When does he GO?
Join Date: Sep 2003
Location: OZ
Posts: 139
Likes: 0
Received 0 Likes
on
0 Posts
Genex. I recall reading in The Fin Review last week Dixon saying they are seeing a softening in demand for Jetstar, and that Qantas group profits are being generated by the International premium product-Mainline. Maybe it is time for your "lucid explanation" we are all ears.
Join Date: Dec 2007
Location: Australia
Posts: 161
Likes: 0
Received 0 Likes
on
0 Posts
OBNO, as I will be writing about this issue, not talking, your ears are not going to be of much help. Try the eyes.
And....if I am going to put some time into this "lucid explanation"....can I ask that you put aside any pre-conceived ideas and think through this clearly. I can't promise you will understand it all....or that if you do, you will agree with me. But I'd rather not start off on this educational venture with you already committed to not agreeing with me.
While I put some time into writing, you can usefully use your time by going the Google and spending some study time getting to grips with "Economies of Scope". You will not understand much of what I am going to explain unless you do. I think that's a fair exchange of time don't you?
And....if I am going to put some time into this "lucid explanation"....can I ask that you put aside any pre-conceived ideas and think through this clearly. I can't promise you will understand it all....or that if you do, you will agree with me. But I'd rather not start off on this educational venture with you already committed to not agreeing with me.
While I put some time into writing, you can usefully use your time by going the Google and spending some study time getting to grips with "Economies of Scope". You will not understand much of what I am going to explain unless you do. I think that's a fair exchange of time don't you?
Bull**** Genex, and it's economies of scale, not scope.
Economies of scale were originally a concept to do with manufacturing where there are set-up costs that can be amortised more cheaply if volume is increased.
....Unfortunately Genex, since approximately 1955 following the development of the Kanban system by Toyota, the aim of industry everywhere has been to reduce the economic order quantity from many thousands to just one item.
So your concepts of a monster Jetstar or QF group with many thousands of spare engines, spare people, specialised labor etc. is irrelevant. The industry is being driven towards the goal of an airline owning (or leasing) the absolute minimum number of aircraft and maximum utilisation with minimum maintenance. Everything is supposed to happen "just in time' with minimal spare capacity - which is what Kanban is all about
Economies of scale were originally a concept to do with manufacturing where there are set-up costs that can be amortised more cheaply if volume is increased.
....Unfortunately Genex, since approximately 1955 following the development of the Kanban system by Toyota, the aim of industry everywhere has been to reduce the economic order quantity from many thousands to just one item.
So your concepts of a monster Jetstar or QF group with many thousands of spare engines, spare people, specialised labor etc. is irrelevant. The industry is being driven towards the goal of an airline owning (or leasing) the absolute minimum number of aircraft and maximum utilisation with minimum maintenance. Everything is supposed to happen "just in time' with minimal spare capacity - which is what Kanban is all about
Join Date: Aug 2006
Location: Suitcase
Posts: 234
Likes: 0
Received 0 Likes
on
0 Posts
Genex, apart from the usual crud you come up with, your opening to OBNO has to be up there with the most immature, puerile attempts at a put-down I have seen on Pprune.
Stop showing off and grow up.
Stop showing off and grow up.
Join Date: Dec 2007
Location: Australia
Posts: 161
Likes: 0
Received 0 Likes
on
0 Posts
Sunfish.....you missed the point entirely. What I was getting at has little at all to do with economies of scale. That is a subject all of its own and one where there's a lot to talk through. But Economies of Scope is a very significant theoretical underpinnning of the Qantas 3 Brand policy. I didn't create it, I am not responsible for it, I don't know the people at Qantas, Jetstar and QantasLink who created it or administer it....I simply observe it and see that it works for the Qantas Group whereas for many other of the world's current (and long-gone) airlines, it doesn't. I suspect it's not perfect but these days any airline that gets better than a C+ at running things is probably way above average.
And as for WynSock.........your reply out-pueriles anything I have yet seen on Prune. Well done. As your career unfolds I trust you do take on the opportunities to learn without pre-conceived ideas and with some diligence. I think you will find it rewarding. Prejudice has no place in the cockpit. This a complex issue and deserves some study, not just one-liners.
And as for WynSock.........your reply out-pueriles anything I have yet seen on Prune. Well done. As your career unfolds I trust you do take on the opportunities to learn without pre-conceived ideas and with some diligence. I think you will find it rewarding. Prejudice has no place in the cockpit. This a complex issue and deserves some study, not just one-liners.
From Wikipedia - Economies of Scope
The assertion that you need to justify, genex, is why it will be JetStar that will be supporting Qantas Mainline, and not the other way around; especially given the widely accepted view that jetStar has been extremely heavily subsidised by Qantas Mainline in virtually every single cost area since day one, and thus would not be able to generate a profit as a stand alone company. I put it to you that such this situation has been occurring in the relatively good times - let alone when JetStar encounters softening demand and rising costs.
Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply-side changes, such as increasing or decreasing the scale of production, of a single product type, economies of scope refer to efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products. Economies of scope are one of the main reasons for such marketing strategies as product bundling, product lining, and family branding.
Often, as the number of products promoted is increased and broader media used, more people can be reached with each dollar spent. This is one example of economies of scope. These efficiencies do not last, however; at some point, additional advertising expenditure on new products will start to be less effective (an example of diseconomies of scope).
If a sales force is selling several products they can often do so more efficiently than if they are selling only one product. The cost of their travel time is distributed over a greater revenue base, so cost efficiency improves. There can also be synergies between products such that offering a complete range of products gives the consumer a more desirable product offering than a single product would. Economies of scope can also operate through distribution efficiencies. It can be more efficient to ship a range of products to any given location than to ship a single type of product to that location.
Further economies of scope occur when there are cost-savings arising from by-products in the production process. An example would be the benefits of heating from energy production having a positive effect on agricultural yields.
A company which sells many product lines, sells the same product in many countries, or sells many product lines in many countries will benefit from reduced risk levels as a result of its economies of scope. If one of its product lines falls out of fashion or one country has an economic slowdown, the company will, most likely, be able to continue trading.
Not all economists agree on the importance of economies of scope. Some argue that it only applies to certain industries, and then only rarely.
Often, as the number of products promoted is increased and broader media used, more people can be reached with each dollar spent. This is one example of economies of scope. These efficiencies do not last, however; at some point, additional advertising expenditure on new products will start to be less effective (an example of diseconomies of scope).
If a sales force is selling several products they can often do so more efficiently than if they are selling only one product. The cost of their travel time is distributed over a greater revenue base, so cost efficiency improves. There can also be synergies between products such that offering a complete range of products gives the consumer a more desirable product offering than a single product would. Economies of scope can also operate through distribution efficiencies. It can be more efficient to ship a range of products to any given location than to ship a single type of product to that location.
Further economies of scope occur when there are cost-savings arising from by-products in the production process. An example would be the benefits of heating from energy production having a positive effect on agricultural yields.
A company which sells many product lines, sells the same product in many countries, or sells many product lines in many countries will benefit from reduced risk levels as a result of its economies of scope. If one of its product lines falls out of fashion or one country has an economic slowdown, the company will, most likely, be able to continue trading.
Not all economists agree on the importance of economies of scope. Some argue that it only applies to certain industries, and then only rarely.
Join Date: May 2001
Location: Sydney
Age: 60
Posts: 1,542
Likes: 0
Received 0 Likes
on
0 Posts
Another interesting idea would be to look at Virgin's profitibility in the routes that Qantas gave to Jetstar such as Launy and reduced in service such as "cooly"[see other thread] and Hobart!
Many punters I know have moved their traffic from QF to Virgin - great for the group!
Many punters I know have moved their traffic from QF to Virgin - great for the group!
Join Date: Aug 2007
Location: sydney
Posts: 64
Likes: 0
Received 0 Likes
on
0 Posts
Genex,
Enjoy what you have now mate as the future is just as uncertain for you as it is for any QF pilot.
I mean we all know that Jetstar is Dixon's little pet project. So what happens in the event of a management change. Will the new CEO be as enthusiastic about Jetstar?
AIPA recently tried in vain to talk to you guys about joining forces. What do you do? Piss that opportunity away and then actively engage in a **** fight with QF mainliners on PPrune.
Life is full of interesting and unexpected surprises. So your smugness might be a tad misguided.
Trust me when I say to you that you are not the hero you think you are.
Enjoy what you have now mate as the future is just as uncertain for you as it is for any QF pilot.
I mean we all know that Jetstar is Dixon's little pet project. So what happens in the event of a management change. Will the new CEO be as enthusiastic about Jetstar?
AIPA recently tried in vain to talk to you guys about joining forces. What do you do? Piss that opportunity away and then actively engage in a **** fight with QF mainliners on PPrune.
Life is full of interesting and unexpected surprises. So your smugness might be a tad misguided.
Trust me when I say to you that you are not the hero you think you are.
Join Date: Dec 2007
Location: Australia
Posts: 161
Likes: 0
Received 0 Likes
on
0 Posts
I am not a JQ pilot and am certainly not a hero, whatever particular meaning attaches to that word. I certainly did not say that JQ subsidized Mainline....simply that "It would be way more enlightening to see how the legacy airline fared without Jetstar..."
The argument that Qantas mainline could survive at Jetstar yields in the discretionary market segments is probably untenable. Hence the Economies of Scope theme..(and the Wikipeadia article is a start Johnny , you should re-read it carefully) .....that (and this is putting part of the concept very simply) if you are already running one airline you can run another airline more efficiently than would two completely separate entities. The allocation of fixed costs and transfer pricing intra-group is a matter which always attracts great debate and is not possible, as with all such arbitrary matter to be resolved to everyone's satisfaction.
I take no joy in the atrocious relationships between pilot unions and pilot groups. It was not always thus and need not be. But I'd suggest that there is one group with the industrial power to change it all and they have not done so and are most unlikely to do so.
Until then, as I have once again been thoroughly beaten by superior wit, knowledge and skill I will retire back into the cave. Cautioning you only to to be wary of what you wish for.....the Qantas Group without Jetstar might not be a very pretty place to work, indeed for many currently working, there may be no jobs at all.
And OBNO.....what is that short for?.....I do not mean to be patronizing. But am still a little ruffled by the AIPA monkeys and peanuts campaign that has never been withdrawn. Maybe I'm too think-skinned and over-reactive.
The argument that Qantas mainline could survive at Jetstar yields in the discretionary market segments is probably untenable. Hence the Economies of Scope theme..(and the Wikipeadia article is a start Johnny , you should re-read it carefully) .....that (and this is putting part of the concept very simply) if you are already running one airline you can run another airline more efficiently than would two completely separate entities. The allocation of fixed costs and transfer pricing intra-group is a matter which always attracts great debate and is not possible, as with all such arbitrary matter to be resolved to everyone's satisfaction.
I take no joy in the atrocious relationships between pilot unions and pilot groups. It was not always thus and need not be. But I'd suggest that there is one group with the industrial power to change it all and they have not done so and are most unlikely to do so.
Until then, as I have once again been thoroughly beaten by superior wit, knowledge and skill I will retire back into the cave. Cautioning you only to to be wary of what you wish for.....the Qantas Group without Jetstar might not be a very pretty place to work, indeed for many currently working, there may be no jobs at all.
And OBNO.....what is that short for?.....I do not mean to be patronizing. But am still a little ruffled by the AIPA monkeys and peanuts campaign that has never been withdrawn. Maybe I'm too think-skinned and over-reactive.
There is an old Polish name for your "Economies of Scope" argument, loosely translated it's called "Pissing in the Soup", and it's not very smart at all.
It doesn't work and never has. Qantas can make it look like it works, but we don't know what cross subsidies exist between them.
The trouble with this approach is that Board level decision making suffers, because the Board is being asked to switch focus all the time from one entity to another. Ultimately the wrong decisions get made. This is why, after some monumental cock ups - Like buying Magma Copper in the U.S., BHP deliberately split itself into BHP Oil and Gas and BHP minerals, and sold their steel division.
In the case of QF look at the decisions that have to be made? Which aircraft is right for QF mainline domestic? Oh! But that won't work for Jetstar because of (insert reason). Well what about QF LH bases in (insert country)? Yes but we already have a Jetstar International base there, how is that going to work? That's the sort of conversations that will be going on all the time. You need three boards, in three totally financially separate companies, all pursuing their own strategy to make that work.
This whole idea has been tried before in many industries and it doesn't work. The usual management mantra is "stick to your knitting", meaning focus on your core business.
It doesn't work and never has. Qantas can make it look like it works, but we don't know what cross subsidies exist between them.
The trouble with this approach is that Board level decision making suffers, because the Board is being asked to switch focus all the time from one entity to another. Ultimately the wrong decisions get made. This is why, after some monumental cock ups - Like buying Magma Copper in the U.S., BHP deliberately split itself into BHP Oil and Gas and BHP minerals, and sold their steel division.
In the case of QF look at the decisions that have to be made? Which aircraft is right for QF mainline domestic? Oh! But that won't work for Jetstar because of (insert reason). Well what about QF LH bases in (insert country)? Yes but we already have a Jetstar International base there, how is that going to work? That's the sort of conversations that will be going on all the time. You need three boards, in three totally financially separate companies, all pursuing their own strategy to make that work.
This whole idea has been tried before in many industries and it doesn't work. The usual management mantra is "stick to your knitting", meaning focus on your core business.
Join Date: Apr 2008
Location: Hicksville, Alabama
Posts: 171
Likes: 0
Received 0 Likes
on
0 Posts
source: http://www.smh.com.au/news/travel/qa...259007024.html
However, Mr Borghetti hit out at union claims Qantas could be using the environment of high oil prices to drive down the working conditions of its 36,000 staff.
"What I recommend these people do is either pick up a newspaper or watch some morning news," he said, noting the drastic moves by US airlines such as United and American to cut capacity in recent days to combat higher oil prices.
However, Mr Borghetti hit out at union claims Qantas could be using the environment of high oil prices to drive down the working conditions of its 36,000 staff.
"What I recommend these people do is either pick up a newspaper or watch some morning news," he said, noting the drastic moves by US airlines such as United and American to cut capacity in recent days to combat higher oil prices.
I was hoping that as a contender for replacement of FOG, JB would be a little more "employee and customer focused". Obviously not! More of the same mantra from the same school, and more of the same plan taking us down the orange road, no doubt.
What a patronising di*khead. No, John. I had no idea that oil prices have increased. I'm rushing off to buy a newspaper to find out what's going on.
Join Date: Oct 2007
Location: gold coast QLD australia
Age: 86
Posts: 1,345
Likes: 0
Received 0 Likes
on
0 Posts
I suggest you blokes, go look at the posting of 19th year of 89, if you think it cannot happen again think again. You have to have a united front if you are to get anywhere. The word is (so I am told) from a mate from the big end of town that Cosgrove is almost dead set. If that is the case at least we will get a operational thinker, not a bean counter, a bloke who is at least a lateral thinker. For CH%$st sake start thinking together, because the A/C are starting to go up against the fence, and you blokes are going to have to present a united front. Bigtime.
