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So you need a new fleet Leigh?

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So you need a new fleet Leigh?

Old 15th Apr 2018, 03:16
  #141 (permalink)  
 
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Originally Posted by ExtraShot View Post
We keep hearing about these ‘Virtual Airline’ business models, but I can’t really think of one off hand. Where you might say codeshare, etc; all airlines use codeshare and the like to give its customers a slightly improved route network, this is hardly said business model. Every airline still flies its own metal on the routes where it can get the loads it needs and make money... people want to get the product / brands they pay for, and if they don’t get it they’ll go elsewhere.

Qantas is going to be increasingly competing with airlines that have already had more modern and efficient fleets for a decade. Most are already taking a step-change again, leaving Qantas at risk of being an entire generation behind, AND playing catch-up.

Qantas employees are constantly told they are too expensive, or that their Western Terms and conditions are uncompetitive in an Asian region, yet when it comes to making serious strides where costs can REALLY be impacted in competing with SQ and Cathay and the like, the current management seem to drag their feet.

Unfortunately for the IR bullies, using aircraft orders will no longer be effective as a tool in an industrial battle. The staff (pilots/engineers/and others), are now increasingly aware that either Qantas gets serious about a fleet renewal program, or it gets annihilated by it’s competitors who have been serious about it for a decade or more already. It’s only a matter of time before the share market becomes aware of this as well.

Alan Joyce has been at the helm for almost TEN years, and I can't think of one new aircraft order made in that time... but the time has come. They need to outline a fleet renewal program for the next decade, and it needs happen relatively soon.

Rated De is correct.
No, he is not.

Qantas' labour cost base is higher than almost all of its competitors - especially those in Asia, Middle East, New Zealand and South America. If you want an example of a virtual airline, try looking next door at Virgin. If there were easy millions to be made operating a full service international airline out of Australia with modern aircraft, Virgin would be expanding rapidly internationally. Look at the fares being offered to Europe by the Chinese and Middle East carriers. QAN offering these fares would not only be economically loss-making, they wouldn't even be cash flow positive.

I understand there is a strong view among some senior QAN people that no more investment should be made into QI. The 777X or A350 project is a once in a generation opportunity for QI to have a future of growth, but the numbers have to add up. Don't assume that they will.
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Old 15th Apr 2018, 03:27
  #142 (permalink)  
 
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Originally Posted by RealityCzech View Post
No, he is not.

Qantas' labour cost base is higher than almost all of its competitors - especially those in Asia, Middle East, New Zealand and South America. ill.
You’re right...time for a sweeping cull of the campus. Time for executive remuneration to reflect the size of the airline. Time for honesty and not this puerile attempt to shape perceptions based on a lie.
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Old 15th Apr 2018, 03:34
  #143 (permalink)  
 
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Originally Posted by RealityCzech View Post
No, he is not.

. If you want an example of a virtual airline, try looking next door at Virgin. If there were easy millions to be made operating a full service international airline out of Australia with modern aircraft, Virgin would be expanding rapidly .
How do you know what Virgin's shareholders want? They mostly want out of Virgin, and Virgin's management are well known to be inept with every fleet choice they have made for 15 years. Don't hold them up as a paragon of virtue.

Just leafing through the Chinese A320 cotract rate for captains...its about twice what I make on a bigger jet for QF. The US carriers all pay more, and soon Rated De's predictions will bear out.
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Old 15th Apr 2018, 03:44
  #144 (permalink)  
 
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Interesting response. At no point did I claim to know what VAH shareholders want nor hold VAH up as a paragon of anything. These straw man arguments are irrelevant.

That's a great n = 1 sample, but misleading. Look at the cost bases in their entirety as well as their ownership structures and the economics of the markets they operate in.

QAN is in a much stronger position financially than a few years ago, especially domestically. But the international scene just gets more and more competitive by the day and QI will only get investment if it can charge fares that allow the investment. Higher pilot costs make that less likely. A lot of PPRuNe posters seem very excited about pilot shortages leading to huge wage rises for Australian pilots. I would bet that the numbers are also being run on doing less inhouse flying and more virtual flying instead of being forced to pay higher wages. That may end up being the path chosen.

It's just one big complex equation at the end of the day.
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Old 15th Apr 2018, 03:44
  #145 (permalink)  
 
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So RealityCzech, how does remuneration of QF executives compare with other airlines in our region? Compared with say Singair, Cathay, Air NZ? How many of the 5000 front line employee's jobs could be still be employed with Mr Joyce's $25mil and Mr David's $10.4mil?
At least you are going to solve the Pilot employment crisis, a virtual airline doesn't need any of those pesky precious pilots..
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Old 15th Apr 2018, 03:47
  #146 (permalink)  
 
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The endless references to remuneration might make you feel better/worse,but they aren't going to influence outcomes relevant to your career. I'd politely suggest getting over it.
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Old 15th Apr 2018, 04:12
  #147 (permalink)  
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Imagine realityczech is dealing in reality. Let us explore this administrative wet dream! People wander around the 'campus', Waterside and even CX city (only Monday to Friday) dreaming stuff like this up. Far easier than actually generating revenue like flying passengers, serving passengers and fixing the operating assets.


(Assuming people still want to be in a Frequent flyer program that has no international flying attached to it),
  • Frequent flyer without the flying bit, generates $1.4 billion.
  • If Code share revenue is reported in "other revenue' it totals $377 million
Code share revenue is really interesting. Airline executives fall back on 'commercial-in-confidence' however that revenue must be reported in the Income statement somewhere. As we reported in another thread Mr Joyce was extremely careful to never discuss the 'amazing revenue improvement' generated by the rivers of code share revenue flowing form the Emirates 'alliance'.
Simple arithmetic from the cancellation of the Frankfurt (Via Singapore) the Hong Kong and Bangkok to London services at best generates $377 million.

Adding it all up, Qantas group generates with QF international axed about $10 billion.



Given that scenario;


You’re right...time for a sweeping cull of the campus. Time for executive remuneration to reflect the size of the airline. Time for honesty and not this puerile attempt to shape perceptions based on a lie.
A proportional cull of the non revenue generating designer coffee brigades would improve efficiency no-end.

Replacing a 'real airline' with a virtual one is something that exists in 'breakout rooms' industry wide. Perfect in theory, as the Professor eloquently draws his neatly constructed graph. MBA level managers the world over taught the theory. The problem they face is that it works far less eloquently in reality.

Last edited by Rated De; 15th Apr 2018 at 04:25.
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Old 15th Apr 2018, 04:23
  #148 (permalink)  
 
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. If you want an example of a virtual airline, try looking next door at Virgin
Virgin, Not really the shining example of financial success that would support your case.

If Qantas managements aim is to become little more than another ‘Flight Centre’, they should probably inform their shareholders of said aim.

If they wish to remain a competitive airline, a serious program of fleet renewal occurring throughout the next decade, and beyond, needs to become a reality. The lack of which should start to pique the shareholders interest.

Last edited by ExtraShot; 15th Apr 2018 at 04:36.
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Old 15th Apr 2018, 04:31
  #149 (permalink)  
 
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Originally Posted by RealityCzech View Post
The endless references to remuneration might make you feel better/worse,but they aren't going to influence outcomes relevant to your career. I'd politely suggest getting over it.
I would personally say I don't give a toss what "they" earn, by their basis of remuneration the rest of the company should be earning 10 times the world average, I just wish reasoned assessment would break out on the Campus, that you would stop blaming pilots for not renewing the fleet. People on the front line only see the slow motion train wreck that is occurring whilst Joyce fiddles.
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Old 15th Apr 2018, 04:33
  #150 (permalink)  
 
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RealityCzech, your post is just another veiled threat from QCC that we you are not renewing the fleet until ....
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Old 15th Apr 2018, 04:34
  #151 (permalink)  
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Qantas' labour cost base is higher than almost all of its competitors - especially those in Asia, Middle East, New Zealand and South America.
A convenient part truth. Which part of the labour unit cost do you refer?
The data sets we use would show you are extremely choosy.


If you want to argue semantics, Qantas has an average stage length that means the longer the flight the lower the CASK and the labour cost whilst incremental increasing, is of a lesser order than say RPK growth. . Qantas factor productivity in key work groups, which we assume is the implication from your statement, are mid range and when adjusted for stage length are better than average.

When we include fuel in the CASK and adjust the unit cost, and hold the stage length constant, Qantas is very inefficient. Want to guess why?
Very good, they burn more fuel per RPK because over a given stage their fleet burn 64% more fuel.

Qantas 'worst major airline' for fuel efficiency on trans-Pacific flights, study suggests - ABC News (Australian Broadcasting Corporation)

Qantas need a new fleet
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Old 15th Apr 2018, 05:42
  #152 (permalink)  
 
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Originally Posted by RealityCzech View Post
No, he is not.

Qantas' labour cost base is higher than almost all of its competitors - especially those in Asia, Middle East, New Zealand and South America. If you want an example of a virtual airline, try looking next door at Virgin. If there were easy millions to be made operating a full service international airline out of Australia with modern aircraft, Virgin would be expanding rapidly internationally. Look at the fares being offered to Europe by the Chinese and Middle East carriers. QAN offering these fares would not only be economically loss-making, they wouldn't even be cash flow positive.

I understand there is a strong view among some senior QAN people that no more investment should be made into QI. The 777X or A350 project is a once in a generation opportunity for QI to have a future of growth, but the numbers have to add up. Don't assume that they will.
I have no doubt that the labour unit cost in Australia is higher than a Middle East airline hiring a person from the subcontinent or the Chinese pulling a person out of a village and into a newly minted city. These employees aren’t pilots but more of your background operational staff.

However, if you want to go compare pilot wages with our competitors then be realistic. Qantas Captains and First Officers are paid similar packages to their Middle Eastern, European, American(North and South) and Asian counterparts. Some higher and some lower. To go further, Qantas pilots don’t operate with two Captains and two First Officers on longhaul and in some cases work more efficiently than their Chinese counterparts who carry four pilots(two Captains, a First and Second Officer) whilst we carry three.

When it comes to fuel efficiency, your pilots operate on one of if not the most fuel efficient fuel policy worldwide. An advantage you take for granted.

It’s not your pilots that are the problem with your cost structure but you see us as an easy target. Try all you like to blame pilots but we won’t be wearing the blame for our management not ordering aircraft.

I also find it interesting that you go on to further threaten us with sending our passengers to other airlines. These airlines will all be in the same basket. There are only so many pilots to fly so many aircraft, unfortunately for management types, the number of pilots required is more than the number available to fly aircraft, worldwide. All airlines are or will be parking aircraft. So if all airlines are having problems carrying their current passengers, what makes you think that they will be able to carry Qantas passengers reliably?

Compounding your problem, the less metal you have obliterates your bargaining power with other carriers to obtain profit out of your virtual airline. Especially if they can’t carry them as mentioned above. If you add in that the Frequent Flyer program would be at the delicate tipping point of value for the customer to obtain an ability to redeem points vs the program making money, I think your shrinking to profits in the real world is the straw man.

I tell you what I do find ironic though, all these MBA’s from all over the world created the pilot shortage by making flying affordable to almost everyone through globalisation and their obsessive desire to cut pilot terms and conditions.

If Qantas wants to compete and most importantly survive, they will have to invest in efficient aircraft and practices.
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Old 15th Apr 2018, 06:39
  #153 (permalink)  
 
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Originally Posted by RealityCzech View Post
The endless references to remuneration might make you feel better/worse,but they aren't going to influence outcomes relevant to your career. I'd politely suggest getting over it.
If you don’t like seeing endless references to executive remuneration, maybe you need to ease up on the endless references to labour cost base.
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Old 15th Apr 2018, 20:01
  #154 (permalink)  
 
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Originally Posted by RealityCzech View Post
I would bet that the numbers are also being run on doing less inhouse flying and more virtual flying instead of being forced to pay higher wages. That may end up being the path chosen.
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Old 15th Apr 2018, 22:34
  #155 (permalink)  
 
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RC: Oh dear oh dear oh dear.....

This is one of those very rare occasions I agree with you! More likely an unique occasion - so don't think for one second think this relationship will evolve any further.

I have been convinced that Dear Leader is totally incompetent for a very long time.

There are TWO (possibly 3) things I give him credit for. Firstly, he can use the billions Qantas has provided him to renovate a room into a nice bar. Now many people have managed to create nice bar/cafe's without billions of dollars, or guaranteed licensing etc etc, but I am a generous man at heart, so lets give him credit there. What he's done with that cafe/bar mix, is to turn that into a brand of soft corruption worthy of Chairman Xi Jinping dealing with Pacific Islands. And there is NO doubt, that has been hugely successful - he's read the market very well in that regard. It's inoculated himself against negative press, a negative political environment and also given him enormous clout amongst the small CEO club of Australia. The final plank in his repertoire is his ability to argue for his own benefit (ie:lie) - at the expense of everything Qantas stands for -to rape the place with a vigour that defies his stature. To the point I'm sure his sexual partners would attest to same.

Undoubtedly this guy in a business sense has passion fingers (f%cked anything he's touched) but politically he's good.

So - given his great triumph is the Chairmans Lounge, what's he done that anyone with his skillset would do? He's expanded the concept massively. He's worked out that being a contestant on 'The Block' with an unlimited budget and not actually having to even swing a hammer himself is far easier than actually running an airline. Tricky things airlines, even with a near monopoly and possessing all the trickyness of a cunning Leprechaun!

I don't think he has any interest in actually running the airline (as do you RC), he is about using the Lounges to grab customers through the qantas.com website. And it is sort of working.

There are a couple of problems with this. Other airlines have them too, and once they exist around Australia the differentiation between Lounges will diminish. So too with the Chairmans Lounge. At the moment it buys political and press compliance, but as Qantas flies to fewer and fewer places, this will diminish rapidly.

The other tiny problem is that as a virtual airline, it has been done before. And quite well too. We have Google, Tripadvisor, Expedia, Webjet, Flightcenter, Priceline, Hotwire, Travelocity, Orbitz - and that's just off the top of my head. The reach of Qantas.com is pretty much domestic only - and anything just domestic, will, over time, simply wither without a product behind it. The major issue with any website is driving traffic to it. While the Lounges in Australia are attractive that will be possible. But without a SIGNIFICANT benefit to people, that will fall off quickly.

Then we get to the Company 'Mission Statement'. Successful Companies have a single statement that clearly states what it is they do. As far as I can work out, for Qf, it's 'What's in it for me?' because Qf has demonstrated it really doesn't know what it is anymore. Webjet? National Flag Carrier? Round the world airline? Domestic airline? Jetstar? Red Q? Licencing operation? Vehicle for the CEO's political ambitions? Hard to say... I asked this question of an HR drone in a 'meeting' they generously organised for me a few years ago, and they couldn't answer the question either, in fact, it had them totally stumped. If the Thought Police cannot answer such a simple question, what hope do the rest have who don't mainline Company KoolAid hourly?

In short, unbelievably, I think you are right RC. QF doesn't _need_ to have aircraft, but if it doesn't it will sooner or later cease to exist. I think most people here believe that is a shame.

Never in the history of Australian business have so few enriched themselves so much, at the expense of so many.
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Old 15th Apr 2018, 22:46
  #156 (permalink)  
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A very accurate precis:

Then we get to the Company 'Mission Statement'. Successful Companies have a single statement that clearly states what it is they do. As far as I can work out, for Qf, it's 'What's in it for me?' because Qf has demonstrated it really doesn't know what it is anymore. Webjet? National Flag Carrier? Round the world airline? Domestic airline? Jetstar? Red Q? Licencing operation? Vehicle for the CEO's political ambitions? Hard to say... I asked this question of an HR drone in a 'meeting' they generously organised for me a few years ago, and they couldn't answer the question either, in fact, it had them totally stumped. If the Thought Police cannot answer such a simple question, what hope do the rest have who don't mainline Company KoolAid hourly?
Qantas was gifted an enviable position at Privatisation. Dissected by cost accountants it has hacked itself to pieces. It is not surprising that HR drones don't know the mission because theirs is all about self preservation and mission creep.

Qantas is not enlightened leadership, sadly despite knowing the price of everything and neatly inserting them in a mathematical model, Mr Joyce neglected the one limitation that actually matters:

The real world dynamic of airlines is impossible to model without very expansive limitations (assumptions)

Ask any researcher or analyst about models, the limitations (assumptions) necessary to get models to work mean in fact oftentimes they are highly unstable.

From all accounts, Mr Joyce has an autocratic style, top down and whilst politically astute (Chariman's lounge, upgrades and soft corruption) does not take kindly to critique, we had experienced this with him numerous times.
Thus in trusting the model he ignores anything not contained within it. For airlines this is a really tricky proposition. In fact if one looks at airlines that do it really well, empowerment of people, like Captains exercising command judgement is something that is encouraged. At Qantas we would respectfully suggest it is punished, autonomy of people, profesisonals doing their job is actively discouraged. This doesn't bode well in highly fluid industries.


Jim Collins wrote a great book, From Good to Great one of the most eloquent empirical studies into corporate performance.

Are you a hedgehog or a fox? In his famous essay “The Hedgehog and the Fox,” Isaiah Berlin divided the world into hedgehogs and foxes, based upon an ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.”
Those who built the good-to-great companies were, to one degree or another, hedgehogs. They used their hedgehog nature to drive toward what we came to call a Hedgehog Concept for their companies. Those who led the comparison companies tended to be foxes, never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent. (our emphasis)


An empirical comparison of Qantas to its peers would suggest that foxes outnumber hedgehogs in Coward street.

Qantas need a new fleet
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Old 15th Apr 2018, 23:15
  #157 (permalink)  
 
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Well said angryrat and others.
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Old 16th Apr 2018, 10:35
  #158 (permalink)  
 
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Qantas want a new fleet , they just want to crew it at Network rates !
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Old 16th Apr 2018, 11:00
  #159 (permalink)  
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Originally Posted by Rabbitwear View Post
Qantas want a new fleet , they just want to crew it at Network rates !
And given that Network can’t attract and retain pilots at their current rates how do you reckon that’ll go?

Qantas know they’re screwed. Hence they’re running roadshows and talking pilot academies and so on to try and work out precisely how screwed they are in the medium to long term, and whether there is enough interest out there for them to un-screw the situation.

Yep, they know they’re screwed. They’re still working on the presumption though that their pilots don’t know it also.
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Old 16th Apr 2018, 11:05
  #160 (permalink)  
 
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Originally Posted by Keg View Post
And given that Network can’t attract and retain pilots at their current rates how do you reckon that’ll go?

Qantas know they’re screwed. Hence they’re running roadshows and talking pilot academies and so on to try and work out precisely how screwed they are in the medium to long term, and whether there is enough interest out there for them to un-screw the situation.

Yep, they know they’re screwed. They’re still working on the presumption though that their pilots don’t know it also.
Could the fact that they are now out of denial be considered an evolution of their thinking?
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