Following AirAsia X announcing more A330s in the near term, the CAPA Centre for Aviation has published a detailed analysis of where the Malaysia founded wide-body low fare associate of Air Asia is headed, and it makes interesting reading in the run up to this Thursday’s announcement of the full year Qantas financials to 30 June.

The most important question arising is whether Qantas can afford to keep to a ‘capital light’ approach to further expansionary investment.

Keep in mind that immediately prior to announcing the termination of  negotiations with Malaysia Airlines and the Air Asia group about a premium single aisle carrier that would be based in Kuala Lumpur, Qantas reconfirmed that such a venture would have to be capital light.

This adds a dimension that isn’t really explored in the detailed and highly informative Centre for Aviation analysis, which is looking at a hemisphere wide panorama rather than a narrow Australian perspective. But if we take an Australia centric view, Qantas has now sent signals that it isn’t (or wasn’t) contemplating large capital heavy investments in anything until Qantas long haul is ‘fixed’, earns its costs of capital, and becomes a strong profit centre.

This ought to be a reminder to onlookers, and investors and staff, that while Qantas stands still or even shrinks in relation to aggregated international services, its competitors are continuing to exploit an unprecedented expansion taking place in the air travel markets relevant to Australia.

That doesn’t mean Qantas is wrong to be cautious and capital light. But if it is right in its caution, while its competitors are being less than cautious, they are nevertheless growing at its expense, and are taking away existing markets and expanding into new markets that the Australian flag carrier, and its trans border Jetstar franchise, may lose and never be able to recover.

A question I think readers of the Centre for Aviation report need to keep in mind is,”Can Qantas afford to wait three to five years for the Joyce plan to work for a resumption in Qantas international expansion to take place?”

I think the answer is ‘No.’ Let’s hope I’m wrong.

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