QFi Flight loads

[SeatBackForward]

In the bus industry they refer to empty buses as "Refrigerated Air Carriers", as an observation - how full are QF International flights? We are being told QFi is not profitable, but are passengar loads reflecting this? Understand that loading and profitability are a closely gaurded secret, however im sure there is a strong correlation!

 

[docjames]

Qantas (edit: for clarity, and Virgin) release flight stats monthly to ASX

http://www.asx.com.au/asxpdf/20120531/pdf/426lg76jjj002w.pdf


Qfi 82% load factor for April 2012 (up from 81% April 2011)

What the stats never tell you is whether revenue per seat end up greater than cost per seats flown.

 

[eastwest101]

Qantas (edit: for clarity, and Virgin) release flight stats monthly to ASX

http://www.asx.com.au/asxpdf/20120531/pdf/426lg76jjj002w.pdf


Qfi 82% load factor for April 2012 (up from 81% April 2011)

What the stats never tell you is whether revenue per seat end up greater than cost per seats flown.

Yep - that is the amazing thing about QFi - the load factors are actually alright, despite the coughpy world economy, old fleet, natural geographic disadvantage, higher fares and presumably higher costs they do have the bums on seats, but supposedly QFi makes huge losses.

 

[freepyjamas]

Yep - that is the amazing thing about QFi - the load factors are actually alright, despite the coughpy world economy, old fleet, natural geographic disadvantage, higher fares and presumably higher costs they do have the bums on seats, but supposedly QFi makes huge losses.

Personally, I think air travel is just too bloody cheap to sustain a profitable business in a high-wage economy.

Take QF's current deal: return to JFK for a bit under $1800.

So discount economy pax are paying around $50 an hour to be transported at incredible speed from Sydney to NYC... being fed, watered and boozed.. with a hundred movies to choose from, many that are still at the cinema. The plane is worth about $300m, the pilots are highly-trained experts, and the levels of safety are amazing.

And for that, all they can charge is $50 an hour. On an hourly rate, I pay more to get my car washed. $35 bucks and it takes them about 20-30 minutes. An hour in a taxi to the airport will cost over double what QF can charge per hour.

Simplistic I know. But it's clear that to have the kind of prices people expect to pay, you either need to operate in a low cost economy, receive taxpayer funding, or you resign yourself to running a business on very slim margins, and most likely at a loss.

Personally, I believe that QFd and QFi should be considered an important part of Australia's tourism strategy, and supported accordingly. As a business expected to survive on it's own merits, I'm not surprised its share price is tanking.

 

[nlagalle]

Yep - that is the amazing thing about QFi - the load factors are actually alright, despite the coughpy world economy, old fleet, natural geographic disadvantage, higher fares and presumably higher costs they do have the bums on seats, but supposedly QFi makes huge losses.

If you have outdated work practices or rigid employees conditions that will add to your costs too. I see outdated practices in my industry having to change to avoid painting red on the balance sheet..

 

[SeatBackForward]

Personally, I think air travel is just too bloody cheap to sustain a profitable business in a high-wage economy.

Take QF's current deal: return to JFK for a bit under $1800.

So discount economy pax are paying around $50 an hour to be transported at incredible speed from Sydney to NYC... being fed, watered and boozed.. with a hundred movies to choose from, many that are still at the cinema. The plane is worth about $300m, the pilots are highly-trained experts, and the levels of safety are amazing.

And for that, all they can charge is $50 an hour. On an hourly rate, I pay more to get my car washed. $35 bucks and it takes them about 20-30 minutes. An hour in a taxi to the airport will cost over double what QF can charge per hour.

Simplistic I know. But it's clear that to have the kind of prices people expect to pay, you either need to operate in a low cost economy, receive taxpayer funding, or you resign yourself to running a business on very slim margins, and most likely at a loss.

Personally, I believe that QFd and QFi should be considered an important part of Australia's tourism strategy, and supported accordingly. As a business expected to survive on it's own merits, I'm not surprised its share price is tanking.

This is a fantastic post and I think rings very true. I heard an interesting thing a while ago. when air travel first started, it was the equivalent to two years income to travel between Australia and Europe, the same today can be had for the equivalent of two weeks..that really surmises how the "cost of air travel" has reduced.

 

[N860CR]

This is one of the reasons that there are reservations about the actual losses being sustained by Intl (if any).

While Qantas do have the occasional sale, they are generally the most expensive carrier on most routes that they fly and go out with very high load factors. I believe that management are running a lot of the "incidental" costs through the International business that are inflating the loss figures they are reporting. A lot of very valid questions have been asked of Qantas' based on who pays for what and they've refused to answer them. QFi own a number of the JQ 330's and are leasing them across to Jetstar, but nobody knows how much Jetstar pay. When Jetstar passengers use the First/Business lounges, QFi pays for that...

There are a lot of unknowns (that very few of us will ever get the details of), however it is very unlikely that QFi is losing anywhere near as much money as is being reported. When you factor in the connections, cross-marketing etc that Intl provides to Domestic, then who knows if there's really a loss at all.

 

[medhead]

Personally, I think air travel is just too bloody cheap to sustain a profitable business in a high-wage economy.

Take QF's current deal: return to JFK for a bit under $1800.

However, they don't sell every seat on the aircraft at that price. So while the analysis is interesting it doesn't really tell us anything. In any case $50 times by 200 seats is $10,000 an hour.


Sent from the Throne

 

[cmon0005]

If you have outdated work practices or rigid employees conditions that will add to your costs too. I see outdated practices in my industry having to change to avoid painting red on the balance sheet..

Yep agree with you on this.
As an example in the old days of PMG then Telecom Australia there were more than 80,000 employees (now they have around 30k staff), because they had people in the exchanges literally reading the amount of minutes of calls each phone line had made every month for the bill, off counters on the exchange equipment.

Imagine how expensive calls would be today if unions forced Telecom to keep all the staff and stick to the old work practices rather then adapt to the new technology. This is what is happening to Qantas..

ie. Maintenance of modern aircraft A380!

 

[eastwest101]

...While Qantas do have the occasional sale, they are generally the most expensive carrier on most routes that they fly and go out with very high load factors. I believe that management are running a lot of the "incidental" costs through the International business that are inflating the loss figures they are reporting. A lot of very valid questions have been asked of Qantas' based on who pays for what and they've refused to answer them. QFi own a number of the JQ 330's and are leasing them across to Jetstar, but nobody knows how much Jetstar pay. When Jetstar passengers use the First/Business lounges, QFi pays for that...

It seems there are a lot of people whom wonder about those things as well. That is why I was dissapointed that when the management separation happened with QFi and QFd being reported separately I really wanted JQi and JQd also broken out so shareholders could really see what was going on. Having said that - transfer pricing between different divisions of a large company is legal and very difficult to prove, and I suspect, very very common. It has unhinged a lot of good companies that no longer exist because people were fiddling the books and hiding the performances of different divisions.

Without any information from management, or spin and obsfucation from management - all shareholders can do is speculate about what is actually going on in the business, and put their trust in management. In the Qantas Group there is definately major trust issues between the shareholders and management.

 

[Moopere]

Personally, I think air travel is just too bloody cheap to sustain a profitable business in a high-wage economy.

I agree with the premise that air flight today is cheap, cheaper than its probably ever been. We've been paying essentially the same outright cost for 10-15 years at least, yet inflation of every type is in there doing its dirty work ... so how can the airfare not have substantially raised during this period??

As for operating in a high wage economy. I've got a view on this. I don't know that operational wages in first world countries are an insurmountable problem, I think you just have to make a business plan around them. For example, raise the quality of product bar, right up, give you guests, who are pretty much all paying a premium to do business with you, a _reason_ to enjoy and rejoice in their choice to fly with you.

The name of the game is surely profitability ... not outright size. I understand that a certain critical mass needs to be maintained, but ultimately, if you shed some LCC customers and shrink as a result, your profitability might actually go up. Certainly, in competition with regional LCC's QF/JQ can't possibly compete in the LCC space on any sort of level playing field ... unless running from someplace other than Australia.

On an hourly rate, I pay more to get my car washed. $35 bucks and it takes them about 20-30 minutes. An hour in a taxi to the airport will cost over double what QF can charge per hour.

I pondered the same thing last weekend. 1 hr PER, 2x 0.5hr SYD, 1 hr PER = 3 hours in a taxi cost me about $300 which was only a little bit less than my cash contribution to a business class flight PER-SYD return......

 

[amaroo]

$600+ Y fares for SYD-BNE-SYD in the 90's couldn't save AN.

Airlines are no different to any other person/business/Government - CODB, is where it counts!

 

[sutho58]

based on a response from jb747,, an A380 flying mel-lax would use approx 160k worth of fuel, if we say that the load factor is 80%, that equates to $380 per passenger in fuel.. no wonder qfi isn't profitable as you still need to factor in wages, maintenance and interest payments on aircraft..
So, i'm sure that we would all agree that flying today is very cheap imo.

 

[ColinP]

based on a response from jb747,, an A380 flying mel-lax would use approx 160k worth of fuel, if we say that the load factor is 80%, that equates to $380 per passenger in fuel.. no wonder qfi isn't profitable as you still need to factor in wages, maintenance and interest payments on aircraft..
So, i'm sure that we would all agree that flying today is very cheap imo.

It's actually even worse than that. jb747 said an A380 would use about 160 tonnes. At a specific gravity of 0.8 that equates to 200,000 litres. I don't know how much QF pay for fuel but I'm guessing that's at least $200,000 worth.

 

[TheInsider]

It's actually even worse than that. jb747 said an A380 would use about 160 tonnes. At a specific gravity of 0.8 that equates to 200,000 litres. I don't know how much QF pay for fuel but I'm guessing that's at least $200,000 worth.

AVGAS at a little training airport (4 years ago), was around $1.80 a litre.

 

[Aussie_flyer]

Jet Fuel Price Monitor

USD966 a tonne this week

 

[Sprucegoose]

Qantas staff should buy out QFi, overnight it would become 'profitable'.

 

[JQ29]

Qantas staff should buy out QFi, overnight it would become 'profitable'.

Are u suggesting a QF staff buyout would result in change in work practices given that they now own the company?
Practices requested by the company are surprisingly turned on.. and lower cost options utlised?
Current demarkacations, foreign ownership laws, QF staff, their benefits are OUTDATED. Something must change.. the cross subsidiation from their domestic business and shielded through limited competition. This is all changing.. govt allowing etihad,dnata, emirates, sq into playing field.. Is the RED Kangaroo on the same path as Ansett? Matter of time.. Jack Bower the clock is ticking!

 

[eastwest101]

based on a response from jb747,, an A380 flying mel-lax would use approx 160k worth of fuel, if we say that the load factor is 80%, that equates to $380 per passenger in fuel.. no wonder qfi isn't profitable as you still need to factor in wages, maintenance and interest payments on aircraft..
So, i'm sure that we would all agree that flying today is very cheap imo.

True but don't forget the revenue from cargo may help defray that $380 per PAX figure. I don't know by how much - maybe only 20-25% maybe?

 

[markis10]

True but don't forget the revenue from cargo may help defray that $380 per PAX figure. I don't know by how much - maybe only 20-25% maybe?

Net freight revenue is 6% of total revenue while passenger revenue is 81%, the Qantas fact book has some good data and its interesting to look at the historical data framed by the dates of when the current management took over, especially with QFi. Yields are up over that time, pity in such few years the capacity in terms of ASKs has dropped along with passenger numbers. Fuel is a significant cost, but so is people and airport infrastructure, going to one whale flight a day versus more frequent smaller operations reduces consumer appeal by offering less choice while also increasing risk when it comes to interuptions, given the fleet mix currently on offer I suppose QF dont have much of a choice!

http://www.qantas.com.au/infodetail/about/investors/qantasDataBook2011.pdf (page 46).