Qantas' Jetstar Asia headache dogs Dixon
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Qantas' Jetstar Asia headache dogs Dixon
Wed "Melbourne Age"
Qantas' Jetstar Asia headache dogs Dixon
April 26, 2006
The budget airline is not proving the winner its part-owner had hoped, writes Eric Ellis.
MADAME Chong Phit Lian, Geoff Dixon's new right-hand steward of Qantas' Big Asian Adventure, Jetstar Asia, used to run Singapore's mint.
Unfortunately for Dixon and Qantas shareholders, that's probably the last time Madame Chong was awash with cash. The struggling budget airline, 45 per cent owned by Qantas, is proving anything but a licence to print money.
Take the midday flights this correspondent took last week, a shuttle return from Singapore to Jakarta. This should be one of Jetstar Asia's better-patronised routes; Singaporeans are investing heavily in President Yudhoyono's economically rekindled Indonesia, and the favour is returned by Indonesians indulging in power retail therapy in Singapore's gleaming malls. Flights between the two are usually packed.
But not this week. Just 10 of 100-odd seats were occupied on the run down, and no more than a third coming back. The fare was $200 — Singapore Airlines' fares are about double — so it can't have been the price. Some passengers paid just $50 one-way. "How do they survive?" rhetorically inquired one passenger of her husband, as she surveyed Dixon's row on row of empty seats.
Great question, and one that dogs Dixon and his fellow Jetstar Asia shareholders, including the Singapore Government's Temasek Holdings, owner of Qantas' great regional rival Singapore Airlines. The $S60 million ($A50.7 million) injected when Dixon merged Jetstar Asia with Temasek's other Singapore-based start-up Valuair in July has just about run out. Singapore's mostly good-news-only paper, the Straits Times was uncharacteristically muscular when it described Jetstar Asia as facing a cash crunch. Jetstar-Valuair has had five CEOs in two years, and the latest — Madame Chong — has no aviation experience.
Dixon clearly has a problem that tests his corporate and political skills. It's all a long way from the launch in October 2004, when he boasted: "I don't know where the other (low-cost) airlines will end up. But I can tell you that Jetstar Asia will still be around in three or four years. I often think it's best to wait to see how everybody else destroys themselves, and then you come in and maybe pick up some of the pieces. We intend to be profitable in year one."
That hasn't happened and as fuel prices head north, there will be more pain for Qantas. A further complication is that Dixon's Jetstar Asia partner Temasek has a jumble of Singapore-based aviation interests: Singapore Airlines, Tiger Airways, SilkAir — all Jetstar Asia competitors.
Singapore Airlines recently boasted that its revenue and passenger loads had never been higher than over the past nine months, that is since Jetstar Asia merged with Valuair.
It's in stark contrast to the thumping success story next door in Malaysia, Air Asia. Launched in 2002, this genuine budget airline — a Kuala Lumpur-Bali fare is $30 — has rattled the Government-owned incumbent Malaysian Airlines' cage so hard, it has become Malaysia's leading airline. Last month it acquired 99 of Malaysian Airline's 118 domestic routes.
Dixon can only drool at the rapid rise of Air Asia; profitable from day one, a $400 million IPO in 2004, and two profitable subsidiaries, in Thailand and Indonesia.
Air Asia is adding routes almost daily; Jetstar Asia is scaling back, planning to drop routes. Madame Chong reckons she needs another $S36 million to see the airline through the crunch. But what she really needs is genuine entrepreneurship of the kind displayed by Air Asia, which has perfectly caught the middle-class Asian travel boom.
Perhaps the two saving graces for an envious Dixon are that Air Asia is allowed only one flight from Singapore — to Bangkok — and that its CEO Tony Fernandes, like Dixon's Madame Chong, has never worked in aviation. Fernandes, 42, was a music industry executiveand a big fan of Richard Branson.
Still, there's hope for Jetstar Asia. It recently became something of a cousin to Air Asia, when Temasek inherited a shareholding in
Fernandes' Bangkok-based Air Asia Thailand. While Fernandes once told me he saw Singapore as a rival, Temasek and Dixon would do well to listen and learn from their new family member.
=================================================
Qantas' Jetstar Asia headache dogs Dixon
April 26, 2006
The budget airline is not proving the winner its part-owner had hoped, writes Eric Ellis.
MADAME Chong Phit Lian, Geoff Dixon's new right-hand steward of Qantas' Big Asian Adventure, Jetstar Asia, used to run Singapore's mint.
Unfortunately for Dixon and Qantas shareholders, that's probably the last time Madame Chong was awash with cash. The struggling budget airline, 45 per cent owned by Qantas, is proving anything but a licence to print money.
Take the midday flights this correspondent took last week, a shuttle return from Singapore to Jakarta. This should be one of Jetstar Asia's better-patronised routes; Singaporeans are investing heavily in President Yudhoyono's economically rekindled Indonesia, and the favour is returned by Indonesians indulging in power retail therapy in Singapore's gleaming malls. Flights between the two are usually packed.
But not this week. Just 10 of 100-odd seats were occupied on the run down, and no more than a third coming back. The fare was $200 — Singapore Airlines' fares are about double — so it can't have been the price. Some passengers paid just $50 one-way. "How do they survive?" rhetorically inquired one passenger of her husband, as she surveyed Dixon's row on row of empty seats.
Great question, and one that dogs Dixon and his fellow Jetstar Asia shareholders, including the Singapore Government's Temasek Holdings, owner of Qantas' great regional rival Singapore Airlines. The $S60 million ($A50.7 million) injected when Dixon merged Jetstar Asia with Temasek's other Singapore-based start-up Valuair in July has just about run out. Singapore's mostly good-news-only paper, the Straits Times was uncharacteristically muscular when it described Jetstar Asia as facing a cash crunch. Jetstar-Valuair has had five CEOs in two years, and the latest — Madame Chong — has no aviation experience.
Dixon clearly has a problem that tests his corporate and political skills. It's all a long way from the launch in October 2004, when he boasted: "I don't know where the other (low-cost) airlines will end up. But I can tell you that Jetstar Asia will still be around in three or four years. I often think it's best to wait to see how everybody else destroys themselves, and then you come in and maybe pick up some of the pieces. We intend to be profitable in year one."
That hasn't happened and as fuel prices head north, there will be more pain for Qantas. A further complication is that Dixon's Jetstar Asia partner Temasek has a jumble of Singapore-based aviation interests: Singapore Airlines, Tiger Airways, SilkAir — all Jetstar Asia competitors.
Singapore Airlines recently boasted that its revenue and passenger loads had never been higher than over the past nine months, that is since Jetstar Asia merged with Valuair.
It's in stark contrast to the thumping success story next door in Malaysia, Air Asia. Launched in 2002, this genuine budget airline — a Kuala Lumpur-Bali fare is $30 — has rattled the Government-owned incumbent Malaysian Airlines' cage so hard, it has become Malaysia's leading airline. Last month it acquired 99 of Malaysian Airline's 118 domestic routes.
Dixon can only drool at the rapid rise of Air Asia; profitable from day one, a $400 million IPO in 2004, and two profitable subsidiaries, in Thailand and Indonesia.
Air Asia is adding routes almost daily; Jetstar Asia is scaling back, planning to drop routes. Madame Chong reckons she needs another $S36 million to see the airline through the crunch. But what she really needs is genuine entrepreneurship of the kind displayed by Air Asia, which has perfectly caught the middle-class Asian travel boom.
Perhaps the two saving graces for an envious Dixon are that Air Asia is allowed only one flight from Singapore — to Bangkok — and that its CEO Tony Fernandes, like Dixon's Madame Chong, has never worked in aviation. Fernandes, 42, was a music industry executiveand a big fan of Richard Branson.
Still, there's hope for Jetstar Asia. It recently became something of a cousin to Air Asia, when Temasek inherited a shareholding in
Fernandes' Bangkok-based Air Asia Thailand. While Fernandes once told me he saw Singapore as a rival, Temasek and Dixon would do well to listen and learn from their new family member.
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The jetstar asia debarcle just goes to show whay complete idiots dixon and his band of merry men are.
Ineffective due dillegence, taking on the singaporeans in their own backyard - effectively giving temasek a means to bleed the QF group.
145 million lost and counting. I bet it doesnt effect bonuses this year..
Ineffective due dillegence, taking on the singaporeans in their own backyard - effectively giving temasek a means to bleed the QF group.
145 million lost and counting. I bet it doesnt effect bonuses this year..
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An observation that i am sure has nothing to do with the success of "air asia"
but it is the only airline of all mentioned in the news paper article using 737 (many clasics) the rest use shiney new A320
but it is the only airline of all mentioned in the news paper article using 737 (many clasics) the rest use shiney new A320
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It would appear the same due dilligence undertaken by flight ops is leading to another disaster...The Singapore basing..
See what happens when lunatics run the asylum?
Anyone can manage when it is all falling your way, let's see how these blowhards do as it gets tougher!
See what happens when lunatics run the asylum?
Anyone can manage when it is all falling your way, let's see how these blowhards do as it gets tougher!
As I repeatedly said when this thing was announced, Qantas brings no competitive advantage to this market therefore it will fail. J* Asia is simply an excuse to make Mr. Dixon "Chairman" of something, its about ego.
I've had to deal with similar cockeyed proposals by CEO's before - but usually they only wanted to invest about $10 million to get there egos massaged.
I've had to deal with similar cockeyed proposals by CEO's before - but usually they only wanted to invest about $10 million to get there egos massaged.
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Sunfish.
I remember that post of your and at the time I had doubts as to the veracity of what you were saying.
I do not harbour those doubts now.
The problem is, when senior management fcku something up, instead of looking at themselves or taking responsibility they just seek to smash the staff, particularly the operational staff, even harder.
I remember that post of your and at the time I had doubts as to the veracity of what you were saying.
I do not harbour those doubts now.
The problem is, when senior management fcku something up, instead of looking at themselves or taking responsibility they just seek to smash the staff, particularly the operational staff, even harder.
Grandpa Aerotart
Was chatting to an Adam Air crew this morning in Jakarta as we filed through immigration....saw about 6 or 8 latish model 737s painted in their orange colour scheme as we arrived at the airport in the crew bus...they were off to Singapore.
ABSOLUTELY STUNNING young Indon FA in an orange 60s style miniskirt uniform and an older Indon captain with youngster FO.
Chatted on, blah, blah..."Good airline?"
"No"
Saw yet another airline's latish model 737 land as we held behind a GA 737...just can't think of the name (Edit: Batavia Air)...Indonesia, and Asia in general, is awash with LCC 737s...Dixon was dumb to think he could compete...arrogant actually.
ABSOLUTELY STUNNING young Indon FA in an orange 60s style miniskirt uniform and an older Indon captain with youngster FO.
Chatted on, blah, blah..."Good airline?"
"No"
Saw yet another airline's latish model 737 land as we held behind a GA 737...just can't think of the name (Edit: Batavia Air)...Indonesia, and Asia in general, is awash with LCC 737s...Dixon was dumb to think he could compete...arrogant actually.
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I think he's also arrogant enough to think J* international is going to be the roaring success domestic is. I'll be very interested to see if the 330's are holding similar load factors going to places like Vietnam. People fly domestic because they pay $49 for a seat. Different story international.
Geoff in 2 years
Geoff in 2 years
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With ref to Intl LCC's .. anyone have any info on the Tiger Air flights in/out of DRW? They seem to be continually offering the roughly AU $49 airfares - that really can't be helping things much either. The number of backpackers in and out - I know what I'd be doing if I was one ...
They may be offering $49 flights, just try booking one. Some seats have to be available at this price if this is what they are advertising but usually they go quickly, and will be sold out on the day you want to travel. Of course higher priced seats still available on your intended flight.
Same with QF, DJ, J* I rarely score the lowest advertised price unless I get in quick, book ahead and am flexible with times/dates.
Same with QF, DJ, J* I rarely score the lowest advertised price unless I get in quick, book ahead and am flexible with times/dates.
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JQ Asia should have been closed down last September. Any airline that loses over $10m a month will only be kept alive if ther is a reason. And what is that you ask? The now Chairman of that company was its sponsor and along with little Al is a front runner to take GD's job when he retires. He can't be seen to be associated with a failure. So QF will continue to pump it up until such time that little Al can absorb it into his world. All JQ Asia's commercial functions are now managed from JQ headquarters in Melbourne.
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If J* Asia is absorbed under the umbrella of J* then produce a nice statement of financial performance, and we will see how well it is actually doing...Instead of hiding the disaster in "group" accounts we will then see how much subsidy is paid to J* group..Me thinks internal transfers are a big ticket item, no wonder J* makes $19.7m EBIT in year 1 
As someone once remarked, you can polish a t*rd all you like, but it is still a tu*d
As someone once remarked, you can polish a t*rd all you like, but it is still a tu*d
I agree QFinsider. It gets tiring continually hearing of how we as a Legacy carrier have such high overheads, when it's obvious that we are subsidising other sections of the Group to an extent.
It would be great to see a journalist or shareholder association do some investigation of this "creative accounting" that is used to make Jet* look good at the expense of Mainline.
Then again, I probably shouldn't hold my breath waiting for any excellence in aviation related journalism.
It would be great to see a journalist or shareholder association do some investigation of this "creative accounting" that is used to make Jet* look good at the expense of Mainline.
Then again, I probably shouldn't hold my breath waiting for any excellence in aviation related journalism.
