Is QFi overextending itself?

[Melburnian1]

It may be difficult financially for medium sized airlines such as the international division of Qantas to justify aircraft sitting idle "just in case"unless fully depreciated, but given frequent cancellations and numerous delays, the question has to be asked "is QFi overextending itself?"

QFi seems to like operating flights three days a week to destinations such as ICN and SCL. Yes, they're covered, but thinly. Granted, JQi may be a presence on some of these routes, but most patrons of QFi don't regard JQi as possessing an equivalent offering.

It looks great on the map for QFi to be able to boast it flies to all inhabited continents, but the downside of thrice weekly operation is that when something goes awry, there won't be a QFi flight on that route timetabled for the next day. QFi would no doubt claim 'there isn't the demand for a daily operation' but has it heard of 'build it and they (passengers) will come?'

Similarly, the decision to further extend the A388s with a five or four days a week frequency SYD-JNB is not ideal, even though these aircraft are arguably more comfortable than B789s. A retrograde step to abandon a daily or six day a week frequency.

My hypothesis is nothing short of a daily frequency suffices for any regular public transport, including QFi, worldwide.. Re airlines, this gives prospective passengers some confidence there may be fewer delays if flight A on day A doesn't operate (assuming there are spare seats the next day).

QFi is experiencing troubles with its elderly A333s as well as its A388s and much newer B789s. The decision to base major engineering in LAX was good in terms of getting away from Australia's stratospheric labour costs but disastrous for punctuality and reliability, because apparently not all parts are stocked in Sydney, or for that matter, Melbourne or Brisbane, as 'Crikey' recently highlighted.

QFi would be better served dropping a few 'ego' destinations like SCL from its network, and providing greater frequency on a smaller number of routes where demand exists.

If it continues to prioritise vanity over punctuality and reliability, there's nothing surer that it will slowly continue to decline in annual world airline rankings, just as it did this year by dropping out of the 'top 20.'

 

[TheInsider]

Once again you focus purely on QF and its operations and then have absolutely no consideration for any other airline and their operations.
You are comparing a home base, to other airlines who are simply doing a turn-around in the Australian port. Find some stats on other airlines like BA, NZ, UA, LH, SQ, UL, AI etc etc all out of their home bases and then compare.

Just ONE example is this: British Airways axes hundreds of flights from UK airports after major issue

 

[Melburnian1]

Just ONE example is this: British Airways axes hundreds of flights from UK airports after major issue

What BA did adds veracity to my suggestions, rather than detracts from them.

It recognised it had an 'issue' and dealt with it.

By the way, this is the QF thread, so surely it's legitimate to raise problems herein?

 

[am0985]

QFi would be better served dropping a few 'ego' destinations like SCL from its network, and providing greater frequency on a smaller number of routes where demand exists.

SCL isn't an "ego" destination, there's lots of South Americans in Australia, tourist demand in both directions and not many options across the southern Pacific.

QF also partner with LA on the route (even after LA left OW), so there is still capacity if things go awry.

 

[Human]

I'm no fan of Qantas but I don't think you're being fair on them.

For one thing, I can't see Qantas or any responsible airline building a route map and schedule on the principle "build it and they will come"! If you want an example of what happens to airlines that give that strategy a go, cf. Bonza and any number of short-lived Northern Hemisphere airlines. Right now, for example, Beond airlines is following that strategy and apparently seeing loads of about 10% on some routes.

Yes, it's true that its easier for airlines to make profits on routes when their flights are daily -- IF the demand is there. It does NOT follow that for a route to be profitable it MUST be daily, nor does it follow that for every route, the optimum frequency is daily or more.

I'm wondering what evidence you have that SCL is not profitable and/or not the best use of Qantas' fleet?

 

[p--and--t]

SCL isn't an "ego" destination, there's lots of South Americans in Australia, tourist demand in both directions and not many options across the southern Pacific.

QF also partner with LA on the route (even after LA left OW), so there is still capacity if things go awry.

Spot on. Capacity available 7 days a week either metal or codeshare. I come across lots people from SthAmerica on a daily basis as neighbours and at work.

 

[p--and--t]

Surely it's better to start a route 3-5 times a week, create demand and increase frequency when justified than run at a loss impacting the overall balance sheet. Airlines run on the thinnest of margins at the best of times.

Your headline "is QFi over extending itself" - running flights without equivent demand when you are short of frames is exactly that.

 

[ChrisFlyer]

If it continues to prioritise vanity over punctuality and reliability, there's nothing surer that it will slowly continue to decline in annual world airline rankings, just as it did this year by dropping out of the 'top 20.'

To care about those awards would be the ultimate pursuit of vanity, given they are issued by a company known for charging airlines 'consulting fees' in return for those awards and star ratings. You might recall how Lufthansa was crowned a 5* airline at a time where its best long-haul business product didn't even give everybody direct aisle access, or how Etihad announced it was withdrawing its attention from the awards as part of a bigger focus on cost reductions. I'd much prefer an airline to spend money on literally anything else than a vain pursuit at a 'subsidised' top 20 ranking.

 

[SCM]

I agree, especially on the 333s. These aircraft are very old and have frequent problems (and I mean frequent - just look at the flight history for any of those routes). This means it's a real big gamble to fly Qantas on these routes - especially since many people use those SEA ports as repositioning for better and cheaper J to Europe.

I think in the next few years Qantas will really feel the full weight of it's extreme delay to order new aircraft, because those routes will experience more and more disruptions until all 333s are retired at the end of the decade.

 

[downgraded]

Surely it's better to start a route 3-5 times a week, create demand and increase frequency when justified than run at a loss impacting the overall balance sheet. Airlines run on the thinnest of margins at the best of times.

Your headline "is QFi over extending itself" - running flights without equivent demand when you are short of frames is exactly that.

Agree and disagree. You've got to deliver an acceptable service. From a customer perspective I did a year flying to Manila. CX offered 4 departures a day from MEL with even more connections to MNL. QF had one flight from SYD. CX never left me late once. Only tried QF one single trip and it was a debacle. Only flew once a day. 5 hour (creeping) delay. Not a "new" route. Same A330s as CX but 10 years ago. Is it the aircraft or the operator?

 

[BrianQQ]

QFi seems to like operating flights three days a week to destinations such as ICN

Disagree with this notion on ICN. SYD-ICN on QF was chockers full when I went two months prior, and if a service gets cancelled, I don't doubt that QF won't rebook onto either JQ, or CX/QF via HKG.

There is demand for travel at least to ICN and SCL:

• ICN: better fares for direct services from Australia, beats the pending KE monopoly that will happen in terms of premium fare/direct flights (as we don't have Air Premia services).
• SCL: codeshares with LA, lots of Australians travelling to and from South America.

 

[justinbrett]

Armchair CEOs

 

[SCM]

Armchair CEOs

Well what a CEO wants is usually far from what the customer wants.

We, the customers, want reliable services. CEOs want to maximise share price (ie. shareholder value).

Where the problem comes is, Qantas loses out on some amount of business because of it's reliability issues - and this has some intangible impact on it's revenues (long term as well). Unfortunately it's impossible to quantify how much.

 

[Melburnian1]

We, the customers, want reliable services. CEOs want to maximise share price (ie. shareholder value).

Given "reliability" indicates (lack of) cancellations, I'd add 'and punctual' to the mix.

 

[justinbrett]

Well what a CEO wants is usually far from what the customer wants.

We, the customers, want reliable services. CEOs want to maximise share price (ie. shareholder value).

Where the problem comes is, Qantas loses out on some amount of business because of it's reliability issues - and this has some intangible impact on it's revenues (long term as well). Unfortunately it's impossible to quantify how much.

If QF followed the advice of OP and others here it wouldn’t be in business

 

[Melburnian1]

If QF followed the advice of OP and others here it wouldn’t be in business

As the doyen of business journalism in Austrralia, Robert Gottliebsen, recently again pointed out, QF has only c.$10 million in net tangible assets (given it's long sold off most of 'the farm') and basically funds its operations from future ticket sales.

If it works for it, fine, but it isn't a company I'd choose to invest in. A potential house of cards.

 

[justinbrett]

As the doyen of business journalism in Austrralia, Robert Gottliebsen, recently again pointed out, QF has only c.$10 million in net tangible assets (given it's long sold off most of 'the farm') and basically funds its operations from future ticket sales.

If it works for it, fine, but it isn't a company I'd choose to invest in. A potential house of cards.

I mean, it made a profit of 1.25 billion after tax FY23/24, so they're not poor if that's what you're implying. Revenue received in advance is counted as a liability in its accounting, which is completely normal.

But whoever said airlines were good investments?

 

[Supersonic Swinger]

I'm not sure what the definition of 'ego' flights is, but as a regular on SYD-SCL it is always packed to the rafters. To a mere passenger who is not in QF's scheduling or fleet department, abandoning that to add one or two weekly frequencies to somewhere like JNB would make no sense.

 

[Gold Member]

QF... basically funds its operations from future ticket sales.

If it works for it, fine, but it isn't a company I'd choose to invest in. A potential house of cards.

Oh, you mean "Ghost Flights"? What sort of Company claiming to be the "Spirit of Australia" would do that? The second most DISTRUSTED brand in Australia is who.

 

[elanshin]

In some sense we as the customers might feel that QFi is possibly stretching itself a bit thin.

But there is also a very real thing in business on timing. If you miss the timing, you probably will struggle to be able to get it as someone else is likely to fill the void. So in some sense running new routes that has proven successful has merits.

There are many markets that QF would love to get a headstart on right now which is why they're trying to run lower frequency whilst they're waiting for more air frames.

Of course not every route is a success (SYF - PVG for example) and we see the adjustments. I wouldn't be surprised to see an extra a330 increasing frequency to ICN next year as they likely drop one HND flight. Or maybe they convert that to SYD - KIX and move JQ route elsewhere.

The downside of course is that you've stretched yourself thin at a time where getting new aircraft has been painfully slow globally.