Merged: JetStarization Of Qantas Finished
Thread Starter
Join Date: Oct 2004
Location: Heaven
Posts: 584
Likes: 0
Received 0 Likes
on
0 Posts
Merged: JetStarization Of Qantas Finished
October 16, 2009
The Australian
AFTER a difficult year, Qantas is starting to see signs of an upturn in demand, particularly in economy class, according to chief executive Alan Joyce.
Speaking after what he calls a "bath of fire" in his first year as Qantas chief, as he had to deal with the global financial crisis, failed merger talks with British Airways and swine flu, which cost the airline $90 million in business from Japan, Mr Joyce also said Qantas was looking at increasing economy and premium economy seats in some international flights to boost returns.
That could mean ditching first-class seats on some short international routes.
He also said there would be no more replacement of Qantas routes with Jetstar flights.
Jetstar's future expansion would come from organic growth, including eventual flights to southern Europe.
"We are seeing some life in the marketplace," Mr Joyce said in an exclusive interview with The Australian.
"We are seeing, in recent months, the volumes being a bit better than we were expecting.
"Yields are still terrible but we are getting some high seat factors, which is a good sign.
"The first prerequisite of getting the yields back is that the demand is there."
Mr Joyce said Qantas's seat factor was "two to three points" ahead of last year.
"Our yield is still bad -- it is still over 20 per cent down internationally and in the low teens down domestically, but volumes are better than expected."
The airline's profit fell by 88per cent to $117m for the year to June, but it was one of the few international airlines to report a profit for the financial year.
A difficult second half was offset by profits from the Qantas Frequent Flyer business, although Qantas International lost money.
Mr Joyce said Qantas was looking at reconfiguring its long-distance aircraft, including the A380, to boost the number of economy-class seats, for which demand had been stronger.
That could mean ditching first-class seats completely on some routes.
"One of the things we are looking at is what is the right mix of seats and how they should be laid out to optimise the amount of revenue-generating capacity on each aircraft," he said.
"We are still going to be a first-class airline -- we are absolutely committed to that -- but do we need first-class everywhere?"
"We need it to London and to LA, but where should first-class be apart from that?"
Before the global economic crisis, he said the A380 had more than 70 business-class seats, "but maybe now we only need 50, and more premium economy".
"Economy is going very well at the moment. Maybe we could do with more economy seats."
He estimated reconfiguring seats in the current environment could boost the yield from some flights by as much as 8 per cent.
Irish-born Mr Joyce, who was responsible for the start up and successful launch of the low cost Jetstar airline, has decided the replacement of Qantas routes with cheaper Jetstar services has reached its limitations.
When appointed, concern was expressed that he was going to further "Jetstarise" Qantas.
"This year we will grow Jetstar by 24 per cent and Qantas is going to be reduced by 5 per cent but that is a function of returns," Mr Joyce said.
"If things turned around, I could easily see, in a couple of years when the business market is returning, that Qantas could have a greater growth than Jetstar. We have decided that, with Qantas, we have gone to a minimum network, a network we can't drop below.
"There will be no further replacement of Qantas flights with Jetstar. That's it."
In the past year, Mr Joyce has replaced Qantas routes from Cairns and the Gold Coast to Tokyo with Jetstar flights, both routes that largely service leisure travellers from Japan.
He said this had been critical in heading off potential losses of $100million on the routes.
But he said the Sydney-Tokyo route would remain a Qantas service because it was primarily aimed at business travellers.
He said replacing Qantas's domestic flights in New Zealand with Jetstar services had also turned around a loss of $30m on the routes last year with a break-even situation for the group.
In the longer term, he said there were plans for Jetstar to expand into leisure destinations of southern Europe, which could include Athens, Milan or Rome.
"Rome and Athens are where Qantas has some history of operating," he said.
"There were good loads but the yields were terrible.
"With the big Italian and Greek communities here, there is a big visiting-friends-and-relatives market."
Mr Joyce said the Pacific route to the US was a "blood bath" and predicted one of Qantas's competitors would eventually drop out of the market.
Delta Airlines and Virgin Blue's V-Australia, which began services last year, are the two major competitors with Qantas on the Australia-US routes.
"Qantas is the best performing airline on that network," he said.
"It has a better seat factor and better yields. All the rest are losing money."
The Australian
AFTER a difficult year, Qantas is starting to see signs of an upturn in demand, particularly in economy class, according to chief executive Alan Joyce.
Speaking after what he calls a "bath of fire" in his first year as Qantas chief, as he had to deal with the global financial crisis, failed merger talks with British Airways and swine flu, which cost the airline $90 million in business from Japan, Mr Joyce also said Qantas was looking at increasing economy and premium economy seats in some international flights to boost returns.
That could mean ditching first-class seats on some short international routes.
He also said there would be no more replacement of Qantas routes with Jetstar flights.
Jetstar's future expansion would come from organic growth, including eventual flights to southern Europe.
"We are seeing some life in the marketplace," Mr Joyce said in an exclusive interview with The Australian.
"We are seeing, in recent months, the volumes being a bit better than we were expecting.
"Yields are still terrible but we are getting some high seat factors, which is a good sign.
"The first prerequisite of getting the yields back is that the demand is there."
Mr Joyce said Qantas's seat factor was "two to three points" ahead of last year.
"Our yield is still bad -- it is still over 20 per cent down internationally and in the low teens down domestically, but volumes are better than expected."
The airline's profit fell by 88per cent to $117m for the year to June, but it was one of the few international airlines to report a profit for the financial year.
A difficult second half was offset by profits from the Qantas Frequent Flyer business, although Qantas International lost money.
Mr Joyce said Qantas was looking at reconfiguring its long-distance aircraft, including the A380, to boost the number of economy-class seats, for which demand had been stronger.
That could mean ditching first-class seats completely on some routes.
"One of the things we are looking at is what is the right mix of seats and how they should be laid out to optimise the amount of revenue-generating capacity on each aircraft," he said.
"We are still going to be a first-class airline -- we are absolutely committed to that -- but do we need first-class everywhere?"
"We need it to London and to LA, but where should first-class be apart from that?"
Before the global economic crisis, he said the A380 had more than 70 business-class seats, "but maybe now we only need 50, and more premium economy".
"Economy is going very well at the moment. Maybe we could do with more economy seats."
He estimated reconfiguring seats in the current environment could boost the yield from some flights by as much as 8 per cent.
Irish-born Mr Joyce, who was responsible for the start up and successful launch of the low cost Jetstar airline, has decided the replacement of Qantas routes with cheaper Jetstar services has reached its limitations.
When appointed, concern was expressed that he was going to further "Jetstarise" Qantas.
"This year we will grow Jetstar by 24 per cent and Qantas is going to be reduced by 5 per cent but that is a function of returns," Mr Joyce said.
"If things turned around, I could easily see, in a couple of years when the business market is returning, that Qantas could have a greater growth than Jetstar. We have decided that, with Qantas, we have gone to a minimum network, a network we can't drop below.
"There will be no further replacement of Qantas flights with Jetstar. That's it."
In the past year, Mr Joyce has replaced Qantas routes from Cairns and the Gold Coast to Tokyo with Jetstar flights, both routes that largely service leisure travellers from Japan.
He said this had been critical in heading off potential losses of $100million on the routes.
But he said the Sydney-Tokyo route would remain a Qantas service because it was primarily aimed at business travellers.
He said replacing Qantas's domestic flights in New Zealand with Jetstar services had also turned around a loss of $30m on the routes last year with a break-even situation for the group.
In the longer term, he said there were plans for Jetstar to expand into leisure destinations of southern Europe, which could include Athens, Milan or Rome.
"Rome and Athens are where Qantas has some history of operating," he said.
"There were good loads but the yields were terrible.
"With the big Italian and Greek communities here, there is a big visiting-friends-and-relatives market."
Mr Joyce said the Pacific route to the US was a "blood bath" and predicted one of Qantas's competitors would eventually drop out of the market.
Delta Airlines and Virgin Blue's V-Australia, which began services last year, are the two major competitors with Qantas on the Australia-US routes.
"Qantas is the best performing airline on that network," he said.
"It has a better seat factor and better yields. All the rest are losing money."
Join Date: May 2009
Location: pointy end
Posts: 31
Likes: 0
Received 0 Likes
on
0 Posts
"Qantas is the best performing airline on that network," he said.
Using which measurement?
Certainly not service and travelling pleasure on the A380 upper deck "business class barn"
From a passenger perspective, its V Aus if going to LA and SQ via SIN if going to New York.
He needs to get out more and see what the competition is doing. QF J Class is very mediocre these days.
Using which measurement?
Certainly not service and travelling pleasure on the A380 upper deck "business class barn"
From a passenger perspective, its V Aus if going to LA and SQ via SIN if going to New York.
He needs to get out more and see what the competition is doing. QF J Class is very mediocre these days.
Conversely I was pretty happy with QF J/Class LAX SYD a few weeks ago. Comfortable, great inflight entertainment (no comment on the reliability, but it worked fine on our flight), good food/wine selection, friendly service oriented cabin crew.... What's to complain about??? Certainly didn't look, smell, feel, sound or taste like a barn to me, ifsknt.
Disclaimer : I do work for the mob, but have nothing but good experiences to relay from that sector. Even on the way over (B744 BNE LAX) we had a similarly good experience with the only exception being the "not horizontal flat bed" (fixed on the a380).
Disclaimer : I do work for the mob, but have nothing but good experiences to relay from that sector. Even on the way over (B744 BNE LAX) we had a similarly good experience with the only exception being the "not horizontal flat bed" (fixed on the a380).
Join Date: Sep 2007
Location: southeast asia
Posts: 67
Likes: 0
Received 0 Likes
on
0 Posts
ifsknt, I dont agree!!! After flying Vaust a few weeks ago, Qf bus class leaves it for dead!!! ( and I generally dont like flying qf if I can help it) Vaust was a joke. Service was very poor, meals not real flash, and the pretty little things trying to run it were obviously very new at their jobs...
Overall, not real good at all.
I do agree though that SQ is a better product. I just wish they could start across the pacific...
Overall, not real good at all.
I do agree though that SQ is a better product. I just wish they could start across the pacific...
Join Date: Apr 2008
Location: Europe
Posts: 187
Likes: 0
Received 0 Likes
on
0 Posts
See this press release for what it is - an attempt to calm an increasingly concerned institutional shareholder group.
Remember this group holds shares in Qantas, not in the yield destruction exercise that is JQI.
It is an open secret that the Boston Consulting plan for the Qantas 'group' is for 70% of existing destinations to be services exclusively by JQ and the rest by red tails.
Note that excluded to this is the B787 flying which will be done by contractors outside both seniority lists.
At some point the cross subsidisation will end because the parent revenue stream will not be there to support the JQ operation. When this happens is anyones guess, but inside 10 years would be my bet.
Hopefully the institutional shareholders will be able to see inside the operation by then and exert influence. The problem is that so much is being done by Clifford in the name of 'union busting' that by the time the penny drops any remedial action to save the brand may be a case of too little too late.
This current situation has eerie parallels to the way Frank Lorenzo took apart Eastern in the 1970's in the name of 'breaking' union influence of the operation.
By the time Lorenzo had finished the airline was bankrupt, tens of thousands were unemployed, and Lorenzo himself was vilified and banned from being involved as a company director in the US ever again
Remember this group holds shares in Qantas, not in the yield destruction exercise that is JQI.
It is an open secret that the Boston Consulting plan for the Qantas 'group' is for 70% of existing destinations to be services exclusively by JQ and the rest by red tails.
Note that excluded to this is the B787 flying which will be done by contractors outside both seniority lists.
At some point the cross subsidisation will end because the parent revenue stream will not be there to support the JQ operation. When this happens is anyones guess, but inside 10 years would be my bet.
Hopefully the institutional shareholders will be able to see inside the operation by then and exert influence. The problem is that so much is being done by Clifford in the name of 'union busting' that by the time the penny drops any remedial action to save the brand may be a case of too little too late.
This current situation has eerie parallels to the way Frank Lorenzo took apart Eastern in the 1970's in the name of 'breaking' union influence of the operation.
By the time Lorenzo had finished the airline was bankrupt, tens of thousands were unemployed, and Lorenzo himself was vilified and banned from being involved as a company director in the US ever again
The state of Qantas.
Well, here we are. The AGM is done and dusted. The remuneration package has been voted on and the absurd statements are still made by the qantas board.
Qantas chairman hits out at maintenance unions
Industrial action [last year] by Qantas engineers cost us around A$130 million ($120 ) .................. Sorry, but industrial action???? I thought it was engineers abiding by their contractural obligations. ie no overtime?......
also...."Mr Clifford said rather than cannibalise Qantas routes, Jetstar would compliment them.
“Here is Qantas, one of the world’s premium carriers, (that) has introduced one of the best low-cost carriers in the world,” he said. "
Mr Clifford said rather than cannibalise Qantas routes, Jetstar would compliment them.
http://www.asx.com.au/asxpdf/2009100...ddtn28jh.pdfdf
a nett reduction in market share and passengers in qantas mainline traffic.
Living the dream.....
Qantas, the true spirit of Australia. Or perhaps, Jetstar, the true salvation for shareholders.
Qantas chairman hits out at maintenance unions
Industrial action [last year] by Qantas engineers cost us around A$130 million ($120 ) .................. Sorry, but industrial action???? I thought it was engineers abiding by their contractural obligations. ie no overtime?......
also...."Mr Clifford said rather than cannibalise Qantas routes, Jetstar would compliment them.
“Here is Qantas, one of the world’s premium carriers, (that) has introduced one of the best low-cost carriers in the world,” he said. "
Mr Clifford said rather than cannibalise Qantas routes, Jetstar would compliment them.
http://www.asx.com.au/asxpdf/2009100...ddtn28jh.pdfdf
a nett reduction in market share and passengers in qantas mainline traffic.
Living the dream.....
Qantas, the true spirit of Australia. Or perhaps, Jetstar, the true salvation for shareholders.
Join Date: Apr 2007
Location: The Sticks
Posts: 39
Likes: 0
Received 0 Likes
on
0 Posts
Airlines - are you conflicted?
According to the Sabre Airline Study - you just very well might be: Sabre has released a study which highlights a number of key findings. I will pick out the ones I think are relevant and while cherry picking is the name of the game here - I think it is important to recognize that while airlines think they know what they are doing - there is an underlying trend that shows they are conflicted. So what do you want - Revenue or Brand Value?
According to the study it is "customer loyalty and retention efforts that are viewed by an overwhelming majority of survey respondents (86 percent) as having the most positive impact on their business."
The study goes on to note the conflict the airlines face: "The importance of developing customer loyalty is part of the unwieldy crisis airlines face today as charging additional fees is viewed by them as one of the top tactics to increase revenues."
Overall customer satisfaction with airlines was down this year, at at time when the fewer passengers on planes should have improved the service. The recent passenger imprisonment examples can't have done a lot for their overall image. But if you look at the recent annual Power's survey, Airline customer satisfaction has fallen to its lowest level in four years.
The decline in satisfaction in this year's survey largely was driven by unfavorable customer perceptions on in-flight services, flight crew and costs and fees, according to the survey of nearly 13,000 passengers who flew between April 2008 and May 2009.
Both leisure and business traveler respondents reported overall declines in customer service.
its annual survey, JDP measures customer satisfaction in seven categories: cost and fees, flight crew, inflight services, aircraft, boarding/deplaning/baggage, and check-in and reservations. It awarded Alaska Airlines its highest US airline ranking.
"Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cutbacks on inflight services, increases in fees and issues with the helpfulness and courtesy of flight crews" said Dale Haines, senior director of JDP's travel practice.
Going back to the Sabre study, according to 58 percent of those (airlines) surveyed, merchandising and ancillary revenue will help airlines’ bottom line results. Baggage fees, travel insurance, and vacation packaging were rated among the highest in the survey to generate revenue.
And herein lies the conundrum. Revenue or Brand Value.
The Professor thinks that there is a clear case for the "Brandless" brand such as the LCCs leader Ryanair. Michael O'Leary and his crew don't give a toffee for brand. For them the issue of revenue and thence profit is paramount. For legacy airlines in survival mode - as the Head of IATA constantly reminds us - one would have thought that was also the case. But the legacy airlines tend to revert to type.
For example one would have thought that it was a little weird that Qantas in the middle of a recession and in the middle of one of their heaviest periods of losses in recent memory - would be running a very expensive strategic branding campaign.
So let's count the ways the airlines are undermining their brand value:
- Confusing fees
- Unbundling the product IE charging for things that were previously included
- Debasing the currency by "selling" differentiators that the high value frequent flyers have paid for with their loyalty
- Moving ancillaries to the point of departure and not making them available at the point of sale
- Selling frequent flyer miles for cash
Other interesting Sabre survey findings:
- Increasing revenue and reducing costs is among the most significant challenges in managing airline profits over the next 18 months, according to 67 percent of those surveyed
- Managing revenues (44 percent) and distribution mix (12 percent) are the top two tactics survey respondents plan to use to increase revenues. Ancillary revenues followed closely behind with 11 percent of those surveyed planning to employ this tactic.
The obvious way to solve that conundrum is through the deployment of new technology and breaking the Gordian knot of the GDS cost model. But then I guess Sabre is none too keen to bring out that point.
Still there is food for thought here. Are the airlines mortgaging their future value for revenue today? Does that future value of the brand actually matter? Perhaps more to the point are the airlines going to have to finally admit that they really are not in control of their brand. Social Media seems to have done a number on several airline brands - both good and bad?
Ah this is good stuff
Enjoy
Cheers
Thanks for reading - private comments please to [email protected]
Join Date: Jul 2006
Location: NSW
Posts: 131
Likes: 0
Received 0 Likes
on
0 Posts
Mohikan! Think you dropped a penny.
Alas, too many people are too wet and too weak to chase it down.
When the huffing and puffing is over, expect your words of warning will come back to haunt those who deliberately dropped the ball, rather than claim a contested touchdown.
Hmmm! Wet and weak is too kind, but
is probably defamatory.
Alas, too many people are too wet and too weak to chase it down.
When the huffing and puffing is over, expect your words of warning will come back to haunt those who deliberately dropped the ball, rather than claim a contested touchdown.
Hmmm! Wet and weak is too kind, but
is probably defamatory.
Last edited by Gingerbread; 21st Oct 2009 at 21:25.
Join Date: Jan 2005
Location: Stralya
Posts: 577
Likes: 0
Received 0 Likes
on
0 Posts
Mohikan,
Your statements ring at the heart of the issue facing all of us at Q. In the absence of scrutiny the BS that passes as "J* financials" noone knows what damage is done. It is akin to pruning a tree(mainline) to the point where the tree either recovers or dies. Clifford isn't terribly bright, just another HR Nicolls induced "industrial chieftain" who is personally profiting whilst whistling the tune of the evil of unions.
The media gloss over the lack of information and merely fall into line. further if this so called "complimenting" of mainline is so successful why hasn't one other airline adopted Cliffords/Dixon/Oldmeadow/Joyce's vision of airline salvation?
Your statements ring at the heart of the issue facing all of us at Q. In the absence of scrutiny the BS that passes as "J* financials" noone knows what damage is done. It is akin to pruning a tree(mainline) to the point where the tree either recovers or dies. Clifford isn't terribly bright, just another HR Nicolls induced "industrial chieftain" who is personally profiting whilst whistling the tune of the evil of unions.
The media gloss over the lack of information and merely fall into line. further if this so called "complimenting" of mainline is so successful why hasn't one other airline adopted Cliffords/Dixon/Oldmeadow/Joyce's vision of airline salvation?
Join Date: Sep 2009
Location: Holland
Age: 60
Posts: 560
Likes: 0
Received 0 Likes
on
0 Posts
Next Step For The Leprechaun
Next step in QF's evolution -
Perhaps The Roo and Latestar will merge with Boston Consulting Group to form another enterprise?
It would be like a scene from the Matrix in which thousands of 'Andersons' ( Consultants) take on Neo ( the Unions ) in a battle for supremacy.
Perhaps The Roo and Latestar will merge with Boston Consulting Group to form another enterprise?
It would be like a scene from the Matrix in which thousands of 'Andersons' ( Consultants) take on Neo ( the Unions ) in a battle for supremacy.
Join Date: Jul 2008
Location: Skating away on the thin ice of a new day.
Posts: 1,116
Received 14 Likes
on
8 Posts
qfinsider
I think its pretty clear qantas had to do something in the jetstar space else be beaten by another operator.they had to secure the space.
I dont like it any more than most but the world has changed.
My gripe is not with its existence but the cross subsidisation that is not declared.
If AJ is serious about cuts he would have another dig at middle management and structures processes within.
I dont like it any more than most but the world has changed.
My gripe is not with its existence but the cross subsidisation that is not declared.
If AJ is serious about cuts he would have another dig at middle management and structures processes within.
Sprucegoose
Join Date: Sep 2000
Location: Hughes Point, where life is great! Was also resident on page 13, but now I'm lost in Cyberspace....
Age: 59
Posts: 3,485
Likes: 0
Received 1 Like
on
1 Post
Disclaimer : I do work for the mob, but have nothing but good experiences to relay from that sector. Even on the way over (B744 BNE LAX) we had a similarly good experience with the only exception being the "not horizontal flat bed" (fixed on the a380).
Registered User **
Join Date: May 2005
Location: The Ultimate Crew Rest....
Age: 69
Posts: 2,346
Likes: 0
Received 0 Likes
on
0 Posts
I found something interesting the other day...
I was booking a domestic flight for my daughter and was looking at the web sites....QF,J* and VB.
VB have a happy hour at midday and was comparing prices.I noticed that out of OOL the QF flights were all J* and when compared to the J* prices on their web site for the same flight and type of ticket were more expensive...
So for the average punter why would you buy a ticket on QF because it's the same flight,ticket etc..but cheaper on J*......
Now being the cynic that I am I was wondering if QF eventually will turn around and say we are reducing services because the travelling public prefer to fly J* than QF....
By the way in the end I saved money by booking the tickets on VB....and on principle as well.
I was booking a domestic flight for my daughter and was looking at the web sites....QF,J* and VB.
VB have a happy hour at midday and was comparing prices.I noticed that out of OOL the QF flights were all J* and when compared to the J* prices on their web site for the same flight and type of ticket were more expensive...
So for the average punter why would you buy a ticket on QF because it's the same flight,ticket etc..but cheaper on J*......
Now being the cynic that I am I was wondering if QF eventually will turn around and say we are reducing services because the travelling public prefer to fly J* than QF....
By the way in the end I saved money by booking the tickets on VB....and on principle as well.