Emirates, Australia, and its global aviation food chain
This report appeared in the Crikey bulletin today, and is posted for the record
A contact– make that dead man walking–in Qantas sounded shattered but in good humor this morning. He referred to being under siege from the Virgins and the ‘Emirartichokers’ in response to reports that Virgin Australia was carrying more passengers on domestic routes than Qantas, and that Emirates had run amok with a trebling of daily services out of Perth from next March, while it would start flights between its global hub at Dubai and Adelaide from November 1 (and daily from next February.)
The Virgin story was in fact wrong, as Qantas pointed out in what has been an unruly morning in the Australian aviation play pen.
Virgin is only three quarters the size of Qantas on domestic routes and AAP, which provided the AFR and Daily Telegraph with the figures, is innumerate.
But going on the official yields and growth guidance from both Qantas and Virgin in the 12 months to the end of May, the former has seen its rivers of domestic gold shrink if not dry up, and the Virgins, no doubt aided by Qantas escapees from Jetstar’s torture machines, keeps making Delphic references without all of the figures a sceptic would like to review, to strong performances at the till and in the jets when it comes to fares paid and passengers boarded.
All of which is a bit weird when there is a price war in progress, a classic, bleed yourself to death less quickly than your competitor sort of price war, going on between Qantas and said Virgins, and no let’s not persist with that metaphor.
What consumers will find today is more discount fares at peak times on Qantas and Virgin Australia flights than they have ever seen before, all of which makes anyone paying anything like $200 or more to fly between Melbourne and Sydney feel like an idiot.
The truth about whom is doing what to who will not be quantified in profit and loss terms until Qantas and Virgin Australia publish their full year results late next month, and in the meantime Virgin employees can amuse themselves trying to get their photos put on interactive Qantas video promotional stands or their names on the side of one of its A380s in the new crowd sourced marketing campaign in which the jet will be turned into something like a giant flying Facebook page.
Keep a sharp eye out for Richard Branson!
What Emirates is up to is really serious for Qantas. Emirates is aviation’s largest food chain in operation. It has the world’s largest fleets of A380s and 777s, both in service and on order, and the world’s second largest order for A350s.
The A380s are now swallowing the 777s to cope with its growth on the busiest routes, with the big Airbus replacing the not exactly small 777s on services to Paris, which is going daily double with A380s, as it is reported will New York City, with the biggest airliner in service also replacing a 777 frequency from Dubai to Moscow and apparently to be announced as replacing the Boeing on flights to San Francisco as a result of evolving range and payload improvements.
There will be Emirates A380s daily through Melbourne by the end of year, fulfilling another part of its long standing promise to cater for Australian growth with A380s on just about every route or existing frequency by the end of the decade, although it also has the hots for a new larger version of the 777, the –X, which has been a Boeing teaser act for the last year, and which might be given additional substance at next week’s Farnborough Air Show.
And those 777s swallowed up by the A380s are being… redeployed, to open flights to Lyon, Emirates third port on France, it is launching Warsaw with museum fleet A330s awaiting A350 replacement, it has just launched Barcelona in addition to Madrid, and other 777s will find a new life opening the Adelaide market and dominating the resource capital Perth’s international flights, where Qantas can’t even manage non-stop flights to China never mind the Middle East.
Qantas has long expected its shareholders and employees to accept the unique wisdom of fleet planning that derided 777s as out dated technology that was irrelevant to its needs, as long ago as 2003. It is just one of a set of disastrously bad decisions that has destroyed brand and shareholder value, and most likely, done irreversible harm to it in a future that appears to be the plaything of a strong domestic competitor and aggressive global carriers.
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Would not an attack on Iran bring all Gulf air traffic to a screaming halt ?
by ghostwhowalksnz on Jul 5, 2012 at 5:41 pm
OMG, Emirates out of Perth three times a day!! That’s almost the equivalent of ‘dumping’ in the commodity business. What choice is that going to give anyone wanting/needing to travel west of Singapore?
by ltfisher on Jul 5, 2012 at 8:28 pm
In a post earlier this year I suggested QF should pack up its international operations ex Perth by year’s end and just focus on being a domestic carrier for this city.
Following yesterday’s commencement of services by QR and going daily by December, today’s announcement by EK of its three daily services (oh dear 777′s) and SQ ramping up to 4 flights per day later this year, QF’s decimated international services ex Perth of two flights per day to Singapore and three per week to Hong Kong must soon be history.
QF is doing its level best to destroy the Singapore route with its change to QF 72 to an overnight flight arriving Perth at 4.30 am (one way to justify changing it to Jetstar) and is hopelessly outclassed in any event on the Singapore and Hong Kong routes by SQ and CX with impending frequencies of 4 per day and 2 per day respectively.
What does not seem to have got much run in the press was Qatar’s Al Baker’s comments on arrival in Perth on the inaugural flight yesterday that he was going to be trotting off to meet with QF about strategic partnerships. At least branding would be easy with the letter Q (maybe this is the real Red Q strategy of Joyce). Would make a lot of sense for QF given that the incredible shrinking of its international division has probably reached the point of no return (certainly for anywhere but Sydney/Melbourne).
As if to twist the dagger into QF’s heart was the suggestion that Qatar will be introducing the 787 Dreamliner (the one QF gambled its whole fleet planning on and is yet to get) onto the Dohar-Perth run when they go daily in December.
Perth is a lost cause for QF International and they may as well withdraw at the end of October and stop the death by a thousand cuts.
Shrink international back to Sydney/Melbourne as a trans pacific carrier with a token service to London. There are enough free-loading members of the Chairman’s lounge out of Canberra who will keep spending other peoples money to keep that level of service going.
Whilst QF international ex Perth is a lost cause, at least intrastate services are going gang busters , but yields on trunk interstate services seem to have imploded (peak period fares for Per-Syd QF $199 and Virgin $135 last week) so maybe there are even more problems than QF international on the horizon.
The QF story is a sad and tragic tale and I sadly suspect worse is to come.
by Wild West on Jul 5, 2012 at 9:03 pm
I agree with Wild West – I cannot really think of a reason to Fly Qantas internationally out of Perth anymore; there are plenty of other carriers who will take your dollar, get you to your destination and treat you as a customer, not as a pain in the arse.
You know Qantas is circling the gurgler if everyone and their dog is flying into Perth or adding flights but Qantas just roles over and withdraws – but then we’re not Sydney are we ?
by Graeme Hill on Jul 6, 2012 at 11:30 am
Ben,
I’m surprised you haven’t done an article yet on Qantas / Qatar?
by ChrisCunard on Jul 6, 2012 at 11:48 am
Look Qantas is now flying 3 times a week to Santiago!! – from Sydney
by ghostwhowalksnz on Jul 6, 2012 at 1:03 pm
ChrisCunard,
Qatar kept me in the dark on that. I think they do make for a very interesting story, but I wasn’t going to be the last reporter in the country to get involved in learning more, and I have to admit, when the play pen gets animated and there are plenty of stories, there is always a risk that something will be overlooked.
Next time as they say.
I think the talk of an association with Qantas was a long way short of indicating a real deal is close, and may reflect a desire to pressure Emirates, which Emirates would flick aside without blinking if this was the case.
by Ben Sandilands on Jul 6, 2012 at 3:06 pm
I also read that Emirates wish to run the A380 to Perth by years end but can’t due to the terminal not being able to handle it until upgrades are started in 2014.
by SladeyP on Jul 7, 2012 at 10:16 am