Home' Australian Aviation Magazine : April 2011 Contents APRIL 2011 AUSTRALIAN AVIATION
BACK TO THE WALL?
As 2011 opened Qantas had its back to
the wall, facing problems on virtually every
front. ose ranged from an ageing eet,
A380 issues, ongoing late aircraft deliveries,
greater premium domestic competition to
start in May, and more potent international
alliances and union unrest.
But working for the airline is a deep root-
ed love and pride in the name Qantas, with
most surveys showing that despite all the
media attention over seemingly countless
incidents Australians by and large trust the
airline. And overseas those safety concerns
haven't registered at all.
In a poll taken just before the A380 in-
cident last November, pollster UMR found
that 80 per cent believed that the airline was
the height of the engineers' strike.
However, about half of those sur veyed be-
lieve Qantas safety standards have deterio-
rated over the past few years, although that
was down from a 2008 high of 63 per cent.
By February all the airline's A380s, with
the exception of the crippled VH-OQA,
were back in service and new deliveries on
track with passengers lling seats.
And also working for the airline is its
stranglehold on domestic business class, not
to mention economy for those who have had
enough of LCCs, its world leading lounges,
and its frequent yer program which now
has nearly eight million members, an
extraordinary number for a country with the
population size of Australia.
CBA Equities's Matt Crowe, one of
the industry's leading analysts, agrees. "It
[domestic business class] is one of Qantas's
greatest strengths. Its position with corpo-
rate Australia is extremely strong -- a near
monopoly," Crowe told Australian Aviation.
And Crowe is bullish on the Qantas FF
program. "I don't think there is another car-
rier in the world that dominates its market
like Qantas does with the frequent yer
program. Virtually every adult who ies
is a Qantas frequent yer member. ey
are pro tably selling seats that would have
been very hard to sell."
To head o the looming competition
from Virgin Blue's makeover into a born
again premium carrier, Qantas has mar-
shalled heavy metal -- as it usually does
-- for the premium transcontinental routes
In February Qantas announced it will
deploy internationally con gured 747s and
A330s with lie- at beds on the transconti-
nental routes from Sydney and Melbourne,
to match Virgin's two new A330s to be
launched in May.
Joyce told Australian Aviation that the
changes were a direct response to the grow-
ing demand for travel to Perth, particularly
from business passengers. "Increasing
the premium service we provide business
customers ying from east to west will help
further cement our position as the 'Best for
Business' airline," said Joyce.
Joyce added that on long haul routes,
where possible the airline would deploy
aircraft -- 747s, A330s and 737s -- with seat
back videos throughout, rather than 767s
which would be used mainly on east coast
short haul routes.
At the same time Joyce said that Qantas
will from May add more ser vices to Perth,
lifting capacity by 15 per cent, and 90 per
cent of services will be with widebodies.
Domestically there is no doubt that
Qantas o ers the world's best airline
ser vice, with its lowest fares often cheaper
than LCCs once the seemingly endless and
irritating add-ons are factored in.
And it is hard to see Virgin Blue, even
with everything going its way, putting a
dent into Qantas's share of the premium
market in the short to medium term. How-
ever, it may well dent Qantas's premium
yield as it discounts to both garner market
share and to lure passengers to "try us now,
we're di erent."
Virgin has a number of delivery issues
with its premium product related to the
A330 and 737 with seats, galleys and IFE,
some of which are legacy decisions that
will mean the rollout of the new business
class will be fragmented in many markets.
us it may be well into 2012 before Virgin
can really gain traction on Qantas with a
And in Perth Virgin will not have ac-
cess to its new terminal until early 2013,
although its current terminal is being
However, on the international front the
forces arrayed against Qantas keep gaining
momentum. Whereas once it enjoyed a
virtual monopoly on the Paci c with up to
30 per cent of its pro t coming from that
route according to some analysts, that has
well and truly changed.
Challenges come from "born again" Air
New Zealand, V Australia and Delta Air
Lines, with the latter two likely to have
their alliance approved by US regulators.
While Air NZ doesn't ser ve Sydney-US
any longer, it is taking some marketshare
from Melbourne and Adelaide with
straight through connections to Los Ange-
les and San Francisco via Auckland.
And while business has started travel-
ling again with air fares rising by up to six
TWO SIDES OF THE SAME COIN Without Jetstar Qantas would have really have been in the red. (Seth Jaworski)
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