The May provisional traffic statistics from the Qantas and Virgin Blue brands are the last insights into their operations before black Friday, 3 July.
This Friday is the day Delta, the world’s largest carrier, enters the Australia-US market on the Sydney-Los Angeles route, and Singapore Airlines’ Jetstar clone, Tiger, takes on everybody and Jetstar in particular on the formerly golden Melbourne-Sydney route.
Delta may not be as big a worry for the Australian carriers as Tiger, since it has neither the product reputation nor brand presence to compete at this end of the trans Pacific routes.
But at the other end, in its own briar patch, Delta is a very powerful and respected brand.
Tiger is arguably the bigger challenge to the Qantas and Virgin brands.
The figures, and especially those for the 11 months to 31 May, show that the Qantas group brands are shrinking in combined market share and the Virgin brands are growing. It is a trend that has been very obvious in recent months.
But because Virgin Blue doesn’t reveal yield movements, it doesn’t cast any light on which group is suffering the most, relatively speaking, in their all important cash reserves, or in Virgin’s case, give any clues as to how much domestic and regional Pacific operations are lessening the drain of serious start up costs for V Australia on the Los Angeles routes.
For the Qantas group, the ’shock’ in the May figures is from Jetstar reporting its first significant step backwards since it began flying just over 5 years ago.
Jetstar’s passenger numbers in May were down by -1.6% compared to a year ago.
This added to a poor month by Qantas domestic with the full service brand loosing -4.7% of passengers compared to May 2008.
The figures also show continued divergent flight paths by the Virgin brands (Virgin Blue, Pacific Blue and V Australia) which grew total passengers by 10% in the 11 months to the end of May, compared to -1.6% declines in aggregate by the Qantas brands (Qantas domestic, Qantas regional, Qantas international, Jetstar domestic and Jetstar International).
The Qantas filing to the ASX this morning says total domestic yields have fallen by -4.7% for the 11 months to the end of May, with the international yields off by -2.6%. Both metrics exclude foreign exchange gains or losses.
Successive Qantas managements have declared Jetstar to be the key to the group’s survival, and it will on all the indications fiercely defend itself from Tiger, which plans to roll out major incursions into other key domestic markets in the coming year.
Put in perspective, the latest Qantas figures are stellar by world standards. In the Australian context, they show its market share, as reported yesterday, is in decline despite growth in the Jetstar operations (May domestic aside). Virgin Blue grew its domestic share in the 11 months to the end of May by 5.1% while Qantas domestic lost -4.5% or nearly one in twenty passengers in the same period.
But the full picture depends on the profit and loss statements for this financial year which will be released in August.
And by the time they are released, Delta and Tiger will have changed and toughened things in critically important markets.
