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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