Qantas Dose Of Competitive Reality
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Qantas Dose Of Competitive Reality
Summary
Costs do not prohibit Qantas from competing with Arab carriers in the Persian Gulf, so why does it fail to serve the region and then complain about competitors in Australia?
Analysis
Alan Joyce is the only guy who can explain the absence of Qantas in the Persian Gulf, however, for Qantas to complain about Gulf carriers on its turf is a non-starter.
Whether Air Arabia breaks its costs structure to acquire long haul airplanes to serve Australia next year is unclear, however, Emirates, Etihad Airways and Qatar Airways cannot be held liable for Qantas’ failures.
Codesharing with Etihad Airways to Abu Dhabi and Bahrain simply isn’t good enough. The amount of traffic now bypassing Bangkok and Singapore for travel to the southern hemisphere through the Middle East is evidenced by British Airways reducing services to Sydney and yield erosion suffered by Singapore Airlines on its A380 services.
GCC carriers are taking advantage of air service accords and the recent deal between Australia and Turkey begs the question why Qantas is yet again failing to make the most of the deal refusing to consider direct flights to Istanbul.
Will Qantas start crowing about Turkish Airlines too in a years time?
Qantas can complain all day long about Arab airlines not having to worry about their bottom lines – because they do. Emirates alone is by far the strongest GCC airline that has turned a profit in all years but one since it started up in 1985 – it has gotten governmental support, but not to the level of accusations asserted by Qantas.
In setting up Jetstar, Qantas has lost traffic, business and revenue to its low cost off-shoot and is now bizarrely remodelling its business to cut first class and chase low volume customers – just like Jetstar.
Qantas has no one but itself to blame for the dominance of GCC carriers on its doorstep.
The simple fact is you cannot whine about competitors in your backyard if you fail to compete with them in theirs.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
Costs do not prohibit Qantas from competing with Arab carriers in the Persian Gulf, so why does it fail to serve the region and then complain about competitors in Australia?
Analysis
Alan Joyce is the only guy who can explain the absence of Qantas in the Persian Gulf, however, for Qantas to complain about Gulf carriers on its turf is a non-starter.
Whether Air Arabia breaks its costs structure to acquire long haul airplanes to serve Australia next year is unclear, however, Emirates, Etihad Airways and Qatar Airways cannot be held liable for Qantas’ failures.
Codesharing with Etihad Airways to Abu Dhabi and Bahrain simply isn’t good enough. The amount of traffic now bypassing Bangkok and Singapore for travel to the southern hemisphere through the Middle East is evidenced by British Airways reducing services to Sydney and yield erosion suffered by Singapore Airlines on its A380 services.
GCC carriers are taking advantage of air service accords and the recent deal between Australia and Turkey begs the question why Qantas is yet again failing to make the most of the deal refusing to consider direct flights to Istanbul.
Will Qantas start crowing about Turkish Airlines too in a years time?
Qantas can complain all day long about Arab airlines not having to worry about their bottom lines – because they do. Emirates alone is by far the strongest GCC airline that has turned a profit in all years but one since it started up in 1985 – it has gotten governmental support, but not to the level of accusations asserted by Qantas.
In setting up Jetstar, Qantas has lost traffic, business and revenue to its low cost off-shoot and is now bizarrely remodelling its business to cut first class and chase low volume customers – just like Jetstar.
Qantas has no one but itself to blame for the dominance of GCC carriers on its doorstep.
The simple fact is you cannot whine about competitors in your backyard if you fail to compete with them in theirs.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".
Chasing low yield at the margin (price sensitive) customers at the expense of the high yielding traffic will be revealed to be the grandest of follies in the years to come.
Chasing low yield at the margin (price sensitive) customers at the expense of the high yielding traffic will be revealed to be the grandest of follies in the years to come.
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As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".
If your customer has been booking JQ and flying on QF, it may be more to do with the HIGH number of JQ cancellations and charters that QF operate on behalf of JQ. I think this week is the first week in 4 that QF hasn't done a charter to HNL for JQ...yet. It's only Tuesday!
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BadHat,
Unsure if you wrote that piece or is copied but it raises a few simple questions.
1. Does Qantas have cabotage rights through any Gulf countries, or any likelihood of getting them.
2. What is the real traffic Gulf - Australia, rather than Europe - Australia
3. Qantas already splits its Europe traffic via Sing, Bangkok and HK - does it make commercial sense to split it further.
Simple dilemma for an end of line carrier.
Istanbul may have traffic rights, but no oneworld connections.
For oneworld connections, QF would be better fly to Amman where Royal Jordanian has a great hub
Unsure if you wrote that piece or is copied but it raises a few simple questions.
1. Does Qantas have cabotage rights through any Gulf countries, or any likelihood of getting them.
2. What is the real traffic Gulf - Australia, rather than Europe - Australia
3. Qantas already splits its Europe traffic via Sing, Bangkok and HK - does it make commercial sense to split it further.
Simple dilemma for an end of line carrier.
Istanbul may have traffic rights, but no oneworld connections.
For oneworld connections, QF would be better fly to Amman where Royal Jordanian has a great hub
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The bastard child J* has strange ways .
Passenger purchases $499 return ticket to HNL.
A couple of weeks prior departure gets a phone call from J* offering him upgrade to * class for an extra $300.
Pax accepts the offer and pays extra $300.
At check in HNL (after J* aircraft breaksdown and flight now being operated by QF 767 ),pax advised that * class is now full . Pax asked , will you downgrade back to economy?
Pax blows up says hang on you offered it to me!
Says no will not downgrade to economy.
Pax is offered $600 worth of J* travel vouchers plus $700 worth of vouchers to spend on QF inflight duty free.
Pax gets free trip to HNL , an extra $100 plus $700 worth of duty free.
Great way to run a business.
Passenger purchases $499 return ticket to HNL.
A couple of weeks prior departure gets a phone call from J* offering him upgrade to * class for an extra $300.
Pax accepts the offer and pays extra $300.
At check in HNL (after J* aircraft breaksdown and flight now being operated by QF 767 ),pax advised that * class is now full . Pax asked , will you downgrade back to economy?
Pax blows up says hang on you offered it to me!
Says no will not downgrade to economy.
Pax is offered $600 worth of J* travel vouchers plus $700 worth of vouchers to spend on QF inflight duty free.
Pax gets free trip to HNL , an extra $100 plus $700 worth of duty free.
Great way to run a business.
Koto, there are a large number of QF domestic services that have a JQ code share flight number. You don't have to be Einstein to look at the QF schedule and then book on a JQ flight that leaves at exactly the same time. Pax know that they'll get an inflight meal service that they wouldn't get on a JQ flight - management won't state whether JQ pays QF for the meal service (or even for the flight) which is why the recent QF financial disclosure shows the bastard child making huge increases in profit while mainline suffered a severe decline.
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If your customer has been booking JQ and flying on QF, it may be more to do with the HIGH number of JQ cancellations and charters that QF operate on behalf of JQ. I think this week is the first week in 4 that QF hasn't done a charter to HNL for JQ...yet. It's only Tuesday!
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As pointed out by a techie recently. Ever noticed that the charters are QF flight numbers & operated as a QF RPT service per the ATS plan.
What The,
What the ** are you on about when you write "That is so the costs of the operation are borne by mainline and Jetstar keep the revenue."
This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.
What the ** are you on about when you write "That is so the costs of the operation are borne by mainline and Jetstar keep the revenue."
This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.
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Ken,
I can tell you for a fact that when Jetstar cancel a service and Qantas run a charter, the monies from tickets sold stays with Jetstar.
Any other carrier would have to pay the negotiated fare per pax to the alternate airline. This does not happen in the JQ QF deal.
It is all about making JQ look good and QF look expensive as part of the three pronged strategy for setting JQ up in the first place.
I can tell you for a fact that when Jetstar cancel a service and Qantas run a charter, the monies from tickets sold stays with Jetstar.
Any other carrier would have to pay the negotiated fare per pax to the alternate airline. This does not happen in the JQ QF deal.
It is all about making JQ look good and QF look expensive as part of the three pronged strategy for setting JQ up in the first place.
- Stop Stoddart or someone else from setting up a LCC.
- Apply a bottom up \ top down competitive approach to VB, and
- Break the unions within Qantas.
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Spot on goodonyamate.
It's always has been and will always be about money.Does anyone here think Jetstar or any business was started for any other reason.
It's always has been and will always be about money.Does anyone here think Jetstar or any business was started for any other reason.
Of course JQ will retain the revenu but if Qantas operate a Jetstar flight as a charter using Qantas flight numbers etc., then Qantas would charge Jetstar $xxxxx for the operation. Chances are that the sum of the fares collected by Jetstar would not cover the cost of the charter. This is the way in which carrier-to-carrier charters are operated. You will no doubt find an exchange of paper between JQ and QF which sets out how much JQ will pay for the charter, and who pays for what in terms of out-of-pockets such as airnav charges, handling etc etc.
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Your 100% right Ken, thats how carrier to carrier charters generally work.
But where talking about "in house" services here.
Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.
But where talking about "in house" services here.
Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.
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Why go to Europe with EK rather than QANTAS?
I live in Perth and am about to take my 2nd trip in a year with Emirates to see family in England. Why? Because I can fly Perth-Newcastle(NCL) in 2 stops. This cuts at least 7-8 hrs off the total journey time against going through Asia with the competition. I don't have to transit through Heathrow Hellport or another European hub to get to my destination. Fewer stopovers means fewer chances for bags to get lost/miss connections etc etc. I travel economy and Emirates fares are cheaper than the other flag carriers. The shorter journey time and number of stops reduces the discomfort on such a long trip. The overall travel experience with QANTAS or any other airline is not so different that I would insist on flying with them. My choice of carrier is all about schedules and convenience and on this route Emirates can't be beaten.
Posted by Veeeffarr
I travel economy and Emirates fares are cheaper than the other flag carriers.
I travel economy and Emirates fares are cheaper than the other flag carriers.
Your other points are valid.
Last edited by Going Boeing; 23rd Feb 2010 at 10:36.
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Originally Posted by kotoyebe
Originally Posted by previous to kotyebe
As a customer remarked to me once," I save money by booking J* code shared with Qantas. I know Qantas operates the service and I pay less".
For example: South African going SYD-JHB. Fly that as a South African passenger, get all your points, food, service etc on a Qantas plane but pay between $1500 and $2000 less for Business class than if you booked with Qantas.
What the ** are you on about when you write "That is so the costs of the operation are borne by mainline and Jetstar keep the revenue."
This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.
This is plainly incorrect. The issue may relate to what is on the JQ AOC: I really don't know but I am sure that it's nothing to do with money.
Words from the HNL Port Manager for a certain airline associated with JQ with reference to the cancellation of JQ services and replacement with QF charters :
"This is the 6th time in 6 weeks!"
He went on to complain that his budget was blown for this quarter already (due to having to call in his own staff on days off to manage the services) and when queried at a higher level, was told to 'drop it'!
So yes, their customer (full) service on certain routes may indeed be fantastic. Im thinking SYD-HNL-SYD 6 times since the start of 2010 in fact!
Now watch this space for QF to announce that HNL is unprofitable and that JQ must take over to keep the dream alive.
The day will come when this false accounting will effect the bottom line, come back and bite the Group on the proverbial. I just hope its not too late!!!
"This is the 6th time in 6 weeks!"
He went on to complain that his budget was blown for this quarter already (due to having to call in his own staff on days off to manage the services) and when queried at a higher level, was told to 'drop it'!
So yes, their customer (full) service on certain routes may indeed be fantastic. Im thinking SYD-HNL-SYD 6 times since the start of 2010 in fact!
Now watch this space for QF to announce that HNL is unprofitable and that JQ must take over to keep the dream alive.
The day will come when this false accounting will effect the bottom line, come back and bite the Group on the proverbial. I just hope its not too late!!!
As the CEO of Qantas' former low cost base airline once said "If we can't survive without being propped up by mainline, then we shouldn't be around".
As a shareholder, I would sure love to see the books - particularly on JQ Intl...
Your 100% right Ken, thats how carrier to carrier charters generally work.
But where talking about "in house" services here.
Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.
But where talking about "in house" services here.
Do you know how many QF 600 series MEL-BNE MEL flights have operated as additional capacity required & the operating crew unaware that they were actually J* charters.
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