Qantas Dose Of Competitive Reality

[Bad Hat Harry]

Summary


Costs do not prohibit Qantas from competing with Arab carriers in the Persian Gulf, so why does it fail to serve the region and then complain about competitors in Australia?

Analysis


Alan Joyce is the only guy who can explain the absence of Qantas in the Persian Gulf, however, for Qantas to complain about Gulf carriers on its turf is a non-starter.

Whether Air Arabia breaks its costs structure to acquire long haul airplanes to serve Australia next year is unclear, however, Emirates, Etihad Airways and Qatar Airways cannot be held liable for Qantas’ failures.

Codesharing with Etihad Airways to Abu Dhabi and Bahrain simply isn’t good enough. The amount of traffic now bypassing Bangkok and Singapore for travel to the southern hemisphere through the Middle East is evidenced by British Airways reducing services to Sydney and yield erosion suffered by Singapore Airlines on its A380 services.

GCC carriers are taking advantage of air service accords and the recent deal between Australia and Turkey begs the question why Qantas is yet again failing to make the most of the deal refusing to consider direct flights to Istanbul.

Will Qantas start crowing about Turkish Airlines too in a years time?

Qantas can complain all day long about Arab airlines not having to worry about their bottom lines – because they do. Emirates alone is by far the strongest GCC airline that has turned a profit in all years but one since it started up in 1985 – it has gotten governmental support, but not to the level of accusations asserted by Qantas.

In setting up Jetstar, Qantas has lost traffic, business and revenue to its low cost off-shoot and is now bizarrely remodelling its business to cut first class and chase low volume customers (http://www.fleetbuzzeditorial.com/2010/02/18/premium-market/) – just like Jetstar.

Qantas has no one but itself to blame for the dominance of GCC carriers on its doorstep.

The simple fact is you cannot whine about competitors in your backyard if you fail to compete with them in theirs.

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

[QFinsider]

As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".

Chasing low yield at the margin (price sensitive) customers at the expense of the high yielding traffic will be revealed to be the grandest of follies in the years to come.

[kotoyebe]

As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".

Your customer is either telling you porkies, or has found a loophole. The only services that JQ codeshare with QF are to feed people around the country to and from their international services (operated by JQ). You simply can't book for example, a SYDMEL sector on a JQ coded QF service on it's own.

If your customer has been booking JQ and flying on QF, it may be more to do with the HIGH number of JQ cancellations and charters that QF operate on behalf of JQ. I think this week is the first week in 4 that QF hasn't done a charter to HNL for JQ...yet. It's only Tuesday!

[moa999]

BadHat,

Unsure if you wrote that piece or is copied but it raises a few simple questions.

1. Does Qantas have cabotage rights through any Gulf countries, or any likelihood of getting them.
2. What is the real traffic Gulf - Australia, rather than Europe - Australia
3. Qantas already splits its Europe traffic via Sing, Bangkok and HK - does it make commercial sense to split it further.


Simple dilemma for an end of line carrier.

Istanbul may have traffic rights, but no oneworld connections.
For oneworld connections, QF would be better fly to Amman where Royal Jordanian has a great hub

[simsalabim]

The bastard child J* has strange ways .
Passenger purchases $499 return ticket to HNL.
A couple of weeks prior departure gets a phone call from J* offering him upgrade to * class for an extra $300.
Pax accepts the offer and pays extra $300.
At check in HNL (after J* aircraft breaksdown and flight now being operated by QF 767 ),pax advised that * class is now full . Pax asked , will you downgrade back to economy?
Pax blows up says hang on you offered it to me!
Says no will not downgrade to economy.
Pax is offered $600 worth of J* travel vouchers plus $700 worth of vouchers to spend on QF inflight duty free.
Pax gets free trip to HNL , an extra $100 plus $700 worth of duty free.
Great way to run a business.

[Going Boeing]

Koto, there are a large number of QF domestic services that have a JQ code share flight number. You don't have to be Einstein to look at the QF schedule and then book on a JQ flight that leaves at exactly the same time. Pax know that they'll get an inflight meal service that they wouldn't get on a JQ flight - management won't state whether JQ pays QF for the meal service (or even for the flight) which is why the recent QF financial disclosure shows the bastard child making huge increases in profit while mainline suffered a severe decline.

[Mstr Caution]

If your customer has been booking JQ and flying on QF, it may be more to do with the HIGH number of JQ cancellations and charters that QF operate on behalf of JQ. I think this week is the first week in 4 that QF hasn't done a charter to HNL for JQ...yet. It's only Tuesday!


As pointed out by a techie recently. Ever noticed that the charters are QF flight numbers & operated as a QF RPT service per the ATS plan.

[What The]

As pointed out by a techie recently. Ever noticed that the charters are QF flight numbers & operated as a QF RPT service per the ATS plan.

That is so the costs of the operation are borne by mainline and Jetstar keep the revenue. No wonder the numbers look so good.:ugh:

[Ken Borough]

What The,

What the ** are you on about when you write "That is so the costs of the operation are borne by mainline and Jetstar keep the revenue."

This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.

[What The]

Ken,

I can tell you for a fact that when Jetstar cancel a service and Qantas run a charter, the monies from tickets sold stays with Jetstar.

Any other carrier would have to pay the negotiated fare per pax to the alternate airline. This does not happen in the JQ QF deal.

It is all about making JQ look good and QF look expensive as part of the three pronged strategy for setting JQ up in the first place.

Stop Stoddart or someone else from setting up a LCC.
Apply a bottom up \ top down competitive approach to VB, and
Break the unions within Qantas.

[RedTBar]

Spot on goodonyamate.
It's always has been and will always be about money.Does anyone here think Jetstar or any business was started for any other reason.

[Ken Borough]

Of course JQ will retain the revenu but if Qantas operate a Jetstar flight as a charter using Qantas flight numbers etc., then Qantas would charge Jetstar $xxxxx for the operation. Chances are that the sum of the fares collected by Jetstar would not cover the cost of the charter. This is the way in which carrier-to-carrier charters are operated. You will no doubt find an exchange of paper between JQ and QF which sets out how much JQ will pay for the charter, and who pays for what in terms of out-of-pockets such as airnav charges, handling etc etc.

[Mstr Caution]

Your 100% right Ken, thats how carrier to carrier charters generally work.

But where talking about "in house" services here.

Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.

[Veeeffarr]

I live in Perth and am about to take my 2nd trip in a year with Emirates to see family in England. Why? Because I can fly Perth-Newcastle(NCL) in 2 stops. This cuts at least 7-8 hrs off the total journey time against going through Asia with the competition. I don't have to transit through Heathrow Hellport or another European hub to get to my destination. Fewer stopovers means fewer chances for bags to get lost/miss connections etc etc. I travel economy and Emirates fares are cheaper than the other flag carriers. The shorter journey time and number of stops reduces the discomfort on such a long trip. The overall travel experience with QANTAS or any other airline is not so different that I would insist on flying with them. My choice of carrier is all about schedules and convenience and on this route Emirates can't be beaten.

[noip]

Here goes .....

Agree with all the above ..

Blame GD not AJ.

QF has free skies agreement through middle east.

But I only fly the aeroplanes ...

:)

N

[Going Boeing]

Posted by Veeeffarr
I travel economy and Emirates fares are cheaper than the other flag carriers.

Have you checked recently? I've heard that, since finance has become very tight in Dubai, Emirates now has generally the most expensive fares to Europe. SQ are currently slightly cheaper than QF.

Your other points are valid.

[Romulus]

As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".
Your customer is either telling you porkies, or has found a loophole. The only services that JQ codeshare with QF are to feed people around the country to and from their international services (operated by JQ). You simply can't book for example, a SYDMEL sector on a JQ coded QF service on it's own.


I suspect the point was flying internationally you book a codeshare flight with another Oneworld carrier and get the full Qantas offering for less than if you booked direct with Qantas.

For example: South African going SYD-JHB. Fly that as a South African passenger, get all your points, food, service etc on a Qantas plane but pay between $1500 and $2000 less for Business class than if you booked with Qantas.

[OneDotLow]

What the ** are you on about when you write "That is so the costs of the operation are borne by mainline and Jetstar keep the revenue."

This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.

As posted by me in another thread :
Words from the HNL Port Manager for a certain airline associated with JQ with reference to the cancellation of JQ services and replacement with QF charters :

"This is the 6th time in 6 weeks!"

He went on to complain that his budget was blown for this quarter already (due to having to call in his own staff on days off to manage the services) and when queried at a higher level, was told to 'drop it'!

So yes, their customer (full) service on certain routes may indeed be fantastic. Im thinking SYD-HNL-SYD 6 times since the start of 2010 in fact!

Now watch this space for QF to announce that HNL is unprofitable and that JQ must take over to keep the dream alive.

The day will come when this false accounting will effect the bottom line, come back and bite the Group on the proverbial. I just hope its not too late!!!

So whilst they may pay for the actual charter (who knows... maybe not), they sure as hell don't pay for the ancillary services!!

As the CEO of Qantas' former low cost base airline once said "If we can't survive without being propped up by mainline, then we shouldn't be around".

As a shareholder, I would sure love to see the books - particularly on JQ Intl...

[Wonderworld]

Your 100% right Ken, thats how carrier to carrier charters generally work.

But where talking about "in house" services here.

Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.

Any JQ charters operated by QF will carry 4 digit flight numbers. QF600 series MELBNE flts are not JQ charters. Some will however carry the JQ codeshare flt number.

[ennui]

http://www.pprune.org/middle-east/406551-persian-arabian-gulf-give-me-ika-flight-merged.html

[Mstr Caution]

Any JQ charters operated by QF will carry 4 digit flight numbers.

Incorrect. The J* charters SYD-HNL-SYD operate as the QF3 & QF4 respectively. They are ATS planned as those flight numbers as well. Ask any crew who have done one.


QF600 series MELBNE flts are not JQ charters. Some will however carry the JQ codeshare flt number.


Agreed, all normally scheduled 600 series flights are QF services. It's the adhoc additional capacity services which (some have) been charters. Just like the Internationals mentioned above, QF nominate a 600 series number & ATS plan it as a QF RPT service. Have a look next time one comes up in open time & ask why the additional service.

[73to91]

From moa999 - "3. Qantas already splits its Europe traffic via Sing, Bangkok and HK - does it make commercial sense to split it further."

Split them, perhaps not, but why not a new service?

and "For oneworld connections, QF would be better fly to Amman where Royal Jordanian has a great hub"

So why not Amman ? provides plenty of connections to Lebanon (where I'm sure most of the traffic is heading to anyway ? ), and as stated it is a Oneworld airline - then onto Manchester (if it could ? ) providing an alternative for people wanting to travel to the Midlands and all points north and avoids LHR.

[Veeeffarr]

EK fare was $1959 each inc taxes when I booked in January. Then the cheapest QANTAS fare was around $2200-$2300. Even if QF or SQ was cheaper there is the inconvenience ie additional 8 hrs travel time and an extra stop. You can't change geography, it's a shorter distance via Dubai. Would consider going through anywhere in the UAE but Jordan, Syria or anywhere bordering Israel - don't think so. I could have paid $1650 with Air Asia and gone KL to Stansted but then you have to pay for a loco like Easyjet to NCL with a long stopover. Not worth it. Will qualify for an upgrade on my next trip with EK as well. Did I mention their 30kg baggage allowance for economy?
I'm all for competition but how do you beat that QF?

[Transition Layer]

Etihad has been operating since 2004 and has still not made a profit.

How can you compete with a company which has such deep pockets and doesn't have to make money (although they no doubt will one day).

[indamiddle]

veeeffarr, a small word of caution.
a mate's sister is cc with emirates.
don't accept the towels offered on board, they are recycled!
her stories about the paki labourers and the towels are gross.
QF don't recycle towels but we dropped them in y/c 6 months ago

[Metro man]

QF missed out badly by not having 777s. A Singapore hub with onward connections could have given a wide network with one stop access, routes such as Adelaide - Bombay or Brisbane - Paris would have been possible.

Offer a good product, reduce the cost structure. Maintenance could be done in Singapore under strict supervision, foreign flight attendants could legally be used on many of the routes as opposed to Jetstar illegally using foreigners on Australian domestic services.

A leaner, long term sustainable QANTAS would be better for Aussie jobs than a bloated high cost carrier which can't compete and eventually goes the way of Ansett.

Prehaps they'll get it right with the B787.

[Veeeffarr]

Will check any towels offered carefully for stains...Do they spit in the coffee as well?

[kotoyebe]

Incorrect. The J* charters SYD-HNL-SYD operate as the QF3 & QF4 respectively. They are ATS planned as those flight numbers as well. Ask any crew who have done one.


Oh, really??

Can I have some of what you are smoking?

[Wonderworld]

When the JQ charter flights to HNL operate they are set up in the res and CM system using QF6403 and QF6404 which are the numbers we use in those systems for charters. So JQ get to keep the revenue from the ticket sales and presumably down the track pay QF for the charter.

I would however be amazed to think that would ever occur :E

[DutchRoll]

So JQ get to keep the revenue from the ticket sales and presumably down the track pay QF for the charter.
Yes, it would be lovely if that happened!

Koto, Ken etc: As others have alluded to, it IS all about the money.

1. Sitting in the cockpit pre-departure chatting to engineer about GSE (Aircon, power carts etc) availability. Engineer points across the tarmac at the ground equipment we gave to JQ for free and now when we need it, we hire it back!

2. No 767 bays available in BNE domestic as we taxi in. Except Bay 25, which is reserved at the QF terminal for JQ. Call up ops on the radio to see if it'll be free long enough for us to park & turnaround. Ops say yes, but we can't use it. Why? Because it costs too much money. We have to pay JQ for it! Sit waiting with engines burning for 15-20 mins for another bay to become available. The extra fuel, delay, and angry pax are cheaper to deal with.

3. From the mouth of a manager at HNL in the early days: One million dollars of A330-related equipment for the JQ service billed to Qantas mainline account. Manager calls up and asks for JQ account details. Manager told to wind his neck in.

We are not completely stupid. We all know what the "Qantas Group" is doing, and what business practices they are using to achieve it.