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AUSTRALIAN AIRLINES - Beware the Trojan Horse

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AUSTRALIAN AIRLINES - Beware the Trojan Horse

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Old 25th Feb 2003, 12:51
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AUSTRALIAN AIRLINES - Beware the Trojan Horse

The latest I hear from Australian Airlines is as follows:

Sydney Airport welcomes Australian Airlines

The decision by Australia’s newest international carrier, Australian Airlines, to schedule international flights out of Sydney has been welcomed by Sydney Airport as a move that will contribute to promoting Australia as a tourist destination within the wider Asia-Pacific region.

Sydney Airport Chief Executive, Max Moore-Wilton, said the decision by Australian Airlines would enable international visitors flying with the carrier from Asian destinations to access flights to other Australian holiday destinations once they had arrived at Sydney.


Australian Airlines announced today that by the end of July the new international carrier would be operating three services a week from Sydney to Bali. In addition, Australian Airlines will also commence return services six times a week between Sydney and Cairns, offering seamless transits for inbound passengers travelling from Asia and Japan. (isn't Japan in Asia?)


Sydney Airport accounts for approximately half of all international passengers arriving in Australia, and around one third of all domestic air traffic. As such, it provides an ideal hub for any destination within the country, providing access to a number of domestic and regional airlines.

Mr Moore-Wilton said that the additional traffic to be generated from the Australian Airlines Sydney schedule would further add to a trend that has seen improvement over the past months. He said the Australian Airlines concept of a full service international leisure carrier would also contribute to broadening customer choice.

Australian Airlines decision to extend its schedule to include direct flights to and from Sydney Airport follows the decision last year to locate its head office in Sydney in close proximity to the airport precinct.

News Sydney Airport welcomes Australian Airlines
Date February 25th, 2003
Source Sydney Airport Corporation and 'Oz Flight'
--------------------------------------------------------------------------------
Now I do remember suggesting that Australian Airlines was going to be used as a trojan horse to secretly bring in very cheap labour on whichever routes Geoff Dixon wanted. But NO, Mr. Dixon assured all that Australian Airlines would only ever operate on routes not deemed viable by Qantas. AA would not take over Qantas routes.

So given the following from the Qantas schedule:

QF029 SYD 1105 DPS 1410 0/763 6h05min
QF 030 DPS 2255 SYD 0740 + 1 Day 0/763 5h45min

How does this equate?

Again I would stand by my assertation that Qantas crew need to be wary of Australian Airlines. Qantas simply need to 'pull out' of a route one day and Australian could take over the next. What control do you have? All of a sudden a great slab of your flying & promotional prospects is being shunted of to AA and bingo you have no control over your destiny.

This may sound melodramatic but suggest you heed this now before it is too late. Where will the offloading of flying stop?
---
Just as an addendum, have flown on AA and it is absolute rubbish. Still costs a Sh1tload to fly with them but for less service. Thay claim they are not a low-cost airline (and their airfares prove that) but the inflight service is bare-bones basic. Trying to be a Virgin but without the low airfares. No ice in drinks unless requested - please!

The formula is inappropriate. If you get low service you should pay low fares. The minute a Virgin Blue International operates on these routes, I'm switching, provided they are cheaper (should be easy enough). Not whinging, just stating the case as I see it. C'mon Dennis and Andrea, you can do better.
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Old 25th Feb 2003, 16:44
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Wed "The Australian" 26/2/03

Airline spreads wings
By Alan Wood
February 26, 2003

QANTAS Airways Ltd plans to expand its low-cost Queensland-based subsidiary Australian Airlines in the Asia Pacific, despite increased tension in the region driving the airline's share price lower.

Chief executive Geoff Dixon said Qantas planned to increase the number of routes serviced by Australian Airlines to destinations including Bali.

The airline was also considering adding Australian Airlines routes to Shanghai, China and Sabah, Malaysia, later in the year.

Shaw Stockbroking head dealer James Spiteri said the Qantas share price was hurt yesterday on reports of increased tension in North Korea, with a missile being fired into the Sea of Japan.

Qantas shares closed 16¢, or almost 5 per cent, weaker at $3.23 on high volume of 16 million. Last Thursday Qantas shares slumped more than 10 per cent on concerns the airline's 2002-03 profit might be hurt by a fall-off in bookings amid war tension.

Mr Dixon said yesterday the first definite low-cost route to Bali would start from the end of July, as well as the introduction of Australian Airlines services between Cairns and Sydney from mid-year.

By the end of July Australian Airlines would operate three services a week from Sydney to Bali and one a week from Melbourne, with more possible in 2004.

The number of aircraft in the Australian Airlines fleet, operating since October, would increase to six from four by the end of 2003, with the aircraft being leased from the Qantas parent.

However, Mr Dixon said despite the increasing influence of no-frills carriers in a rationalising world airline industry, Qantas had no plans to become a total low cost operator.

"Qantas – a fully commercial, full service airline confronts both the non-frills players and the Government subsidised airlines," he told a trans-Tasman business circle lunch. " . . . While we will never operate in the same fashion as the no-frills carriers, they have none the less created a paradigm shift in aviation.

"We need to scrutinise every thing we do to reduce process complexity and costs."

Mr Dixon also said the airline intended to have further talks with the Federal Government regarding the limits on foreign investment in Qantas.

The current 49 per cent limit helped drive up costs, he said.

"We are talking to the Government again because it adds about two percentage points to our cost of capital . . . it makes it very hard for us to compete," he said.

Mr Dixon said changes to airline alliance groupings were very likely in the future, given the turbulent climate for world airlines.

The main alliance groupings comprise the Star Alliance with members including United, Air NZ, Thai Airways and SIA; and an opposing Oneworld group including Qantas.

"(We) will probably see the overall alliance issue, involving the likes of Oneworld, Star . . . start to, not break up but, certainly there will be some movement around," he said.

Mr Dixon would not comment directly about Air New Zealand leaving the Star Alliance, given that Qantas proposes to take a 22.5 per cent, $NZ550 million ($515 million) stake in the New Zealand carrier.

==========================================
Wed " Australian Financial Review"

Qantas to use low-cost subsidiary on new routes
Feb 26
Jane Boyle

Qantas Airways plans to use its low-cost subsidiary Australian Airlines to restore flights to Bali and launch new routes to Shanghai and East Malaysia, despite comments last week that forward bookings had dropped markedly on some major international routes.

Qantas shares fell to a 16-month low yesterday - closing down 16¢ at $3.23 - amid fears full-year earnings will be hit by war fallout and weak tourism numbers.

The airline said last week that bookings on routes to Japan and UK were down by up to 20 per cent and an overall 6 to 8 per cent decline in international bookings over the next 16 weeks could deteriorate sharply if war breaks out in Iraq.

Qantas plans to use Australian Airlines as a way of expanding while keeping a lid on costs.

Australian Airlines chief executive Denis Adams said that instead of Qantas adding two flights between Sydney and Denpasar in April as previously planned, the lower cost Australian Airlines will use a fifth plane to be added in July to begin four return services a week between Denpasar and Sydney and Melbourne. Australian will also begin six-weekly Cairns-Sydney services mid-year and plans a new weekly service between Cairns and Kota Kinabalu in East Malaysia.

When a sixth plane is delivered in November, Australian plans three new weekly services between Cairns and Shanghai - Qantas's first direct flights to China since it abandoned the route two years ago.

Australian Airlines also plans additional flights into Singapore, in a move expected to rattle Singapore Airlines.

Australian Airlines, with seat costs around 25 per cent less than Qantas's main operations, will fly at least daily and possibly more frequently to Singapore, with ambitions to expand it as a hub from which to tap new leisure markets.

Meanwhile, Qantas chief executive Geoff Dixon told a Trans-Tasman Business Circle Function the airline was still talking to the federal government about getting its foreign ownership caps lifted.


On the industrial front, Qantas faces more strife after the Flight Attendants Association of Australia threatened further action after a stopwork yesterday over a pay dispute.

It will also meet today with the Australian Services Union, which is demanding an explanation of plans for cuts to staffing levels. About 65 Air New Zealand staff in Australia also went on strike yesterday over a pay dispute.

Last edited by Wirraway; 25th Feb 2003 at 16:56.
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Old 25th Feb 2003, 23:25
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It was also said that AO would not compete on routes operated by Qantas.Now Cairns - Sydney is a major route for QF. How do they explain this. The tip of the iceberg is getting bigger!
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Old 25th Feb 2003, 23:42
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Well at the moment there is only 1 flight that AO does between CNS-OOL-CNS each day if this is the case its probably will be the same with SYD-CNS-SYD or maybe 2 each day.
so i don't think qantas is going to cancle there 4-5 flights a day to CNS out of SYD

especially if pax have to go through international airport procedures
it quicker for domestic pax to go domestic

(unlike us who will do the international domestic thing)


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Old 25th Feb 2003, 23:42
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And operating SYD-DPS along side QF! What is that about? What happened to the "not competing against QF" thing?! Did they think everyone would forget they said that?
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Old 25th Feb 2003, 23:49
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Perhaps the coming hostilities in the Mid East and the subsequent downturn in International travel will make some more of QF's mainline routes unprofitable.

Lucky they've got Australian waiting in the wings to pick up the slack.
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Old 26th Feb 2003, 01:13
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People,

So much emotion about the inevitable. Did you honestly believe the HO propoganda about not eroding the QF market or competing with QF routes???? Oh to be so naieve.

A quick look at the current world aviation market reveals the best performers in these turbulent times are all based on the low cost model (including DJ which is currently showing a considerably better ROI than QF). To think that Mssrs Dixon and Adams are not going to make the most of their own variant defies belief. Of course they are.

QF's ROI averaged over any period is, despite being better than other full service carriers, pitiful. To succeed over the next decade QF will have to do everything possible to reduce operating costs to levels achieved by other low cost airlines, or they will simply perish and guess what, NOONE will have a job (can't happen ? Remember AN).

QF has evolved over the years into a bloated, inflexible, bureaucratic juggernaut which is now plagued by gratuitous industrial action from an employee group with greatly inflated opinions of their worth.

All said and done the airline industry is allegedly a service industry. In any service industry the customer dictates the level of service to be provided. If low cost, no frills (cheap and nasty) is what they want, then so be it. At the same time the management have a performance obligation to the share holders, which is why the likes of DJ and AO will prosper at the expense of the former more traditional full service airlines.

If I were in the QF camp, I would strongly suggest looking back on the previous halcyon days with fond memories, as that is all they will be within 5 years.

If one is an astute observer, one will realise that serious cost cutting is nigh on impossible to achieve under the QF model and can only be achieved by shrinking QF whilst expanding AO.

So get with the program kids, all the emotional rhetoric in this or any other forum is not going to prevent the inevitable. Jump aboard and participate in the latest evolution of the industry rather than sitting on the sideline slinging s**t at it.

BigE
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Old 26th Feb 2003, 01:42
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Well said. And that was the whole enchilada.
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Old 26th Feb 2003, 01:47
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bigenchilada

I think your right on the money, as for domestic Dixon will
most likely keep 'CityFlyer' as mainline and farm out the rest
to Impulse-AO-Qantaslink where up to 20-30% in costs can
be saved, the same as Delta and United are trying in the U.S.
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Old 26th Feb 2003, 03:18
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So what you're saying is clearly that Geoff Dixon and Dennis Adams are outright Liars? Not ever to be trusted?

Rather sad if that is the case even if it is naieve.

But yes bigenchilada I think you are right it was inevitable as my earlier posts indicated.

There is however one major defect with Australian Airlines...it is CrAp. Complete CrAp. What they are doing is charging 'Qantas' type airfares but providing DJ type service and that is not a product anybody wants. It simply will not succeed on its own merits long-term. It has at the moment a little inertia because of its QF backing but the product cannot succeed survive long term.

Either you charge less and provide low service (DJ) or you charge a fortune (as they do) and give full service. There is absolutely nothing 'full-service' about ther Australian Airlines product.

However once the service/cost issue is rectified I think you are right. Australian Airlines is here for the long term. I think QF will be confined to LAX, LHR, HKG and some Japanese sectors, Australian will operate all the NZ, Bali type tourist-based flights and QantasLink will do the domestic stuff for all of the reasons you mentioned.

The tragedy is that by world standards Australian aircrew are paid very poorly and penalised further by a punitive tax system.
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Old 26th Feb 2003, 05:12
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Australian, National Jet, Airconnex, Jetconnect... it may be too late. These little guys are moving along nicely.
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Old 26th Feb 2003, 05:42
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AO

are AO actually selling seats to pax on CNS/OOl flights? or are they just for international connecting pax only? i would've thought that it was for international pax connecting?

doesn anyone know? cheers
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Old 26th Feb 2003, 06:53
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Cairn to Sabah??

Can anyone explain this route - is it a tourist route, do the folks in Cairns head to Kota Kinabalu for their hols?

I would have thought the likes of Langkawi and Penang would have been suitable routes, but from SYD or MEL
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Old 26th Feb 2003, 09:37
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Australian Airlines represents pragmatism at it's best. After years of conducting mostly futile battles with the unions, QF management were left with precious little to show, other than one of the world's finest sheltered workshops. Even the best " anti personnel" operatives came up short against the outdated and extremely restrictive work practices that epitomise QF. Along comes Australian Airlines - the completely new model for QF, but instead of beating the unions with a stick, as per past practice, management simply adopted the view that the best course of action was to let the "old" company grow out, just like a bad haircut. Anyone sitting in QF nowadays, fat, dumb and happy should be very concerned. It is only the largese of the newly pragmatic management, that prevents the clippers being taken to QF wholesale. Bald is certainly an option as opposed to waiting for the bad cut to grow out fully.
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Old 26th Feb 2003, 10:45
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nickmelb,

As of late last week, AO opened up the sale of CNS-OOL-CNS seats to the domestic market as well.

stormy
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Old 26th Feb 2003, 11:29
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Anybody actually know what an Australian Airlines pilot earns, and what the potential earnings are when the bonus scheme is developed?
Anyone spoken to an AO pilot and asked how they like it? Anyone here actually work for AO or QF and know what they are talking about?

Anyone?
Anyone?
Bueller
Bueller
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Old 27th Feb 2003, 00:13
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What are the chances of Australian Airlines employing there own pilots in the future ie not Qantas pilots.
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Old 27th Feb 2003, 03:54
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Arrow

London to a brick that that is one of the next moves, Air Mike 957.

Unless AIPA takes strong action now (something they didn`t do back in AA`s formative stage), contractual degradation and promotions are just a couple of moves away.

After all, Geoff and Margaret NEED those multi-million dollar bonuses!
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Old 27th Feb 2003, 15:27
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Was that a yes,no or nobody really knows yet?
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Old 28th Feb 2003, 00:34
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Air Mike,

as long as AO can get enough Qantas mainline guys to go across then that is the way they will go. As of yet they have not had to face the situation of not having enough guys interested in AO, however a lot of the interested parties do require conversion or upgrade training from mainline. No major problems with FO interest, some problems with Captains. I would suspect that FO to CAPT upgrades would happen in the future with ex QF mainline before external direct entry.


Jake,

for junior pilots it can be summed up as paid more and work a lot less. The lifestyle is significantly improved which adds to the appeal.

For middle ground pilots paid slightly less and still work less.

Probably not many senior guys interested.
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