Much to our surprise the deal did not go through. How long will APA continue to fight? How will the unions react? Will Margaret Jackson keep her job? Unsettled times at Qantas.
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Qantas getting picked at from all sides
By IAG | March 22nd, 2007 | Posted in Delta Air Lines, emirates, qantas, virgin blue | No Comments
This picture must strike some discomfort into Qantas. Besides the irritation of Virgin Blue entering its cozy market to the US, bringing new pressure into a pretty lazy market.
Australia and the United Arab Emirates struck a new air deal yesterday, lifting the cap on flights between the two nations. By 2011 Emirates can double its service and it will have A380s and you can bet they will be flying them between Australia and London. On top of this news, Etihad will also be allowed to operate an extra 21 flights a week to Australia in the next five years. What plane do you think Etihad will use on the route to London? How many A380s can the Kangaroo route use?
Qantas cannot compete against everyone at once and win every battle. The Gulf carriers are going to make revenues on the Kangaroo route thin out a lot. Qantas' other big market is the US, which is also going to get squeezed. A really irritating factor would be if Delta decides to put its 777LRs in the Australia market as well. The fracturing of the market does not favor Qantas. The news that Qantas expects to make A$1.2+B next year is of interest. What do you think Qantas' profits will look like in 2011?
Qantas getting picked at from all sides
By IAG | March 22nd, 2007 | Posted in Delta Air Lines, emirates, qantas, virgin blue | No CommentsThis picture must strike some discomfort into Qantas. Besides the irritation of Virgin Blue entering its cozy market to the US, bringing new pressure into a pretty lazy market.
Australia and the United Arab Emirates struck a new air deal yesterday, lifting the cap on flights between the two nations. By 2011 Emirates can double its service and it will have A380s and you can bet they will be flying them between Australia and London. On top of this news, Etihad will also be allowed to operate an extra 21 flights a week to Australia in the next five years. What plane do you think Etihad will use on the route to London? How many A380s can the Kangaroo route use?
Qantas cannot compete against everyone at once and win every battle. The Gulf carriers are going to make revenues on the Kangaroo route thin out a lot. Qantas' other big market is the US, which is also going to get squeezed. A really irritating factor would be if Delta decides to put its 777LRs in the Australia market as well. The fracturing of the market does not favor Qantas. The news that Qantas expects to make A$1.2+B next year is of interest. What do you think Qantas' profits will look like in 2011?
Virgin Blue, Qantas and United
By IAG | March 22nd, 2007 | Posted in qantas, united, virgin blue | No CommentsAustralia’s Virgin Blue announced an order for six 777-300ERs yesterday. The order going to Boeing was expected. The reason for the order was also expected and it’s the reason which is the basis for this story.
The announcement states “it accelerates plans for long-haul flights to the United States”. Qantas makes a lot of money on its Australia-US routes (~15% to 30% of its profits from various sources) and it has never had domestic competition to the US. Its only competitor on the route is United Airlines (though Singapore wants in real bad). Previously American Airlines and Continental Airlines both tried and failed. This is a non-stop route and requires a specific performance in terms of aircraft. American and Continental both used DC10s which had to stop in Hawaii – they were doomed. Qantas and United use 747-400s and United also uses 777-200ERs. Since they are able to fly non-stop, they have managed to keep customers happier. The cozy relationship is about to end. Virgin Blue has big designs and it will force itself into a spot commercially between these two giants.
The product is the key on a long haul flight. Virgin Blue flies some regional international service but nothing yet like the 14 hour flights across the Pacific. Virgin Blue will not be lowest priced, and this will force United lower down the scale. Qantas will have to move up market.
Clearly Qantas and United will see market revenues fall as they have to accommodate Virgin Blue. Though the new comer will not have anywhere near the capacity to compete with incumbents head on, there will be an impact. Much of the revenue impact will depend on Virgin Blue’s product offering. It would seem that Virgin Blue's product is likely to follow the lead of other things Virgin – edgy and better than average. There likely will be a premium product to extract more dollars. There is is the issue if the service will even have the Virgin word in it since this is overseas service (Pacific Blue again?). By taking this approach, we see Qantas having to go upmarket and upgrading its product to justify prices. On the other hand, wither United? United could follow Qantas, but we expect it not to do so. Rather, we expect United to continue to be the bottom feeder. It is going to be interesting to see where this goes.
Virgin Blue, Qantas and United
By IAG | March 22nd, 2007 | Posted in qantas, united, virgin blue | No CommentsAustralia’s Virgin Blue announced an order for six 777-300ERs yesterday. The order going to Boeing was expected. The reason for the order was also expected and it’s the reason which is the basis for this story.
The announcement states “it accelerates plans for long-haul flights to the United States”. Qantas makes a lot of money on its Australia-US routes (~15% to 30% of its profits from various sources) and it has never had domestic competition to the US. Its only competitor on the route is United Airlines (though Singapore wants in real bad). Previously American Airlines and Continental Airlines both tried and failed. This is a non-stop route and requires a specific performance in terms of aircraft. American and Continental both used DC10s which had to stop in Hawaii – they were doomed. Qantas and United use 747-400s and United also uses 777-200ERs. Since they are able to fly non-stop, they have managed to keep customers happier. The cozy relationship is about to end. Virgin Blue has big designs and it will force itself into a spot commercially between these two giants.
The product is the key on a long haul flight. Virgin Blue flies some regional international service but nothing yet like the 14 hour flights across the Pacific. Virgin Blue will not be lowest priced, and this will force United lower down the scale. Qantas will have to move up market.
Clearly Qantas and United will see market revenues fall as they have to accommodate Virgin Blue. Though the new comer will not have anywhere near the capacity to compete with incumbents head on, there will be an impact. Much of the revenue impact will depend on Virgin Blue’s product offering. It would seem that Virgin Blue's product is likely to follow the lead of other things Virgin – edgy and better than average. There likely will be a premium product to extract more dollars. There is is the issue if the service will even have the Virgin word in it since this is overseas service (Pacific Blue again?). By taking this approach, we see Qantas having to go upmarket and upgrading its product to justify prices. On the other hand, wither United? United could follow Qantas, but we expect it not to do so. Rather, we expect United to continue to be the bottom feeder. It is going to be interesting to see where this goes.
Qatar Airways gets Australian Rights
By IAG | March 16th, 2007 | Posted in a380, gulf, qantas, qatar | No CommentsQatar has been given access to Melbourne. Transport Minister Mark Vaile said under the new air services arrangement with Qatar, Qatar Airways will also have the right to operate a second daily flight to another Australian city from 2008 as Australia increases access rights for Middle East airlines.
Qatar Airways rival Emirates, the largest Arab airline, is expanding routes to Australia and Abu Dhabi-based Etihad Airways will also launch services to Australia later this month. "Around 20 airlines currently already fly these routes over a range of hubs, and with yet more capacity coming into the market, Qantas will have no option but to achieve further cost savings if it is to remain competitive," Qantas Chief Executive Geoff Dixon said in a statement.
All this information is missing the key data point. The Gulf carriers will be flying their A380s into Australia as fast as they can get them. Qantas simply cannot respond. Moreover, with Qantas likely to be privately owned, the Australian state feels less compelled to protect the airline. Which it has done for years.
The Kangaroo Route between Australia and London is very attractive to the Gulf carriers and Emirates has even mused about an LCC version of the A380 being able to offer $400 fares between Sydney and London. This is going to be a huge cat fight. We expect Qantas to play its xenophobia card and wrap itself in the Australian flag. Problem is that Australians are as savvy consumers as anywhere else. They will most likely go with the best deal. The one item nobody dare dismiss is this – Qantas has a spotless safety record; and flights to and from Australia are very long hauls. If any Gulf airline so much as scratches a plane, Aussies will flock back to Qantas.
Qatar Airways gets Australian Rights
By IAG | March 16th, 2007 | Posted in a380, gulf, qantas, qatar | No CommentsQatar has been given access to Melbourne. Transport Minister Mark Vaile said under the new air services arrangement with Qatar, Qatar Airways will also have the right to operate a second daily flight to another Australian city from 2008 as Australia increases access rights for Middle East airlines.
Qatar Airways rival Emirates, the largest Arab airline, is expanding routes to Australia and Abu Dhabi-based Etihad Airways will also launch services to Australia later this month. "Around 20 airlines currently already fly these routes over a range of hubs, and with yet more capacity coming into the market, Qantas will have no option but to achieve further cost savings if it is to remain competitive," Qantas Chief Executive Geoff Dixon said in a statement.
All this information is missing the key data point. The Gulf carriers will be flying their A380s into Australia as fast as they can get them. Qantas simply cannot respond. Moreover, with Qantas likely to be privately owned, the Australian state feels less compelled to protect the airline. Which it has done for years.
The Kangaroo Route between Australia and London is very attractive to the Gulf carriers and Emirates has even mused about an LCC version of the A380 being able to offer $400 fares between Sydney and London. This is going to be a huge cat fight. We expect Qantas to play its xenophobia card and wrap itself in the Australian flag. Problem is that Australians are as savvy consumers as anywhere else. They will most likely go with the best deal. The one item nobody dare dismiss is this – Qantas has a spotless safety record; and flights to and from Australia are very long hauls. If any Gulf airline so much as scratches a plane, Aussies will flock back to Qantas.
Qantas selects GE
By IAG | February 27th, 2007 | Posted in ge, genx, qantas, rolls royce | No CommentsThe Qantas Group has announced that it had selected the General Electric (GE) GEnx engine to power its Boeing 787 fleet of up to 115 aircraft. "The GEnx was chosen because of its superior performance and environmental impact for the type of operation the Group aircraft will perform," said Chief Financial Officer of Qantas, Mr Peter Gregg.
"The GEnx is 20% more fuel efficient, produces around 20% less carbon dioxide and 40% less nitrous oxide than the engines on our B767 aircraft, and operates with a 50% smaller noise footprint,” he said. "This, combined with the ground breaking technology Boeing is introducing with the B787 aircraft, will ensure that the Qantas Group will have the most efficient and environmentally friendly aircraft available," Mr Gregg added.
So the mighty GE engine keeps rolling forward. Note that Qantas, like British Airways, has long been a Rolls Royce domain. We would have bet RR would win here.
Qantas selects GE
By IAG | February 27th, 2007 | Posted in ge, genx, qantas, rolls royce | No CommentsThe Qantas Group has announced that it had selected the General Electric (GE) GEnx engine to power its Boeing 787 fleet of up to 115 aircraft. "The GEnx was chosen because of its superior performance and environmental impact for the type of operation the Group aircraft will perform," said Chief Financial Officer of Qantas, Mr Peter Gregg.
"The GEnx is 20% more fuel efficient, produces around 20% less carbon dioxide and 40% less nitrous oxide than the engines on our B767 aircraft, and operates with a 50% smaller noise footprint,” he said. "This, combined with the ground breaking technology Boeing is introducing with the B787 aircraft, will ensure that the Qantas Group will have the most efficient and environmentally friendly aircraft available," Mr Gregg added.
So the mighty GE engine keeps rolling forward. Note that Qantas, like British Airways, has long been a Rolls Royce domain. We would have bet RR would win here.
