Qantas fleet Choices:A Perspective

[DEFCON4]

Summary
Cutting out premium seating undermines an already precarious business case for the A380 – did Qantas prematurely write off the 777-300ER as well as 747-8 Intercontinental?

Analysis
Former CEO Geoff Dixon was one of the first to lambaste the 747-8 Intercontinental. As part of the original “Working Together” advisory group, Qantas is the only member not to have purchased a single 777.

Dixon confessed that not buying the 777-300ER had hampered Qantas’ ability to effectively compete with new entrants - and not just on the lucrative Australia-US segment.

With Airbus dilly-dallying on A380 production rates it cannot hope to achieve within even a decade, Qantas faces a mounting prospect of behind left behind its rivals.

The carrier deferred its A380’s, it has delayed, swapped and chopped its 787 orders and yet works towards phasing out its ageing 747-400 fleet with nothing to step in to replace that capacity.

That the airline is considering cutting business class seating from its A380 fleet is a startling indictment at the sheer gravity of the mistake of overbuying a big bird whose “flexibility” in a downturn is as commensurate to using gasoline to extinguish a forest fire.

That’s before we consider that Qantas has a hefty batch of 767-300s that need divesting hurriedly too.

Alan Joyce hasn’t had the dream start to his role he may have wished for. Domestic traffic erosion, Tiger Airways, Virgin Blue and new competition on US routes means Qantas has a rockier future ahead of it – perhaps that’s why Joyce alluded to a decade or more to elapse before Qantas could consider merger overtures.

The common theme in this entire quandary is the over-ambitious pep talks on how the A380 would be all things to all long haul airlines.

Reality has shown it to be everything its not.

Shrinking market, half of the 16 customers have deferred orders, a terminated freighter variant and a volatile production regime that shows no sign of stability.

Qantas has already made moves to drop First Class from a slew of key routes – to consider business class immune is at best a hollow fantasy.

If, as expected, Qantas takes the cull to its business class sections, the very ethos of John Leahy’s “you can break-even at 65% load factor on the A380” mantra evaporates as quickly as the Airbus E-Squared concept response to Boeing’s former Sonic Cruiser.

With Qantas increasing freight operations to the USA and having nothing efficient to fly it on when a rebound occurs means their planning will become unstuck.

Dixon was way too quick to condemn the 747-8 Intercontinental – such incremental growth could slot right into its fleet and global network with no problems. Equally, the 777-300ER could play a fundamental role on European routes that Jetstar hoped to ply 787s with.

For the interim, 777s could play a productive role – even the newest 777-300ER customer in Turkish Airlines is poised to deploy the airplane on routes to Australia.

It takes a big man to make big decisions.

Dixon is no longer at the helm of Qantas, although he was indeed man enough to admit the 777 should have been in the fleet.

The question is whether the Alan Joyce is man enough to bite the bullet and order the 777 and/or 747-8 Intercontinental to make up for the failings of the A380.

This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
Contributed by a Member of the GLG Energy & Industrials Councils
So, guys how interesting is that?

A Special Industry Insider Report by John Alwyn-Jones – e-TravelBlackbaord’s Special Correspondent.

[Pegasus747]

clearly an interesting perspecitive.. passenger reaction is really good on the A380 but can the airline really compete with it....

hard to know i guess only time will tell..

personally i would feel a bit better if Qantas had a real replacement for the older 747 in the wings... rather than a pipe dream of the 787 variants still on the drawing boards

[captainrats]

Aviation is cyclical.An understatement obviously.So why would you purchase an aircraft that is only suitable for the top of the cycle?
The 777 offers flexibilities that the A380 does not.At least Scrotum Face admitted he made a mistake.Will Joyce buy 777s now?If he doesnt he is a bigger fool than Dixon

[SeldomFixit]

Any long haul carrier today that is NOT using 777's should get out of the game

[Crossing Guard]

When James Strong and his cobbers from TAA took over Qantas they removed all the red tail men that had experience at running an international airline.
When Strong couldnt make the changes he wanted he spat the dummy and left.Enter Geoff Dixon an ex journo with a few politico mates.His experience at running a large international airline...zilch.
They couldnt run an airline but they discovered they could make a lot of money...for themselves.
Hence poor decisions...
No 777s
Purchase of A330s in the wrong configuration and wrong fuel tank capacity.
Commitment to the A380.
Freight price fixing..mea culpa
Gutting E and M spares inventory
Disengaging staff through fear management.
The EQ platform
The second rate introduction of the Blackberry..now an excellent doorstop
Cutting back on maintenance when having the oldest fleet in the western world.
Threatening and bluffing LAMES.
All adding up to trashing an iconic Australian Brand.
But as the author of the original piece discusses buying the A380 was the biggest blunder.
Thieving incompetent bunglers

[the rim]

yes yes yes you hit the nail on the head ....but we have an up to date IT intranet.....oops.....no we dont add that to the list and we are still waiting for AJ and his mates to walk the talk he gave us some months ago....the only difference between qf and circus is that we have more clowns at qf:(

[maui]

How long has it taken for you guys to realise what a nasty little a'hole the bow tie was.
Time and time again we have heard he was wonderful, he had the most talent of any recent CEO, he engaged the staff (cc at least).

At last someone has woken up.

The worst of it is that he taught scrotum face how to be an a'hole, and then GD perfected it.

That feels better.:ok: tata

Maui

[stubby jumbo]

Top post Crossing Guard.

Dicko use to bang on about LEGACY CARRIERS ........well guess what we have THE DIXON LEGACY now.

Your list of QF failures is on the money.

Any chump can work out the 777 was/is the aircraft for QF.......for Christ sake even the poms ( BA) bought them !!!!!:eek:

The honey moon is over for AJ.......its time to deliver matey.

Otherwise this period will be known as the Leprochaun wearing a bow tie below a scrotum face ........LEGACY :hmm:

[another superlame]

Nice of Scrotum face to admit he made a mistake as he was walking out the door, that was so big and strong of him.

The man is an egotistical fool who plays games with peoples lives, he made a costly mistake,and he doesnt need to face up to the consequences.

[Sonny Hammond]

Any new fleet choice requires spending A LOT of precious CASH.

Even the big boys in the middle east have reigned that in, so who here sees QF being a bit contrary and opening the wallet?

What? Huh? is that silence I hear? I thought so....

No 777's coming for QF any time soon, that horse has bolted...

[ditch handle]

Convert dream[ing]liner slots to 777 ????

[The Green Goblin]

Business 101

You've got to spend money to make money!

I reckon they screwed up when they cancelled 15 787's they should have converted it to 10 or so 777's with an immediate delivery schedule in place and they may have got them at cheap rates considering Boeing has only got a handful of orders this year.

[surfside6]

If you told most of QF senior management that you had some DC3s in pristine condition for sale they would jump at them.
How can you run an airline with management that are clueless.?
No one at QF has any noteworthy experience running an international airline.
No wonder the fleet composition is a mess.The A380 will prove to be a millstone around the Qantas coporate neck

[RedTBar]

Thought of an interesting parallel.Qantas from memory took it's first 747 in 1971 and the oil crisis hit in 1972 or 1973.Now they have just received the latest wide body aircraft just in time for this GFC.
GD has admitted he got it wrong with the 777 but even if AJ wanted to spend the money on the 777 how long would it take to take delivery?

[QF22]

SH
As i recall they raised bucket loads of money a year or two ago to finance the new fleet. What happened to all those billions of dollars? ? ?

[Firecat]

That would be for bonuses to management if things get really really tight

[68+iou1]

It’s obvious the Airbus lunch was better than the Boeing.

[ditch handle]

Rumour has it that Peter Gregg and his family were "sponsored" a fully paid up and rather lavish European holiday around the time of the Airbus order.

[lowerlobe]

Ohhh Ditch..

I think it would be completely reprehensible to even infer that there would have been any incentives or favourable treatment given to airline execs so as to influence their decision on aircraft purchases....:E

I mean to say this is not like the Olympics....:E:E:E:E

[Merlins Magic]

Business 101

You've got to spend money to make money!

If QF aren't careful, they will find themselves in a very similar fleet (age and maintenance) position as Ansett. Whilst the dollar is good and demand is down, QF should be making some real decisions for the future. Stop focusing on the doom and gloom and see this as an opportunity to get ahead of your competition.

Correct me if I'm wrong but did QF also not long ago cancel orders for new 73's. How they can keep operating 73-400s locally and across the ditch I have no idea. Many of the 3rd world African countries have a more modern fleet than QF.

[-438]

'Dixon is no longer at the helm of Qantas, although he was indeed man enough to admit the 777 should have been in the fleet.'

He was also famous for stating "777's are old technology".

Funny the media never had a bad word to say about him when he was CEO.

Fortunately he didn't get his $60million for the take over deal. He 'only' walked away with $12mill in his final year. The guy is a crook.

[maui]

-438

Scrotum Face gives crooks a bad name.:rolleyes:

M

[geoffrey thomas]

Geoff Dixon also admitted that not introducing premium economy much, much earlier was a mistake. It beggars belief that an airline that carries the second tallest passengers in the western world the longest distances couldn't figure that one out.
Best GT

[Transition Layer]

Yes the timing with Premium Economy has been nothing short of brilliant!!!

Due to poor demand in the premium cabins, Premium Y seats are now being sold as economy and part of the business cabin sold as Premium Y. :rolleyes:

At least it will keep some FFs happy in the meantime.

[roamingwolf]

we now have Premium Economy and have had for some time
Not as long as some of our competitors N-BW:oh:
Our new slogan.
Yesterdays ideas tomorro or other airlines ideas next year.:yuk:
happy flying boys and Girls

[Best Rate]

Ahh, the QF Tripler dream-thread has surfaced yet again....

A few negative and envious sentiments being uttered from the skippies as the Big Vee-Oz touches down 16R in front of "the audience" no doubt.... :ooh:

The Toulouse products are grrreat guys! Stick with it - You'll be bonza.....

BR

[lowerlobe]

you need cash to fly them
Yes,you do and the board has said it has the cash if you remember...

The main point here is that it has been admitted by Darth that he should have ordered the 777 but he didn't....

He also said he should have introduced premium economy earlier as our competitors did....but he didn't.

That didn't stop Darth from accepting the nice bonus every year did it?

[Taildragger67]

What amazes me is that some 777s weren't squeezed out of Boeing as comp for the 787 delays.

[The Green Goblin]

What amazes me is that some 777s weren't squeezed out of Boeing as comp for the 787 delays.

My thoughts also!

Something tells me though it 'aint as simple as grabbing a couple and sticking them on the pacific. You need ground support, tech support, spares, flight crew, AOC approval, ops manuals, fleet manager, trolley dollies and much more. A company like Qantas probably needs a few years to prepare to introduce a new type into its fleet.

[Short_Circuit]

What amazes me is that some 777s weren't squeezed out of Boeing as comp for the 787 delays

I am not 100% sure but did not Boeing offer at least 7 slots on the 777 line to QF as compensation last year, when Dicko was ruling the roost, but declined? :hmm:

[OBNO]

The next order for Qantas will be the A350.

[RAD_ALT_ALIVE]

Hey SeldomF,

That is a truly BIG call. At a brief glance, some airlines that, according to you, shouldn't be operating are;

Aerolineas Argentinas
BMI
Finnair
Garuda International
Hawaiian Airlines
Iberia
Lan Chile
LOT Polish Airlines
Lufthansa
Olympic Airways
Philippine Airlines
SAS Airlines
South African Airways
Sri Lankan Airways
TAP Portugal
US Airways
Virgin Atlantic.

There are some pretty big, pretty old, pretty well run, pretty successful airlines amongst them.
:ugh:

[Pegasus747]

YouTube - Hitler's 787 Delayed (http://www.youtube.com/watch?v=BF_P77VEPKA)

[SeldomFixit]

Oh Yeah Rad Alt - you emptied the top shelf with that list.
Probably 3 of them you'd fly on, 777 or not.:rolleyes:

[krankin]

Gold peg..... Gold.

[lowerlobe]

I'd rather have aeroplanes flying regardless of what they are instead of pining over relatively old technology 777's.
Now N-BW...that sounds familiar...

Who else has said that.....let me think....of yeah...GD:yuk:

Like a number of other competitors that also installed premium Y/C they also use the 777 and are making good money with it......

[packrat]

The funniest and most accurate video I have ever watched online..
It says what many think in private

[Ka.Boom]

If an honest and accurate Qantas history is ever written the Dixon years should be explained as a period of greed incompetence and lost opportunities.It will take Joyce and Clifford years to correct and unwind Dixons mess.
Not purchasing the tripler will haunt Qantas for many years to come.
The A380 on the other hand is not living up to expectations.It is an aircraft for the top of the aviation cycle.As has been previously mentioned it does not provide operational flexibility in times of downturn.
Where oh where is John(tubby)Ward?

[Ka.Boom]

[/URL]

V Australia reminds Qantas how wrong it was about the 777

[URL="http://blogs.crikey.com.au/planetalking/author/bensandilands/"]Ben Sandilands (http://blogs.crikey.com.au/planetalking/2009/08/17/f-35-jsf-program-collapse-a-question-of-when-not-if/) Accompanied by the Virgin Blue alternative to the Qantas children's choir, Brett Godfrey reveals the name of the airline's long haul operation

Virgin Blue has really shown how it can punish Qantas for its absurd resistance to acquiring Boeing 777s.
The announced ‘phase two’ expansion (http://www.crikey.com.au/2009/08/17/sydney-loses-its-stranglehold-on-international-flights/) of its V Australia fleet which rises to only four of these jets by December is going to be an enormous headache for Qantas.
And especially considering it holds orders or options for up to 13 Boeing 777-300ERs.
Qantas made two incredibly inept decisions concerning its fleet needs in recent years, in choosing to buy a large fleet of Boeing 787 Dreamliners, and not buying Boeing 777s.
In its defence, it was as easy a sell for the ‘plastic fantastic’ 787 sales pitch from Boeing as many other carriers, just more so considering the order peaked at 65 units and was recently trimmed to 50.
But when Geoff Dixon, then CEO, and Peter Gregg, then CFO, gloated over the wisdom of that deal in December 2005, their major competitors, Singapore Airlines, Cathay Pacific and Emirates, saw clearly the merits of the latest versions of the 777 and swooped.
The 777 is a product of a Boeing that knew how to design airliners and deliver on its promises, not the latter day Boeing that spread a truly promising concept in the 787 far and wide among sub contractors and risk sharing partners, some of them unequal to a task that the new management of Boeing wasn’t effectively supervising anyhow.
Hobbled with an aging fleet that Qantas for a period neglected to even maintain in a clean and reliable manner, it p*ssed more than a billion dollars in excess fuel consumption into the wind by not having 777s in its fleet. Money it will never get back. The 777-300ER is the most fuel efficient 300-400 seat sized longer range airliner available until at least 2014 and perhaps well beyond.
Qantas lost. Singapore Airlines, Cathay Pacific and Emirates gained. And now V Australia is gaining too, even by using the 777s on routes that are really too short in some cases, such as to Phuket or Nadi, to deliver the best economics of the jet.
These short routes give V Australia the chance to play havoc against the likes of Jetstar or Air Pacific at times when the 777s would otherwise be idle between long haul flights, racking up parking fees at the major Australian airports.
Much the same way that Emirates punts its A380s and 777s across the Tasman daily to take advantage of the big cargo container market that Qantas and Air NZ neglect with their smaller single aisle jets, plus passengers as a bit more cream on top, rather than do nothing while waiting for the right time to fly back to Dubai.
Being optimised for long haul, the 777s also have much better economy class amenity than shorter haul jets (despite Emirates going for 10 across seating).
Anyone who is familiar with the crammed condition of economy class on a Qantas 747 to Johannesburg is going to be pleasantly surprised by a V Australia 777. The difference will be very noticeable over the 12-13 hour long flights.
Using 777s, V Australia will be able to offer very attractive alternatives over a range of shorter as well as longer haul flights, cutting across the territory of both Jetstar and the Qantas full service offerings.
This takes the Virgin Blue subsidiary out of its until now total exposure to the cut throat environment of the trans Pacific routes where the A380 does give Qantas a cost per seat per kilometre advantage, as well as an even nicer airliner. And it allows V Australia to diversify into markets where the giant Airbus is some years away from being a force, which it won’t become until sustained growth returns to international aviation.
And the Qantas answer to the 777, the slightly smaller 787, isn’t coming any day soon, maybe never. Qantas can use A330s very effectively over medium distances where that Airbus is the efficiency leader, but as it turns out, those who use the 777 against it in Asia, Singapore Airlines, Cathay Pacific and Emirates, also have large A330 fleets for just that reason. They have the long and medium haul routes covered with A330/777 strategies that eluded Qantas, to its costly disadvantage.
In fact out of its better equipped major competitors, Emirates is the largest A380, 777 and A330 operator in the world, with Singapore Airlines also flying large numbers of all three types.
On Wednesday Qantas has allowed extra time for its always important financial year results announcement and briefings.
There are whispers. Some say it has cancelled the 787. Others that it has come to an agreement with Boeing to replace some or all 787s with 777s.
If it is a case of the latter, better late than never, but rather sad considering the squandered opportunities.

[surfside6]

Never put people with no international experience in charge of an international airline.
When Jimmy Bow Tie came to Qantas he got rid of all the experienced Qantas personnel and replaced them with his mates who had zero experience.
Result: the mess you have now.
Wrong aircraft
Old Aircraft
Declining Service levels
Disengaged staff
The Leprechaun doesnt have a clue how to fix it