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QF to wind back intl routes as JQ set to become Australia’s main intl airline

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smit0847

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More musing from the 'opinion for hire' Tony Webber. While QF have no fleet planning at all I doubt they would be underataking the massive A330 refurb project if they planned to pull out of Asia.Cookies must be enabled. | The Australian

JETSTAR is set to become Australia’s main international carrier as Qantas looks to wind back its worst performing arm. Chief financial officer Gareth Evans has confirmed about half of the group’s $2 billion in cuts will come from Qantas International, which lost $262 million in the last six-months of 2013.
As a result, the Flying Kangaroo could be reduced to just a handful of “protected” international routes between Australia and the US and New Zealand.

That would allow the airline to reduce costs by transferring more of its operations to Jetstar which is based on a budget model, with cheaper staffing and running costs.

Qantas former chief economist Tony Webber said it was fairly clear the airline was working towards Jetstar taking on the bulk of its international work.

He pointed to the establishment of Jetstar Asia and the announcement 14 new Dreamliner aircraft purchased by the group would go to the budget carrier rather than Qantas.
“They really feel that Jetstar is the saviour of the company, and have grown Jetstar at a much faster pace,” said Mr Webber.
“Even though Jetstar Asia is doing really poorly, they’ve invested too much time and effort to just give it away.”
 
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cmon0005

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If they do cut any further Intl routes, especially the ones I use more often, MEL/SYD - HKG, MEL - SIN, MEL/SYD - DXB then I will not be transferring my flying to J* and instead transferring everything over to CX fully, currently CX get 25% of my business. that could move to 95% Internationally.
 

ReLoad

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Surely there isn't much left to chop?

QF is caught in a pretty nasty self fulfilling prophecy at the minute.

I think for me it's the clear lack of strategy (apart from chop chop)

CX has already maxed out its services, I'd expect them to throw bigger planes our way.

God knows what SQ is doing their product is so inconsistent (they have their own issues)

But it's pretty clear to see that the winners are not QF.

The only positive I can think of is the new J product in Asia. Looking forward to that.
 

SeatBackForward

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If the suggestion that QFi is subsidising JQ is true, then the further reduction of QFi will only raise costs for JQ, and reduce the supposed profit margin that JQ has been earning. Combine this with many passengers refusing to simply swap between QF and JQ and it does indeed make for a self-fulfilling prophecy.

The conclusion is that JQ is really cannibalising QF overall.
 

dougieboy

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Winter is coming! It just comes across as if all the decision making throughout the past 5 years was the attempt to bust unions/australian working conditions/mitigating costs and less about improving the travel experience for customers. The big roo about to become Jetstar roadkill beside the Australian runway of life. It's dreamtime for QFi. Oh gee Skip!
 

casanovawa

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While this story may be a bit over blown I can't see much of a strategy for the airline and can't see much of a strategy for the CEO...

What was Joyce employed to do, or has the reality for Qantas changed so much that we are in a completely different world from when the board thought he was the solution??? So far on many fronts its just seem to go from bad to worse...

If he was brought in to bust some unions and get the costs down, those people usually end up getting hated, no two bones about it, so bring someone in for 2 years or so, get the dirty job done, take the pain then they move on to their next role and you get some rebuilder/healer/inspirational type in to say now this is where we are going, this is how we are going to get there and its all going to be better etc, etc

Joyce seems to have tried to make a lacklustre attempt to take the working conditions away and so earned the ire of the employees, and yet never completed the job and can't point to a meaningful vision of the future to try and lift the morale and carry what staff he has left... And in a largely service oriented business having the employees motivated to deliver high quality service i would have thought was a given?!?!

And on the other side of the ledger the fleet management planning seems to have no coherence to it, the best new planes are going to J* which is a cheapy, leisure outfit which the peole would probably quite happily be crammed on a 727 if it meant $99 tickets... Where is the vision of where the route network is going??? Or are they going to spin the bottle next time to figure out what stays and what goes??? Best bets are on more cuts and reductions....

The numerous attempts to start up J*offshots in Asia needs little rehashing, wonder how much money they have sunk into that??? Could they just have found an existing airline out there that was profitable, or had potential to be profitable and bought 25% or 50% rather than the new start up route they chose??? Maybe it looked like it would be a cake walk but obviously has been anything but because the existing players aren't going to stand around while Joyce swans in and eats their lunch for them...

In dire times you really need some high quality, experienced management to pull one out of the bag, does anyone think that Joyce is that calibre of manager or leader???
 

Sethor

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As a result, the Flying Kangaroo could be reduced to just a handful of “protected” international routes between Australia and the US and New Zealand.
I believe this will happen unless QF starts taking up 789 options, I expect Qantas to have a route footprint similar to VA's current one in 10-15 years when they need to retire the A330's.
 
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mrpooky

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I saw a similar article via news.com.au. I thought this was concerning:

Australian Licensed Aircraft Engineers Association secretary Steve Purvinas said Qantas was deliberately running down its international arm to prop up Jetstar.
“We see first hand the bills for maintenance carried out on Jetstar aircraft going onto the Qantas International books,” said Mr Purvinas.
Is that even legal?

mrpooky.
 

VHOEJ

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I will declare now I am a QF employee but I am very concerned about next week.

Yes a large loss will be the story but the big question is ‘what are they going to do about it?’. And when the CEO and CFO brief the media and get asked questions, they will have no answers. There is no strategy going forward, no plan beyond cutting $2b over the next couple of years. If there was a plan, I would be more confident that we have a path to follow but we don’t even have a gravel path right now. Only a handful of new planes to come and nothing else. We should be taking the 787-9 orders, retiring aircraft that don't fit and cost too much money........imagine 787s on routes like Singapore, JBerg, heck even opening new routes up. Such a shame they may never see QF service because our airline is being run by bean counters.

And yes, Joyce should go but the board has to go first. They make the decisions, the CEO is just he figurehead. The whole board needs a cleanout, cleanout of the management and we might have a chance. In the cutting of staff, not one top level manager was pushed. Funny that. Decisions like keeping the 65% strategy…………no one accountable, no one takes responsibility for the result of that.

If management think JQ is going to solve anything, they are kidding. They will make a loss too next week, they won’t be raking in the money – too many Jetstar offshoots all over Asia, bleeding money for starters. Even with the 787 to give them a kick up, they are not any saviour.

The sad thing is the customer service staff do a great job and do everything they can (I am not customer facing) but the management just don’t take any responsibility.
 

sydstar

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If QF seriously think their customers would willingly fly JQ as opposed to the likes of SQ/CX then they really have lost the plot. Why build new lounges in Asia and announce 330 refurbs if JQ will be doing all the flying!

What QF needs above all is a new management with an actual strategy for QFi (like the 789 that everything has been bet on) coupled with unions that are willing to reach compromises to ensure QFi can actually compete with leaner competitors
 

whatmeworry

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The Orange Cancer has nearly killed its host.

He pointed to the establishment of Jetstar Asia and the announcement 14 new Dreamliner aircraft purchased by the group would go to the budget carrier rather than Qantas.
They really feel that Jetstar is the saviour of the company, and have grown Jetstar at a much faster pace,” said Mr Webber.
 

codash1099

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If QF seriously think their customers would willingly fly JQ as opposed to the likes of SQ/CX then they really have lost the plot. Why build new lounges in Asia and announce 330 refurbs if JQ will be doing all the flying!

What QF needs above all is a new management with an actual strategy for QFi (like the 789 that everything has been bet on) coupled with unions that are willing to reach compromises to ensure QFi can actually compete with leaner competitors
Do all refits and lounges using QF money, then pass the result to J* for a pittance?
 

JohnK

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I can't help but laugh.

Jetstar has it's own niche market. That market isn't for the majority of leisure travellers and it isn't for business travellers either.

But I agree. Qantas does not appear to have a strategy to recover from this slump.
 

moa999

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And rejected by Qantas:

22 August 2014
The claim that Jetstar will take over from Qantas International (‘Shrinking Qantas to give over to Jetstar’) is just wrong. Qantas International has about double the market share of Jetstar in and out of Australia. These two airlines serve very different parts of the market and that is not about to change. The aviation market is now tougher than ever, and we’re working hard to make sure Qantas International gives Australians the highest quality travel experience on the ground and in the air, just as it’s done for the past 94 years.
Simon Hickey
CEO, Qantas International
Letter to the Editor - Qantas International
 

ermen

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what about migration by stealth...

move everything to jetstar.. then change of name to qantas... voila!
 

casanovawa

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For it not to become bleedingly obvious, you would have the name change and be stuck with a lot of LCC configured planes, which even with the kangaroo on the tail would not impress most people...

How many years and $s to reconfigure them???
 
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