Joyce: Qantas perth had to go

[cove]

With our latest bookings for 6 to travel overseas out of Perth Qantas got zero. We talked about flying east to pick up the A380 out of Sydney or Melbourne and realized we don't need to bother. We have choices.
Qantas has failed us for flying internationally out of Perth and I hear they are getting small passenger loads between Sydney and London. Muffing the Singapore connection to London was a big mistake.

 

[chonetsao.co.uk]

Good point, however it's not revenue per passenger but revenue per seat, a subtle difference.

Matt

It is not that! It is profit margin per seats and per ton of cargo carried.

We all know Qantas has no problem in managing revenue. Australians pay one of the highest airfares around the globe. The problem of Qantas is not able to keep up the profit margin, or according to some spectators, the profit margin was magically mismanaged through the subsiding of jetstar.

 

[markis10]

Looks like there is still hope of seasonal Asia services, as in school hols and Christmas where there is little discounting on offer:

Mr Joyce said Qantas had made the decision in February to cut its year-round Perth-Singapore flights because they had become unprofitable. He used an example of a budget carrier, understood to be Singapore Airlines offshoot Scoot, charging only $39 each way between Perth and Singapore as one of the difficulties in competing on that route.

He emphasised Qantas would continue to offer seasonal services on the Perth-Singapore and Perth-Auckland routes. "I recognise that Perth has been affected by the withdrawal of some Qantas international routes that were unprofitable," Mr Joyce said.

Read more: Qantas boss Alan Joyce digs in toes on capacity war with Virgin

 

[Cheatah]

I dont think anybody doubts QF were losing money on this route - the real question is why? [FONT=verdana, arial, helvetica, sans-serif]With the Western Australia feed from QFlink and the potential loyalty of their massive Frequent Flyer base I'm amazed they couldn't make this work.

Advice for QF - improve the product in J and Y so you can compete with SQ. L[/FONT][FONT=verdana, arial, helvetica, sans-serif]everage your FF base and your Jetstar Asia/Bangkok Airways partnerships from Singapore.

Part of the problem is QF are running out of time to invest and develop routes like this - sure they are refurbishing their A330s but they need to cut their costs asap, marketing, promoting and developing routes like this take time which they dont have given the pressures they are under.

Why the refurb of their A330s is taking so long is another question QF should ask themselves. At least the aircraft coming back from JQ should be getting the new seats/interiors.[/FONT]

 

[Paddy55]

I can understand why QF might want to pull PER-SIN. It's a flight which as far as QF is concerned terminates in SIN. The vast majority of people who fly on that flight will live in PER (or WA), so there isn't even a feeder advantage on this end, unlike say SYD, which can have realistic feeders from MEL / BNE / ADL. So QF int was left with an option, keep a flight operating in isolation, where they no longer have direct connections to Europe, or scrap that flight. For all we know, 77/78 has been making a loss for years, but QF knew that the loss was offset by 77/78's role in feeding SIN-LHR services, and thus it kept the flight going as a feeder. But with the termination of SIN-LHR there is no longer a reason to keep 77/78 operating. Of course one could always ask why they didn't start a PER-DXB service in it's place.

Of course I support the calls for AJ to go...

Ah, yes. Well it wasn't that long ago that many from PER connected on to QF1 or QF9... And some at HKG to QF29, in addition to the Asian destinations... But that changed, didn't it?

 

[markis10]

I dont think anybody doubts QF were losing money on this route - the real question is why? With the Western Australia feed from QFlink and the potential loyalty of their massive Frequent Flyer base I'm amazed they couldn't make this work. .

They were undercut by cheaper cost base airlines operating more frequencies at cheaper prices. Love how the SQ prices have changed since QF withdrew, now Perth is excluded from many sales!

 

[harvyk]

I dont think anybody doubts QF were losing money on this route - the real question is why? With the Western Australia feed from QFlink and the potential loyalty of their massive Frequent Flyer base I'm amazed they couldn't make this work.

You need to remember that a sizable proportion of QF's FIFO FF base don't actually live in PER or WA. There are many a person who actually lives over in the eastern states and simply does FIFO out to regional WA, thus they only ever see PER DOM terminal during FIFO.

Other airlines like SQ are flying people from PER, to connect to their vast network ex SIN. To them PER is not an isolated route, since it's comes directly off their hub.

 

[JohnM]

If I were BA I would send a service SIN-PER.

They did run a B747 PER-SIN-LHR in the past and it had QF codeshares. It was a convenient service to LHR from PER.

Why it stopped, I do not know - but maybe profitability?

 

[markis10]

They did run a B747 PER-SIN-LHR in the past and it had QF codeshares. It was a convenient service to LHR from PER.

Why it stopped, I do not know - but maybe profitability?

They found the short segment inefficient, Brisbane lost its services at the same time, June 30, 2000.

The move comes as the airline tries to rationalise its operations, Using the 744 on the five hour Perth Singapore sector is inefficient because the plane is designed for 13 hour sectors.

The West Australian - Jan 31st 2000

 

[harvyk]

They found the short segment inefficient, Brisbane lost its services at the same time, June 30, 2000.


The West Australian - Jan 31st 2000[/COLOR]

But they've run many a short sector with B747's in the past (post 2000), for a while there the B743 (when they had them) was relegated to only doing PER-east coast, with only an occasional run MEL-AKL-LAX.

 

[markis10]

But they've run many a short sector with B747's in the past, for a while there the B743 (when they had them) was relegated to only doing PER-east coast, with only an occasional run MEL-AKL-LAX.

This is what British Airways said, not what Qantas do or did. What happened in the past is to a certain extent irrelevent, different times mean different costs, dont forget BA9 used to do LHR to AKL via India (two stops), Malaysia, Perth and then Mel , they also used to do SYD-MEL.

What JB747 has said about the transcon operations with QF recently would appear to be in sync with what BA said re inefficiency FWIW.

 

[harvyk]

This is what British Airways said

Sorry, you're right. I should have following the links in the quotes to find the original quote...

 

[codash1099]

They were undercut by cheaper cost base airlines operating more frequencies at cheaper prices. Love how the SQ prices have changed since QF withdrew, now Perth is excluded from many sales!

That's equally an argument for cutting all of the QFi services anywhere. Just about ALL of their competitors have lower cost bases. Their problem is that their withdrawal of services is the well known slippery slope. Each withdrawal magnifies their problems.

It has to stop somewhere and I fear that their plans are that it stops with the total demise of QFi.

 

[markis10]

That's equally an argument for cutting all of the QFi services anywhere. Just about ALL of their competitors have lower cost bases. Their problem is that their withdrawal of services is the well known slippery slope. Each withdrawal magnifies their problems.

It has to stop somewhere and I fear that their plans are that it stops with the total demise of QFi.

Thats why they are focused on costs obviously!

 

[harvyk]

That's equally an argument for cutting all of the QFi services anywhere. Just about ALL of their competitors have lower cost bases. Their problem is that their withdrawal of services is the well known slippery slope. Each withdrawal magnifies their problems.

It has to stop somewhere and I fear that their plans are that it stops with the total demise of QFi.

[wild speculation]
I'm still pretty sure that their plans end with QFi offering services from SYD / MEL to LHR / LAX (with a mid point for LHR services, be it DXB or moved back to an Asian port) and that's it. Something they can do with a handful of A380's. AKL, WLG, CHC with remain since that is JC and not QFi.

This will be enough OS value to keep the value in QFF, and since these are all A380 destinations they can keep the A380 as their flagship... All other aircraft will be moved to dom or sold. This is prob half the reason why JQ is has got the B787 "before QF" (since QF are most likely wanting to hand over medium haul int to JQ).

[/wild speculation]

 

[moa999]

Has anyone seen AirAsiaX's recent prices.

Every few weeks, another sale for bookings 2-9 mths out.

PER-KUL $179
MEL-KUL $199
SYD-KUL $199

etc.

Returns are even cheaper.
Premium for $400 more.

--

Reality is a long-weekend away inc 2 nights accomodation at a 5* hotel
is cheaper in KUL then pretty much every other Aussie capital.

And no way can Qantas compete with those prices.

 

[xt_20]

I just booked PER - SIN traveling in early July for under $300 per person one way! It's no wonder they can't make money!
SQ are charging more than double that.

 

[zainman]

Is there any chance once EK commences A380 flights to PER that one of the other 2 flights on 77W could be routed via SIN? Similar to what happens with the DXB-SIN-MEL flight? 5th freedom...

 

[BobbyFlyer]

Just flew PER-SIN on Monday and returned last night. Monday was only half full in Y but last night was only a handful of seats empty in Y. By comparison colleagues flew SQ at same times and found similar story with them, so its not just QF loads. If SQ can make it work why not QF?
There is only a short window of time to see if Emirates or BA takes QF's place. I dont know anyone at work that is going to fly 3K to SIN from PER going forward (certainly not going to take the JQ flight via DPS). So will maintain my WP status for this year, but already working on plans to switch over to *A next year - which means i stop fly QF domestically as well.

 

[harvyk]

Just flew PER-SIN on Monday and returned last night. Monday was only half full in Y but last night was only a handful of seats empty in Y. By comparison colleagues flew SQ at same times and found similar story with them, so its not just QF loads. If SQ can make it work why not QF?
There is only a short window of time to see if Emirates or BA takes QF's place. I dont know anyone at work that is going to fly 3K to SIN from PER going forward (certainly not going to take the JQ flight via DPS). So will maintain my WP status for this year, but already working on plans to switch over to *A next year - which means i stop fly QF domestically as well.

You can't begin to determine the viability of a route based on a single flight by simply counting seats. Airlines have to take a long term view, they know that they will get nearly empty flights at stages which technically make a loss on that flight (even on SYD-MEL, not every flight makes a profit on it's own), and they know that sometimes they will get a full (either pax or freight or both) flight which offsets the loss making flight.

There are other factors at play, for example how many on the SQ flight where joining other SQ services? Given SIN is SQ's hub, they can realistically connect PER with most of the world. Unless you are doing something like PER-BNE via SIN there is limited QF options for connections.

Finally, there are other costs at play. For example with EK, it may just be a rumor, but I've heard there are financial advantages in running SYD-AKL even if almost empty over having a plane sit around in SYD. For all we know, SQ are simply using excess capacity on the SIN-PER route, a route that they can run in a relatively small amount of time.

Finally who says SQ are actually making a profit on the route? (a for real profit, not a moving money between books profit / loss)

Of course without studying the financials of each airline, it's hard to know exactly why they do the things they do.