What are Strategic up to?

[ozbeachbabe]

Nice summary of this thread is available from the SMH, although the news re a second A300 is new!

Strategic Airlines applies to fly Australia - USA route

The chief operating officer of Strategic, Damien Vasta, declined to say to which US mainland cities the airline could fly to through Honolulu. But he hinted Strategic could seek to open up new routes not serviced by its larger competitors. ''We're not in the business of trying to compete [head-to-head] with our mainline competitors.''
He also played down speculation that Strategic was trying to make itself enough of a nuisance in order to lure Virgin Blue into taking it over. ''We have certainly not done anything to this point with that in mind,'' Mr Vasta said.

Read more: Strategic Airlines applies to fly Australia - USA route

Call it womens' intuition, but the last sentence in the above paragraph doesn't seem like he's ruling out the possibility of a takeover by DJ in the future otherwise he surely would've categorically denied it.

They could always look at SFO for their mainland city now that QF have pulled out. Coincidentally SFO is a major hub for VX (Virgin America). HNL would definitely be a bonus stopover for Aussies wanting to fly to the mainland too!

 

[JohnK]

Even if that strategy at the moment includes changing their name (Air Australia is rumoured)

Our new national carrier?

Nice summary of this thread is available from the SMH, although the news re a second A300 is new!

A new A300! Now that is news....

 

[ButFli]

They could always look at SFO for their mainland city now that QF have pulled out. Coincidentally SFO is a major hub for VX (Virgin America). HNL would definitely be a bonus stopover for Aussies wanting to fly to the mainland too!

The problems is that non-US carriers have no rights to carry domestic passengers so any passengers that stopover in HNL cannot be replaced by new passengers from HNL to SFO unless those passengers are transferring from another international flight. A larger airline could make it work (like QF do with multiple flights into LAX and only one aircraft continuing to JFK) but a small one like Strategic with only one aircraft on a route couldn't.

 

[ozbeachbabe]

The problems is that non-US carriers have no rights to carry domestic passengers so any passengers that stopover in HNL cannot be replaced by new passengers from HNL to SFO unless those passengers are transferring from another international flight. A larger airline could make it work (like QF do with multiple flights into LAX and only one aircraft continuing to JFK) but a small one like Strategic with only one aircraft on a route couldn't.

You'd still have a lot of people probably wanting to fly (hypothetical example) SYD/SFO which would still be 'bums on seats' anyway for the HNL/SFO leg plus people who had stopped over in HNL & were then joining the flight a couple of days later for the HNL/SFO sector.

I remember QF used to do it when QF3 operated SYD/HNL/SFO & also QF17 SYD/NAN/HNL/LAX & you'd see the comment "online stopover or connecting traffic only". The "online" bit meant that you had to be connecting from one QF flight to another whether you were transiting or had stopped over in HNL.

 

[samh004]

You'd still have a lot of people probably wanting to fly (hypothetical example) SYD/SFO which would still be 'bums on seats' anyway for the HNL/SFO leg plus people who had stopped over in HNL & were then joining the flight a couple of days later for the HNL/SFO sector.

I remember QF used to do it when QF3 operated SYD/HNL/SFO & also QF17 SYD/NAN/HNL/LAX & you'd see the comment "online stopover or connecting traffic only". The "online" bit meant that you had to be connecting from one QF flight to another whether you were transiting or had stopped over in HNL.

I guess that’d be similar to the HKG/CNS/BNE and HKG/ADL/MEL routes?

 

[eastwest101]

I think that they have got Qantas's attention:

Strategic accuses Qantas of dumping, 'predatory pricing'

• <LI class="byline first ">Steve Creedy, Aviation writer <LI class="source " sizset="77" sizcache="11">From: The Australian
• April 25, 2011 12:00AM

STRATEGIC Airlines has complained to the consumer watchdog that Qantas is trying to protect its monopoly on the Brisbane-Gladstone route by dumping capacity and slashing prices.

The fledgling airline has started twice-daily weekday services on the route this week using a two-class Airbus A320.
It is unhappy that Qantas subsidiary QantasLink, which operates Q400 turbo-props on the route, has slashed fares to $69 one-way and added eight peak-hour services a week. Strategic has asked the Australian Competition & Consumer Commission to look at whether the airline's actions are anti-competitive and predatory.
Strategic chief commercial officer Damien Vasta said the airline expected Qantas to react to its presence by cutting fares, but said it saw the price reduction as dramatic and "quite predatory".

Mr Vasta said QantasLink had been charging as much as $600 one-way previously and the lowest off-peak fare of about $94 had been hard to get.

He said Strategic, which had launched introductory $59 one-way fare specials and lead-in fares of about $90 one-way, had been prepared to wear the fare competition until the airline announced it was also increasing capacity.

Strategic was adding about 3000 seats a week to the 6000 already operated by Qantas and there appeared to be no need for the additional peak-hour services.
"For them to then increase capacity even after we'd introduced another 50 per cent availability of seats on the market suggests they're trying to make sure that if they can't kill us with price, they'll kill us with schedule," Mr Vasta said. However, QantasLink defended its decision to increase services.

"QantasLink has serviced the Gladstone community for around 30 years and we recently increased capacity between Gladstone and Brisbane to meet the growing demand in the region," a spokesman said. "This increase in demand is being driven by a number of very large resource projects in the region."

Meanwhile, Strategic has applied for an allocation of capacity to the US, where it is thought to be looking at services to Hawaii using its Airbus A330 widebody aircraft.
The airline said it would take up the capacity by August next year.
Qantas has also applied for an allocation of 540 seats a week on services beyond Bali using 180-seat Airbus A320s as part of a move to increase Jetstar services to Denpasar.

 

[LiamR]

I think that they have got Qantas's attention:

It's pretty clear to me that they are just setting themselves up for another airline to buy them out.... Can someone hurry up and do that?

1 A330 isn't much of an international airline. Even V Aus had more when they started up as well as orders for more 773's

 

[eastwest101]

Yeah maybe - my impression was - when they lost the defence contract that they would try to ride the resource boom, certainly the Port Headland and Gladstone choice of routes would fit with that story.

I am just surprised that Qantas didn't throw Jetstar into the Gladstone-Brisbane and smash Strategic with Jetstars lower cost base and then revert to Qantaslink once Strategic left....

 

[kamchatsky]

It's pretty clear to me that they are just setting themselves up for another airline to buy them out.... Can someone hurry up and do that?

1 A330 isn't much of an international airline. Even V Aus had more when they started up as well as orders for more 773's

Why would anyone want to take over Strategic? What do they have that DJ/QF don't?

 

[eastwest101]

Why would anyone want to take over Strategic? What do they have that DJ/QF don't?

Spare capacity? A few more A330 and A320's would certainly fit with the QF/JQ group fleet, especially with 787 delays, a little less so for Virgin Australia as they are not a 320 operator at the moment.

I would think that its more cost effective for QF/JQ to send them broke first and then buy the assets rather than pay a "takeover premium" - even though Strategic are not a publicly listed company.

 

[medhead]

It looks like a goer:

AUSTRALIA'S newest international carrier, Strategic Airlines, has won rights to fly to the United States in what amounts to one of the most ambitious plans in its short history.
The International Air Services Commission granted Strategic yesterday unlimited passenger and cargo capacity on the Australia-US route for the next decade

.


Read more: Strategic wins right to fly to US

 

[ozbeachbabe]

Why would anyone want to take over Strategic? What do they have that DJ/QF don't?

Spare capacity? A few more A330 and A320's would certainly fit with the QF/JQ group fleet, especially with 787 delays, a little less so for Virgin Australia as they are not a 320 operator at the moment.

I would think that its more cost effective for QF/JQ to send them broke first and then buy the assets rather than pay a "takeover premium" - even though Strategic are not a publicly listed company.

I wouldn't mind betting SQ would love to buy Strategic now they have 10 years worth of traffic rights Australia/USA.

SQ have being trying for ages to get that & would (almost) kill for it.

It would not surprise me in the slightest if SQ were trying to do a Strategic deal of some kind.

 

[Nigelinoz]

Well I hope they do better on the US route than they are apparently doing on Brisbane-Gladstone,I hear the loads are less than impressive to the point that some flights are carrying less than double figure passenger numbers.
One wonders how long they could sustain operations based on those sort of figures.
Cheers
N'oz

 

[ozbeachbabe]

Well I hope they do better on the US route than they are apparently doing on Brisbane-Gladstone,I hear the loads are less than impressive to the point that some flights are carrying less than double figure passenger numbers.
One wonders how long they could sustain operations based on those sort of figures.
Cheers
N'oz

The trouble is that the locals scream for another airline to come in to compete with the high prices charged by QF then the other airline comes in only to have QF slash prices & up capacity to force the new competitor out.

We saw this happen with DJ into Alice. Locals whinged about QF having a monopoly & vowed to support DJ. So what happens? DJ fly to ASP, QF drop airfares to 'compete' (ie oust competitor), locals do not support DJ but instead elect to fly QF at the lower prices brought about by the new entrant.

End result is DJ didn't get good load factors to ASP so pulled out & all of a sudden QF hikes the price up again only to have locals cough & moan. The point is they had their chance to support DJ but didn't so made their bed & now have to lie in it.

The same will happen with VC into GLT if it isn't already. If the airline doesn't get the support of the locals it would pull the services so locals had better get used to paying higher fares on QF again.

 

[markis10]

Well I hope they do better on the US route than they are apparently doing on Brisbane-Gladstone,I hear the loads are less than impressive to the point that some flights are carrying less than double figure passenger numbers.
One wonders how long they could sustain operations based on those sort of figures.
Cheers
N'oz

Must have something to do with the sudden QF $69 flight specials!

 

[crazydave98]

I wouldn't mind betting SQ would love to buy Strategic now they have 10 years worth of traffic rights Australia/USA.

SQ have being trying for ages to get that & would (almost) kill for it.

It would not surprise me in the slightest if SQ were trying to do a Strategic deal of some kind.

Why bother? SQ could simply set up an Australian AOC, find some local patsy to own 51% but take all the profit back to SIN by inflated aircraft sub-lease costs and transfer pricing, and fly A380s across the Pacific with their own brand and product. Only catch would be they could not put the SQ code on the flights (essentially for 5th freedom flights you have to have the rights to fly a sector in order to be able to put your code on another carrier on this sector).

There are locals who have offered to be partners but SQ is intent on operating in their own right - they will be waiting a long time but they are patient.

Tiger also likes to whinge that it can't operate on the trans-Tasman or ex-Australia (other than to SIN) - but it too only needs to find a local partner to give it the rights of an Australian carrier.

 

[oz_mark]

End result is DJ didn't get good load factors to ASP so pulled out & all of a sudden QF hikes the price up again only to have locals cough & moan. The point is they had their chance to support DJ but didn't so made their bed & now have to lie in it.

The same will happen with VC into GLT if it isn't already. If the airline doesn't get the support of the locals it would pull the services so locals had better get used to paying higher fares on QF again.

Yep, happens all the time.

 

[markis10]

Yep, happens all the time.

And has happened previously in GLT with Alliance.

 

[oz_mark]

I wouldn't mind betting SQ would love to buy Strategic now they have 10 years worth of traffic rights Australia/USA.

SQ have being trying for ages to get that & would (almost) kill for it.

It would not surprise me in the slightest if SQ were trying to do a Strategic deal of some kind.

The determination from the IASC does put some conditions around the ownership and management of Strategic.

 

[oz_mark]

And has happened previously in GLT with Alliance.

When I heard JB talk about the market wanting competition in business class, I thought that this may because the 'market' want price competition, but may well stay flying Qantas. It's a risk to DJ's ambitions as well...