Do people REALLY want to save Qantas or is it just talk?

[ajw373]

I have listened to so much cough from Tony Abbott about Qantas being a national icon, how it needs to be saved from the big bad boys over seas and how Australians love Qantas, yet now he is off to the UK............. but not on Qantas.....

Good to see the true loyalty mate.. ..... What an example to set................

But it begs the question. If the Govt, or opposition, or Unions or other interested parties are hell bent on "Saving" Qantas, should they not first "Support" Qantas by actually "Flying" Qantas.....

Indeed they should, or should I clarify and say they should support ALL Australian airlines by using them over foreign ones, same too with federal public servants, who currently on a cheapest fare basis.

 

[ajw373]

But does this whole dillema not all come back to QF's cost base? People are adamant that they want QF in the Australian market, but then there are those who are also adamant that the union are in the right and QF should cough up.... where is the balance...
...

Press ahead with its off shoring activities and then offer a better hard/soft product as a result.... This will ultimately make the airline more profitable therby appeasing the shareholders....
...

Yep it is about cost base AND also being able to offer destinations to people, which is where Qantas's new offshore airline comes into things. Qantas is currently stuffed when it comes to SE Asian destinations. The demand just isn't there for wide body flights from the east of Australia to many destinations in Asia and narrow bodies which they may be able to fill if they can somehow combine people from all cities in Aus just don't quite have the legs.

The answer of course is an alliance with an airline in Asia, which Qantas has (Cathay), but unfortunatly that airline is at one extreame end of SE Asia, so is good for connections to China, with the other major airlines smack in the middle already tied up with star. This of course means anyone flying to a destination in SE Asia other than Jakarta, Singapore or Bangkok and wants to use Qantas must also fly on another airline and alliance, so of course they may as well fly that airline all the way from Oz. Hence why we have Thai and SQ in particular with so many flights out of oz and from more cities than Qantas. Indeed right now I am in Laos on a multicity trip and have already flown SQ and TG to get here simply because there is no way I could fly to where I have with Qantas or any other OneWorld airline.

So of course enter Malyasia to OneWorld thus offering a heap of new destinations to Qantas (including the two cities I started and will end my trip with) and also with Qantas wanting to set-up shop in Asia. Where the idea that Qantas want's to move its operation offshore from has me really buggered. Everything I have seen points to wanting to EXPAND offshore, not move offshore, and this includes maintenance where Qantas has shown it's commitment to continued maintenance in Aus, with some done offshore.

Qantas also has the same issue in Europe. Their major partner is at the end of the road, meaning back tracking to get to anywhere other than London or Frankfurt. In this case Qantas is under even more pressure because it has both the Asian and ME carriers to compete with, both who thanks to geography can offer one stop services to Europe. No wonder they, like most European airlines have decided to give city to city flying from Europe to Australia a miss or offer just a basic service such as what Qantas and BA are doing with their SYD/MEL to LHR services.

 

[ajw373]

QF is still rolling out pictures of golden haired surf lifesaving kids to a population that isn't predominantly Caucasian anymore and has moved on in terms of values. They seem like the fuddy duddy airline because just like my grandmother they got stuck in their heyday and dressed like that forever more while the world moved on.

Not sure what adds your looking at. Most I have seen have people of all walks of life in them, including people of aboriginal decent, Asian etc. In fact could be anyone you see walking down the street in oz. Internationaly their crew is also pretty multinational too.

 

[ajw373]

Nobody denies that. What people are disputing is that the 25% extra is due soley to employee wage costs, which is what present airline management would have us believe. They will not automatically have a 25% lower cost base by setting up a new base somewhere else. A lot of those costs have nothing to do with what they pay pilots and baggage handlers, but may have a lot to do with running a much older, and less efficient fleet than their competitors.

Suggest you read the annual reports of Qantas, Singapore and Emirates for starters. In particular have a look at staffing costs which is listed for all 3 companues. When you do you will see that staff cost is the MAJOR point of difference between these 3 airlines in particular. I posted the figures a while back, but if I recall staff was 1/3rd of Qantas's total cost, along with fuel, whereas Emirates and SQ the cost of staff was about 1/6th of total costs.

Unless of course you are a conspiracy theorist, like many around here who thinks that Qantas is cooking the books to make things look worse than what they really are.

 

[harvyk]

Yep it is about cost base AND also being able to offer destinations to people, which is where Qantas's new offshore airline comes into things. Qantas is currently stuffed when it comes to SE Asian destinations. The demand just isn't there for wide body flights from the east of Australia to many destinations in Asia and narrow bodies which they may be able to fill if they can somehow combine people from all cities in Aus just don't quite have the legs.

The thing is you can't be everything to everyone. Yes there are lots of different locations within SE Asia with direct widebody flights to AU. But in each case only AU airlines attempt to fly from multiple AU cities to multiple SE Asia cities. Other airlines will typically take you back to their home base and then transfer you onto another flight.

For example yes you can fly from SYD to HKG with SQ, but you'll stop off in SIN doing it. You can not get direct SYD to HKG flights on SQ, and whilst there is a market for that route direct, SQ doesn't try and fill it with a direct service. However CX provides a direct SYD to HKG service, but if you wanted to fly SYD-SIN CX would send you SYD-HKG-SIN (or place you onto a QF flight for a direct service).

The whole reason why airline alliances exist is because one airline can not be everything to everyone. I think QF have almost forgotten that little detail.

 

[ajw373]

The thing is you can't be everything to everyone. Yes there are lots of different locations within SE Asia with direct widebody flights to AU. But in each case only AU airlines attempt to fly from multiple AU cities to multiple SE Asia cities. Other airlines will typically take you back to their home base and then transfer you onto another flight.

For example yes you can fly from SYD to HKG with SQ, but you'll stop off in SIN doing it. You can not get direct SYD to HKG flights on SQ, and whilst there is a market for that route direct, SQ doesn't try and fill it with a direct service. However CX provides a direct SYD to HKG service, but if you wanted to fly SYD-SIN CX would send you SYD-HKG-SIN (or place you onto a QF flight for a direct service).

The whole reason why airline alliances exist is because one airline can not be everything to everyone. I think QF have almost forgotten that little detail.

Sorry, whilst what your saying is 100% true I don't quite get your point.

Also don't think that Qantas has forgotten the importance of alliances either, hence why they are sponsoring MH into OneWorld and also plan to set-up their own airline to fill other voids in where they cannot get access to due to the simple fact that the Star allaince through Thai and Singapore more or less have SE Asia tied up for pax out of Australia.

 

[ajw373]

PS forgot to tie my comments above back into the topic at hand. To save Qantas we need to fly on Qantas, to fly on Qantas they need to fly or have access through partners to more destinations. It is the latter which is why many end up choosing airlines other than Qantas. The days of us travelling to big 'ticket' locations like London, Singapore etc are long gone. Global business and tourism now demands access to much smaller destinations and that can only be acheived by an airline like Qantas through alliances or filling the void themselves, which what their current exapnsion program is all about.

 

[simongr]

There have been a lot of posts here complaining about having to use other carriers so alliances don't work for a lot of people...

 

[drron]

Unfortunately the airline business is a difficult one to make a profit.I read a quote from Warren Buffet where he suggested if a capitalist had been present at the Wright's first flight he would have done business a great service by shooting them down.
Qf isn't the only airline in a bind-
Earnings tumble as airlines struggle
SIAs latest profit down 62%,EK by 76%.
Yet some prosper-
Ryanair raises full-year profit forecast - FT.com

Ryanair has raised its full-year net profit guidance by 10 per cent on the back of stronger-than-expected growth in unit revenues in the first half and capacity cuts in the second.
Revenues per passenger at the low-cost carrier increased by 11 per cent in the six months to September 30. These were pushed up by rising average fares – which include baggage fees – helped by some longer routes.
​

So it seems like the airline we love to hate is showing everyone the way.
Yes I dont want to see QF go but if it is to remain costs must come down.Simple.

Now just as an aside and not really my opinion but there is a lot being said here about AJs record.I realised that his record with full service airlines really isn't that good-
Aer Lingus-now an LCC.
Ansett-bankrupt and gone.
QF-?

 

[ajw373]

True they don't always work, so what do you suggest Qantas does? Just give up and leave it all to SQ, Thai, Emirates etc or do something about getting more destinations and giving people a reason to leave Aus on Qantas metal.

 

[elbarto]

Yep it is about cost base AND also being able to offer destinations to people, which is where Qantas's new offshore airline comes into things. Qantas is currently stuffed when it comes to SE Asian destinations. The demand just isn't there for wide body flights from the east of Australia to many destinations in Asia and narrow bodies which they may be able to fill if they can somehow combine people from all cities in Aus just don't quite have the legs.

The answer of course is an alliance with an airline in Asia, which Qantas has (Cathay), but unfortunatly that airline is at one extreame end of SE Asia, so is good for connections to China, with the other major airlines smack in the middle already tied up with star. This of course means anyone flying to a destination in SE Asia other than Jakarta, Singapore or Bangkok and wants to use Qantas must also fly on another airline and alliance, so of course they may as well fly that airline all the way from Oz. Hence why we have Thai and SQ in particular with so many flights out of oz and from more cities than Qantas. Indeed right now I am in Laos on a multicity trip and have already flown SQ and TG to get here simply because there is no way I could fly to where I have with Qantas or any other OneWorld airline.

So of course enter Malyasia to OneWorld thus offering a heap of new destinations to Qantas (including the two cities I started and will end my trip with) and also with Qantas wanting to set-up shop in Asia. Where the idea that Qantas want's to move its operation offshore from has me really buggered. Everything I have seen points to wanting to EXPAND offshore, not move offshore, and this includes maintenance where Qantas has shown it's commitment to continued maintenance in Aus, with some done offshore.

Qantas also has the same issue in Europe. Their major partner is at the end of the road, meaning back tracking to get to anywhere other than London or Frankfurt. In this case Qantas is under even more pressure because it has both the Asian and ME carriers to compete with, both who thanks to geography can offer one stop services to Europe. No wonder they, like most European airlines have decided to give city to city flying from Europe to Australia a miss or offer just a basic service such as what Qantas and BA are doing with their SYD/MEL to LHR services.

Offshore expansion is really the only option for Qantas. They're never going to get the cost base as low here as their Asian and Middle Eastern competitors have theirs, so creating subsidiaries overseas is their best bet. Using a single, identifiable brand and consistent product has to be a better strategy then this RedQ cough they're looking at.

And if Qatar ever go ahead with their IPO, QF should be looking to get on the register with a big stake.

 

[medhead]

Suggest you read the annual reports of Qantas, Singapore and Emirates for starters. In particular have a look at staffing costs which is listed for all 3 companues. When you do you will see that staff cost is the MAJOR point of difference between these 3 airlines in particular. I posted the figures a while back, but if I recall staff was 1/3rd of Qantas's total cost, along with fuel, whereas Emirates and SQ the cost of staff was about 1/6th of total costs.

Unless of course you are a conspiracy theorist, like many around here who thinks that Qantas is cooking the books to make things look worse than what they really are.

The problem with those published staffing costs is they are for the entire airline. In the case of qantas it is only QFi that is being singled out as underperforming. We have no way of knowing how much of that 1/3 is attributed to QFi vs QFd or JQ or the other bits like QFF. So it is not really a great indicator of what is happening with the bit that supposedly needs saving.

Add to that the unions under the pump due to salary are related to both QFi and QFd. Yet QFd made the biggest contribution to profit of the airline operations. Then we can also consider JQ that must have comparable staff costs to the evil overseas competitors. If the JQ staff costs are so favourable why don't they make a much bigger contribution to profit? I'm not conspiring on here, just saying that the total staff bill doesn't really tell us anything.

 

[ajw373]

The problem with those published staffing costs is they are for the entire airline. In the case of qantas it is only QFi that is being singled out as underperforming. We have no way of knowing how much of that 1/3 is attributed to QFi vs QFd or JQ or the other bits like QFF. So it is not really a great indicator of what is happening with the bit that supposedly needs saving.

Add to that the unions under the pump due to salary are related to both QFi and QFd. Yet QFd made the biggest contribution to profit of the airline operations. Then we can also consider JQ that must have comparable staff costs to the evil overseas competitors. If the JQ staff costs are so favourable why don't they make a much bigger contribution to profit? I'm not conspiring on here, just saying that the total staff bill doesn't really tell us anything.

I would say JQ didn't contribute a bigger proffit in $ terms because it's earnings are less due to it being an LCC. The only true comparision would be to see how much they returned to the company as a % of their costs.

In relation to Qantas staff costs, quite clearly costs at QFd are not quite as important simply because their costs are being covered by Australian income, generally paid by Australians with little competition especially at the pointy end where the money is more easily made.

So if it costs more then there is more scope to charge more and hence more scope to recover the costs. Internationally though when your competing on a global level you cannot increase what you charge your customers to pay for higher costs such as staff when the competitors are charging a lower price due to their lower cost base.

Having said that with Virgin moving into full service then the fat that Qantas uses to pay for it's higher cost Australian staff, in this case relative to Virgin's cost will errode, so pressure will come to mount on reducing costs at QFd also.

 

[medhead]

I would say JQ didn't contribute a bigger proffit in $ terms because it's earnings are less due to it being an LCC. The only true comparision would be to see how much they returned to the company as a % of their costs.

indeed. I think I was just saying that the total staff cost isn't going to provide a real picture. It could be that QFF and head office are the biggest users of staff. (saying that after experience working in a government where the premier's department expanded by more than the savings that the Health department were forced to achieve)

On JQ, my recollection of recent results was that their revenue is a lot lower than QFd, so on that basis profit was pretty good even if the absolute number wasn't that big. However, I also recall that profit growth was better from QFd percentage wise. Anyway, the main thought from me is that isn't as simple as a single number, which is what AJ and the unions are trying to have us believe. (in quoting their respective single numbers)

 

[JohnK]

True they don't always work, so what do you suggest Qantas does? Just give up and leave it all to SQ, Thai, Emirates etc or do something about getting more destinations and giving people a reason to leave Aus on Qantas metal.

Giving people a reason to leave Australia on Qantas metal is a good thing.

Expecting those same people to connect to a LCC utilising single aisle A320's or 737's aircraft for trips of 2:00 hours-5:00 hours duration is not such a good thing.

I would be happy if Qantas flew into SIN/HKG/BKK early afternoon from East Coast Australia to allow time for same day connections and I would gladly fly Qantas to Asia and my choice of carrier for the intra-Asia connections.

 

[The Rok]

Giving people a reason to leave Australia on Qantas metal is a good thing.

Expecting those same people to connect to a LCC utilising single aisle A320's or 737's aircraft for trips of 2:00 hours-5:00 hours duration is not such a good thing.

I would be happy if Qantas flew into SIN/HKG/BKK early afternoon from East Coast Australia to allow time for same day connections and I would gladly fly Qantas to Asia and my choice of carrier for the intra-Asia connections.

JohnK, I respect that this might be your opinion, and indeed the opinion of many frequent flyer on this forum, but clearly that is not the sentiment of the market. If the market dictates the need for a medium haul LCC then why should QF not be the one to do it.

At least it will mean profits coming back to AU.

 

[medhead]

JohnK, I respect that this might be your opinion, and indeed the opinion of many frequent flyer on this forum, but clearly that is not the sentiment of the market. If the market dictates the need for a medium haul LCC then why should QF not be the one to do it.

At least it will mean profits coming back to AU.

One problem with that is that qantas itself ignores the existing LCC jetstar when telling us 82% of people fly with an airline other than Qantas. There is no recognition of the 9% flying on jetstar, so clearly qantas will not see it as profits coming back to AU.


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

 

[harvyk]

Sorry, whilst what your saying is 100% true I don't quite get your point.

Yeah I realised after I posted it my point probably wasn't made overly clearly. What I was saying was most Asian airlines which operated Asia services to AU fly from AU to their home port only. The reason we have SYD - Multiple Asian destinations is because multiple airlines operate direct flights to their respective home cities, no one airline tries to do it all.

QF however appears to be trying to do it all by setting up RedQ. What this will most likely do is cut QFi's routes down to a single strategically placed Asian city. What we will no doubt one day see is QFi flying only a couple of routes (more to say “see we’re still flying”) and subsidiaries like Jet Connect \ Red Q and JQ doing all the flying which QFi used to do.

 

[ajw373]

Giving people a reason to leave Australia on Qantas metal is a good thing.

Expecting those same people to connect to a LCC utilising single aisle A320's or 737's aircraft for trips of 2:00 hours-5:00 hours duration is not such a good thing.

Hence why Qantas is teaming up with MAS, which is a premium carrier and why they also want to create their own premium carrier in Asia.

 

[JohnK]

Hence why Qantas is teaming up with MAS, which is a premium carrier and why they also want to create their own premium carrier in Asia.

I see no issue with Qantas teaming up with MAS in Asia and even Europe.

I have an extremely hard time trying to associate the word "premium carrier" with a carrier flying A320's and 737's.