Qantas cutbacks mean zero growth 08/09; landing in Buenos Aires from November

Image: Qantas Billboard
Buenos Aires-Sydney: On November 24 the Argentine capital becomes the airline’s first non-stop service to South America. The route, operated by 747-400 thrice weekly, is the airline’s first new international route for some time.

It has not been the best of times for Qantas recently. After having to deal with striking mechanics its legendary safety record (as quoted by Dustin Hoffman in ‘Rain Man’) nearly came unstuck just as it announced who its next CEO would be (whose job is likely to be rather harder than his predecessor’s).

Despite excellent profits in its last financial year the airline recently announced plans to retire up to 22 of its older aircraft from its fleet of over 140. Forecast capacity growth for the year ending June 2009 has been scaled back from 8% to zero and it plans to cut staff numbers by 1,500 across the globe. A number of domestic and international routes have already been axed or will be transferred from Qantas to Jetstar where that makes sense.

Qantas international generates nearly 60% of group’s ASKs

The Qantas group consists of five distinct airlines, three under the Qantas brand and two under the Jetstar brand launched back in 2004. Jetstar was born out of Qantas’ decision to buy the failing Impulse Airlines and use it to take on low-cost newcomer Virgin Blue in the domestic market. Not surprisingly the five airlines have very different shares of the total passengers flown and ASKs (available seat-kilometres) produced by the group.

CHart: Qantas Group shares
Source: Qantas

Qantas domestic handles almost 45% of all passengers, twice as many as Qantas international (and Jetstar domestic) but only represents 24% of all ASKs. Qantas International with just 21% of passengers accounts for well over half of all ASKs.

Qantas “never crashed” clip

Sydney, Melbourne and Brisbane are top three airports

Qantas’ busiest airport is Sydney followed by Melbourne and Brisbane. At eight of Qantas’ top 10 Australian airports capacity is split between Qantas and Jetstar. At present Jetstar does not operate to Canberra while Qantas does not fly from Melbourne Avalon airport.

Chart: Qantas Top 10 airports
Source: OAG Max Online for w/c 28 July 2008
Image: Qantas
At eight of Qantas’ top 10 Australian airports capacity is split between Qantas and Jetstar.

On many domestic routes Jetstar and Qantas ‘compete’ against each other though usually the real competition is with Virgin Blue, and more recently Tiger Airways. At Sydney airport Qantas is the biggest domestic airline offering 50% more seats than Virgin Blue. Combined with Jetstar it has around 61% of domestic capacity at the airport.

Airline Domestic capacity share International capacity share
Qantas 47.7% 28.2%
Virgin Blue 31.1% 2.0%
Jetstar 13.3% 6.5%
Air New Zealand 8.2%
Singapore Airlines 7.5%
Source: OAG Max Online for w/c 28 July 2008

Qantas is also easily the biggest international airline at the airport with over a quarter of all capacity and operating non-stop to 18 destinations including four in New Zealand and three in the USA. European destinations Frankfurt and London Heathrow are served via points in Asia. On 24 November Qantas will begin thrice-weekly flights to Buenos Aires from Sydney, making it the airline’s first non-stop service to South America. The route will be operated by a 747-400 and marks the airline’s first new international route for some time.

Image: Qantas Airlines Image: Qantas Airlines
787 Routes: Hedging between Jetstar and Qantas. The first 787s are now arriving end-2009, 15 months later than planned. The airline has ordered 65 787s (with options for 50 more) with the initial intention that Jetstar would receive the first few to help it with its Asian routes. A380 routes: The A380 starts operating on October 20 between Melbourne and Los Angeles and between Sydney and Los Angeles on 24 October. A second A380 will be added in November and in early 2009 the aircraft will be seen on routes from Sydney to Singapore and London.

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