Is there a great big Singapore strategy for Qantas?
Qantas may not get the public hearing it has recommended the Independent Air Services Commission hold on the possible consequences of the Virgin Australia restructuring, but it’s submission will be examined, as will a departmental submission, and any response that Virgin Australia may make to them.
This process will give Qantas another opportunity to advance its long held argument that its competitive position is compromised by the restrictions imposed on it by the Qantas Sale Act, and the government another opportunity to say the Qantas needs to adjust to that reality.
But if some of the industry observers of Qantas are correct in their views as to where Qantas will go following the collapse of its Asia based premium airline strategy, what happens in the IASC may not be the major story in the weeks or months to come.
Before turning to the next big Qantas move, this is what a spokesperson for the IASC said this afternoon:
Virgin has applied to the Commission to transfer its allocations of capacity on the Indonesia route from Virgin Australia Airlines Pty Ltd to Virgin Australia International Airlines Pty Ltd. In effect this is a request from Virgin for a variation of a number of determinations of capacity.
Under the Commission’s processes in the International Air Services Commission Act 1992, the Commission must conduct a review if an Australian carrier applies for a determination to be varied.
On 28 February the Commission published an invitation for submissions on the Virgin application. In addition to the submission from Qantas, the Department of Infrastructure and Transport has indicated that it will make a submission. Before moving to a decision on the transfer application, Virgin will be provided with an opportunity to respond to the submissions.
Also this afternoon, a spokesperson for Anthony Albanese, the Minister for Infrastructure and Transport said:
An application to the IASC is a standard requirement under the Act in the case of a company restructure.
Virgin did not apply for any variation to its traffic rights and this will have no effect on its day to day operations.
And to complete the picture, a spokesperson for Virgin Australia said that the airline believed it was in full compliance with Australia’s air navigation act in relation to its proposed restructuring.
Which leads to some of the clues, and views, as to what Qantas might do next.
Several very well informed observers think that Qantas, having been able to establish its Jetstar Asia franchise in Singapore as not being in breach of the Qantas Sale Act, will strengthen that operation by one of a number of means, including spinning off Jetstar into a company headquartered in Singapore, and even floating off at least 51% of it on the Singapore Stock Exchange, and possibly holding a permitted equity in Qantas.
Qantas intends to base all of its 50 Boeing 787s in Singapore, where it has already based a substantial A320 fleet and a small number of wide bodied A330s. The first 15 of those 787s are currently intended to be used by Jetstar. Those 787s ultimately required by Qantas could be leased to it and maintained in Singapore.
The building up of the Qantas group investment in Jetstar in Singapore has long been taken as a given path for Qantas by many within Qantas in various capacities. It did not escape notice when Qantas CEO Alan Joyce was giving testimony to the Senate Committee inquiring into proposed toughening of the Qantas Sale Act early last month that he several times referred to the possibility of setting Jetstar free to succeed by selling it off should it not get its way on such issues as rotating Asia based cabin crew through its domestic network, or having unfavorable amendments to the act passed into law.
After the failure of the Malaysia solution to the claimed woes of full service Qantas, what Qantas could do with Jetstar, and what Virgin Australia could do with stronger equity partners, such as Etihad, are the defining questions for Australia’s major airlines, assuming of course that neither of the mutually exclusive calamities of a fuel price breakout or global financial crisis were to occur.
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Hi Ben
Are you sure that SIAEC maintains QF’s A380s? I thought it was done by Lufthansa Technik?
by The Doc on Mar 13, 2012 at 7:01 pm
Yes you’re right. The initial heavy maintenance was done in Germany by Lufthansa Technik and there is some that will be done in Singapore, not including Nancy of course. I don’t have all of material at hand so I’ve removed that reference, and will do more checking when I’m better located than at moment.
by Ben Sandilands on Mar 13, 2012 at 7:20 pm
So what your saying is Joyce purposefully sets up QF to fail to make a situation where the spin off of his love child Jetstar is seen as the only course of action? Interresting way to get to an end game!
by crystals76 on Mar 13, 2012 at 8:15 pm
The rooster is really coming home to roost for Purvinas and the ALAEA.
Their ridiculous industrial campaign is looking like it will end up costing his members many hundreds of jobs.
If I was in the position of the Qantas Board I would be ensuring all the 787′s were all based in Singapore and maintained in Singapore out of the reach of the ALAEA so as to limit their ability to hold Qantas to ransom ever again.
by Flying High on Mar 14, 2012 at 2:02 am
A quick search on linkedin would show that the Head of Group Operations at Jetstar Airways is based in Singapore. As is the entire Jetstar IT and Global Marketing department.
by The Doc on Mar 14, 2012 at 5:38 am
There’s been a steady stream of them at the LH Technik hanger at FRA when I’ve been through lately.
by Rufus on Mar 14, 2012 at 7:43 pm
Flying High – What came first the plans to run down Qantas leading to industrial action over “job security” or industrial action? As far as I can see the action has all been about job security so the plan must have come first.
Witness John B who was rejected as CEO by the Qantas Board but was able to take his skills to Virgin where there are no plans to adversely affect job security, in fact quite the opposite.
No, I’m sorry, the Qantas Board’s foreign equity Plan A having been scuppered they have now moved to Plan B, elements of which are slowly being revealed. The Board are clearly in agreement with Alan Joyce’s rantings or they would have sacked him by now. It would be really nice if the good General, a national hero, would speak out and defend what is being done to this airline (All the rest of the Board are Director junkies just in it for what they can get out of it).
Peter Cosgrove was appointed to the Qantas Board in July 2005.
He is a Member of the Safety, Health, Environment and Security Committee and a Director of Qantas Superannuation Limited.
General Cosgrove is a Director of the Australian Rugby Union and Cardno Limited. He is Chairman of the South Australian Defence Industry Advisory Board, the Australian War Memorial Council and is Chancellor of the Australian Catholic University.
General Cosgrove served in the Australian Army from 1965 including command of the international forces in East Timor from 1999 until the force was withdrawn in February 2000. He was the Chief of the Australian Defence Force from July 2002 until his retirement in July 2005.
General Cosgrove was Australian of the Year in 2001.
What about it, Peter?
by Geoff on Mar 14, 2012 at 8:16 pm
Are you suggesting a ‘whiff of grapeshot’ Geoff? It has worked in the past.
by ltfisher on Mar 14, 2012 at 9:24 pm
Flying High, I think you are. Without the current alaea exec team the engineers would be 10% worse off and still be getting sacked. Qantas is the only company I know that continually pays its people to retire.roflmao.counting the money, lol.
by discus on Mar 15, 2012 at 8:53 pm