How will Joyce react to troublesome routes?

[Platy]

Why do people think that JQ is the solution to unprofitable QF routes?

Perhaps the efficient QF Group PR machine, an uncritical media and gullible travelling public are contributing factors...

 

[simongr]

1. The potential Indian market is colossal. If QF can't run the route profitably, they must be making some profound errors.

2. QF do not HAVE to fly there. The problem is that if they choose not to, they are ignoring one third of the world population (and a country Australia are looking to, to sustain any chance of economic growth).

3. Route by route profit is only one factor to consider when setting an overall strategy.

4. QF group has a history of attempting to replace some routes with Deathstar on the basis they will be cheaper to run and thus result in greater profitability only to see these fail.

5. Adjusting factors such as pricing, product and marketing strategy might improve profitability - adding and substracting routes on simple profit analysis is not the only option.

6. Removing ever more routes from the QF schedule weakens the overall QF brand.

The indian population is huge and as a market it is huge. However - is it a consumer of Australian products or an exporter to Australia? I have had some limited dealings in India recently and the view seems to be as India as an exporter of services to Oz rather than a place that will drive Australian growth.

You say that route by route profitability is only one factor in a strategy but why is one route to India such a keystone of QF's strategy?

I personally wont fly on QF to India due to the limited flights - I would rather have an airline that has connections and daily flights - I am happy if they remove the india flights as it helps capacity and redundancy on the rest of the network.

So you'd be quite comfortable for the Fed Gov to remove the protection of QF on the highly profitable US routes? Routes which might feature a higher passenger demand if the more competition were allowed?!

Absolutely!

 

[Platy]

I personally wont fly on QF to India due to the limited flights - I would rather have an airline that has connections and daily flights - I am happy if they remove the india flights as it helps capacity and redundancy on the rest of the network.

Ignoring the small sample size of your own case (thanks for sharing), there is demand, but the QF strategy has failed to capture it...

 

[NM]

India may be a huge population base, but what portion of that huge population has the financial wherewithal to be able to fly long-haul international? And of those that can afford it, how many have Australia high on their list of preferred destinations?

While India continues to be a low-cost labour market for hosting call centres, service desks, software development etc, those activities in themselves do not require significant amounts of international travel to complete the tasks. In fact, the off-shoring model for such service tasks is based around significant cost reductions. And those cost reductions would be seriously compromised if it required significant amounts of international long-haul travel to maintain the service delivery model. The services that tend to be delivered from India tend to be the ones that don't require a lot of travel to maintain.

It is no surprise to me that India is not a huge cash cow for international travel to/from Australia, despite its huge population. I know of several companies that do huge volumes of business in India. But their business model for making such of-shoring of services viable is based around reducing not only their labour costs but also controlling the service delivery costs including minimising the need to travel there.

 

[SusanS]

So you'd be quite comfortable for the Fed Gov to remove the protection of QF on the highly profitable US routes? Routes which might feature a higher passenger demand if the more competition were allowed?!

Hi Platy,

I think the level of protection on the US routes borders on paranoia from the Fed Gov & greediness from Q ( yes sometimes even ruthless shareholders feel uncomfortable with greed - the thinking ones anyway) and I would welcome an easing of the protection - Q would have to lift its game, which would be good, because I can't fly with UA again - it'll kill me.

Let's see how Virgin goes? I wouldn't mind pretending to be a rock star for 14 hrs! It could be fun?

Off thread - but while I have your attention - did you see today in the Herald Sun report - Joyce said Q might become a niche carrier - didn't I say that a couple of weeks ago? My crystal ball works pretty well most of the time.

Keep up the cynicism.

 

[Platy]

Joyce said Q might become a niche carrier

Respectfully, what is that supposed to mean?! I don't think it means a thing without some sort or clarification.

 

[garyjohn951]

- I would rather have an airline that has connections and daily flights -

Absolutely!

So that excludes Beijing; Shanghai; Buenos Aires; Johannesburg from you list of places you will fly to with Qantas !! And that is only from Sydney

 

[SusanS]

Respectfully, what is that supposed to mean?! I don't think it means a thing without some sort or clarification.

Ok, not sure what you mean exactly, however I think it means that Q mainline is likely to become a boutique/niche carrier - exclusive, part of the market that is very profitable, and will become a smaller part of the overall Q group. Joyce rightly said, Q is an end of line carrier, so it's unlikely that Sydney will be a hub, should the BA-QF merger take place. Therefore Q is likely to become a niche carrier within the global BA-QF alliance, more likely your beloved J* will be the major player with a hub in Asia. We're talking Ryanair/Aer Lingus scenario here, but within the same entity. I imagine it will be Q group, Qmainline - niche, J* -mass market. Probably a reversal of where the 2 brands are today. However, they'll still call Australia home, which is ok by me.

I don't know, maybe the crystal ball is a bit foggy - it's late and my brain is tired.

 

[JohnK]

Looking into my crystal ball I can see clearly that JQi's entry into Europe will be a failure. After this experiment JQi will be confined to a few leisure routes in Asia and JQ can compete with DJ and TT on some leisure routes domestically in Australia.

 

[ANstar]

Respectfully, what is that supposed to mean?! I don't think it means a thing without some sort or clarification.

I think a niche carrier means an airline with one or 2 long haul routes and then a mostly regional player. Ie Air NZ or V Aus.

 

[dajop]

India may be a huge population base, but what portion of that huge population has the financial wherewithal to be able to fly long-haul international? And of those that can afford it, how many have Australia high on their list of preferred destinations?

It is no surprise to me that India is not a huge cash cow for international travel to/from Australia, despite its huge population.

I think the one factor you are missing is the large number of Indians who have now settled in Australia and do have the means to get back to India or fly relatives out to visit Australia. I am not sure in other cities, but in recent years Melbourne has taken many Indian migrants. On several (SQ) flights I've sat next to people doing exactly this.

SQ seem to have tapped into this market very successfully and I have noted significant number of Indians travelling on flights that connect at SIN with flights to India (you can see this visiting the check in hall at MEL before SQ's 11am departure).

QF are never going to make a huge impact on this market, and I think their best bet is the codeshares with Jet via SIN. Who (apart from QF contracted clients and status credit chasers , and those who have ignorant TA's) is going to fly, for example MEL-SYD-BOM-DEL with PITA transfers between terminals at SYD & BOM when they can simply fly MEL-SIN-DEL, with a smooth transfer at Changi? The opportunities offered for single stops between SYD/MEL/BNE/PER and BOM/DEL/CCU/BLR/HYD/MAA by SQ (and even others such as MH, TG & CX if their connections worked) do restrict QF's ability to compete in the market with their less than daily SYD-BOM service. It may work better if it connected smoothly to BA flights and could be supplemented by Kangaroo Route traffic.