Geez Qantas that was quick!

[Rated De]

Given the script by the QF Domestic 'CEO' AKA the $4 million dollar man was only delivered to the Qantas mainline pilots only a week ago, the jet is painted and flying..

Crew may be sparse, but it just goes to show that like politicians these guys are disingenuous only when their mouths are moving!

Airbus A320-232 - QantasLink (Network Aviation) | Aviation Photo #4867227 | Airliners.net (http://www.airliners.net/photo/QantasLink-Network-Aviation/Airbus-A320-232/4867227)


Hand on heart they have no nefarious 'intentions'...Qantas pilots ought ask themselves, did anyone notice his other hand?
The question to ask is were his fingers crossed?

[nefarious1]

I’d be interested to ask the paint shop how many more they have booked in to paint like that.

[engine out]

This was touted before Xmas, everyone new long before last week

[wheels_down]

Virgin have had A320s for years , did not hear a peep out of any employee. Nobody could give two hoots.

Qantas does the same everyone gets all antsy. It’s the end of the world etc...

[TBM-Legend]

Cringe and whinge welcome to Australian aviation...

[Rated De]

I’d be interested to ask the paint shop how many more they have booked in to paint like that. This


Virgin have had A320s for years , did not hear a peep out of any employee. Nobody could give two hoots. Correct the author if wrong, but are seniority lists at Virgin all amalgamated now? Was there an attempt to do so when Mr Borghetti became CEO?

The point being the latest snake oil merchant, Mr David said 'nothing to fear', inflated the number of Network (subsidiary) from 2 to 6, (as posters wrote here) then remain perplexed that;



The pilots don't trust them





Newspaper articles at the time of JQ's creation stated only 23 aircraft, lost decade ensued as JQ rapidly out numbered its parent!

Mr David was certainly not a Qantas 'executive' in 2004. Which airline had he yet to be terminated from back then?

[ExtraShot]

A full water cannon salute for a couple of Decade-odd-Old repainted Bogan freighters.

Bit over the top, don’t you think? Unless some kind of ‘image’ is trying to be portayed...

[The Green Goblin]

A full water cannon salute for a couple of Decade-odd-Old repainted Bogan freighters.

Bit over the top, don’t you think? Unless some kind of ‘image’ is trying to be portayed...

Kind of poetic isn’t it? Used to take them on holiday. Now it’ll take them to work.

[ExtraShot]

Kind of poetic isn’t it? Used to take them on holiday. Now it’ll take them to work.


HA. Very true.

[dartman2]

Four wheel mains probably indicates it is a well used ex-Indian Airlines one... I think they were the only ones to buy them.

[TWT]

Nope, not 4 wheel mains. It's an ex-Jetstar frame. Here's another view of that aircraft along with GT's analysis :)

https://thewest.com.au/business/aviation/qantaslink-adds-two-180-seat-airbus-a320s-to-meet-demands-of-wa-resources-industry-ng-b88754346z

[Slippery_Pete]

In this little black duck’s opinion, sharing a link to any of that author’s articles should be an immediate 1 month sin bin by Pprune moderators.

[Capn Bloggs]

Four wheel mains probably indicates it is a well used ex-Indian Airlines one... I think they were the only ones to buy them.
Your darts can't be much good if your eyes are that bad! :)

[TWT]

Calm down Slippery Pete.

The primary reason for me posting it was for the PICTURE.
Besides, I did warn about the author so people could choose NOT to click on the link.

[dartman2]

I stand corrected, its the angle of the photo...

[regional_flyer]

Virgin have had A320s for years , did not hear a peep out of any employee. Nobody could give two hoots.

Qantas does the same everyone gets all antsy. It’s the end of the world etc...

Of course nobody gave two hoots - the A320 fleet wasn't VA's at the applicable time. First Skywest A320 arrived in Oct 2010; purchase of Skywest announced Oct 2012.

[Transition Layer]

Kind of poetic isn’t it? Used to take them on holiday. Now it’ll take them to work.

Oh that’s f*ckin brilliant :D :ok:

[bazza stub]

Unless some kind of ‘image’ is trying to be portayed...

Let’s face it, what is QANTAS without some publicity stunt?

[AerialPerspective]

Virgin have had A320s for years , did not hear a peep out of any employee. Nobody could give two hoots.

Qantas does the same everyone gets all antsy. It’s the end of the world etc...
Virgin only got their A320s because they bought SkyWest.

[Rated De]

Whilst hands continue to be wrung at Union H.Q...
This just in...

Beware of managers speaking with forked tongue! :sad:



Recovered from the 'pilot meeting' that apparently spooked management into cancelling further 787 orders was this picture...


https://s14-eu5.ixquick.com/cgi-bin/serveimage?url=https%3A%2F%2Fmedia.istockphoto.com%2Fphotos% 2Ffingers-crossed-picture-id172955125%3Fk%3D6%26amp%3Bm%3D172955125%26amp%3Bs%3D612x61 2%26amp%3Bw%3D0%26amp%3Bh%3DuDKX7NieGkd1ICTzR2jdEiwULiGHzyIV jvVUnb5K3ls%3D&sp=fb0e40f05c4d7086e5170365455fed60

[airdualbleedfault]

Bazza, remember the big hoo ha when QF got their first 787, a year or 2 after the rest of the world? QF, leaders in self promotion

[*Lancer*]

Virgin have had A320s for years , did not hear a peep out of any employee. Nobody could give two hoots.

Qantas does the same everyone gets all antsy. It’s the end of the world etc...

Would Virgin pilots still feel the same if Skywest subsequently got 57 more A320/1s and 11 B787s?

[morno]

I’m curious, for all those QF pilots who thought that Jetstar was stopping their progression, did you not all have an opportunity under the MOU to go across and further your careers as Captains with JQ? And if you did, why didn’t you?

[allthecoolnamesarego]

I’m curious, for all those QF pilots who thought that Jetstar was stopping their progression, did you not all have an opportunity under the MOU to go across and further your careers as Captains with JQ? And if you did, why didn’t you?

Not everyone was covered by the MOU.
Why would you leave Q to work twice as hard for half as much, only to come back to Q after 3 years at your previous rank?

Crapstar DID stop Q pilots progressing in the company they joined. Fact

[V-Jet]

There is around (maybe more accurately, at least) $2b of wasted capital in JQ entities. That’s the issue long term QF staff have with JQ. It is inconceivable to anyone but a crackhead that was spent in the best interests of the Company that paid (and is still paying) the bills. In my book, that could only be described as a cataclysmic financial disaster.

And I have nothing against JQ staff.

[morno]

Thanks for the info. I didn’t know everyone wasn’t covered by the MOU.

I don’t disagree that the creation of JQ certainly did effect the direction of QF at some point, but there’s a few things I think no one can disagree with:

1. There was a gap in the market that needed filling that QF was unable to do. Jetstar was a necessary evil, whether you like it or not. For it to do well, with its low yield, it needs new and efficient aircraft.
2. Jetstar is here now, it’s performing pretty well in its market segment and the growth period is over. From the outside looking in, it appears the focus is now on QF.

So for friggs sake, could we all move on and get on like good little boys and girls? You’re an entire group, why not all hope for the best outcome for the entire group, instead of hatred towards Jetstar.

[V-Jet]

There’s no hatred of Jetstar but setting it up was pointless and expensive. You do NOT need to set up an entire company just to sell discount tickets! There was never anything stopping Qf selling a ‘service free’ economy ticket either on seperate aircraft within its own fleet or a seperate section on any jet.

The only reason to set up a seperate airline at monumental expense that makes any sense to me is if they intended to spin off an entity that was stuffed full of Qf cash for their own personal gain. No one has been able to prove to me that the entirety of the Jq operation has netted dollar one, and even if it has (happy to concede I may be wrong) then I would still suggest the purpose of business is to charge as much as you can for something, not deliberately increase your cost base to undercut yourself. In short, spending Qf money on Qf would have garnered a far better monetary reward.

Believe me please, I have nothing against JQ in any way. They (Qf management) have wasted just as much on share buybacks to ensure their own bonuses after all. I do, however, have a seething hatred of the incompetents wrecking Qf, a very rare and successful premium Australian brand.

[Chris2303]

There’s no hatred of Jetstar but setting it up was pointless and expensive. You do NOT need to set up an entire company just to sell discount tickets! There was never anything stopping Qf selling a ‘service free’ economy ticket either on seperate aircraft within its own fleet or a seperate section on any jet.

You mean like Air NZ with it's seat only product?

[Arthur D]

I wonder if QF management have a site where they bitch about what crap pilots QF drivers are......

seriously guys, to still be asserting that JQ is some sort of financial alchemy is akin to belonging to the flat earth society.

for your own health, suck it up and move on.

[V-Jet]

It’s not a question of moving on. Nor is it flat earth. It’s a forensic accounting question basically. The money has gone and Qf needs a new fleet 15 years ago. JQ has a FAR newer and more appropriate fleet. There is no malice in this question at all, but is there any evidence that JQ has made money?

Comments like ‘performing strongly’ and ‘business case’ in my mind hide a litany of lies. Surely someone can point to hard figures somewhere?

[Airbus A320321]

“2. Jetstar is here now, it’s performing pretty well in its market segment and the growth period is over. From the outside looking in, it appears the focus is now on QF.”

The 18 A321LRs confirmed for JQ from 2020 may suggest that the pendulum of capital expenditure is swinging back to Jetstar.

The A321LR order and further 787 orders were competing business cases which it appears JQ has emerged victorious from. An idea which was confirmed by Joyce in his comments at the Singapore Airshow last month.

That’s not to say QF won’t get more 787s, but that program has certainly been delayed. By how long is the million dollar question.

[bazza stub]

Million dollar question? Only a million?

Alan doesn’t have the luxury of time, he’s farked the airline so comprehensively he needs to get on it like.....5 years ago! He’s padding the books in preparation for his departure I’m sure.

[V-Jet]

My guess is that Qf has no money for 787's (the completely different 'Gamechanging' ones to JQ's of course). That makes it A320's OR 787's. And even Alan can't seem to screw up the domestic quasi monopoly - despite his best efforts. Qf debt is 70-75% ADDITIONALLY, I understand they are buying JQ leases to get them on the books by the deadline so I think they are looking for scapegoats to avoid the difficult questions. IE: $2b on JQ and +/-$2b on share buybacks, but no money for desperately needed aircraft for the company that pays the bills. Nor any concern for it's longevity.

To explain the DE ratio to those that don't know, look at it like this. When you buy a house, generally considered 'safe as houses' you HAVE to have at least a 20% deposit. Businesses are FAR more risky than residential houses so have to have a lot more equity than a simple house. At 70-75% Debt to Equity, Qantas is starting to push limits. If Qantas had 50 Gamechangers or 50 777's (or both!) then I'd say that possibly makes sense. But it doesn't and that's where I see MAJOR issues. Alan might be able to keep the music playing, but it is looking like a house of cards to me.

For the people who think this is simply an anti JQ rant/attack, please provide some information to the contrary. Look at it this way, I don't mind making a fool of myself on here, but I do speak to people about what I see as a rolling disaster and when I do, I do NOT want to be easily written off.

Comments like 'business case' don't count because if there is no money there clearly is no business case. Too broad an approach.

Comments like 'performing strongly' don't count because that is likewise meaningless for (almost) the same 'Eddie the Eagle' reason.

[goodonyamate]

I’m confident you’ll be seeing more 787’s between now and when the JQ aircraft are slated to arrive. There’s nothing new here, JQ we’re always getting these aircraft. I’m not defending the idiots at fort fumble, but they are right in that there is no need to firm up options before they expire. The lies about pilots calling a meeting being the reason are just that, lies. The issue is, we can’t crew the aircraft we have now. We won’t be able to crew the 8 787’s when they turn up, there’s no point getting more right now unless you want to park them against the fence.

[Keith Myath]

...but is there any evidence that JQ has made money?

Comments like ‘performing strongly’ and ‘business case’ in my mind hide a litany of lies. Surely someone can point to hard figures somewhere?

Publicly available 2018 half year results for a listed company state Jetstar results as:

1.936 Billion revenue, 318 Million EBIT.


Search for QANTAS AIRWAYS LIMITED DIRECTORS’ REPORT
ABN 16 009 661 901 HALF-YEAR ENDED 31 DECEMBER 2017

[V-Jet]

Great to see a number - despite Qf paying for unknown (but large) sums - can you get any other years? JQ Int allegedly 50% loads, anyone confirm?

[Keg]

What about JQ international and the game changing 787s they fly Keith? How did they perform? Oh, that’s right. No one knows because those numbers aren’t in the annual reports. Why is that I wonder?

[Airbus A320321]

Great to see a number - despite Qf paying for unknown (but large) sums - can you get any other years? JQ Int allegedly 50% loads, anyone confirm?

Not uncommon to see 335 pax on the TV screen in the crew room in the morning for inbound 787s so I sincerely doubt that is true. The only flights that are consistently low on passengers are the Chinese charters which Jetstar gets paid a set fee for anyway.

Whoever is spreading that rumour is either seriously misinformed or is peddling an agenda.

A quick look at the loads on the staff travel website would quash that theory I’m sure.

[morno]

despite Qf paying for unknown (but large) sums

How do you know that QF is paying them if it’s unknown? And like I said earlier, does it really matter? It’s all one Group. Isn’t the idea that the Group as a whole makes money?

I know for a fact that I’ve struggled to get a seat on JQ Int’l Staff Travel lately, so 50% loads is incorrect.

[RealityCzech]

One of the main purposes of Jetstar is to protect mainline, wedge Virgin and to discourage foreign competition entering the domestic market and thereby making mainline less profitablle. Jetstar is key to mainline success. Unfortunately some myopic pilots only see Jetstar as taking “their” commands - as if you somehow own commands.

[blow.n.gasket]

What a steaming crock of Management inspired hogwash Reality !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of One of the main purposes of Jetstar is to protect mainline, wedge Virgin and to discourage foreign competition entering the domestic market and thereby making mainline less profitablle. Jetstar is key to mainline success.
Could have just as easily been achieved with deeply discounted seats offered down the back of Mainline aircraft without all the duplicated back office staff , management , ground staff, training departments ,engineering staff , checkin staff ,ground equipment , ,etc , etc.
Hardly an efficient use of capital if your main aim is to block foreign competition !

[RealityCzech]

What a steaming crock of Management inspired hogwash Reality !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of
Could have just as easily been achieved with deeply discounted seats offered down the back of Mainline aircraft without all the duplicated back office staff , management , ground staff, training departments ,engineering staff , checkin staff ,ground equipment , ,etc , etc.
Hardly an efficient use of capital if your main aim is to block foreign competition !


No it couldn’t have been achieved that way. Jetstar needs a lower cost base to offer lower fares for that segment of the market. Most of those functions were not duplicated. They were introduced commensurate with the increase in overall capacity as Jetstar grew and the overall market grew.

[blow.n.gasket]

Lay off the Koolaide .
It’s your reality that is checkered mate!

[gordonfvckingramsay]

So duplicating a whole airline as a way of reducing costs Czech? Sorry.....try again.

[Rated De]

No it couldn’t have been achieved that way. Jetstar needs a lower cost base to offer lower fares for that segment of the market. Most of those functions were not duplicated. Other than salaries what part of the 'cost base' is lower?



Aircraft acquisition costs? NO
Fuel costs NO
Maintenance not substantially
Air navigation charges? NO



What Qantas has created is a duplicated structure.


Low Fare airlines face pretty much exactly the same fixed cost.

The are LOW YIELD HIGH VOLUME businesses, they need consistent high load factors.




Leisure travel airlines are very demand elastic. This means any increase in price sees a substantial decline in passenger numbers. It is a paradox of the LFA manager, how to raise yield when passengers are not loyal to anything other than cheap prices.
Ryan Air and Air Asia etc need ancillary revenue because their fixed costs are very similar.



What Qantas saw was an opportunity to step around the QSA and 'create competitive wage tension'.



If they saved 3% on crewing costs, the expense of JQ far outweighs any actual economic benefit.


They persist because of ideology.
The hero myth of Mr Joyce relies on JQ and his fanciful story of 'creation' that he somehow was responsible for it. He was merely chosen by Mr Dixon.

[Rated De]

Publicly available 2018 half year results for a listed company state Jetstar results as:

1.936 Billion revenue, 318 Million EBIT.


Search for QANTAS AIRWAYS LIMITED DIRECTORS’ REPORT
ABN 16 009 661 901 HALF-YEAR ENDED 31 DECEMBER 2017 Keith, the listed entity is Qantas.



The Qantas group has six operating segments.
Qantas is broken into TWO segments, DOMESTIC and INTERNATIONAL
Jetstar has ONE segment although it operates more aircraft, wonder why?

AASB 8 refers to Operating segments.


There is a threshold of revenue and other parameters that necessitate a segment being reported. JQ presumably do not meet these thresholds.


If JQ does not meet the threshold MANAGEMENT can CHOOSE to report the JQ segment as Domestic and International if;


'Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements'

Qantas management prefer not to report both segments. The mind boggles why not, particularly if it is as they claim, somehow a 'standout'. Many with whom I consult, say JQ is a standout, for all the wrong reasons.


Qantas management choose not to. Why not?

JQ has a role in the leisure segment, but it has grown beyond its paddock and is arguably a real drain on the performance of the Qantas segment.


As for the General Purpose Audit conducted by the big four, it shows nothing about how management assign costs. To see that would require a different sort of audit, the sort of audit Qantas would never CHOOSE to have...

[maggot]

Not to mention the global franchise dreams, all leases through friendly pockets of course

[Arthur D]

Sooooo, the alternative is to shut down JQ and grow Qantas mainline????

Seriously?

Apart from being Borgetti’s wet dream, who on gods green earth would benefit?

Customers - not those flying JQ. They will not / cannot pay QF prices
Shareholders - they seem pretty happy with the share price
Staff - yes QF mainline pilots and some others would love it. Meanwhile 7000 JQ people unemployed

With JQ out of the way, and given Virgins ‘me too’ strategy, the LCC space would be vacant for a new entrant. Lion, Air Asia etc., who will happily step in and eat your lunch (commands) and then greedily go for seconds.

Be careful what you wish for.

[Rated De]

Sooooo, the alternative is to shut down JQ and grow Qantas mainline????

Did not suggest that, I said it has a role in the leisure market.
I did say that separating the segments would give 'transparency'. That may actually show how poor a contributor the 'International' JQ business actually is.

With JQ out of the way, and given Virgins ‘me too’ strategy, the LCC space would be vacant for a new entrant. Lion, Air Asia etc., who will happily step in and eat your lunch (commands) and then greedily go for seconds.

That was the original line pitched by Mr Dixon.
How precisely would a foreign entrant operate domestically?
The only way currently under consideration would be cabotage. That would allow foreign competitors onshore flying domestically.
With charateristic classic hypocrisy Qantas oppose that, but want crew cabotage with Jetconnect. Cognitive dissonance anyone?

Staff - yes QF mainline pilots and some others would love it. Meanwhile 7000 JQ people unemployed

Allegedly 5,000 Qantas staff were shown the door, JQ to date have not experienced one job loss.

As I have restated several times, JQ have a role, but nowhere near the scale management ideologically cling to.

Want to see who makes what? Separate the JQ segments into International and Domestic. Then we would more clearly see which 'business' carries its weight.

[Keg]

I’m not sure anyone is suggesting to shut down JQ. That genie is out of the bottle. It does seem pretty pointless though to be launching a 737 and an A320 between SYD and MEL at the same time.

There was a time pre JQ when QF was making bloody good money with a full 767 every half hour or so between SYD- MEL- SYD and SYD- BNE- SYD. Over the subsequent 15 years that could have expanded to an A333. Instead we now launch a 737 and an A320 along with the duplicated back of house structures. Doesn’t seem all that efficient to me when you could have simply quarantined the back half of an A330 and declared it a ‘pay for stuff as you go’ zone.

[Rated De]

Doesn’t seem all that efficient to me when you could have simply quarantined the back half of an A330 and declared it a ‘pay for stuff as you go’ zone.

Qantas had a fully depreciated 734 fleet. Liquid overhaul(paint) and marketing 'Qantaslite'.
Hire new cabin crew, use the same 'back of office' functions and all of a sudden you had product differentiation, a new product at that and most of the costs absorbed by the pre-privatisation Qantas (taxpayer). Efficent and almost seamless in the Qantas system. New pilot contracts if you want, but given they already flew the aircraft, why bother when the cost is already 'sunk'.

Ideology is rarely found in the same room as common sense.
-Anon

[morno]

How precisely would a foreign entrant operate domestically?

Yeah that’s never been done before, hey Tiger!

They didn’t set up an entirely new airline for Jetstar anyway. It used to be called Impulse.

And how exactly would they get the volume that is potentially required by simply using a few rows down the back of Qantas?

morno

[Keith Myath]

Great to see a number - despite Qf paying for unknown (but large) sums - can you get any other years? JQ Int allegedly 50% loads, anyone confirm?

2016

3.636 Billion revenue, 452 Million EBIT

2015

3.464 Billion revenue, 230 Million EBIT

2014

3.222 Billion revenue, (116) Million loss

2013

3.288 Billion revenue, 138 Million EBIT

2012

3.076 Billion revenue, 206 Million EBIT

2011

2.613 Billion revenue, 169 Million EBIT

2010

2.197 Billion revenue, 131 Million EBIT

2009

1.646 Billion revenue, 107 Million EBIT

2008

1.564 Billion revenue, 102 Million EBIT




There is a threshold of revenue and other parameters that necessitate a segment being reported. JQ presumably do not meet these thresholds.


If JQ does not meet the threshold MANAGEMENT can CHOOSE to report the JQ segment as Domestic and International if;


'Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements'

Qantas management prefer not to report both segments. The mind boggles why not, particularly if it is as they claim, somehow a 'standout'. Many with whom I consult, say JQ is a standout, for all the wrong reasons.


Qantas management choose not to. Why not?


So by your own admission, they don’t meet the threshold to necessitate individual reporting. Yes, they could choose to report individual Jetstar segments if they believed that the ‘information about the segment would be useful to users of the financial statements.' It’s axiomatic that they don’t think it useful to report separately. It depends on what agenda you’re pushing as to what you want reported and why. From the Qantas pilots on here, I guess you want to prove that the JQ international division is underperforming. From the Jetstar perspective, there is plenty that would like to see the Asian franchise results. What’s Qantas’ agenda? I’m guessing they want to hide the Asian franchise results. At the end of the day none of this matters, as the bottom line is Jetstar is profitable, even with the encumbrances of the multiple franchise divisions.



JQ has a role in the leisure segment, but it has grown beyond its paddock and is arguably a real drain on the performance of the Qantas segment.



How do you figure that? Do you want a regulated market? Should Jetstar stop growing in the hope that Qantas grows into the market ahead of the competition? What about the competing airlines, should they also hold off expansion to allow Qantas to grow into the market?

[Keg]

They didn’t set up an entirely new airline for Jetstar anyway. It used to be called Impulse.

Lol. Impulse had 10 717s? Qantas bought it and expanded it into a different segment to how many A320s? If that doesn’t qualify as ‘setting up an entirely new airline’ I don’t know what does!



And how exactly would they get the volume that is potentially required by simply using a few rows down the back of Qantas?

morno

Easy, you offer more than a few rows. QF used to service OOL with multiple 767s ex MEL and SYD daily. They could have easily offered more/ less rows of ‘Qantas lite’ service on different routes on different days depending on demand. Increased demand sees increased frequency of services- without duplicating the back of house processes and other support/ administrative services.

So on a SYD- MEL- SYD route you’d have less rows of lite service in the morning and arvo peaks and more rows in the middle of the day. You’d also fly bigger aeroplanes when you needed to instead of two smaller aeroplanes. That way the QF group wouldn’t have lost a bunch of Gold Coast pax to VOZ when QF mainline pulled out.

An example. The QF A330 red eye PER- BNE often has pax connecting to CNS including frequently some in J/C so they can get sleep in the lie flat bed. If the group sent an A330 PER- CNS we’d carry the ‘lite’ pax for 180 seats that the JQ A320 currently does and the remaining 60 pax would be J/C and a few economy pax who were prepared to pay a bit more.

Anyway, it’s done. It’s not going to change. To deny it could have been done differently though (and far more transparently) and probably equally successfully is just myopic.

[Potsie Weber]

Go to Qantas.com.au and you will see Jetstar flights listed when searching city pairs. Go to Jetstar.com.au and it only shows Jetstar flights.

[V-Jet]

Keith - thanks for that.

So, assuming around $2.5b setup for JQ, and without making allowances for the extremely rubbery accounting QF utilises, the costs worn by QF that support JQ, the duplication of services (undercutting itself) maintenance, crewing, catastrophic failure of JQ HKG and the semi nationalisation of an entity with the jailing of staff in Vietnam (among other things) that still shows a back of envelope loss of around $800m.

That's an EXTRAORDINARILY large ($3.3b?) opportunity cost in terms of 777's and Gamechangers to QF :( :(

What's 15 years of heavy jet fuel at 5-7,000kgs of fuel per hour for EACH jet worth??

So sad....

[Tankengine]

I love the “LCC need lower costs to be competitive” followed by “It is all profit, why are you worried?” comments.
QF international was lambasted a few years ago for being unprofitable while flying gas guzzlers when it should have had the new 787-8s that were initially ordered for it! (Lets not mention those old tech 777s! ;) )
Wood for trees guys! If Jetstar needs lower costs because tickets are so cheap then imagine how much money was made to CG and Hammo etc when QF fuff fare, high yield traffic was going to those ports!
Yep, Jetstar has a place, but not at the expense of HIGH YIELD traffic. Give punters too much of a choice and they might just take the cheaper option which nets “the group” less money.
If Jetstar didn’t exist, and QF had changed a few things and expanded then the “group” would have been better off. (In my opinion)
Ask the 20+ year FOs who still cannot get an east coast command what Jetstar has cost them. (While newbies have commands at Jetstar who, in a different circumstance, would have joined the larger Qantas.)

[blow.n.gasket]

Also V-Jet don’t forget the $50-60 million every 6 months being pumped into that amazing Japanese Business just to cover wages now that partners JAL & Mitsubishi have disowned that Jetstar franchised opportunity !

It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?

[Tankengine]

Also V-Jet don’t forget the $50-60 million every 6 months being pumped into that amazing Japanese Business just to cover wages now that partners JAL & Mitsubishi have disowned that Jetstar franchised opportunity !

It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?
Jetstar HK?
RedQ? Smartest men in the room? ;)

[V-Jet]

What's 15 years of heavy jet fuel at 5-7,000kgs of fuel per hour for EACH jet worth?? So sad....

For the GT's out there - that's the EXTRA fuel a 380/744 burns compared to a Gamechanger/777 for every hour it's in the air. Lucky we work for an airline that prides itself on being carbon neutral and extremely efficient! Imagine if we weren't!!

As an aside, I think I've answered my own question. It's worth about $25m a year to the most incompetent leader since a German Corporal decided Russian winters wouldn't be a problem. God knows what Scrotum face extracted. That's a whole 'nother issue...

Again, nothing against Jetstar crew and staff at all. Just so very, very sad. The only thing I can say is that crew and engineering costs (until there is a giant hole in the ground) are a relatively minimal expense.

PS: I saw and got chatting to a Thai JQ Cabin crew in BNE a few months ago on the tail of something just appalling. What they go through as a matter of course in their working lives is horrific. Not out of pity, but out of respect I handed my duty boarding pass to the senior guy to hand out to whoever he felt deserved it best. For a 'Group' who 'prides itself on a great work/life balance' I was disgusted at what these people are 'required' to perform domestically in Australia, where I see it as straight out illegal, let alone internationally.

As a well known QF F/O often states (when he's not stealing cars of course:) ) R E S P E C T....

[Rated De]

Seeing as though you referred to the Quantitative threshold,


An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds:

(a) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments.


So practically Qantas group revenue FY16 was $16.2 billion, so the JQ 'segment' meets the threshold, but its 'international' does not.



Qantas domestic and international flew 99,879 (million) ASK grossing $11.5 billion revenue



JQ domestic and international flew 48,832 (million) ASK that is 49% of the Qantas ASK, yet they gross no where near 50% of the revenue.



You are right Keith, it is a dog of a business, probably nothing to be gained for management to show how poorly it contributes to group revenue given the resources it consumes.

[Keith Myath]

If you want to be taken seriously V-Jet, you can’t just pluck figures out of thin air

I’ll paraphrase



...is there any evidence that JQ has made money?
...$2.5b setup for JQ
...extremely rubbery accounting QF utilises
...costs worn by QF that support JQ



You’re going to have to back it up with facts to come up with your back of the envelope loss of $800m. Everyone can have their own opinion, but you can’t have your own facts.

Either there is a massive conspiracy to mislead the market, shareholders, regulatory authorities and so on – or Jetstar, as disclosed in the Qantas Group financial reports is profitable.

If you dispute the figures as published, stump up, or better yet - take it up with ASIC. There are serious penalties for misleading the market. Just make sure you have something more than innuendo, rumour, insinuation, suggestion, feelings and opinions.

Also V-Jet don’t forget the $50-60 million every 6 months being pumped into that amazing Japanese Business just to cover wages



You got any evidence to back that assertion up? Or is this just more opinion masquerading as fact?

[Arthur D]

Well said Keith.

What are we saying here? That all LCC’s are a sham, or just JQ?

Surely to suggest that Ryanair, Easyjet, Southwest etc. all independently profitable and none of which have any Legacy carriers to ‘feed’ off are a sham is ludicrous.

So what’s different about JQ?

I don’t subscribe to the ‘cheap seats at the back’ model any more than putting an Ibis inside a Hyatt hotel. They are completely different business models appealing to completely different segments of the market. Yes, the outcome is the same, a nights rest (hopefully), but that’s about it.

The continuing assertion that JQ is somehow being subsidised is a nonsense, I realise the futility, but it really needs to be put to bed.

[AileronsNeutral]

I don’t subscribe to the ‘cheap seats at the back’ model any more than putting an Ibis inside a Hyatt hotel. They are completely different business models appealing to completely different segments of the market. um, better parallel would be an Ibis in a Sofitel, Hyatt is a different hotel chain.

Agree completely with the rest of your post and you only have to look at Air Canada/Rouge, Lufthansa/Eurowings, IAG/Level (LH low cost complementing its’ premium airlines BA and Iberia) as a few examples of the QF/JQ model being used to protect revenues.

[Tankengine]

Well said Keith.

What are we saying here? That all LCC’s are a sham, or just JQ?

Surely to suggest that Ryanair, Easyjet, Southwest etc. all independently profitable and none of which have any Legacy carriers to ‘feed’ off are a sham is ludicrous.

So what’s different about JQ?

I don’t subscribe to the ‘cheap seats at the back’ model any more than putting an Ibis inside a Hyatt hotel. They are completely different business models appealing to completely different segments of the market. Yes, the outcome is the same, a nights rest (hopefully), but that’s about it.

The continuing assertion that JQ is somehow being subsidised is a nonsense, I realise the futility, but it really needs to be put to bed.
Ryanair, Easyjet and Southwest are individual airlines which happen to be LCC.
Jetstar is owned by Qantas! Of course it is being subsidised (plenty of evidence), and that is OK, just the accounting should show the situation more accurately.
My issue is more that the group as a whole is so missmanaged! :(

[morno]

Well best show the evidence, or quit the suggestions that QF is subsidising JQ.

I see plenty of assertions/rumours/feelings/mate told me/he stole my command, very little evidence.

[blow.n.gasket]

Kieth , Morno et al
There are many back issues from news papers espousing multiple Jetstar overseas franchise loss making abilities.
Here’s an example
Plenty more out there if you browse.

Qantas poised to inject millions into Jetstar Japan
By Matt O'Sullivan
29 October 2013 — 12:23pm
Qantas is said to be on the cusp of pouring more money into Jetstar Japan as it seeks to secure its position in the domestic Japanese market against other newcomers.
Japanese newspaper Nikkei has reported that Jetstar Japan will raise 11 billion yen ($118 million) next month from Qantas and Japan Airlines, which each have stakes of 33.3 per cent.
Jetstar Japan’s two other shareholders, Mitsubishi and Century Tokyo Leasing Corporation, are not expected to participate in the private placement. They both have stakes of 16.7 per cent in the budget airline.
Qantas was asked for comment this morning but is yet to respond.
Since it began flying in July last year, Jetstar Japan has become the largest budget airline in Japan with a fleet of 17 A320 aircraft. Low-cost airlines are a new phenomena in the Asian nation.
But the cost of entering the Japanese market has weighed on the financial performance of Melbourne-based Jetstar, which booked $50 million in start-up losses from Jetstar Japan and Jetstar Hong Kong in the year to June.
The airline did not split out the losses when its parent, Qantas, reported its full-year results in August.
Japan Airlines has conceded that Jetstar Japan has experienced growing pains since launching domestic flights.
JAL chairman Masaru Onishi said in June that turning Jetstar Japan into a profitable business would depend to a large extent on the timing of a start to short-haul flying to destinations in China, Korea and Taiwan.
He expected Jetstar Japan to begin international flying within the next two years.
Macquarie Equities has estimated that Jetstar Japan is losing about $50 million a year as it competes against Peach and AirAsia Japan, which will be rebranded Vanilla Air next month.
Malaysian budget airline AirAsia decided several months ago to pull out of the airline joint venture in Japan.
After initially relying on selling tickets via the internet, the budget airlines are looking to boost ways of encouraging consumers to fly with them in a market where people tend to book through travel agents.

[Lapon]

[QUOTE]I don’t subscribe to the ‘cheap seats at the back’ model[QUOTE]

Albiet on a much smaller scale Air NZ managed to do this fairly well post Freedom Air.
Thier economy class is no different to any other LCC yet they still have a preimum cabin to cater for that end of the market.

The cheap seats down the back model in a QF/JQ scenario will still have the same 'overall capacity' but without the mentioned back office and scedule duplications.

As a pax its the scheduling that gets to me. Im amazed how often Ive seen QF departing within half an hour of JQ then nothing for hours (if at all) afterwards.

Does a true LCC (Ryan etc) have a parent company that it competes with? No. Whats done is done but I have to side with the likes of Air NZ on the cheap seats at the back model.

[downdata]

I don’t subscribe to the ‘cheap seats at the back’ model any more than putting an Ibis inside a Hyatt hotel. They are completely different business models appealing to completely different segments of the market. Yes, the outcome is the same, a nights rest (hopefully), but that’s about it.
.

Yeah... you only have to look at the business models of some the largest airlines in the world (i.e. not Qantas) to see that a LCC sub is not required to be successful. The US3 is doing just fine. In fact AA is doing so well without an LCC sub that it is, quote their CEO, "(n)ever going to lose money again".

[Tankengine]

Well best show the evidence, or quit the suggestions that QF is subsidising JQ.

I see plenty of assertions/rumours/feelings/mate told me/he stole my command, very little evidence.

You want a signed affadavit by an ex IT person who did “unassigned” jobs getting Jetstar going?
FFS, anyone close to the action can see **** happening, and “commercial in confidence” provisions stop “evidence” of accounting practices. I was in a Qantas hangar today with a Jetstar 787, you reckon Jetstar pays rent? Any losses go straight onto international. (Prove me wrong!)
Besides, I need to PROVE to YOU what has been going on over ten years?

[Ollie Onion]

Honestly who cares, the Qantas Group is profitable, Qantas Mainline is now expanding and recruiting. Jetstar was setup as a way of protecting the low cost end of the market, a market that Virgin was very successfully eating up for itself, Jetstar has worked a treat in this respect, it has forced Virgin away from that demographic and kept Tiger small. Sure Qantas does give some commercial advantage to Jetstar but that is the benefit of being ONE group, every large entity does exactly the same thing. If you think it is truly illegal then you should report it with your evidence.

Jetstar are never going to generate the equivalent profits for the equivalent ASK's as they are a LCC, margins are thinner, costs need to be lower and it works on bum's on seats as opposed to high yield routes and products (business / first class). The passengers that fly on Jetstar are not necessarily passengers who would travel on Qantas if Jetstar didn't exist. Many only travel because of the $29 fares. Even if you put a basic economy class down the back of a Qantas plane the fares at the lower end would not be sustainable with the cost structure of a large airline. We see examples of legacy carriers all over the world trying to adapt, British Airways now doesn't have reclining seats on Eurofleet and you have to purchase food, Air NZ now has a product where you get nothing on board, they still aren't as competitive as their respective LCC competitors because their costs are so much higher.

Jetstar and Qantas are a strong model together, they dominate the domestic market in Australia, create issues for Air NZ in NZ and are now starting to generate profits for Qantas in markets where qantas had little to no presence such as Japan and Vietnam, this is a good thing for the group surely?

[Rated De]

Honestly who cares, the Qantas Group is profitableThis is an interesting opinion, there is no crime that Qantas has committed, however we would posit the following important caveat:

Under Australian Accounting Standards cost (who pays for what) between segments, for example JQ and Qantas is pretty much up to management (within generous limits)

A threshold is set internally, otherwise a box of paperclips would need to be inter-segment accounted. Management decide where this threshold is.

It may be $100,000, it may be $1,000,000. There is no way to tell from the outside, but we would wager they know on the inside! At executive level, there would be regular 'robust' discussions about which segment is going to pay; between Mr Evans (at JQ) and whoever is the CEO of Qantas International now.....Who ultimately pays is a matter for the executive and that consists of the Chief decision 'makers' including the CEO. It is a company policy type decision!

Therefore without seeing these types of thresholds, which are not included in the Annual Report (nor are they required to be), there is no definitive way to ascertain how much this threshold affects a segment and its performance. The auditors merely ascertain that the company accounts are presented consistently as management said they would and the accounts apply with the standard.. This threshold is not a subject for discussion, it gives generous management latitude.

Perhaps this is why the questions persist.

Using the 'JQ is cheaper than Qantas' without a disclosure of this type (as management have done repeatedly) is disingenuous and has been used as a cornerstone of 'labour issues' for a decade. We would argue that the accounting standards were not designed to be used like this.

[Arthur D]

Oh dear.

Yes, we have always been at war with Eurasia.......

As has been said before, if you feel that strongly, call ASIC, call the media, campaign shareholders, go nuts.

Or...... just bitch about it.

[V-Jet]

Explaining this really does seem like explaining the value of a good forward defensive stroke to a woman, or using fossil evidence of the Evolutionary process to a Creationist. As no one has seen an ape turn into a human, some will never see the possibility. And so it is with Jetstar.

A far better explanation has been verbalised (in writing no less:) by Arthur above) who has in one genius sentence gone straight to the nub of the issue in a way I could only have dreamed of.

'Yes, we have always been at war with Eurasia'

Clearly Arthur is well versed in the principals of IngSoc. Or is that QanSoc? QanSoc has a nice ring to it and explains the problem PERFECTLY. To believe Jetstar (particularly) International has actually netted dollar one does require a skilled appreciation of Newspeak, particularly Doublethink. All disseminated from the Corporate Campus (Inner Party) through HR - obviously the Ministry of Truth.

For those of us not so well educated in the principals of Newspeak and can't see 4 fingers held up as anything but 4 fingers (instead of anything The Party says it to be) we just can't see the things the way the Inner Party does.

Outside the Inner Party/Corporate Campus; Jetstar International is seemingly at best struggling and at worst a basket case being propped up by the parent airline that's been shrunk to greatness. It has been gifted routes, lounges, booking systems, maintenance & hangars - you name it, it's either been given or piggybacked off the parent.

To Outer Party members, every single question levied in support of Jetstar can be rebutted by asking the same question in return. So many very serious questions are deliberately NOT answered by Qf/JQ management that it begs the question why? As any parent of a child of even two could tell you - questions are deliberately not answered accurately when they cannot be honestly answered without lying or incriminating oneself. If only the Alan Joyce problem (even seeing that name makes me queasy) could be solved as simply as sending him to bed without milk and cookies!

It is irreconcilable to thinking people that the airline was created out of thin air, for free. The figures for startup have been bandied around as between $2b and $3b.

Keith generously provided 'net' figures (although created by the Inner Party of '2+2=whatever they want' fame), but accepting those as 'genuine' and a startup cost in the middle of the two figures ($2.5b) cost, we come up with a loss over 10 years of some $800m. And as many have pointed out that's in addition to such triumphs as ReqQ, JHKG, JJapan, JPacific etc etc etc (etc etc etc etc etc etc).

Taking that further we add the loss to the mid figure startup cost of $2.5b and we have a $3.3b OPPORTUNITY cost to Qantas - again, that's aside from all the 'freebies' JQ gets on a day to day basis.

As far as my notes make out, in 2005 (TEN years AFTER the 777 flew) the QF International Fleet consisted of:
12 x 747 Classics
30 x 767
32 x 744
Roughly 23,200 seats available to sell.

In 2018 (almost TWENTY FIVE years AFTER the 777 flew) the Qf International Fleet consists of:
12 x 380
10 x 744
3 x 787
26 x 330
Roughly 16,500 seats available to sell.
Note that ALL 747's are being 'replaced' with aircraft with 138 fewer seats.

Looking at that 'Post Transformation' Fleet another way paints a similar, but slightly different picture. For EVERY SINGLE HOUR the QF International Fleet is in the air, it is burning around 167,000kgs of Jet-A/A1 MORE than almost ANY of it's 777/787 competitors. This is INSANE.

Qantas has therefore been shrunk in terms of seats by 40% while it has also managed have INCREASED it's fuel burn in relative terms compared to it's competitors by some 167,000kgs for EVERY, SINGLE HOUR it is operating.

We know $2.5bish has effectively been invested in the personal pockets of Qantas' long suffering and undernourished Management Team (The Inner Party) and it would seem roughly $2.5b has been invested into a group that has lost over ten years $800m.

Had nearly $5b been put into 777's and 787's (sorry - Gamechanger's! JQ has 787's, only Qantas International has been blessed with Gamechangers) instead of $5b into personal pockets and a group that looks like it's lost $800m then just imagine what it could have been generating?

The we get to debt. 1992, Qf had zero debt and $1.5b in the bank. 2005 I understand debt was around 50-55% and now it's 70-75%. As I wrote previously, I'd get that if the fleet was efficient and there were enough of them, but it is as far from efficient as you could almost imagine and will soon be even smaller than the 40% 'Transformational' shrinkage.

The object of business is to charge as much for something as you can. I still do NOT understand why you would seemingly twist yourself in knots, load your company up with massive debt and extra duplicated services to charge around 40% LESS than your primary product. Witness that famous 'Jetstar makes more money selling muffins'. This seems to me completely nuts!

Certainly to me (admittedly an Outer Party Member actively committing Thoughtcrime on a daily basis) it looks like the Great Transformation has simply shrunk the airline 40%, increased it's relative (to competitors) fuel usage by 167,000kgs per HOUR and hugely increased it's debt whilst at the same time massively enrich it's genius Corporate Campus Inner Party Members.

[RealityCzech]

Some people have way too much spare time on their hands.

Where in all of the above carry-on is any analysis (let alone mere acknowledgment) of the fundamental changes in international competition from the fabled glory days of government ownership and flying 747 classics to today’s reality?

[V-Jet]

Some people have way too much spare time on their hands.

Where in all of the above carry-on is any analysis (let alone mere acknowledgment) of the fundamental changes in international competition from the fabled glory days of government ownership and flying 747 classics to today’s reality?

Funny you mention glory days of Classics (2005 certainly wasn’t the glory days btw) but seem to overlook the main point that QF is STILL flying classics when they needed a new fleet 15 years ago.

Can you explain why Qf has such gifted management but is burning 170,000kgs of jet fuel more per HOUR than any of its major competitors?

Too much time...... that’s funny!

[Popgun]

Qantas International (or any other full service, premium airline) cannot compete effectively against Scoot, Air Asia, Malindo, Norwegian or any of the multitude of International LCCs that have thrown their hat in this arena. The cost base is too high.

I'm certainly no Qantas Angel, but the dual brand strategy seems to be working. Sometimes JQ is a sword...at other times it is a shield.

The crucial thing to remember, however, is that it is attached to the hand (of Qantas). It is not really a separate company. There is only one share price!

The (financial) health of the entire group entity is what REALLY matters.

PG

[V-Jet]

The (financial) health of the entire group entity is what REALLY matters.

Absolutely. Those 167,000kgs of gas PER HOUR any jet is in the air do add up though. JQ domestic (in fact IMHO ANY AU domestic entity, given the quasi monopoly position of JQ/Qf) is safe. No issues there. JQ int? Well, I would suggest that is up to the big man (tautology?) paying the bills.

The cost base is a furphy. If you think that is so important then you would agree selling tickets for 40++% more and packing them in is more important.

Just think about fuel price vs ticket price.

Not arguing with anyone personally, do not take it as such. I'm just not so sure that many at QanSoc can say the same....

Fuel cost vs ticket price...

Fuel cost vs ticket price...

Just give some thought again about that extra c170,000kgs per hour - it is quite a lot. That is the physical weight of around one hundred SUV's EXTRA being thrown into the atmosphere MORE than any of Qf's major competitors. Every. Single. Hour.

Lucky Qf has such a fantastic Carbon Offset programme - otherwise their bonuses might be completely screwed!!!!

Just did some research. Australia's most popular SUV mid size seems to be the Mazda CX-5. It's curb weight is 1455kgs. Again, putting it into perspective, QF International is throwing the equivalent weight of 114 MORE of those (no doubt luxurious beasties) into the atmosphere in fuel weight EVERY SINGLE HOUR MORE than anyone of its' serious competitors whenever it is in the air and operating. It's completely insane!

Maybe a better way of putting that is if someone buys a ticket on QF International, they are directly contributing to a management that espouses it's green credentials at every opportunity, yet is contributing to Global Warming at an Olympic level!

If you work for JQ and think I'm wrong - then what is the point of JC/NC and any other entity? This pursuit of minuscule savings when the gross waste is ignored is absolutely totally insane! AND - it's a safety related business.

Glad it's not mine!!

[On eyre]

V-jet - FFS stop before you go blind !!

[V-Jet]

Am I wrong? Point out the errors! Laughing at QF shareholders is comic relief to me at this stage. I just can't believe the insanity continues....

I ask again - am I wrong? If so, where?

[Rated De]

The cost base is a furphy. If you think that is so important then you would agree selling tickets for 40++% more and packing them in is more important.

Just think about fuel price vs ticket price.



The fundamental metric is best summed up unsurprisingly by Herb Kelleher. ( I paraphrase)

'Unit cost is important, but ought not be an obsession. You can be the generate the biggest revenue in the business, or have the lowest cost but in either case, you can still go broke.The fundamental metric is the difference between your costs and your revenue.'

Not having a fuel efficient fleet when the cap ex spend is on the lower side due the interest rate suppression and revenue is relatively robust is perhaps the most critical error an airline executive management can make.

Qantas got lucky with the fuel price.
They can continue to focus on their labour unit cost and outsource as much work as possible, but the fuel included CASK ( no matter the crew cost they achieve) is an order of magnitude on the wrong side.

Qantas need a new fleet.

[jetlikespeeds]

This pursuit of minuscule savings when the gross waste is ignored is absolutely totally insane! AND - it's a safety related business.


This statement alone best describes the whole group, from one end to the other. The people at the campus simply don’t get it.

[Rated De]

This statement alone best describes the whole group, from one end to the other. The people at the campus simply don’t get it. What has happened in most corporations is that with the maturity of a business it loses its direction.

We could discuss the role of business schools generating cookie cutter MBA and commerce graduates but suffice to say, there is a renewed inwards focus as the direction is lost.

This is why we state repeatedly 'lower labour unit cost' is the obsession.

Regular surveys, usually conducted by the big accounting firms show the sole focus most CFO level executives have:

Cost control

It isn't aircraft replacement, competitor activity or FX exposure, it is time after time, cost. This is not to say cost is not important but it can detract from strategic vision and forward thinking decision making, where large amounts of capital may need to be expended NOW in order for some future benefit; like an aircraft purchase.
As such this cost obsession permeates downwards, and the rush is on to save cost, labour being an important component of airline cost...

The Network decision is evidence of it, indeed the unchecked growth of JQ growing beyond scale is arguably evidence of it.

All the while the big picture is lost as the MBA class, all taught the same way focus on cost reduction, their KPI depend on it!

Recalling a comment of a poster that Qantas had ordered not a single aircraft in the Clifford/Joyce regime, if correct (we will check) is a big tell.


Qantas still need a new fleet.

[chuboy]

Am I wrong? Point out the errors! Laughing at QF shareholders is comic relief to me at this stage. I just can't believe the insanity continues....

I ask again - am I wrong? If so, where?

You are wrong because you assume the only cost associated with operating an aircraft is how much it costs to fill it up with Jet A1.

Ask yourself why you do not drive a Tesla Model S even though it costs far less in energy to drive it from A to B than the fossil-fuel powered motor vehicle you currently own.

[Rated De]

Qantas International (or any other full service, premium airline) cannot compete effectively against Scoot, Air Asia, Malindo, Norwegian or any of the multitude of International LCCs that have thrown their hat in this arena. The cost base is too high.Not quite sure what 'cost base' you refer to make such an assertion.

Depending on data source fixed or sunk costs of airlines amount to 70-80% of total cost.



Air frame cost* the same
Fuel cost the same
Air Nav charges the same
Landing and terminal costs (same airport) very similar

There are small savings in crew costs (general) and the choice to lease air frames rather than bring them on balance sheet can change reporting metrics somewhat. IFRS 16 will change this accounting advantage many Low Fare Airlines enjoy*.



Flying 'point to point' rather than a 'hub' can save and likely that represents a difference in fixed cost, terminals, lounges and such are costly to run.


Low fare airlines have a role; they stimulate a demand elastic market segment. They by definition are low yielding, high load factor required businesses.



Their competition has these higher costs as they have built brand differentiation, but they also face less demand elasticity, particularly in the product differentiated J class, where significant margin exists. . Less elasticity allows yield to be captured. As yield is far easier to build and maintain, add in a frequent flyer business and a hub and spoke network suddenly adds yield potential. This cannot be replicated by a basic low fare airline model. Do these businesses have brand value or are they merely 'cheapest on the day' models is an interesting question.


So the cost base is a component of the discussion, it is not all of it.. Established airlines are well able through scale and brand value to 'compete'. They also can stimulate demand in the Y cabin, adding capacity and reducing the ability of the Low Fare Airlines to build any yield as flights move closer to the day of departure( by increasing price). Ask Mr O'Leary (Ryan Air) or Mr Fernandes (Air Asia) how this affects their ability to build yield and you may understand how Mr O'Leary can apparently suggest that use of the toilet will cost a pound: He struggles to build yield.


Control of the yield premium is something that means an airline can maximise the difference between wherever its cost base resides and the revenue it can generate for a seat sold. It is after all the gap between the revenue generated and the costs incurred that represents the operating profit. This margin is the important one. (Apologies to Herb Kelleher)

Qantas still need a new fleet.

[V-Jet]

You are wrong because you assume the only cost associated with operating an aircraft is how much it costs to fill it up with Jet A1.

Ask yourself why you do not drive a Tesla Model S even though it costs far less in energy to drive it from A to B than the fossil-fuel powered motor vehicle you currently own.

No, I think you missed my point. OPPORTUNITY COST was the major thrust of my argument. And I wasn't referring to cost based on gassing the fleet up. I was referring to the EXTRA cost that Qantas spends on carrying pax vis a vis their competitors. IE: An A380 burns 13,000kgs of fuel an hour, a 787 burns 4500kgs.

As for Tesla.... I suppose 'you' (as in third person - not directing this at you personally, it's such a common misunderstanding I hesitate to direct it at one person) think PV cells on roofs are 'efficient'.

I admire what Musk is 'trying' to do, but PV cells, and even worse - their loathsome batteries are woefully inefficient. Nor are they clean. They are VERY clean if you happen to live in Australia, US or Europe and you don't consider either the transport costs, environmental ills caused by their manufacture (and I've been to a factory in Shenzen - it's nothing short of disgusting what pours unregulated into the SCS for the benefit of 'clean' Western nations). Then there are the batteries. Solar/Tesla Batteries basically have a (short) half life. Their manufacture on an ecological cost is off the charts. Their disposal is currently even worse.

Iv'e had this discussion with Qf's Andrew David and at this point I stopped getting responses. In short it is a JOKE.

I applaud people 'trying' to gain efficiency, but if you really espouse 'efficiency' (in a domestic situation) you go for a Model T Ford or a VW Beetle and the most efficient local power source you can. Ideally, nuclear.

Where I see MAJOR economic costs is in burning fossil fuels that have a finite supply for no reason. And THAT is where I put the blame firmly on QF. Whether or not you believe in 'Global Warming' is to my mind completely irrelevant. We 'SHOULD' be living cleaner, because we can.

In the case of running an airline is an absolute financial necessity. For the managers of QF that is completely unnecessary and a waste of resources while you can 'kick the can down the road' and put the cash in your own pocket.

Even then, I'd sort of excuse that myopic attitude IF they didn't ram down my throat every week their impeccable (but to anyone with even a 1st grade education - absolute and complete hogwash) 'Green' credentials. It's yet another complete lie from the Ministry of Truth.

[Chris2303]

"Qantas still need a new fleet."

B747-8I
B797
B787
A320
Regional Jet for Link

[virgindriver]

I reckon they could just go:

777x
A330neo
A320neo

Give the 787s to JQ, ditch the A380s and replace the 737s with 320s.

Done