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Qantas gift keeps giving, Cathay Pacific adds London flights

The Qantas effect continues to benefit competitors, as it retreats and they advance.

The Qantas response to the Asian century of isolating more of Australia from its world continues to benefit better run high quality carriers, with Cathay Pacific adding a fifth daily rotation between Hong Kong and London with an ‘inferior, outmoded’ Boeing 777-300ER from 27 June.

Whether a kangaroo traveller wants a short stop in Asia, or a prompt connection, the additional service provides Qantas customers who don’t want to be punted onto Emirates flights or through Dubai with additional alternatives while still being able to earn Qantas points.

This is the key part of the CX statement:

Cathay Pacific Airways today announced a fifth daily return flight between its Hong Kong hub and London Heathrow, scheduled to debut on 27 June 2013.  The additional flight further demonstrates Cathay Pacific’s commitment to serve key long-haul markets around the globe with multiple frequencies offering maximum customer choice.

Cathay Pacific Chief Executive John Slosar said: “We are offering our customers the best of all worlds.  First, products that are second to none including our new long-haul Business Class, winner of the Skytrax Best Business Class in the world award.  Second, people and service that have earned us recognition as a five-star airline.  And third, the choice to travel when it is convenient with multiple frequencies throughout the day.”

In addition to the 35 frequencies a week to London the new flight brings, Cathay Pacific offers 25 flights a week to New York City and 17 to Los Angeles.  Both routes are planned to gain additional frequencies in 2013.  Even in medium-haul markets such as Sydney and Melbourne, Cathay Pacific offers 28 and 21 flights a week, respectively.

Mr. Slosar added: “Whether getting passengers to their destinations on a nonstop flight or connections via our convenient, world renowned hub in Hong Kong, we are working to expand the network in a way that brings additional flight options to our customers.  It is just another way we are giving passengers more reasons to choose Cathay Pacific.”

Pity about the Skytrax reference. CX doesn’t need that.

It is clear that Singapore and Hong Kong will mount strong competition for those who fall out with the Qantas-Emirates combination, with both cities offering a wide range of differing experiences and business opportunities if a journey is broken, as does Dubai.

Three more different cities could hardly be imagined.  However the tension in the Qantas-Emirates arrangement that will soon be market tested comes from being taken for granted, as well as the inferior amenity of business and economy class in EK 777s when compared to the outstanding quality the same carrier offers in its A380s.  Whatever people may feel about Cathay Pacific’s product, and its exceedingly disappointing old business class, the new product in its 777-300ERs and the A330s that operate between Australia and Hong Kong has been met with strong approval from those in my circle of frequently flown travellers.

With the best will in the world, the Qantas strategy of cutting back on routes and thus markets, both inbound and outbound, means it is standing still and getting run over in a growing market by very well run competitors.

It is fanciful to claim, as Qantas does, that once it makes long haul Qantas viable, it will actually invest in re-expanding the brand, and that people will automatically come back. There is nothing automatic about brand loyalty. Screw it, and it screws you back.

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  • 1
    ltfisher
    Posted February 7, 2013 at 1:14 pm | Permalink

    The CX move was an obvious one and will give them a great chance to attract more of those QF passengers who have no interest in a desert stopover/change of carrier. All they need to do now is set up a better service PER-HKG and that will give them even more cream.

  • 2
    patrick kilby
    Posted February 7, 2013 at 2:02 pm | Permalink

    I suspect QF will expand capacity as noted by a fellow commenter earlier the freeing up of two A333s for refurbishment, and soon a spare A380 following their refurbishment might mean an expansion in the Northern summer season of more routes to Asia and I suspect daily A380s to HK and there may be enough A380 capacity for daily Singapore as well. The combined QF/EK to the UK is much more than 5 per day and I think most are A380s. I have been on the CX744 to London (and they are still there) and not much fun at all. Why is it people are now criticising the desert stopover while EK has been doing sucessfuly for the last decade. ‘Me think thou protesteth too much’.

  • 3
    SDMack
    Posted February 7, 2013 at 2:26 pm | Permalink

    Could this also be a consequence of NZ’s withdrawal from the route next month?

  • 4
    madge
    Posted February 7, 2013 at 2:43 pm | Permalink

    I also think this has more to do with the loss of NZ from HKG-LHR, and BA not bringing back the 3x weekly BA22.

  • 5
    Ben Sandilands
    Posted February 7, 2013 at 3:14 pm | Permalink

    In my opinion, Dubai, Singapore and Hong Kong all offer some outstanding stop over experiences, but I also think the latter two offer more variety and are inherently easier to navigate, and you don’t have to pay quite as much care and attention as to where the air conditioning is.

    Dubai is also very interesting for what it is trying to do, with some considerable success, in becoming a freight and air hub, and importing jobs that demand high levels of skill in MRO for aviation, as well as FTZ initiatives. The UAE is doing many things to give jobs and stability to a country in a volatile part of the world, and if at all possible, you should ensure you spend some time in nearby Abu Dhabi, which has a different suite of attractions, at the end of a sometimes dramatic 99 kilometres autobahn experience.

    However Singapore and Hong Kong offer more by way of casual discoveries in my opinion, especially the latter’s easily reached other islands.

    And if Hong Kong traffic continues to grow CX is also going to need A380 daily flights to Sydney to add to the seats now flown by four A330s. I wouldn’t try to explore any of these cities in a matter of hours, unless it was to lunch with a contact, and think that each deserves at least one night in a hotel, or a friend’s home.

  • 6
    Nick Brodie
    Posted February 7, 2013 at 6:55 pm | Permalink

    Ben, CX has added flights from Hong Kong – HELLO – HONG KONG! Last time I checked HK was half way (thereabouts) to London.
    Taking into account SIA cutting back on pilots I’d say this has more to do with market forces in Asia rather than anything Qantas is doing here.
    Qantas has added capacity in real terms and allowed for better connections intra-asia as well as into Europe.
    Sensible move to treat Asia as a destination (both business and tourism) rather than just a curious stop-over with some interesting experiences on the way to Europe.
    Hong Kong, Singapore and Dubai are hubs – Australia isn’t.
    Anymore Qantas bashing today Ben?

  • 7
    Ben Sandilands
    Posted February 7, 2013 at 7:20 pm | Permalink

    And hello to you too Nick. If you examine the BITRE stats you will see that CX does have some seats going from Australia that don’t get sold, and that it could sell them to people wishing to fly to Europe via Hong Kong, or indeed to China proper, with a full service product.

    And about the bashing. If you want to kill Qanta stone dead, a good starting point would to be nice and regurgitate the rubbish that it puts out to the uncritical part of the media.

    If you care about Qantas, as distinct for some within Qantas who have much to answer for, both in labour and management, you could try a robust response to some of its claims, including the back sliding that seems to have begun on AJ’s commitment to upgrading the product in its premium offering on A330s.

    I think we both agree about the need for a better and more viable Qantas. I also think my way of expressing this has a better chance of working than constantly overlooking broken promises or failed initiatives. Something has to work, other than telling significant parts of the country to fly Emirates. Or to downgrade to Jetstar in the middle of the night at Changi.

  • 8
    timjack Elton
    Posted February 7, 2013 at 7:59 pm | Permalink

    “Anymore Qantas bashing today Ben?”
    With respect, cheap shot Nick, CX,SQ etc run more flights direct out of Australian capital cities than Qantas do to Asia which Ben has pointed out for months.

    What’s the problem Nick, another one who can’t handle the obvious?

    Qantas has dithered for years with incompetent management planning.

    You are right, SQ offered voluntary pilot leave without pay but still manages to add capacity on routes where required, unlike Qantas who only reduce, now for three years or more. Some of the Jetstar services that replaced the old QF are struggling, so where did the slack go? Not Qantas group either..

    I am sure Mr Joyce will blame everything on staff costs when the half yearly results are announced on the 21st Feb, probably again sounding like the grim reaper, bleating how unfair it all is… par for the course now and it is tiring.

    It is hard to defend many of Mr Joyce’s decisions the past couple of years but I suppose he is lucky to have your support, he needs all he can get….

    Personally I don’t believe the current management have the talent to fix anything, hence the reason why the EK deal is so important to them, EK will fix it for them. It is my view Mr Joyce and co will be just passengers once the ACCC approval is granted.. having said that, nothing is for certain in aviation, anything could happen, I simply don’t like the course Qantas LH is taking.

    Having said that, deep down, for all concerned, I hope that I am wrong and I would be first to put my hand up to say so if I am.

  • 9
    keesje
    Posted February 7, 2013 at 11:47 pm | Permalink

    It would make sense from a QF/EK efficiency standpoint to have QF take over all flights from Australia to Dubai and EK into Europe.

    QF needs medium sized long haul aircraft like the 787-9 and larger soon to build up more efficient capcity and frequencies. Maybe EK can shift a few dozen of its early 777/A350 slots. In 2005 QF placed all their long haul eggs in the Dreamliner basket. That basket fell on the ground. I consider that a management mistake. Other carriers were more carefull / realistic about this incredible Dreamliner business case.

    DXB-Australia should be able to get efficient fleet rotations. DXB is becoming the largest 24/7 hub with direct connections to the rest of the world. Many opertunities for QF, Including US east coast, Africa, Middle East.

    For illustration 7500NM from Dubai.
    http://www.gcmap.com/map?P=&R=7500nm%40dxb&MS=wls&MR=1800&MX=720×360&PM=*

    Geographically for QF to have good hub to/ from Asia would be in the north of Australia..

    No doubt EK is working to bring Business class up to their A380 standard.

  • 10
    patrick kilby
    Posted February 8, 2013 at 6:48 am | Permalink

    It is worth noting that QF numbers have risen steadily over the past three years so where is that coming from?? Not the US alone surely??

  • 11
    Ben Sandilands
    Posted February 8, 2013 at 7:09 am | Permalink

    Patrick,

    Which growth numbers are you referencing? Are you aggregating Jetstar into the picture?

    Qantas as a group including Jetstar is growing in total but not as fast as the total markets in which it operates, with the result that the proportion taken by competitors is rising while that taken by Qantas is falling.

    However the figures do not differentiate between travel by Australian nationals and others, and just to add to the uncertainty, many Australians who travel, sometimes very frequently, may do so on other nationality passports, which is something persons close to me do for example.

    In the domestic markets if you are referring to them we see very strong growth by all participants, not all of it profitable, and the actual shares seem fairly static although a closer look will indeed show that at the margins there is a small component that is resistant to the the major brands.

    I always thought the Jetstar franchise was on paper a very good way for Qantas shareholders to participate in a huge source of growth unrelated to the demographic limitations that affect domestic markets, including the Australian market for overseas trips.

    However for reasons that are much debated elsewhere, this has not moved from paper to real world experience. Not for Jetstar, and not for Tiger, although it appears to have been reasonably successfully done by AirAsia.

    For all of its structural problems, and the unfairness of the Qantas Sale Act, which I have often mentioned, Qantas is also crippled by management ineptitude and ideological matters, and that is where a critique can be directed, as well as challenged.

  • 12
    Aidan Stanger
    Posted February 8, 2013 at 10:54 am | Permalink

    keesje -

    It would make sense from a QF/EK efficiency standpoint to have QF take over all flights from Australia to Dubai and EK into Europe.

    EK operate 777s to Adelaide. QF don’t have 777s, so how would their handing over the route to Qantas imorove efficiency?

    Of course from an EK commercial perspective it’s a non starter anyway – and besides, many passengers prefer to fly EK.

  • 13
    TT
    Posted February 8, 2013 at 12:43 pm | Permalink

    I read an article from Aviation Week earlier this week, an interview from Cathay CEO John Slosar stating CX is evaluating A380 vs B747-8 and decision to be made in the 1st half of 2013… It will be very interesting to see when they would switch B777 to LHR to B747-8 or A380.

    Like I stated previously in this forum, I personnally thinks CX would prefer B747 over A380 simply all of CX’s telephone numebrs in Hong Kong are all 2747XXXX (which was 747XXXX because HK phone numebr change from 7 digits to 8 digits). I think Boeing had an (unfair?) advantage for a start (may be Airbus need to talk to HK telco regulator to reserve all 380XXXXX telephone numbers for them as part A380 sales pitch…)

  • 14
    Nick Brodie
    Posted February 8, 2013 at 6:52 pm | Permalink

    Much of the criticism levelled at Qantas appears to be from those members of the travelling public who want Qantas to behave like Australia is a hub – it ain’t.
    It simply cannot – as a business – fly from every mainland capital to every point of the globe. The days of the Southern Cross Route and the Festival Route are long gone. Residents in cities much larger than ours in countries much larger than ours served by airlines much larger than ours have to hub through cities on shorter routes into Europe.
    We were spoilt for too long by Qantas.
    Now we’re spoilt for choice and the travelling public is taking full advantage of that choice to the detriment of Qantas.
    Qantas has tough decisions to make in terms of fleet renewal – the A380 was a great choice, maybe the 787 wasn’t. Maybe they should’ve gone with 777′s, maybe they still will – Airbus or Boeing, everyone has an opinion. Routing is tough – many airlines can do it more efficiently, cheaper, with lower cost bases.
    It’s a tough gig, for sure but I can see positives coming out of some of the QF decisions but not others.

  • 15
    Rodney Harris
    Posted February 8, 2013 at 7:07 pm | Permalink

    This is all starting to look predictable and what I was afraid of when the Emirates deal was announced. Cutting back on unprofitable routes is fraught with danger as the ones previously profitable become marginalised.
    QF International leaves Adelaide completely and all but leaves Perth. One flight per day to one destination is not really critical mass any more. Why hand all that revenue and loyal customer base to other airlines? This risks eroding the domestic market for them also. To me it looks like the QF problem was not too much capacity and investment in places like WA, but too little. Is giving up the lucrative growth market of WA the price Emirates extracted for an alliance with a desperate Qantas?

    I am a loyal QF platinum frequent flyer who would really like to use my status on destinations other than Singapore. My few experiences with Jetstar haven’t really matched the great service I’ve had from QF both domestic and international over the last 20+ years.

    Wouldn’t a better approach for Qantas be to be the first airline to fly Dreamliners out of Perth and invest rather than pull out?

  • 16
    Ben Sandilands
    Posted February 8, 2013 at 7:44 pm | Permalink

    Most of us would agree with Rodney Harris, including myself.

    Events are not being kind to the 787 at the moment. But I’d agreed with the idea. Similarly, if Qantas had structured its deal with Emirates to continue its investment in the A380, and make more than token use of Dubai in terms of the big Airbus some of the 8 frames in limbo could have been used out of Perth, once the airport gets it act together with the terminal facilities, which is what is holding up EK’s plans to operate one daily to Dubai.

    I think the 787 faces considerable but not insurmountable problems, and we shouldn’t forget that the next version, the -9, could be a stunning success later this decade.

  • 17
    mrsynik
    Posted February 8, 2013 at 9:21 pm | Permalink

    Ben, Haven’t seen any of it in your articles but have you noticed that QF (i.e. the real QF not the Horse Burger dressed up as a Beef Burger (JQ)) have but one daily return flight from Australia to Japan now. Their “competition” (used loosely as they’re both in 1 World ) in JL are the same. Why the lack of competition on direct Australia – Japan flights these days? Would like to see an article on the history of these flights and their dwindling from the golden age 25 years ago when even ANA graced the Aussie shores.

  • 18
    George Cayley
    Posted February 8, 2013 at 10:16 pm | Permalink

    I have to agree with Rodney.

    I too am a Qantas platinum FF, taking 2-3 flights/week out of Perth around 30/70 international to domestic (Kangaroo route through Singapore or HK 6-9*per year with 1 night stop over to reduce jet lag). My preference has been to use QF via Singapore & to use QF domestically. Unfortunately for QF I changed to Star Alliance due to: tired A330; threat of reduced services on preferred route & not wanting to fly BA at all (very tired planes & service). The result has been to flip to SQ internationally where poss & to move to Virgin domestically as for me there was no point mixing Alliances. QF lose money relating to my domestic & FF loyalty (which are both profitable for them according to their newspaper adds this time last year when they preempted the separation of their International business). I personally prefer not to route through Dubai, though will target A380s where poss.

  • 19
    keesje
    Posted February 8, 2013 at 11:56 pm | Permalink

    I think any modern 300 seat long haul aircraft would have made a massive difference for QF in the 2001 – 2015 period. 777s, 787s, A340s, M11s, A350s all could have filled the role of increasing destinations, frequencies below the 744s and A380s lie they did/ do elsewhere.

    On a side note, I can see QF so fed up with after all this 787 business, they strike a large deal on a new A333/ A350-900/-1000 fleet with EK round the table providing early slots.

    http://www.ausbt.com.au/qantas-ceo-very-p-ssed-off-with-boeing-over-787-dreamliner-delays
    http://www.ausbt.com.au/qantas-cancels-boeing-787-dreamliner-order

  • 20
    DB2820 Postman
    Posted February 11, 2013 at 5:44 pm | Permalink

    Ben, why is it that you continue with the interminable Qantas criticism; whilst intentionally overlooking the true competitive landscape and thus appropriately recognising the severe limitations of the options available to Qantas?

    I have on numerous occasions made comment about the massive advantages of “hub carriers” over “end-of-the-line carriers”. You know this, but intentionally appear to ignore this factor in your commentary and criticism of Qantas.

    You appear to intentionally distort the competitive landscape and economic realities of situations and continue to put forward a negative perspective on Qantas even though you are informed enough to know that they are massively disadvantaged in the international arena and have few viable options. It is very much akin to how the authors of conspiracy theories intentionally leave out relevant counter-veiling facts to support a bizarre proposition. To the un-informed it looks like sense; whilst to the informed they know that it is cr…p, but do not get the airtime to say so.

    And it is because I know that you understand this, that your commentary about Qantas continues to annoy me so much.

    And here I am saying this when I am not the biggest fan of Qantas’ product and services. I flew on Qantas international 4 times during last two weeks, and its inflight staff are the first people that should have a bl…dy good look at themselves; but no chance of reform there I am afraid. Also a big factor why I will return to the fresh young staff on the Asian carriers. But enough said.

    Qantas is an end-of-the-line carrier. Cathay Pacific, Singapore, Emirates, Etihad, Qatar, Malaysian and Thai are “hub carriers” with the ME carriers having the best located hubs in the world and appropriate capital investment in their hub airport infrastructure. The Chinese carriers are also hub carriers and starting to exploit this advantage. Within 10 years they will be the biggest carriers in the world (all 3 of them).

    Hub carrier advantage is also why the Asian carriers are able to viably exploit small markets like Adelaide, whilst Qantas cannot.

    The only solution for end-of-the-line carriers (i.e. Qantas) is to become a “solid spoke” on the hub operation of a large hub carrier. Qantas has done this with Emirates to cover its UK/Europe/Nth Africa operations and now must replicate this with a major Asian carrier (preferably a North Asian hub carrier).

    Yes, carriers like Singapore Airlines and Cathay Pacific are well run carriers, but they have the advantage of being hub carriers, placed right at the crossroads of major North and SE Asian markets with huge populations and rapidly expanding economies.

    But even Singapore and Cathay are being beaten by the better hub carriers of the ME and hence one of the reasons for the recent decline in both Singapore Airlines’ and Cathay Pacific’s fortunes.

    But they are also not having it all their way in short haul markets (in North Asia particularly), and this why why Cathay is paranoid about the potential start-up of Jetstar in Hong Kong. They are also very fearful of Air Asia. And so they should be. They know that well run LCCs are are going to savage them massively.

    The first casualties of the LCCs in North Asia will be the Japanese carriers, followed by the Korean and Taiwan carriers. Cathay will also be hurt badly, as will Singapore Airlines, albeit it has moved into this space itself with Tiger and Scoot which will in turn cannibalise both Singapore and Silk Air. Only impediment to the LCCs at the moment is capacity and slots at major North Asian airports. But this is changing rapidly.

    Just watch this space re the LCC impact in North Asia as well as the growing dominance of the best placed international hub carriers. The European carriers (also primarily end-of-the-line carriers, but within very large home markets) are also going to be much further impacted by both LCC short haul competition as well as the ever increasing dominance off the ME carriers. Lufthansa, Air France, Iberia, SAS, Austrian, Alitalia have to undertake major surgery and labour reform if they are to survive, as does BA. Most likely that the staff of these airlines will simply ride them into the ground, expecting a “too big to fail” bailout to save them. They are all already in a bad way, and it is only going to get worse, even if fuel prices drop.

    Qantas is definitely on the right path with stitching together a North and SE Asia LCC operation (via Jetstar) and with becoming a solid spoke in large hub carrier. It must now repeat the Emirates deal with a North Asia hub carrier. Otherwise its “Qantas” branded Asia operations will almost disappear because they simply will not be viable or offer an effective customer proposition.

    Regettably, many commentators on this blog appear to be living in the past; in total denial of how much global aviation has changed in the past 10 years or so.

    Some of the greatest denialists are within Qantas itself; particularly in the pilot, cabin crew and engineering areas who are totally out of touch with the realities and unforgiving attributes of the commercial market place.

    Ben, please, please endeavour to put forward a more balanced perspective on Qantas.

    You are too informed to join the ranks of the denialists who are living in another world dreaming of times past. Dreaming of times that will never return.

    Personally, I believe that Qantas’ macro strategies are on the right track.

    But they have many other issues to address. Cost is a big issue as is age, attitude and flexibility of its inflight staff when compared to its Asian competitors.

    This latter point is probably beyond resolution, but is a real competitive differentiator, however unpallateable or politically incorrect it may be for me to mention it. It certainly is a factor that influences my purchase decisions when travelling as I know it is for a great many other frequent travellers.

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