Qantas Failing in Japan
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Qantas Failing in Japan
Once Japan was a cash cow for Qantas.
Not any more.
Losses on the route have led QF to consider withdrawing altogether and running JetStar only into the Land of The Rising Sun.
Qantas have managed Japan badly over the last decade....Little or no advertising...The AO experiment..third rate unreliable equipment(the Classics) and Jet Star into Osaka and Nagoya.
The LCC model into Japan just doesnt work.
Put JetStar into Tokyo and pax loads will fall even further.
Japan is Australias third largest trading partner.Pulling out of there will have an enormously negative impact on the business traveller.
The Qantas network continues to shrink under Dixon.
How many destinations are left?...Eleven
Not any more.
Losses on the route have led QF to consider withdrawing altogether and running JetStar only into the Land of The Rising Sun.
Qantas have managed Japan badly over the last decade....Little or no advertising...The AO experiment..third rate unreliable equipment(the Classics) and Jet Star into Osaka and Nagoya.
The LCC model into Japan just doesnt work.
Put JetStar into Tokyo and pax loads will fall even further.
Japan is Australias third largest trading partner.Pulling out of there will have an enormously negative impact on the business traveller.
The Qantas network continues to shrink under Dixon.
How many destinations are left?...Eleven
Bigger picture
There's more to this than just QF and Dixon.
Japan is a dog for NZ too; has been for nearly a decade and I suspect for many other carriers.
Reality is, compared to 70's, 80,s and early 90's the Japanese economy has tanked - and they just aren't spending.
Discretionary items like travel are hit hard.
The days of Japan being a cash cow are gone for good.
Play the long term game... keep building China, get ready for India and when the 787 arrives, the whole industry gets turned upside down.
Japan is a dog for NZ too; has been for nearly a decade and I suspect for many other carriers.
Reality is, compared to 70's, 80,s and early 90's the Japanese economy has tanked - and they just aren't spending.
Discretionary items like travel are hit hard.
The days of Japan being a cash cow are gone for good.
Play the long term game... keep building China, get ready for India and when the 787 arrives, the whole industry gets turned upside down.
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The Aussie dollar is too strong for the Japanese.
However,at the same time the Yen/US dollar rate has always been high....and it has never stopped the Japanese from visiting Hawaii.
The Aust and US dollars are closer today than they have been for a long time.So why are the Japanese still visiting the US but at the same time losing interest in Australia.....
In a word 'Marketing'.....but I can't see the strategy of replacing a legacy carrier with a LCC helping to show the Japanese that they are a valued customer.
As has been said before....image or perception is all important.
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There are a number of reasons Japanese numbers are falling.
- Other Markets (Hawaii, Singapore, Hong Kong) all adjust to suit the Japanese style of shopping, golf, eating, touring, short stays etc. Australia and NZ offer the one product to all comers.
- Aust. and NZ do not market to the Japanese in a way that encourages them to visit more than once. Other countries somehow get the Japanese back several times - repeat visitors.
- Lack of competition. For years the route was JAL & Qantas. Air fares were always high and still are compared to other destinations.
- QF do SFA marketing as a brand, Japanese are brand focused. Virgin brands do very well in Japan. If DJ went to Japan i'm sure the image alone would kick QF Butt.
- Cost. The Yen vs. AUD$ has always gone up and down. However, Australian and NZ hotels, meals and general spending is more expensive than other destinations. But Cost is not the main reason for falling numbers.
- Other Markets (Hawaii, Singapore, Hong Kong) all adjust to suit the Japanese style of shopping, golf, eating, touring, short stays etc. Australia and NZ offer the one product to all comers.
- Aust. and NZ do not market to the Japanese in a way that encourages them to visit more than once. Other countries somehow get the Japanese back several times - repeat visitors.
- Lack of competition. For years the route was JAL & Qantas. Air fares were always high and still are compared to other destinations.
- QF do SFA marketing as a brand, Japanese are brand focused. Virgin brands do very well in Japan. If DJ went to Japan i'm sure the image alone would kick QF Butt.
- Cost. The Yen vs. AUD$ has always gone up and down. However, Australian and NZ hotels, meals and general spending is more expensive than other destinations. But Cost is not the main reason for falling numbers.
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I'm based in Japan right now and Qantas is doing a ton of advertising here. There are Qantas billboard trucks running around and entire trains have been decked out with Qantas advertising. Looks like they are really trying to drum up some business.
The economy is definitely slowing down, spending is way down and money doesn't grow off the trees like it used to several years ago... The exchange rate is also really bad, I'm moving back to oz soon and really not looking forward to exchanging my savings!
I definitely agree with everyones comments on Jetstar not working in Japan, service is a huge part of the Japanese culture and people just expect more. The whole idea of an LCC is completely foreign, there aren't even any domestic LCCs.
I'm not exactly sure about this but I presume most of Jetstars sales are online. Here in Japan the majority of people still go to the travel agents, so unless they really push it the Japanese will tend to stick to the more traditional legacy carriers.
I also find that fares are a little expensive relatively. I had some friends looking to go on vacation, they looked at airfares and it was cheaper to fly to the states than it was to oz. And when I go to book tickets from Japan, Qantas is always the most expensive option by far, sometimes double the lowest fare.
The economy is definitely slowing down, spending is way down and money doesn't grow off the trees like it used to several years ago... The exchange rate is also really bad, I'm moving back to oz soon and really not looking forward to exchanging my savings!
I definitely agree with everyones comments on Jetstar not working in Japan, service is a huge part of the Japanese culture and people just expect more. The whole idea of an LCC is completely foreign, there aren't even any domestic LCCs.
I'm not exactly sure about this but I presume most of Jetstars sales are online. Here in Japan the majority of people still go to the travel agents, so unless they really push it the Japanese will tend to stick to the more traditional legacy carriers.
I also find that fares are a little expensive relatively. I had some friends looking to go on vacation, they looked at airfares and it was cheaper to fly to the states than it was to oz. And when I go to book tickets from Japan, Qantas is always the most expensive option by far, sometimes double the lowest fare.
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Duopoly
For what is essentially a duopoly between JAL and QF there is something very wrong if they are not making a decent profit.
When it comes to being both innovative and creative regarding improving yields Qantas management comes up empty.
When it comes to being both innovative and creative regarding improving yields Qantas management comes up empty.
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surfside -
Most of our Japan corporate traffic goes over SIN or KUL on a cost based choice.
The Jap fares are a pain in the butt and overly restrictive.
China however is QF 1st choice and meetings set to use the nonstop PEK services. Fares are reasonable.
QF is still trying to milk a yen that is near the 100 level against the former Pacific Peso, and the sons of the rising sun are just going to haul their skinny clenched butts into HNL.
This is a market I would consider would find it hard to accept JQ as they are value for money with quality service oriented. LCC's as qf86 rightly said are riding the divine wind.
Japanese traffic is of little value overall to Australia apart from salaries. they come here, are on organised tours, stay at Japanese owned properties, are directed to Japanese owned outlets but at least do visit local attractions, albeit at monstrously inflated prepaid prices.
More frequency into PEK makes more sense for my Corporate dudes. They are pumping up and over HKG if they cannot roll on MON WED FRI departures.
There may be something quite accurate in what R-F-Green says too. These local predators who direct the Japanese clientelle into their own stores and rip the living suitcase out of them may not be allowed to operate in the other destinations of choice.
Maybe we have killed the market and overpriced it by apathy and lack of action.
Nothing new there.
Best all
EWL
Most of our Japan corporate traffic goes over SIN or KUL on a cost based choice.
The Jap fares are a pain in the butt and overly restrictive.
China however is QF 1st choice and meetings set to use the nonstop PEK services. Fares are reasonable.
QF is still trying to milk a yen that is near the 100 level against the former Pacific Peso, and the sons of the rising sun are just going to haul their skinny clenched butts into HNL.
This is a market I would consider would find it hard to accept JQ as they are value for money with quality service oriented. LCC's as qf86 rightly said are riding the divine wind.
Japanese traffic is of little value overall to Australia apart from salaries. they come here, are on organised tours, stay at Japanese owned properties, are directed to Japanese owned outlets but at least do visit local attractions, albeit at monstrously inflated prepaid prices.
More frequency into PEK makes more sense for my Corporate dudes. They are pumping up and over HKG if they cannot roll on MON WED FRI departures.
There may be something quite accurate in what R-F-Green says too. These local predators who direct the Japanese clientelle into their own stores and rip the living suitcase out of them may not be allowed to operate in the other destinations of choice.
Maybe we have killed the market and overpriced it by apathy and lack of action.
Nothing new there.
Best all
EWL
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EWL
Can you clarify the first sentence of your last post?
Japanese businessmen fly to Oz via KUL or SIN.
They suffer a stopover in order to save money...Is that correct?
I dont know what restrictions are in place but what about using NRT as hub to Europe?
Japanese businessmen fly to Oz via KUL or SIN.
They suffer a stopover in order to save money...Is that correct?
I dont know what restrictions are in place but what about using NRT as hub to Europe?
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Jetstar want to relinquish the Cns-Osaka and Cns-Ngo back to Qantas mainline (767's) from sept '08 and have made representation to QF flight ops to see whether it can be done.
Mainline crewing and aircraft capacity will make this difficult.
The JTB are putting pax ex Ngo and Osaka on the bullet train to Tokyo and then Nrt-Australia rather than booking them on Jetstar direct.
Jetstar regularly have < 100 POB southbound.
AO and QF had, at one stage, 2 767 services a day Cns-Ngo, sometimes both full., approx 500 pax.
Mainline crewing and aircraft capacity will make this difficult.
The JTB are putting pax ex Ngo and Osaka on the bullet train to Tokyo and then Nrt-Australia rather than booking them on Jetstar direct.
Jetstar regularly have < 100 POB southbound.
AO and QF had, at one stage, 2 767 services a day Cns-Ngo, sometimes both full., approx 500 pax.
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Hi Harry
To clarify, a lot of QF/QF codeshare flights out of Japan go via somewhere and all the QF metal leaves back of the clock, hence there are a lot of one stop services to MEL ADL etc and even one of the SYD services with the 763 in 1 stop (CNS) so therefore using SQ or MH with a decent transit time in SIN or KUL is no imposition. The fares are generally much better too.
Where JQ has been slipped in under the cover of darkness, the legacy carriers are in general a similar price or cheaper. This naturally does not include the specials from time to time, but includes all the normal goodies.
The same is true in many cases ex Australia. Marketing position + sucker behind keyboard who knows EVERYTHING cos Magda said so = bum in seat when the Thai flight MEL BKK was the same price and they would have fed and watered the punter.
Derek
The more you pump LCC's into premium destinations, the more you erode the upper end of your market, so CNS may be suffering a little of this.
It was definitely the case with MCY, with many of the boutique shops and upper end restaurants having to reinvent theselves or close when the top end went elswhere and the shallow end of the gene pool started lobbing in.
That's the way she goes!!!
Best all
EWL
To clarify, a lot of QF/QF codeshare flights out of Japan go via somewhere and all the QF metal leaves back of the clock, hence there are a lot of one stop services to MEL ADL etc and even one of the SYD services with the 763 in 1 stop (CNS) so therefore using SQ or MH with a decent transit time in SIN or KUL is no imposition. The fares are generally much better too.
Where JQ has been slipped in under the cover of darkness, the legacy carriers are in general a similar price or cheaper. This naturally does not include the specials from time to time, but includes all the normal goodies.
The same is true in many cases ex Australia. Marketing position + sucker behind keyboard who knows EVERYTHING cos Magda said so = bum in seat when the Thai flight MEL BKK was the same price and they would have fed and watered the punter.
Derek
The more you pump LCC's into premium destinations, the more you erode the upper end of your market, so CNS may be suffering a little of this.
It was definitely the case with MCY, with many of the boutique shops and upper end restaurants having to reinvent theselves or close when the top end went elswhere and the shallow end of the gene pool started lobbing in.
That's the way she goes!!!
Best all
EWL
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Qantas is a business and I don't think the entire executive management is gripped by some form of long term collective hysterical blindness. (well we can argue about that later). But if there was money in selling a high class (and probably relatively high cost) product in Japan, and only by doing that, wouldn't they do it? After all they don't have a price only product on CityFlyer do they?
Can't be just the age of the aircraft.....JQ's 330s are near new. And for years....maybe even today....Honolulu Airport was full of older 747 classics, 767s and DC-10s from Japan. Didn't seem to me to put the Japanese tourists off.
We...the Prune community....seem to always label GD as "self interested". If there was more money (and more bonuses) in cranking up the JQ product to be a full service, or replacing it with QF's "full service" wouldn't he do it?
If bemused be the word...then I am bemused
Can't be just the age of the aircraft.....JQ's 330s are near new. And for years....maybe even today....Honolulu Airport was full of older 747 classics, 767s and DC-10s from Japan. Didn't seem to me to put the Japanese tourists off.
We...the Prune community....seem to always label GD as "self interested". If there was more money (and more bonuses) in cranking up the JQ product to be a full service, or replacing it with QF's "full service" wouldn't he do it?
If bemused be the word...then I am bemused
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Captain Sherm
You overestimate the ability of QF management to...well...manage
In my time I have had contact with most of Qantas senior management.....Borghetti is a neighbour...none of them posesses a particulalry scintillating intellect.Dixon doesnt even have a basic MBA.
They have been extremely lucky.Ansett fell over...the Howard government particulalrly compliant and it took Virgin a while to get on its feet.
Delays in aircraft delivery have kept capacity tight and yield high
To paraphrase...a drovers dog could have run QF over the lasr ten years and made a tidy profit.
Not bemused and not amused
In my time I have had contact with most of Qantas senior management.....Borghetti is a neighbour...none of them posesses a particulalry scintillating intellect.Dixon doesnt even have a basic MBA.
They have been extremely lucky.Ansett fell over...the Howard government particulalrly compliant and it took Virgin a while to get on its feet.
Delays in aircraft delivery have kept capacity tight and yield high
To paraphrase...a drovers dog could have run QF over the lasr ten years and made a tidy profit.
Not bemused and not amused
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This was spoken of in June 2007 when I started a thread on J* int.
Information at hand detailed the poor performance of J* international.
Unfortunately we will never see the figures as to the contribution margin of J*.
One wonders why today as then, they persist with an inferior product that is totally relaint on volume to make up for yield.............
Information at hand detailed the poor performance of J* international.
Unfortunately we will never see the figures as to the contribution margin of J*.
One wonders why today as then, they persist with an inferior product that is totally relaint on volume to make up for yield.............
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This topic got me thinking as to why QF would be struggling, with only two airlines on the routes.
One thing I could think of is that it is mainly a business and tourism customers, and not too many visiting friends and relatives. Where I work is quite large and has a number of people from different cultures. The main ones would be Chinese (both from China and Chinese/Singaporean), Indian and then the Aussies with a European background. Out of about 700 people there are only 3 Japanese.
I don't have immigration figures, but if this is indicative of the rest of the population this could be one of the reasons why Japan is a difficult market. Business travel is pretty constant and tourism can be fickle, but the visting friends and relatives seems to be a small pool of people to rely on to travel.
These are just my thoughts on one of the reasons. Of course you have also got QF trying to milk the most cash possible, by offering next to nothing.
One thing I could think of is that it is mainly a business and tourism customers, and not too many visiting friends and relatives. Where I work is quite large and has a number of people from different cultures. The main ones would be Chinese (both from China and Chinese/Singaporean), Indian and then the Aussies with a European background. Out of about 700 people there are only 3 Japanese.
I don't have immigration figures, but if this is indicative of the rest of the population this could be one of the reasons why Japan is a difficult market. Business travel is pretty constant and tourism can be fickle, but the visting friends and relatives seems to be a small pool of people to rely on to travel.
These are just my thoughts on one of the reasons. Of course you have also got QF trying to milk the most cash possible, by offering next to nothing.
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Japan as a Tourist Destination
Apart from skiing Japan has never really been considered by Australians as a holiday destination.
The place has ton of stuff to see and posesses a very rich history and culture.Japan has never really marketed itself as a tourist destination.
Rather than relying just on Japanese coming to Australia...what about encouraging Australians to visit Japan?
The Yen/A$ is the best its been for almost 20 years.Japan has become incredibly cheap for Australians to shop...Computers,cameras,clothes,childrens clothes and accessories.
Its a much better destination than BKK or SIN or HKG .
The place has ton of stuff to see and posesses a very rich history and culture.Japan has never really marketed itself as a tourist destination.
Rather than relying just on Japanese coming to Australia...what about encouraging Australians to visit Japan?
The Yen/A$ is the best its been for almost 20 years.Japan has become incredibly cheap for Australians to shop...Computers,cameras,clothes,childrens clothes and accessories.
Its a much better destination than BKK or SIN or HKG .
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TC:
I've often wondered why QF didn't code share via NRT....
The last two times i've used FF points to LHR the flights have been via NRT.
But cold hard $$ can't buy a code share via NRT.
They could try code-sharing with BA out of NRT to LHR maybe? It's getting terribly boring going via BKK or SIN to LHR all the time.
The last two times i've used FF points to LHR the flights have been via NRT.
But cold hard $$ can't buy a code share via NRT.