QF Sydney-Shanghai unprofitable?

[Spongbob]

There is a report in The Australian suggesting a Qantas submission to the ACCC concedes the SYD-PVG service is not generating the return on investment:

"Mr Joyce told The Australian the airline was not returning its cost of capital on the assets it employed to sustain its Sydney-Shanghai service amid stiff pricing competition from other Chinese hub carriers, as well as increasing access to Chinese destinations by hubs such as Singapore, Hong Kong and Kuala Lumpur."

 

[nonpop]

Subscriber only article

 

[samh004]

From what was summarised on Facebook:

1. Not returning its cost of capital
2. Air China wrote a submission against the partnership
3. ACCC chairman Rod Sims seems to be giving out business advice and suggesting that instead of flying through the 2-ports in Shanghai, they partner with China Southern (who I get the feeling are much bigger and would surely be an even bigger anti-competition issue)

 

[yohy?!]

cant be a surprise really - the inbound tourism pax from China would be very price sensitive with a lot of choices for 1-stop connections to compete with which would keep yields low

 

[Isochronous]

Unsurprising given that for such a long time tickets couldn't even be purchased from the Qantas China website without visiting the Shanghai Qantas office in person.

They need to do some actual marketing in China. Finnair make a lot of money flying to China so it is possible.

 

[A330]

They need to do some actual marketing in China. Finnair make a lot of money flying to China so it is possible.

Are you sure about that? In 2014 Finnair lost €36million.

 

[MEL_Traveller]

Unsurprising given that for such a long time tickets couldn't even be purchased from the Qantas China website without visiting the Shanghai Qantas office in person.

Exactly this! Why bother going into an office when you can book another airline without needing to?

I'm also not sure how geared to the Chinese market Qantas was... I took the flight a couple of times but don't remember seeing too many Chinese speaking cabin crew (with resultant communications issues). They had at least one native speaker who did the announcements... but certainly not the majority of crew.

I think also the A330-300s were weight restricted? A good chunk of seats were supposedly not for sale. The A332s don't have the same issue.

 

[Christoo]

I travel to China on average about once a month and never with Qantas.
I am WP and would love to fly on QF metal but the scheduling and pricing is prohibitive.
I need to fly overnight and arrive in the morning ready for work so middle of the afternoon flights are useless.
Currently I fly either CX PE or J or else I fly on the very reasonably priced CZ J QF codeshare. Both are decent services that get me there at the right time.
If QF had a decent schedule they would get me into Shanghai and Hong Kong or Guangzhou by 8am they would have all of my business.

 

[dajop]

Also the brand probably isn't exactly ideal to says/sell in China, where Q has a very different pronunciation to Kw.

 

[trippin_the_rift]

In China almost all ticket sales are done through physical travel agents - and agents are price driven always pushing their customers towards who pays the highest commission or have the best packages. Guo Tai (Cathay Pacific) always has promotions and packages in China and people know this as a premium airline with promotion so they will often tell their agent fly cathay with package. On top of that there's the branding issue where 'Qantas' means nothing its literally just 'The Australian Airline'.

I'm sure there's more than one reason though.

 

[gpr49697]

i hope they are not thinking of cancelling! i like the flight. i find going via hong kong and dragonair too many delays and disruptions.

 

[Isochronous]

i hope they are not thinking of cancelling! i like the flight. i find going via hong kong and dragonair too many delays and disruptions.

As someone who was stuck on a KA A320 for 4 hrs on the HKG Tarmac due to air traffic control issues when connecting, that made me appreciate the direct service!

 

[MEL_Traveller]

Re: Rumour:[Denied by RR] Qantas to ban JQ SYD-MEL pax from F lounges & send to J lou

As someone who was stuck on a KA A320 for 4 hrs on the HKG Tarmac due to air traffic control issues when connecting, that made me appreciate the direct service!

you should know by now to avoid the KA A320! not the most passenger friendly plane.

the possibility of the 500 gates at HKG, pretty poor seat comfort, no IFE (and more importantly, no IFE in the event of a long delay) mean I'll wait 30 or 60 mins for a proper plane.

 

[Isochronous]

Re: Rumour:[Denied by RR] Qantas to ban JQ SYD-MEL pax from F lounges & send to J lou

you should know by now to avoid the KA A320! not the most passenger friendly plane.

the possibility of the 500 gates at HKG, pretty poor seat comfort, no IFE (and more importantly, no IFE in the event of a long delay) mean I'll wait 30 or 60 mins for a proper plane.

Learned that the hard way 2 years ago. Have religiously avoided the A320 since.

 

[JohnK]

i hope they are not thinking of cancelling! i like the flight. i find going via hong kong and dragonair too many delays and disruptions.

Have you seen the latest sale airfares? That can't be a good sign.