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Qantas putting up the white flag on its "65% line in the sand" strategy?

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Sojourner

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I wonder if this is a signal that the market share war is ending and we'll see more increases in ticket prices.
The battle for domestic passengers has forced Qantas to all but admit defeat to Virgin Australia, with the red kangaroo to add zero capacity for the first three months of the next financial year.


Despite the Easter long weekend falling in April in 2014, Qantas has struggled to put passengers in seats compared with a year ago.
Passenger numbers fell by 1.5 per cent in April, compared with the previous year, despite a 2 per cent increase in capacity and a 0.4 per cent inch up in demand.


Virgin Australia has been pushing Qantas in a price war for domestic low-cost customers, forcing the former national airline to reassess its plans for next year.


"In response to changing conditions to the domestic market, the Qantas Group has revised planned capacity additions in the first three months of financial year 2015," the airline said in its monthly traffic statistics report.


As a result, Qantas will not be adding any capacity in the first three months of the 2015 financial year, and will look to revise growth, according to demand, supply and customer requirements for the following period.


Read more: Virgin battle breaking Qantas' domestic strategy
 

markis10

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Ouch - checkout the JQ Int numbers, first are for the month compared to same last year and second set FYTD

JQ.jpg
 

lovestotravel

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Get back to me when VA actually make some money on domestic.... There is more than enough capacity around without the need to add additional!



Ouch - checkout the JQ Int numbers, first are for the month compared to same last year and second set FYTD

View attachment 28259

Oh no need to worry JQ has the newest aircraft, and is just such a profitable arm of QF.......... which is why they get the brand new 787's and QFi get A330's.....
 

cmon0005

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Ouch - checkout the JQ Int numbers, first are for the month compared to same last year and second set FYTD
The QF International results actually look quite positive for once. Revenue seat factor seems the highest out of all of their other services(including JQ).
Yet they haven't mentioned this, only the decline in TOTAL International numbers (which I suspect mean JQi and QFi together). possibly an attempt to make QFi look worse or JQi better?
 

markis10

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The QF International results actually look quite positive for once. Revenue seat factor seems the highest out of all of their other services(including JQ).
Yet they haven't mentioned this, only the decline in TOTAL International numbers (which I suspect mean JQi and QFi together). possibly an attempt to make QFi look worse or JQi better?

I didnt publish the whole table, only the two items that were significant to me, JQi and QFi make up 15% or thereabouts of QF traffic. Its certainly interesting to see their opposite results given both play in the same space.
 

Lowjhg

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Virgin Australia has been pushing Qantas in a price war for domestic low-cost customers, forcing the former national airline to reassess its plans for next year.


So Who's the current national airline then? :p

Ironically posted from the QF JCL SYD DOM


 

Isochronous

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Good. This is this biggest reason why QF is bleeding money. QFi results also look good.
 

turtlemichael

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So the Board and management are now accepting what every "expert" knew all along (that seeking market share at any cost as a road to profitability has failed). So why is the Board and managment still there?
 
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and all those AFF'rs going elsewhere for BFOD now trhat ASA's are gone
 

dajop

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with Jq's lower costs a 68% load factor may make more money than a QF 80% factor
Also depends on what people are paying. You easily get 100% loads if you sold international flights for $200 return, but no profit. Just looking at anecdotal pricing evidence on the one route I travel (and/or look at) a bit, SIN/MEL, JQ's prices seem to have risen this year, and QF's dropped to the point that a JQ inclusive return fare (with plus bundle + luggage) is usually around the same as QF's fare, and of course JQ don't provide (much) food or drink, IFE, pillows etc which all come at a cost to QF.
 

Sojourner

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So the Board and management are now accepting what every "expert" knew all along (that seeking market share at any cost as a road to profitability has failed). So why is the Board and managment still there?
Credit where it's due... AJ has an uncanny ability to survive disastrous strategies. Whatever happened to the "Red Q" which was meant to be the new "premium airline" in asia? It's one blunder after another... and of course, it's never AJ's fault, it's everything else.
 

medhead

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dont know, ask markis10... he enjoys pulling stats out
My point is that it is extremely hard to find a JQ cost per ASK. The best I can find is a quote of a media release from 2004 in which Qantas quoted a cost per ASK of 8.7 c/km reducing to 7.8 c/km (or something like that). When I looked into the idea of switching to JQ from QF, Clive Doman in the SMH had QF cost per ASK of (something like) 10 to 14 c/km (depending on domestic or international). The revenue per ASK or perhaps the cash fare per km for my preferred route was something like 16 c/km on QF, on those evil cheap red-e-deals. The one fare I purchased on JQ with bundle, was 8 c/km. It is highly dependent on the missing JQ cost per ASK, but I find it difficult on those numbers to see that JQ is more profitable per km. QF is making up to 4 cents per km as a margin; Is JQ really running at a cost of 4 c/km or less?

I would love it if anyone can provide a more up to date cost per ASK for JQ.

BTW, these numbers are from my memory, but I have posted them here somewhere, recently.
 

eastwest101

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My point is that it is extremely hard to find a JQ cost per ASK. The best I can find is a quote of a media release from 2004 in which Qantas quoted a cost per ASK of 8.7 c/km reducing to 7.8 c/km (or something like that). When I looked into the idea of switching to JQ from QF, Clive Doman in the SMH had QF cost per ASK of (something like) 10 to 14 c/km (depending on domestic or international). The revenue per ASK or perhaps the cash fare per km for my preferred route was something like 16 c/km on QF, ..

Indeed medhead - I fell for the same trap and wasted a good few hours looking for an ASK for JQ without any success. The 2004 predicted JQ figure of reducing to 7.8c/km would be well out of date given the fuel price rises seen since 2004.

The closest that I cam was the 2013 CASK weighted average figure of 6.8c/km for Tiger (combined SIN and Aus costs though), you would have to think that JQ would have a higher CASK than Tiger (Asia and Australia).

QF just seem to lump the whole group CASK together and selectively use the figure to show how evil their foreign competitors, are or how great QF Management are, or how expensive it is to do business in Australia depending on the intended audience!
 

medhead

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Indeed medhead - I fell for the same trap and wasted a good few hours looking for an ASK for JQ without any success. The 2004 predicted JQ figure of reducing to 7.8c/km would be well out of date given the fuel price rises seen since 2004.

The closest that I cam was the 2013 CASK weighted average figure of 6.8c/km for Tiger (combined SIN and Aus costs though), you would have to think that JQ would have a higher CASK than Tiger (Asia and Australia).

QF just seem to lump the whole group CASK together and selectively use the figure to show how evil their foreign competitors, are or how great QF Management are, or how expensive it is to do business in Australia depending on the intended audience!
The Australia dollar has also increased since 2004, which would offset the fuel price a little bit. But it is extremely interesting that the figure is so difficult to find. It is also interesting that the Qantas reports do provide some ability to get relatively useful numbers for the Qantas airline parts of the group but not Jetstar.
 

eastwest101

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The Australia dollar has also increased since 2004, which would offset the fuel price a little bit. But it is extremely interesting that the figure is so difficult to find. It is also interesting that the Qantas reports do provide some ability to get relatively useful numbers for the Qantas airline parts of the group but not Jetstar.
Qantas management have traditionally been extremely defensive about disclosing costs and details about the JQ operation in the past. You would expect that if they did publish some comparable CASK costs of different parts of JQ and QF then they would be challenged and open to criticism on the assumptions behind their calculation of CASK, especially if the JQ CASK costs come in very low given that JQ operate in Australia with its alleged high labour costs.

Looks like KPMG have attempted to 'unscramble the egg' and have surveyed a group of airlines in this report - which is interesting reading but does not provide any easy answers to medheads question.

https://www.kpmg.com/AU/en/IssuesAn...cuments/airline-disclosures-handbook-2013.pdf

Page 19 is the interesting graphic where the gap between LCC CASK and 'Legacy' Airline CASK has been narrowing but the rate of growth in CASK for LCC's is higher than the 'Legacy' airlines. Whether this means that the all the fat that could possibly have been cut out of the legacy costs has already been cut out, or maybe another alternative is responsible such as fuel prices hurting everyone or as they say in the report 'structural issues' is up to others to discuss.
 
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