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QF To Get Challanged By Long-haul Carriers  
User currently offline777ER From New Zealand, joined exactly 11 years ago today! , 12334 posts, RR: 18
Posted (9 years 10 months 3 weeks 3 days 3 hours ago) and read 4987 times:
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DOMINANCE by Qantas and higher fares on some routes means Australia remains a potential target for low-cost, long-haul airlines, according to industry veteran Bill Franke Mr Franke, who is chairman of Singapore Airlines' offshoot Tiger Airways and a managing partner at US-based transportation equity fund Indigo Pacific Partners, said there were significant hurdles to starting up long-haul, low-cost airlines, which made a successful start-up in Europe or the US unlikely.

Asia was also high risk, he said at the Centre for Asia Pacific Aviation's low -cost airlines conference in Singapore.

He said long-haul carriers needed expensive wide-body aircraft as well as marketing and maintenance facilities at each end of the flights.

They also faced operational challenges and restrictions on services.

In round numbers, if it took $50 million to start up a low-cost, narrow-body airline, it could take $200 million to set up a long-haul operation.

Existing airlines would also "fight to the death" to prevent a low-cost airline undermining one of their few remaining sources of profitable operations. But, he said, there were some markets where the idea could work.

"And because of the cost structure and fare structure on the long-haul markets out of Australia, probably somebody will look at it or should look at it," Mr Franke said .

"I know for a fact that there are two or three investor groups that have nudged the idea around and talked about whether it was timely to pursue it and for a variety of reasons chose not to do it.

"But because of the dominance of Qantas in the marketplace on the international routes and because of their fare structure, it is something that will be susceptible to competitive incursion. "

Mr Franke said a decision to allow existing airlines to pick up passengers in Australia and carry them to the US would make it harder for a low-cost, long- haul airline such as a Virgin Blue offshoot to enter the market.

"Established airlines are flying large airplanes with a a lot of seats and they can always make some seats available at the lowest possible fare in those aircraft," he said.

"If Qantas had competition, it would create some problems for a low-cost start-up because you'd have not only Qantas seats, you would have Singapore Airlines seats ... That would have very competitive pricing as to some seats on every airplane.

"So I think that would be a business opportunity that competition might obviate. In other words, you might not have that opportunity. "

Addressing longer-term trends, Mr Franke said few opportunities remained to make money from investing in low-cost airlines in western Europe, the US, southeast Asia and Australia.

He believed opportunities for investing in the low-cost carriers still existed but were not for the faint of heart.

They centred on developing markets such as eastern Europe, developing Africa, Turkey and the Middle East, Russia, India and China.

"Low-fare airline service represents an opportunity to introduce these people to air transportation for the first time," he said.

"However, pursuing investment opportunities in these regions won't take you down an easy path. "

Other possible investment opportunities included the private and general aviation jet industry, air taxis and all-business-class airlines.

Mr Franke also expected a new generation of multi-class, full-service airlines with a low-cost structure driven by the ability to start with a clean sheet of paper.

Unlike low-cost carriers, the new airlines would provide high-quality accommodation for "frill seekers" and employ a marketing strategy that focused on niche customers.

"We believe there is good potential to generate revenue in the West by using proven strategies such as networks and multi-class configurations, but doing so with a cost structure that approximates the low-cost model. "


SOURCE: The Australian - Steve Creedy and http://www.ozflight.com.au

12 replies: All unread, jump to last
 
User currently offlineAllpress From Australia, joined Jan 2005, 73 posts, RR: 0
Reply 1, posted (9 years 10 months 3 weeks 3 days 3 hours ago) and read 4919 times:

QAntas will keep there long haul trips i reakon


landing is just a controlled collision with earth
User currently offlineBill142 From Australia, joined Aug 2004, 8466 posts, RR: 8
Reply 2, posted (9 years 10 months 3 weeks 3 days 2 hours ago) and read 4854 times:

QAntas will keep there long haul trips i reakon

Yes... but competition may get tougher for them.


User currently offlineAussieItaliano From United Kingdom, joined Jan 2005, 442 posts, RR: 0
Reply 3, posted (9 years 10 months 3 weeks 2 days 16 hours ago) and read 4557 times:

In about 2 weeks, John Anderson will let us know how soon QF will be getting competition on the US routes. I think that will be telling as to how much Australia will be willing to let foreign carriers (and eventually foreign LCC's) into the Australian market.


LHR - The Capital of the World
User currently offlineJc2354 From United States of America, joined May 2004, 589 posts, RR: 0
Reply 4, posted (9 years 10 months 2 weeks 6 days 1 hour ago) and read 4287 times:

I really wouldn't put much faith in anything Mr. Franke says. He really lacks any experience in anything, yet has an impressive resume for some reason. His only forte, if you will, is becoming CEO of companies that are fixing to emerge from bankruptcy, and taking credit for their miraculous turnarounds.


If not now, then when?
User currently offlineOzGlobal From France, joined Nov 2004, 2732 posts, RR: 4
Reply 5, posted (9 years 10 months 2 weeks 5 days 19 hours ago) and read 4131 times:

"But because of the dominance of Qantas in the marketplace on the international routes and because of their fare structure, it is something that will be susceptible to competitive incursion. "

What the ... ?

Lack of competition from LCC's and on International Routes???

i) QF competes directly with a successful LCC domestically : VirginBlue
ii) QF has HUGE competition on Kangaroo (Oz - Europe) and Asian routes: think: BA, SQ, EK, TG, MH, CX, and most other asian carriers!!
iii) QF operates two of its OWN LCC's Jetstar (domestic) and Australian (Int'nl)
iv) The ONLY route without stiff competition is Oz - LAX with is shared only with UA, and on this topic he is silent...

So what IS this guy on about??



When all's said and done, there'll be more said than done.
User currently offlineNumberTwelve From Germany, joined Dec 2004, 1431 posts, RR: 9
Reply 6, posted (9 years 10 months 2 weeks 5 days 18 hours ago) and read 4072 times:

OzGlobal, I agree.
Before Virgin Blue started Service the Australian domestic prices were very high. But just compare the Europe routes from QF, they have very low yield.

It's a mix of all the routes QF is flying - just talking about one market and judging QF that their fares are high, is just unfair.

And when SQ is crying, QF has traffic rights from SIN to Europe, so they should keep the ball flat - SQ uses SIN as a hub for East Asia and Australia and they have big advantages due to their hub. So it's little strange to say, QF is unfair.


Some pick out the raisins , others have a good mix in their network



signature censored by admin - so check my profile
User currently offlineAirbazar From United States of America, joined Sep 2003, 8650 posts, RR: 10
Reply 7, posted (9 years 10 months 2 weeks 5 days 18 hours ago) and read 4040 times:

My opinion is that this dogfight for the Oz-USA routes is far more important than just the yields on those routes. You have to look at the big picture. You can almost say that the Oz-LAX market is what enables Qantas to be a World player in the aviation industry. It would be interesting to see what percentage of their anual earnings comes from the Oz-USA routes, but I venture to guess that it's high. Without the money from those routes their footprint in the aviation industry would likely be far smaller. Can you imagine what SQ has to gain without QF (or with a smaller QF), at their hub in SIN?

User currently offlineETA Unknown From Comoros, joined Jun 2001, 2089 posts, RR: 0
Reply 8, posted (9 years 10 months 2 weeks 5 days 17 hours ago) and read 3990 times:

Agree with reply 4 above- Mr. Franke appears to just be spewing garbage.
As for low cost long-haul carriers- every Asian airline falls into this category compared to QF! I guess Steve Creedy of The Australian needed filler...


User currently offlinePhilSquares From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 10 months 2 weeks 5 days 17 hours ago) and read 3978 times:

1) Perhaps ETA Unknown could enlighten me in his comment that every Asian airline falls into this category compared to QF!. I guess I would challenge that remark.

Secondly, SQ's argument for 5th freedom rights from OZ-US is more than just
NumberTwelve's characterization of SQ is crying!. Qantas vis a vis Jetstar Asia has started their own LCC based in Changi. So, from their perspective the Singapore government is keeping the "ball flat" what ever that means.

I honestly think the consumer would benefit from more competition on the OZ-US routes. The traffic SQ really would like to capture is the premium market. Right now there are two choices, QF and UA. I would say QF and SQ are on one level and then UA is perhaps a few notched down. I think if you look at the amount of traffic on the routes, you will see the premium cabins are consistently full, while the economy cabin loads fluctuate with the seasons, just as the price does.


User currently offlineETA Unknown From Comoros, joined Jun 2001, 2089 posts, RR: 0
Reply 10, posted (9 years 10 months 2 weeks 5 days 14 hours ago) and read 3896 times:

PhilSquares: every Asian airline has lower operating costs than QF...
Voila enlightenment!


User currently offlineOzGlobal From France, joined Nov 2004, 2732 posts, RR: 4
Reply 11, posted (9 years 10 months 2 weeks 5 days 13 hours ago) and read 3876 times:

You can almost say that the Oz-LAX market is what enables Qantas to be a World player in the aviation industry. Airbazar

If you mean "historically" then no: QF along with BA would be the world's most pioneering global players in terms of reach and coverage, having both pioneered the "Kangaroo route" LHR-Oz and "Around the World Service" in the early 20th century.
If you mean "financially" and at this moment in history, then MAYBE. QF actually obtaines 1/3 of its total profit on OZ-LAX. This is WAY out of proportion to the traffic volume (which itself is extremely healthy at 37 744's weekly!!!). Hence, the footprint my be smaller, as you say, but QF has always been a "world player" in terms of reach and coverage.

Ozglobal



When all's said and done, there'll be more said than done.
User currently offlinePhilSquares From , joined Dec 1969, posts, RR:
Reply 12, posted (9 years 10 months 2 weeks 5 days 12 hours ago) and read 3836 times:

ETAUnknown:

Voila, would you care to supply the data? I think you'd have a hard time backing that up for some carriers such as CX and SQ.

So until you can qualify your statement, I think it's rubbish.

As you say, Voila That.


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