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Is Qantas right about NZ? Its rivals might agree

In its last ditch attempt to persuade the ACCC to allow Qantas to reduce its capacity on the New Zealand routes by less than 4% a year under the partnership with Emirates the Australian partner holds out the possible creation of new (or revived) non-stop services such as Adelaide to Auckland as one of the benefits.

Qantas argues that it would not have the aircraft available for such developments if it was compelled to keep its current capacity intact, as the ACCC has proposed.

In short, it wants to cut its capacity by 102,o34 seats a year plus another 6 (!) for Jetstar to 2,568,653 seats from routes where in other filings it claims to losing a small amount of money annually but potentially free up equipment to fly routes to NZ that don’t require connections at Sydney or Melbourne.

Qantas may well have a case. In fact it may well be being quietly urged on from the sidelines by Virgin Australia and Air New Zealand, since no-one is flying their jets anywhere near to fully booked on the Tasman routes except for when there are sporting events that fill the odd flight with fans invading stadiums on either side of ‘the ditch’, or ‘duch’.

The public, that is redacted version of the Qantas submission to remove commercially sensitive information, can be found here by scrolling down to the ‘applicant’ submission filed on 18 January.

It isn’t written like a typical media release, as this extract illustrates.

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  • 1
    Ronnie Moore
    Posted January 29, 2013 at 9:14 pm | Permalink

    We flew Air NZ MEL-AKL 777 and it was full (on a Thursday). I beg to differ with your assertion that no airline is flying their jets anywhere near to fully booked trans-tasman. Some routes are extremely well booked. The fact there are two daily Emirates A380′s from Australia to Auckland (plus 777′s between other cities, both sides) suggests that someone is going to not be fully booked at some times, but the ones who adjust their capacity and pricing to compensate (eg AirNZ have A320, 767, 777-200 and 777-300 to schedule in multiple flights per day from both Melbourne and Sydney to Auckland). Qantas, Jetstar and Virgin all have good options for city pairs and at various times of the day (even overnight!). I find your analysis inaccurate and incomplete. Wellington is relatively less served, but not by Qantas, and there is a direct Adelaide (and Perth) flight to Auckland. The fact that Qantas has not made this part of their timetable is in my view mostly down to incompetent short sighted Qantas management who seem more interested in running down even the most friendly of short-haul routes. Time was there was a Qantas 747SP into Wellington and by current world travel numbers there should be a couple of A330′s a day, at least, now?

  • 2
    Ronnie Moore
    Posted January 29, 2013 at 9:27 pm | Permalink

    I might add, Qantas used to have a 747 QF25 MEL to AKL and on to LAX, and the return, which progressively got run down to an A330 and has now ceased. QF thought it couldn’t compete with the other incumbents on the route so gave it up to A320′s, 737′s, 767′s, 777′s and A380′s. Incredible. Its not for me to say Qantas isn’t capable of flying more than a token NZ based 737-only service, which it might not even be able to fill up to make a profit and thus might as well give the routes up altogether. QF might as well give up the Tasman, since it has proven itself to be totally incompetent, inflexible and uncompetitive on all the routes (and there are so many of those city pairs) it is certainly not doing anyone any favors by complaining about it now, when Jetstar outsells it 8:1?

  • 3
    moa999
    Posted January 29, 2013 at 10:30 pm | Permalink

    At least QF’s 737s with a ‘domestic business’ class are better than VA/NZ with their all economy seats to suit layout — the only route that VA hasn’t rolled out its domestic business in.

    The quality on East Coast- Perth is much better than East Coast- New Zealand.

  • 4
    Ben Sandilands
    Posted January 30, 2013 at 6:46 am | Permalink

    Ronnie,

    I can’t claim any credit for the analysis, but am just the much speared messenger.

    Thinking back, quite some time to the early 60s, I first upgraded from the Wanganella and the epic sea voyage to a TEAL or Tasman Empire Airways Lockheed Electra that took about as many hours as the boat took days to do the crossing.

    Soon after that came the DC-8s and a change of name to Air New Zealand. Both the Electras and DC-8s were lovely aircraft with spacious interiors. For about an extra 10-12% on the fare or around £10 you could fly first class, with an extraordinarily high level of catering and such flourishes as after dinner cigars (declined) and personally embossed stationary on which you could write a letter home which was posted by the chief purser.

    By the time I chose a Qantas flight it was operating 707-338s but even into the mid 60s there were still some Air NZ Electras, and one flight I distinctly recall left around 11.45 pm from Sydney since it was exempt from the jet curfew being a turbo-prop and arrived at Christchurch just after dawn, and the usual stunning crossing of the Alps at around about Arthur’s Pass with a good view south-west along the ranges to Cook and a distant glimpse way past Sefton of Mt Aspiring.

  • 5
    ltfisher
    Posted January 30, 2013 at 9:35 am | Permalink

    On a number of occasions I flew into Wellington in the 747SP. A great aircraft, originally destined I believe to service the Sydney-Los Angeles route non stop, but often frightening when landing in Wellington’s short and cross-wind blown airstrip. Unless there have been significant changes Ronnie, I’m not sure how well “a couple of A330s” would cope.

  • 6
    mark
    Posted January 30, 2013 at 9:46 am | Permalink

    Ronnie, you can beg to differ all you want but the facts speak for themselves, while the odd flight may do well, over a month the trans tasman struggles for any airline, using the October load figures from BITRE:

    AirNZ 81%
    Qantas 76%
    Jetstar 78%
    Emirates 63%
    Virgin 79%

    That was a good month, Emirates and others often go to 50% loads.

  • 7
    Aidan Stanger
    Posted January 30, 2013 at 10:42 am | Permalink

    Why does the ACCC still regulate Qantas services on an international route where there’s plenty of international competition?

  • 8
    Posted January 30, 2013 at 3:25 pm | Permalink

    Aidan: how on earth do you get “plenty of international competition”? At the moment there are three groups (ANZ/Virgin, Qantas/Jetstar and Emirates); the current plan is about cutting that to two groups.

  • 9
    Ronnie Moore
    Posted February 1, 2013 at 11:22 pm | Permalink

    Ben. I didn’t actually quarrel with the analysis. If you read my post, I disagreed with your assertion that NO airline is flying their jets ANYWHERE NEAR TO FULLY BOOKED. I expect more from you as a very experienced aviation reporter. Even I know that ~80% load factors are rather satisfactory these days.

  • 10
    Ben Sandilands
    Posted February 2, 2013 at 7:52 am | Permalink

    Ronnie,

    Those aren’t assertions. They are a reference to the BITRE stats quoted in the links to the ACCC submissions. Which I read carefully. Agree that less than 80% load factors can be good, but only if the yields are there and they are making money. I noticed an anomaly recently while booking a return trip to Christchurch. Many of the fares now on offer are indirect flights via Auckland because of the adverse effect the earthquakes had on the non-stops which relied on a level of leisure travel which has disappeared or been displaced to Queenstown. They are mostly in the low to mid $500 return band, but can takes more than 10 hours on some of the routings offered, which is a helluva long time to rattle around Auckland airport and the yields are probably negative or neutral considering the total distances. However Emirates was offering non-stop returns for almost $1300! Yes, in economy. So assuming it sold only a few such fares, which are around 2/3rds what it costs a bargain hunter to fly to Europe and back in economy I’d guess EK would only break even on that route with a 777-300ER, which is not efficient over such a short stage since you carrying excessive airframe weight related to its ultra long range capabilities, if it was selling a lot of air freight.

    I’m agnostic when it comes to the merits or otherwise of the Qantas position re the Tasman. I don’t need to have an opinion one way or the other to pick up on an interesting exercise in airline strategy.

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