
Two Qantas 747's parked side by side at Heathrow
Qantas has announced an overhaul of its international operations to try to right the ship from the tough position it currently sits in. These changes were announced in a document entitled “Building a Stronger Qantas” released to investors on August 16th. Having read the document (twice) my outsider’s assessment is that there appears to be a bit of a lack of coherent focus.
Qantas services to London Heathrow will be dropped to two daily flights via Singapore. Existing services via Hong Kong and Bangkok will terminate in those cities. Passengers will transfer onto flights operated by British Airways. Not too long ago there was talk of Heathrow becoming an all A380 station for Qantas. The newly released document now states Heathrow will be served by “A380 aircraft or equivalent product.” This, I presume, is in reference to the 9 747s Qantas plan to retrofit to “A380” standard.
Sydney – Buenos Aires flights will be dropped in favour of a Sydney – Santiago service. This makes sense. Santiago is alliance partner, LAN’s biggest hub. This switch makes numerous places in South America accessible with a single stop. Add to this the fact that Aerolineas Argentinas is destined to join Skyteam, SYD-EZE makes less sense than ever.
Delivery deferral of 6 A380s by 5 years (FY’14 to FY’19) This decision was likely based on a simple total cost of operation calculation. There is no doubt that the A380 is the sexier offering but the fact that the 747s are paid off make them more viable at this time.
Qantas will focus on Premium International Travel ex-Australia. Given the lower cost of labour and (perceived?) better service on the numerous Asian carriers that service Australia, is this wise? Qantas is no slouch but topping titans like Singapore Airlines is not going to be easy. I fear that this may be too big a hill for Qantas to climb.
The document also indicates that Qantas will set up a “new premium, full-service airline based in Asia under a new brand.” At the time of writing, no “base” has been chosen. I would imagine any base would have to be chosen with some synergies with Qantas and/or its OneWorld partners in mind. This would suggest that it would have to be Hong Kong, Bangkok, Kuala Lumpur or Singapore. Given the scale back in both Hong Kong and Bangkok, neither of those appears to be the frontrunner. Singapore is already quite a ferocious market and I have a hard time believing Qantas has the stomach for it. This leaves Kuala Lumpur. Geographically speaking it’s well placed to serve most of Asia but given that it’s in a region with an appetite for LCC flying isn’t this too a bloodbath waiting to happen?
In addition, Qantas plans to launch Jetstar Japan in 2012. Japan is not an easy marketplace at the best of times but the current economic climate and the fact that the key partner in this venture is JAL – a carrier with deep problems of its own – really make me wonder if this is ever going to be anything more than a pipe dream.
Good luck Qantas, you’re going to need it!