flow on affect to other sections of the business but if he had the nouse he would be able to handle that with a simple supply and demand argument.

If I were a VB pilot or a "Go Cat" one I would see JQ as more of a threat to my job than if I was at QF. JQ is there to protect the high yield business. Dixon has always been at pains to point out that the money in the business is made by the mainline product QF (see any investor presentation).

QF pilots, get over it. JQ pilots, get into 'em for a good increase in T&C's now. Strike whilst the iron is hot or you will never get another chance. The most important EBA for pilots in this country currently being negotiated is yours as it will determine the benchmark going forward for many many years. Good luck.

[Pixie Princess]

despite the fact that few flights carry any freight

Rubbish! 10-15 tonnes of freight both ways is most common.

[Mstr Caution]

Qantas Freight that is

[indamiddle]

what the
'manpower costs v revenue'
these costs also include management, the highest in the asia/pac region.
don't expect any significant change soon even with costcutting

[What The]

Executive salaries would make up 1% of the total. $33m of $3.3b. You are clutching at straws with that argument.

[MELKBQF]

Qantas catering divisions were instructed on what price they would tender for the J* intl contract - well below normal commercial rates and below cost.

Gate Gourmet is the cateing supplier for JQ not Qantas Flight Catering!

[blueloo]

Isnt that false Advertising? "Gate Gourmet"

[Going Boeing]

Gate Gourmet is the cateing supplier for JQ not Qantas Flight Catering!

My understanding is that QFCL supply J* out of Cairns - are you positive that this is not the case?

[Trustworthy]

Bottom line is that J* is obviously working - I heard they are now the 5th biggest int'l airline outbound oz (only beaten by QF, CX, SQ, MH)

[AN Flyer]

Gate Gourmet is the cateing supplier for JQ not Qantas Flight Catering!

In all ports barring CNS, this is true. I believe Caterair got the tender for catering JQ ex CNS due to no Gate Gourmet facilities up there. Once upon a time there were indeed GG kitchens in Cairns, but these all closed down in the days leading up to Ansett's demise. There are one or two old Gate Gourmet GSE trucks parked on the far side of CNS airport next to General Aviation that serviced AN, (visible from the highway next to the airport) but these are in mothballs, poor condition and havent been used in years.

[LetsGoRated]

Last 2 months LF have been 87-96!! The sky is falling!!

[Eastwest Loco]

Good load factor indeed Rated.

BUT.............what is the yield and return per flight with DOCs and nasty things lilke infrastructure taken into account?

One can fly around all day with full aeroplanes, and still go out backwards if an airline is "paying" passengers to fly with them.

I hope that is not the case.

Best all

EWL

[G Cantstandya]

Letsgorated,

I think you are making up stuff to satisfy your hate of JQ, I can tell that the load factors to Japan out of syd are over 85% and cairns, although not doing as well as syd is sitting around 70%, they are the facts.....

[QFinsider]

The reason there is no mention of yield is because there isn't much. Anyone can sell a seat for next to nothing and claim a full aircraft, whether it returns the cost of capital over the life of the asset is another thing entirely..

The J* Int business case carries so many assumptions it will not add to "group" profit.

Unfortunately we never see the real figures.

However maybe our "management" are really "the smartest guys in the room" :E

[genex]

Doesn't fuss me a lot but exactly why would Dixon et al set up Jetstar if it doesn't make money? You can't really say it is to lower wages because if they did that it would add to profits wouldn't it? And if its not returning an adequate return on capital (is QF itself?) then they would be losing money there so why do it?

Just asking

[QFinsider]

a fair question genex.

I have my own suspicions based upon the reality that to look at the mainline fleet and route structure you see a serious problem.


Fleet average age increasing
Poor route structures
lack of investment
Tunnel vision with respect to business development


As such reinventing the wheel with a statement of lower cost base implies it is the staff responsible for the inability of mainline to allegedly return its Cost of Capital.

If a market is unviable with a mainline product, an Australian Airlines product what ensures it is viable with a J* product.

If the answer is lower costs, where are they?

Same fuel burn
Same enroute charges
Same terminal and landing charges
Same acquisition costs of capital equipment
Same establishment costs at an airport from type writers to telephones..


If your only claimed differential is labour costs, these are at best minimal differences. They are not that different.(however they are closely guarded at Q) What is different is who pays for the infrastructure. Much of it is gifted from mainline Qantas. As such is J* likely to do better?
The cost as claimed by J* may be lower, but the cost to group is little different.
In my opinion no. The brand has little penetration into the target markets. The product inferior than many of its direct competitors. Many of the markets it flies to are thin one way markets, with extremely elastic demand.Combine this elastic demand with low yield and I would ask serious questions as to the justification for this model. What actually underpins it?.,

For me the answer lies not in non seen financial details (they are hidden for a reason) I suspect with a further re-election of the coalition and development of workchoices we would have seen wedge politics on a grand scale. To me it is an industrial tool. The lack of credible financial information(externally audited stand alone accounts-with transfer pricing issues addressed) only deepens my suspicion.

[genex]

True, you could be right.

It's not just transfer pricing though....so many of an airline's costs are fixed and need to be allocated on an arbitrary basis. As with transfer pricing hard always to be consistent. Even revenue isn't always that easy to allocate.

Then there's the issue of Tiger, Lion, Virgin et al. Dixon just had to something and JQ was that something. It enabled him to hold off the mongol hordes.

I suspect the truth is in fact in there somewhere, though hard to fathom, and it is commercial property so not going to be easy to find.

Jetstar, can make money where QF mainline can't with reduced labour costs, a single training path based on the Airbus CCQ efficiencies, higher seat density and few of the "frills" that do cost money and may well not pay for themselves in QF.

It's not perfect...but nearly every major airline has done something similar...leveraging off its existing cost and infrastucture base. Dixon is one of the few people to make it work.....albeit with the caveat..."thus far".

[B A Lert]

Same terminal and landing charges

Not so. You can be sure that many of the airports to which Jet* operate have given them significant financial incentives for them to operate to those airports. Jet* are currently trying to get such a deal with Northern Territory airports so that it can establish a hub in Darwin.

Both Singapore and Malaysia offer incentives to carriers to serve Changi and KLIA respectively as both have large shiny airports that can be better utilised. Same for may other places. Australian airports are also known to offer rental cuts on property leases, reduced handling charges and so on in order to attract new business. Some may even offer funds for a joint advertising promotion.

Jet* would fall into the category of "new operator" and therefore gain a cost advantage over its parent. When the sweetheart deal is over, some carriers will move on and declare that the market to that airport is not economically viable simply because they cannot afford, or choose not to afford, the landing and other charges paid by established airlines.

[ANstar]

Jetstar to boost Queensland-Japan services in December | The Australian (http://www.theaustralian.news.com.au/business/story/0,28124,25199584-36418,00.html)

[paulg]

17 March, 2009

INCREASED FLIGHTS GOOD NEWS FOR CAIRNS

The Minister for Tourism, Martin Ferguson AM MP, and the Member for Leichhardt, Jim Turnour, have welcomed today’s decision by Jetstar to reinstate direct international services between Cairns and western Japan on the Cairns-Osaka route
Both the Federal and Queensland governments have worked hard and spent more than $8 million to assist the Tropical North Queensland tourism industry since the Qantas Group cut services between Cairns and Japan last June

Minister Ferguson said: "The Australian Government's response has supported marketing and business development initiatives and resulted in increased charter flights and new international services between Cairns and Japan.

"Today's very welcome announcement by Jetstar builds on these achievements "Australia's tourism industry is presently operating within a volatile global market, so this decision will provide a major boost for the Tropical North Queensland tourism industry Mr Turnour said: Tropical North Queensland is a premier tourist destination and Jetstar's plan to fly an extra four weekly services to Osaka will be welcomed by local tourism operators.

“Increased flights mean increased visitors which of course, mean increased economic activity and jobs for Tropical North Queensland”

Jetstar has also advised their intention to extend its existing Cairns pilot and crew base to include international pilots to support growing operations from the city.

Mr Turnour said: "Marketing investment in Japan to increase awareness and preference to visit Australia will also realise an increase in visitor numbers and assist our important local industry.

“I look forward to working with Jetstar, Queensland Airports, and the local industry to see the realisation of this plan which would increase visitors arriving directly to Cairns from Japan, thereby supporting the local economy and importantly, local jobs.

[teresa green]

So much for JQ being a failure in Japan. Loadings are good, and if the wheel falls off, there is always Beijing, the chinese are aplenty on the Gold Coast, especially young tourists.

[8888]

I wish people would refrain from putting so much emphasis on 'good' loads. I recall Ansett having pretty 'good' loads up to its demise. Front end traffic, plenty of freight and appropriately priced back end tickets ensure a route/airlines long term profitability not simply 'good' loads.

I wonder how the Jetstar boys will take the news that Cairns is to be closed when some moron in an office doesn't like the accounting numbers presented to him at some stage in the future... or Darwin, or Perth. It beggars belief the ambivalent contempt that crew are held in by management down there. Good luck to you.

[mohikan]

Its irrelevant if the loads are good going to and from Japan.

Its irrelevant if there is no yield on said loads due to low airfares.

Its irrelevant if the operation is massively cross subsidised.

JQI is about massive ego, hubris and inadequate planning and due dilligence.

Because of that no matter what it will be a 'success' as far as PR and route profit figures go. Even if said figured are doctored to the max.

This thread and others are irrelevant. JQI could lose 200 mil per year (see JQ Asia) and it would still be a 'success'

[UDH]

Well said 8888.

[clownfish]

Qld premier throwing $2M into the advertsing programme sealed the deal according to the ABC news.

[argusmoon]

As in most countries slot availability is limited.Qantas cant run its own aircraft into many of the Japanese airports...mainline is too expensive(?) and the market has softened.Maintain the slots by gving them to Jet *Only problem is there is a Q of other airlines who would like to have those slots.They cry foul over the Jet* arrangement.So how is all this allowed to happen?What deals have been done to allow this situation to exist.
Jet* is the successful failure protecting QF slots until the time is right for mainline to expand again.
Quite frankly the Japanese are over Australia as a destination.The marketing has been crap.The understanding of the market is minimal and the equipment QF has sent there over the last 10 years has been rubbish.Although things are changing it will take a long time for the market to revive.
BTW there are still 5 jumbos a day flying into HNL from Japan..full.The Japanese are discerning travellers.They know where the value for money is.
It ain't Australia
Any way this is just a bit of cabernet musing

[halas]

Good post Angus.

From a 12 year old single malt reponse.

halas

[rammel]

I too dislike being ripped off in Australia, and I live here. I rarely buy anything of value here anymore, due to most things being available overseas for about 1/2 the price.

As an airline staff member, using our discounts it is cheaper to go to Thailand (Bangkok, Phuket or Koh Samui) staying in 4 star accom for 5 nights than what it is to go to any Nth Queensland destination.

Hong Kong is great for a 2 or 3 day trip to stock up on various goodies, the US once a year is also pretty good, even with a cr@ppy exchange rate.

Skiing overseas is about the same cost as here, some places even cheaper. The comparison between overseas skiing and here can not be compared, it is so much better value all up overseas. And the equipment is also so much cheaper also.

Sorry for the rant, but if you use staff travel wisely and plan for what you want, you can save money and have a good time away as well. If I live here and are p!ssed about how much we get ripped off, why would anyone want to visit here to be ripped off blind.

[teresa green]

Have to agree with you there Rammel, I find Nth QLD overrated anyway, It never stops bloody well raining for a start, anything in the water consumes you, and if go into the bush those Cassowary birds size you up. At least on the Gold Coast you only have to run the gauntlet of bull sharks, or far more dangerous, the ones on the land, and if you stay away from Surfers you will go home still in one piece. (hopefully) The North coast of NSW leaves it for dead, beautiful deserted beaches, that are not brown from rain runoff, (just about every photo of Nth Qld must be touched up) the water is always brown, Sorry Maroons, but it ain't always paradise here.

[argusmoon]

Sorry to all the folks that live in CNS but there is a lot more in Australia to attract Japanese tourists than the Mossman Gorge.Once you have been to CNS you can tick the box.
Australia can learn a lot from Hawaii on how to attract Japanese tourists.Many Japanese travel to HNL on a regular basis.
If Australian Tourism can figure out why maybe they will have a shot

[lowerlobe]

argusmoon....

There's a lot more to Cairns in particular and FNQ in particular than just the Mossman Gorge but I agree it's no Honolulu.To me though that's it's attraction but I'm not Japanese and that's who we're trying to get....

Perhaps we should find somewhere that has something in common with Honolulu.Something that the Japanese can understand and look at with pride....and relate to.....something like Pearl Harbour.....I know.............Darwin :ooh::ooh:

The again they also shelled Rose Bay in Sydney so maybe we could push that as well....:E

At the end of the day it's hard to beat Waikiki Beach even if there is no surf and the sand is imported.The image although built up with advertising and several movies is as I said hard to beat.

The reality is that Cairns is a small place and really a stop over on the way South but the Japanese with one weeks holiday a year don't have the time.