RedQ or Red Herring?

[browski]

Is there any chance RED Q was just an announcement to distract attention from job cuts?

Does anyone believe that a 49% Qantas owned airline based in KUL/SIN/HKG (and offering "premium service") can compete against the established home players?

I guess it's possible, but there is something NQR about the strategy. Can someone explain where this gap in the market exists?
The only possible gap I see is flying to the multitude of regional cities in India and China. But let's say that is the case, will premium passengers really fly 5 hours KUL-DEL or SIN-NKG on an A320? Surely they'd prefer the existing A330 or B777 options on SQ/MH/TG/CX/IT/CA etc?

I can see Jetstar Japan getting up, and I can see JetStar and JetStar Asia expanding......but RedQ seems a stretch.
Well, I guess they'll have to use those 110 A320s on something.

 

[dfcatch]

Is there any chance RED Q was just an announcement to distract attention from job cuts?

Does anyone believe that a 49% Qantas owned airline based in KUL/SIN/HKG (and offering "premium service") can compete against the established home players?

I guess it's possible, but there is something NQR about the strategy. Can someone explain where this gap in the market exists?
The only possible gap I see is flying to the multitude of regional cities in India and China. But let's say that is the case, will premium passengers really fly 5 hours KUL-DEL or SIN-NKG on an A320? Surely they'd prefer the existing A330 or B777 options on SQ/MH/TG/CX/IT/CA etc?

I can see Jetstar Japan getting up, and I can see JetStar and JetStar Asia expanding......but RedQ seems a stretch.
Well, I guess they'll have to use those 110 A320s on something.

I don't share your doubts.

I think it's a genuine expansion into a growth market.

OTOH - if RedQ doesn't go ahead - I think job cuts in the existing airline are a foregone conclusion.

I would also argue - that paradoxically, the harder the unions make it for QF to restructure - the larger the volume of redundancies in the medium term.

IMHO.

Job cuts shouldn't be feared.

Ideally - they should be minimized, and structured in a way that natural attrition accounts for as much as possible. This is the strategy that should be championed by those pushing for job security.

 

[browski]

I don't share your doubts.

I think it's a genuine expansion into a growth market.

Well fair enough, it may be a market expanding in population but...........it is not exactly expanding in profit. See:

Singapore Airlines

Malaysia Airlines posts $78 million 2010 profit | ATWOnline

Airlines based in China are doing extremely well, but RedQ would be no chance to be based there, would they?

 

[dfcatch]

I had thought that they would be well placed to service Chinese growth (regardless of where they are based)..??

 

[oz_mark]

My own thoughts is that if this does come to pass, one of the established players would be a partner in the airline. If you take the statements at face value, I think China would be too far north to base an airline that can fly to Australia with A320's.

But I do agree, something seems NQR about the whole proposal.

 

[JohnK]

But let's say that is the case, will premium passengers really fly 5 hours KUL-DEL or SIN-NKG on an A320? Surely they'd prefer the existing A330 or B777 options on SQ/MH/TG/CX/IT/CA etc?

Hmmm. Not quite a "premium" passenger but I prefer a full service airline if that is the same thing. No way am I going to spend 7-9 hours on a flight to Asia in economy to then hop on a 5 hour journey on an A320.

Cheap and no frills? I guess it is possible. "Premium"? No way....

 

[mannej]

Hmmm. Not quite a "premium" passenger but I prefer a full service airline if that is the same thing. No way am I going to spend 7-9 hours on a flight to Asia in economy to then hop on a 5 hour journey on an A320.

Cheap and no frills? I guess it is possible. "Premium"? No way....

Again, does British airways not offer a premium only service between London city and new york on a 319?

 

[Justchecking]

Again, does British airways not offer a premium only service between London city and new york on a 319?

They do, but how many all J class 319 do they have? Is this an expanding market for them or a test market? I imagine if it was really profitable then that would be where they'd be spending their money. My guess, and it's only a guess, is there is a very limited market for that kind of thing.

One has to wonder why home based airlines in the region haven't already gotten into it. Maybe it's a completely revolutionary idea and no-one has thought if it yet. But I somehow doubt SQ, CX and whoever else is over there havent at least given it a cursory once over. It would be a simple thing for these airlines to test it out. Maybe the answer is.....it's a very limited market without great profit potential.

The other concern I have that premium airlines come with a lot more overheads and infrastructure than budget ones. You need manned check-in counters, smart lounges and limo's to really make the product competitive. While as a OW member QF has access to partner facilities does RedQ have access? If not, then theres a very high startup cost right there.

Since we've not heard a single morsel of information since about this great new initiative and it's start-up since its announcement, I can only guess at the reasons.

 

[simongr]

Hmmm. Not quite a "premium" passenger but I prefer a full service airline if that is the same thing. No way am I going to spend 7-9 hours on a flight to Asia in economy to then hop on a 5 hour journey on an A320.

Cheap and no frills? I guess it is possible. "Premium"? No way....

If the aircraft had the same seats as a QF A380 with the same pitch how is it different to an A380?

I flew a domestic leg on an intl A330 with a 2-4-2 config so I can't see how 3-3 on a A320 would be that much worse...

 

[JohnK]

Again, does British airways not offer a premium only service between London city and new york on a 319?

I don't think QantAsia is going to configure 110 A320's in an all business class configuration.

If the aircraft had the same seats as a QF A380 with the same pitch how is it different to an A380?

I would definitely accept that compromise but you and I know full well know that is extremely unlikely to happen anytime soon in this reality.

I flew a domestic leg on an intl A330 with a 2-4-2 config so I can't see how 3-3 on a A320 would be that much worse...

Again in my opinion there is a huge difference between spending 5 hours in an A330 or 767 compared to A320's or 737's.

 

[Robert K]

I believe the target market for RedQ are the new money middle class chinese.
They crave anything that can be perceived as premium and love to brag.

Catering to the 'discerning leisure' crowd.
i think the product offering would be something more inline with premium economy.

RedQ will be a western airline (you white people seem to hold some fascination for us asians) assuming there will be the token white flight attendant!

Jetstar caters to the budget leisure market.

It wouldn't make much sense for australia to have a budget (jetstar), middle class (redQ), and premium (qantas) airlines. As majority of the population is somewhere between lower-middle class.

But in asia, the line between classes are more clear. hence a need to differentiate.

 

[browski]

If we look at the next 9 Chinese Cities after the Big Three (PVG,PEK,CAN) let's see which airlines from SQ, MH, TG and CX/KA service these cities

Tianjin - none
Shenzen - none (Silk Air)
Shantou - none
Shenyang - none
Hangzhou - KA
Wuhan - KA
Nanjing - KA
Chengdu - KA, TG (and Silk Air)
Xian - none

We are lead to believe that there is this blossoming "discerning" middle class from these cities that are desperate to fly a classier airline to KUL, BKK, HKG or SIN OR onwards to Australia but..........SQ, MH and CX and TG are unable to see/meet this opportunity.......yet aussie RedQ will nail it.

Too funny.

 

[harvyk]

Personally I believe the market for RedQ is connecting AU / NZ flights from QFi \ JQ, which the general idea of feeder flights into a central hub and then connecting flights out to Asia and eventually European destinations.

I think this is probably a direct assult (even if they don’t claim it is) on SQ and EK and other airlines whom are doing well simply because of the geographic location of their bases.

 

[simongr]

I don't think QantAsia is going to configure 110 A320's in an all business class configuration.


I would definitely accept that compromise but you and I know full well know that is extremely unlikely to happen anytime soon in this reality.


Again in my opinion there is a huge difference between spending 5 hours in an A330 or 767 compared to A320's or 737's.

Tackling each of these in turn

1 - ReqQ has been suggested to be an all business class airline.

2 - I know nothing of the sort. RedQ has been reported to be a premium airline so I am 100% sure that it will have good seats IF there is a whY class. In BIZ I think they might go an updated SB1 rather than a full flat option.

3 - can you please give me one (only one) reason why the smaller jets are worse than the larger jets that DOESNT relate to the seats or service. Seats and service are airframe agnostic as evidenced by the fact that BA have an all J small jet fleet or both CX and AA fly 777s and the service in J on AA is as cough as the seats.

 

[docjames]

Again, does British airways not offer a premium only service between London city and new york on a 319?

Yes it does. Some talk of expanding to BOS but doesnt seem to be happening any time soon.

They do, but how many all J class 319 do they have?

Two only iirc.


IIRC, there are market manipulation laws that would prevent AJ from giving guidance about moves to commence such an operation and the implications for the share price, if genuine plans didnt exist. So the plan on that basis must exist. Whether it comes to fruition, and whether it a) makes any money at all and b) "saves" QFi remains to be seen.


I've said repeatedly the issue for QFi is not staffing costs etc but that they dont serve what the public want - single stop into multiple destinations. With the 788/789 they may be able to achieve this. The reason they only get 20% of the market now is to anyone not in SYD, and to a lesser extent MEL, they can go one stop to europe, not three or more by the time they transit SYD AND LHR. QF, at a price premium, via LHR into Europe, is not competitive with EK single stop to multiple destinations via DXB, SQ single stop via SIN, CX single stop via HKG etc etc.

The reason they can still make money on the US routes, and compete to JNB and EZE/SCL, despite the increased competition on the US route, is everyone else has to use roughly the same plan - hub via LAX (or SFO) out of BNE/SYD/MEL or via AKL. Or stop in either SYD or AKL (ie. one stop) as the competition is forced to do the same (LA/AR SYD-AKL-SCL/EZE). I'm not surprised the DFW flight has good loadings and has been expanded - single stop ex-SYD into almost anywhere in the US east of the rockies (and some west too - most of those also available via LAX) is appealing to lots of customers, and they'll pay a (slight) premium to use it.


RedQ will only work if there is existing demand within Asia to sustain it as the supposed aircraft will struggle range-wise to reach southern Aus - how many nonstop A318/9/20/21 flights on any carrier are there east coast aus-singapore? Or KL? Or BKK? or anywhere in Asia other than DPS. And Aussies don't want to fly eg. BNE-xx_-Shanghai or ADL-xx_-HKG if they can go direct on another carrier. Particularly business (read: premium, profit making) passengers. QFi need to grow their market by offering direct flights on 788s/330s point to point from Aus to final destination. eg. BNE-Shanghai, ADL-HKG, MEL-BKK (oh, wait, they JQ'd that one) etc. And the Oneworld black hole - the Middle east, where aussie white collars are in demand (try getting there on OW from Aus - enjoy that transit of HKG, Mumbai). And why they chose EZE with it's terrible connections, and at the extreme of their a/c range over the OW hub and non-payload limited port that is SCL - at least they saw the error there.


Man I wish I could go to a QF management meeting and work out why they dont see all of this. or see what they apparently know that is guiding some of the decisions around QFi planning.


Phew, rant over.

 

[JohnK]

3 - can you please give me one (only one) reason why the smaller jets are worse than the larger jets that DOESNT relate to the seats or service. Seats and service are airframe agnostic as evidenced by the fact that BA have an all J small jet fleet or both CX and AA fly 777s and the service in J on AA is as cough as the seats.

In my opinion the seats and service are the most important part of the flying experience.

If I only had to give one reason apart from those 2 then it would be spaciousness. For someone who suffers from claustrophobia single aisle and perceived lack of cabin space also matter.

 

[browski]

Personally I believe the market for RedQ is connecting AU / NZ flights from QFi \ JQ, which the general idea of feeder flights into a central hub and then connecting flights out to Asia and eventually European destinations.

I think this is probably a direct assult (even if they don’t claim it is) on SQ and EK and other airlines whom are doing well simply because of the geographic location of their bases.

But can you name some routes which will be assaulted by these A320s?

 

[wilco]

Again, does British airways not offer a premium only service between London city and new york on a 319?

Not quite. Its an A318 and its specially configured with 32 seats. I cannot imagine how this new QF airline can even consider offering such a spacious configuration on any intra-asia or regional flight.

 

[MEL_Traveller]

also to note... Hong kong Airlines will shortly be starting an all premium service to London... using an A330 but with 1-2-1 beds in premium business and 2-2-2 cradle seats in regular business. Will be interesting to see how that goes and if there is indeed demand.

 

[drron]

In my opinion the seats and service are the most important part of the flying experience.

If I only had to give one reason apart from those 2 then it would be spaciousness. For someone who suffers from claustrophobia single aisle and perceived lack of cabin space also matter.

So the claustrophobia is the real reason you dont like the A320 not because it couldn't be a premium offering.I dont think there are many executive jets that are widebody but most would be considered a premium flying experience.So why not an A320.

And by the way simongr not all service in J on AA's 777s is cough.I generally have a very good experience.Sure F on the 777s is better and for me the AA 777 F seat is better than the QF 747 F seat.Not had a sector in an A380 yet.