Plane Talking

Latest Qantas update: Passenger numbers up, yields down, Jetstar continues to grow apace

Look closely at the domestic business class cabin on your Cityflyer next time your company makes you walk through to the economy section. It’s not going to be around much longer in its current form in the new reality of cheaper and tighter seating.

As this commentary included in today’s release of the Qantas operating statistics in September makes clear:

QF Sept guidance

In direct english, Qantas is saying it can’t get away with high fares in the current market and that business class isn’t selling like it used to.

Put this beside head-to-head scheduling by Jetstar against both Cityflyer and Tiger on the Melbourne-Sydney route and the writing is definitely in the timetables if not on the terminal walls.

The market is changing to a broader based beast with price, frequency and reliability much more relevant than frills.

The headline figures are that total group passengers were up 6.6% in September compared to 2008 and Qantas is managing its capacity well, flying fewer non-revenue passengers than a year earlier.

But in the actual detail, Jetstar is growing strongly, and aggregate yields are sick.

Qantas international carried -20.8% fewer passengers in the month, or -7.1% using the passenger/distance flown metric of revenue passenger kilometres as shown in the detailed table below. To a degree this will reflect shorter to medium haul Jetstar international routes taking over Qantas frequencies on the Japan routes for example, but also the loss of market share to competitors such as Singapore Airlines, Emirates, Cathay Pacific and on the once lucrative US routes to V Australia.

QF 0909

The yield figures mean that an awful lot of Qantas frequent flyer points would have to be flogged to retailers and other third party buyers to keep the group’s flying operations profitable in the first quarter of the current financial year.

And the more those points are created and sold the less the opportunity for those who earn them the hard way, by flying, to convert them to reward flights.

‘Delta V’ trans Pacific deal gets closer

The competition watchdog the ACCC today published a draft determination proposing authorisation of a joint venture between Virgin Blue and Delta Airlines on their flights between Australia and the US.

Although not final the draft makes a link up early in 2010 likely given that the necessary US approval for the deal seems inevitable because it already allows an identical arrangement across the North Atlantic by Delta and Air France KLM.

In a statement the ACCC says:

ACCC DeltaDelta flies the Australia-US route now with ultra long range Boeing 777-200LRs while V Australia uses the larger -300ER version. The flexibility of using both types to maximise freight or passenger payloads and fly further into the US than Los Angeles and San Francisco would offer both airlines valuable efficiencies, however the main attraction comes from two way traffic feeds similar to those enjoyed between the Qantas and American Airlines networks.

Submissions and related information about the ‘Delta V’ deal can be found on the
ACCC website, where it is understood more documentation will be added before the close of business today.

Is tin back in for jets?

News that China is looking hard at using aluminium rather than composites for much of its proposed Comac C919 airliner raises the question as to whether ‘plastic fantastics’ like the Boeing 787 Dreamliner and Airbus A350 are mistakes.

Both high composite projects make ambitious claims for the use of non-metallic materials. And the first, the 787, is in diabolical strife. Overweight, hard to build, late, and quite possibly incorrectly modelled in relation to the behaviour of oven baked sheets of laminated reinforced carbon fibre.

Which of course, is what Airbus was warning concerning the risks of plastic airliners right up to losing the contest for the big Qantas 300 seat twin jet order to Boeing in December 2005.

After that Airbus back pedalled and went down the fashionable plastic road in hot pursuit of Boeing with a revised A350, albeit a redesign using composites in a more conventional manner than is the case in the 787s.

The news from China comes soon after Mitsubishi Heavy Industries, which makes the plastic wing for the 787 Dreamliner abruptly decided to go for tin not composites in the wing and most of the fuselage of its own MRJ or regional jet project.

Mitsubishi bailed on plastic wings after the one it is building for Boeing broke during a stress test at the wing-body join earlier this year.

CASA, Qantas and unanswered safety allegations

In the spirit of brave rather than ‘cowardly’ criticism, when will CASA deal with a series of allegations about unsafe practices by Qantas last year raised by the licensed engineers union?

Not deal with, as in, have a spokesman dismiss them as immaterial or industrially motivated.

But deal with, as in investigate and publish detailed findings, and then enforce the rules if the laws or regulations have been broken or offended.

There is a thread on the topic of CASA CEO John McCormick’s criticism of criticism at a Senate Estimates Committee hearing on Pprune.org, the ‘professional pilots rumour network’, which is a site that will scare the hell out of travellers if they conclude that most of the posters really are at the controls of their flights.

Of particular interest is this comment from Steve Purvinas, the federal secretary of the licensed engineers’ union, not made under ‘cowardly’ anonymity.

union 1union 2

Blind Freddy knows the ALAEA has an agenda to further its member’s interests. It’s the union’s job. Just as CASA has an obligation to uphold the law and investigate safety allegations. And just because a union refers a matter to the safety regulator doesn’t invalidate the matter.

CASA has demonstrated its incompetency in relation to Qantas. Is it not time for the new CEO John McCormick to address the regulator’s lack of effective oversight and deal in detail with the ALAEA claims?

These claims might be bullsh*t. They might be true. We need to know.

Tiger v Cityflyer comes into sharper focus

Tiger’s second announcement of new Sydney flights in two days underlines the pressure the Singapore Airlines controlled low fare airline is applying to the high fare Qantas Cityflyer operation.

Yes. Cityflyer. Not low fare Jetstar, nor middle market Virgin Blue, but high fare Qantas, and especially its inter capital Cityflyers.

Today Tiger’s touch up is the doubling of services between the Gold Coast and Sydney from early February following yesterday’s announcement of entering the route in December.

And while the Cityflyer product doesn’t serve the Gold Coast, the effects of Tiger’s increased presence in Sydney include further dilution of the relevance of the high fare and high cost Qantas product on a network wide basis.

Tiger set about its Sydney centric assault on the Qantas domestic network early in July when it entered the Sydney-Melbourne route with up to four daily returns. It will have up to the 13 return services daily out of Sydney by mid February, to Melbourne (9), Adelaide (2) and the Gold Coast (2).

February is the misery month for its competitors because business travel activity normally doesn’t emerge from the holiday season doldrums until then.By which time more announcements of new routes by Tiger are certain.

The problem for Cityflyer and its high fares and inefficient two class cabins is the undermining of its product by four way competition featuring increased frequency and convenience at fares that make the full service Qantas product seem out of touch with a market that has changed radically in its demands since the arrival of Virgin Blue and collapse of Ansett.

Travellers are no longer locked into return fares, because they are sold on a one way basis and single screen mix and match searches are available through on-line travel retailers and company account booking portals.

And Qantas has already shown where it sees its true interests by scheduling flights by its low fare subsidiary Jetstar head to head against the two class Cityflyers on Sydney-Melbourne contrary to its public insistence that it will do no such thing.

It seems to be more important to Qantas to contain Tiger by stalking it with increased Jetstar flights than it is to prop up the expensive operations of a full service domestic network that business travellers like but their corporate travel managers dislike.

Tiger of course doesn’t distribute its capacity through business account friendly channels, but when it comes to SMEs and individual entrepreneurs or persons controlling their own travel budgets the fare competition it is causing probably does far more to induce customers away from Qantas to Virgin Blue or Jetstar than to itself.

This doesn’t seem to worry Tiger. It is largely buying market share by giving away flights well in advance for little if anything more than the taxes, levies and charges it has to pay per seat for air traffic services (!) security screening, noise, and airport facilities.

What it plans to do once it has acquired substantially more market share is one of the bigger questions in Australian air transport at this moment.

Plain talking about CASA and the media

The new CEO of CASA, John McCormick, made some comments about its critics at the conclusion of a Senate Estimates Committee hearing on October 20.

The white or final Hansard record is less entertaining than accounts of the pink or first draft Hansard, but let’s look at the former, since it constitutes the public record.

Before concluding, I would like to make an important point, one that should probably have been made long before now. CASA is certainly no stranger to criticism, complaints and variably informed expressions of dissatisfaction with the things we do and the way we do them from the diverse industry we regulate, amongst others. I welcome this, as a responsible director of any regulatory authority should welcome balanced, reasonable and constructive advice about where we may have gone wrong, or where we may at least be seen by some to have gone wrong, or where we might do better. Well-meaning criticism can be helpful, even if it is wide of the mark, and it gives us a better understanding of the way our actions are perceived and experienced.
So let me be clear: I have absolutely no interest in discouraging or dissuading our critics from drawing CASA’s actual or assumed shortcomings to my attention, to the government’s attention, or to the attention of the Australian public. As I said, I welcome and embrace this. At the same time, however, let me be equally clear in highlighting the very significant difference between candid, robust criticism of CASA’s actions as an organisation and what cannot fairly be characterised as other than mean-spirited, injudiciously self-serving and frequently false accusations about, and the vindictive public disparagement of, individual CASA officers by name and by station.
This is wrong and unfair and, in some cases, I think it is downright cowardly. It does nothing to advance the interests of our safety or organisational improvement, and it almost certainly is not intended to do either. If left unaddressed, it impugns the reputations and integrity of committed, capable and professional individuals who are dedicated to the critical, and sometimes thankless, regulatory and other safety related tasks, and it takes a serious toll on the morale of the entire staff in ways that, I dare say, some of those who try to conceal what is often nothing more than demagogic vitriol behind the facade of a pointed evaluatory critique could not begin to understand.
CASA is and I, as the Director of Aviation Safety, am, and all our employees are fully accountable for our words and actions, including our regular appearances before this committee, Chair. Clearly, these critics have no intention of exposing themselves to anything like the kind of scrutiny to which we are, and should be, subject. Frankly, I seriously doubt whether many of them could withstand it if they were. To those who constantly challenge CASA to lift its game I say, ‘Thank you and keep it coming.’ To those whose intent is merely to insult, denigrate, vilify and, in some instances I suspect, to defame individual CASA officers, unless and until they might be held accountable for their words and actions, I can only say, ‘Shame’. Thank you, Chair.

McCormick would be aware that his real job description is to prevent the crash of an Australian airliner during the tenure of the government of the day.

And the second most important requirement of his job description is to keep the airlines happy.

The two requirements are not completely compatible.

The underlying managerial culture of modern enterprises in deregulated markets is to push the productivity metrics of the business to within a millimetre of breaking the people or the equipment, and to lift output by double digit figures year in year out.

Unfortunately in the airline game, that can kill hundreds of people at once, and CASA is the safety regulator at a time when there are abundant warning signals about standards in Australia and abroad.

McCormick now heads an authority that was found wanting in material matters by an ICAO audit of safety oversight conducted prior to his taking up his appointment.

One of his tasks is to drag CASA up to a position where it has people who know what they are doing, and are properly trained and directed in carrying out their duties.

He also heads an authority that has blood on its hands over the Transair disaster near the Lockhart River airstrip in 2005. Under his predecessor Bruce Byron, CASA knew that Transair was dangerous and in breach of requirements, but did not act effectively on its knowledge, did not warn the public, did not perform its obligations under the Air Safety laws and in the very room he gave testimony, denied that it had anything to apologise for.

Last year CASA was caught red handed by its own special audit of Qantas as being gravely incompetent in its oversight of the national icon. At the time CASA denied any responsibility for the oversight and enforcement of airworthiness directives, and has, as of this day, not even launched a prosecution against Qantas for allowing a sub fleet of Boeing 737-400s to fly for five years without the completion of a compulsory airworthiness directive concerning the forward pressure bulk head.

Now the good news is that CASA has a Minister in Anthony Albanese who auditions for a role in the Australian Childrens Choir every time he gets to his feet in the house to sing the praises of Qantas.

But Mr McCormick, be warned, the Minister is no fool, he just doesn’t like journalists who belong to no one and will write it as it is. Everything public about airlines has to be harmony, light and happiness, and buried under sanctimonious platitudes if not delivered standing beside a priest in full drag after Sunday prayers.

The state of public administration of aviation in Australia is well below par, and by all accounts you are well qualified to address this.

However an uncritical media is not your friend in pursuing this objective.

Your reference to ‘cowardly attacks’ and how you would welcome well-meaning criticism are puzzling.

The purpose of criticism is to inform the public of failings in performance, disclosure or compliance with relevant laws.

Increasingly, it is also to state the bleeding obvious, and report and analyse events and affairs in precisely those terms that the image makers and media managers advise the executive cadres not to use.

It’s all about plain talking.

Talking points: Jetstar fire, PC pilots grounded & 787 Dreamliner wing fixture latest

The Jetstar engine fire at Newcastle Airport last night wasn’t an emergency evacuation using slides. Just a bolt for the front and rear stairs after a ground engineer told the pilots he had seen a three second flash of flame from one of the A320’s engines after it came to a standstill at the terminal gate.

There were 173 passengers on the flight from Brisbane making it a nearly full jet. Cabin attendants ordered immediate deplaning without carry on luggage which was later retrieved for the passengers. No slides or emergency overwing exits were used.

The Jetstar procedure was exactly what any airline obeying the rules would follow in such circumstances. Better to be safe than sorry. Everyone treats the appearance of flames as an emergency, and in this case, the airline thinks that for an unknown reason, some unburned fuel vapour had collected inside the cowling of the engine and ignited just as it was being powered down.

The engine was replaced and an investigation is underway.

Two Northwest A320 pilots who flew 240 kilometres past their destination of Minneapolis on October 21 ignoring calls from air traffic control and sparking fears of a hijacking are looking for new careers after the Federal Aviation Authority revoked their pilot licenses.

The pilots are reported by US media as having admitted to becoming engrossed in using their personal computers to check out new company rosters, and failing to respond to various attempts to get their attention as the jet continued past the airport. The rosters don’t matter any more.

The Boeing 787 wing fix design and validation process has been completed according to Flightblogger. Now it has to be manufactured and fitted to the stress test frame and the number one jet in the flight testing and certification fleet before the promised first flight before the end of the year can take place.

Waiting, waiting……

Angry Flyers Lounge: Make Tiger pay now

Today’s bad press on Tiger raises the question, why shouldn’t consumer protection laws force all airlines to promptly refund fares and pay compensation when they strand passengers and force them to pick up the tab for hotel rooms, meals and other incidentals?

There is no justification for Tiger taking up to two months to compensate hundreds of passengers for the expenses they had to meet in Hobart last Friday when it pulled their flight.

If Tiger can operate an airline it can’t seriously claim to be challenged by the simple task of providing compensation on the spot. It has passenger credit or debit cards on record from the fare purchase. It can reverse the transactions instantly. Holding on to the money for months is grubby.

If Tiger can’t understand this, and fix it, there is a clear case for consumer law to be applied to them, whether through existing laws or airline specific amendments. For the carrier to call the police to assist them in ripping off their customers is obnoxious.

Early last month Crikey contributor Adam Schwab took Virgin Blue to the Small Claims division of the Victorian Civil and Administrative Tribunal over its refusal to offer cash rather than a voucher for a future flight when it cancelled his flight, and won.

Consumer activism against the airlines has become a huge issue in the US, the UK and Europe. If the Australian carriers can’t respect the basic rule that it is the customer’s money until the goods or services are given or performed what option is there but to compel them to change their ways.

Update: Tiger statement on Friday’ Hobart flight cancellation

Tiger Airways was forced to cancel a Hobart – Melbourne flight on Friday evening when a cabin crew member fell suddenly ill and required emergency medical attention.

Unfortunately we do not have a crew base in Hobart and so no replacement was available – we need a certain amount of cabin crew to fly each flight by law.

Tiger Airways apologises to affected passengers but this situation was outside our control.

140 passengers were booked on the flight and were offered a range of options (over and above the terms and conditions that passengers agree to at time of booking) to minimize the inconvenience and move them to their destination as soon as possible. All available seats on Saturday and Sunday (Hobart – Melbourne ) were given to re-accommodate affected passengers onto those flights and there are seats available on today’s flight which departs Hobart at 9:15pm tonight.

Options provided to passengers are outlined below:
Full refund
Credit to fly at another time
Compensation for accommodation in Hobart if they are non-residents
And free of charge transfer to another flight

Some passengers opted to fly on Saturday, some on Sunday and there is a flight tonight at 9:15pm departing Hobart with spare seats.

Tiger Airways apologises about this situation, but it was out of our control.
Cancellations and delays occur with all airlines. TA works hard to keep them to a minimum and actually has the lowest cancellation rate of all major domestic airlines since we started operations in November 2007 (by percentage of flights).

Tiger Airways apologises to any inconvenienced passengers and remains focused on minimising the disruption and will progress affected passengers’ alternate travel arrangements as soon as possible.

(There is Police presence at Hobart airport at all times and it is common occurrence for their attendance given the sensitive environment. Safety of staff and passengers underpins Tiger’s operation at all times)

Boeing forecasts slo-mo boom times for the ‘hood

Boeing has seen the future of air travel in Australia, New Zealand and the (other) South Pacific islands and it is big, very big, but will gain pace slowly in the near future.

Its Commercial Airplanes Vice President of Marketing, Randy Tinseth said “data indicates that the economic downturn has reached bottom and recovery has begun.

“Global recovery will be a long, slow process, and airlines will continue to adapt to the realities of the market.”

However between now and 2028 Boeing forecasts that the 400 medium to large sized airliners in service in this corner of Oceania will grow to a total of 850, after the delivery of 670 new jets worth about $US 90 billion is partially offset by fleet retirements.

Oceania growth

Tinseth says Boeing’s current commercial market outlook to 2008 forecasts global air travel growth will average 4.9% over the period, slightly outperformed by this region at 5.1% per annum.
fleet 00-09This graph (above) captures some the momentous changes in Australian fleets since 2000. It is also a reminder that Boeing, like Airbus, has a very good record for forecasting the big picture for demand, yet can never see the ambushes or shocks of history.

things to remember
And here is the flight shy object of everyone’s attention (below). The beautiful, elusive, unproven, promising, frustrating, tantalising Dreamliner. It’s filed, for better or worse, in the Plane Talking archives of assorted claims and promises.

Dreamliner

Singapore Airlines begins trench warfare in air fares

Singapore Airlines has decided to give money back to its customers flying on its lowest fares to London and its European destinations next year if it comes out with even cheaper offers before they fly.

This is going to have ‘consequences.’

Airlines hate giving cash back to customers. They prefer to concoct $50-$100 rebooking fees out of thin air, and then keep the balance as a ‘credit’ that expires very quickly and can only be used to buy another fare on their services, subject of course to several volumes of conditions resembling a simplified guide to the GST for farmers.

What the Singapore Airlines initiative really means is that despite the administrative costs of its new arrangements for its cheapest fares (including $1950 returns to London) it is determined to keep its very strong position on the kangaroo routes no matter what Emirates or Qantas or Cathay Pacific or especially AirAsia X might do.

The details of the deal will be circulated to travel agents and placed on the Singapore Airlines site this morning. Note that it is offering to refund the differences that might arise on its own cheapest fares not those of its rivals and that its claimed reason for doing this is to remove consumer uncertainty.

Consumers now have the certainty of an extended fare war on the route.