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RedQ: QF To Partner AK And MH, Flying MH A330s?  
User currently offlinecbrboy From Australia, joined Apr 2007, 137 posts, RR: 0
Posted (2 years 11 months 1 week 4 days 9 hours ago) and read 7768 times:

A very interesting piece in this morning's Sydney Morning Herald indicates that Qantas is talking to Air Asia as well as to Malaysia Airlines about the establishment of the proposed premium Asian carrier to be based in Kuala Lumpur. The story appears to have been written with information from Air Asia and Qantas sources and from Conor McCarthy, co-founder of Air Asia and friend of Qantas CEO Alan Joyce. McCarthy is said to be a lynchpin for the deal, helping Qantas to open doors in Asia. The involvement of Air Asia in the venture seems to be a new development, although perhaps it should be no surprise given the share swap between Malaysia Airlines and Air Asia last August.

The story claims that Qantas is pursuing a 'capital-light' deal under which a new ultra-premium airline based in Kuala Lumpur would:

  • - Use 15 A330 aircraft due to be delivered to Malaysia Airlines;
  • - Service Australia and other medium-haul destinations including China and India;
  • - Provide multi-class service, not just business;and
  • - Complement Malaysia Airlines' plans for a short-haul premium carrier.

Qantas is also said to be pursuing a code-share alliance with Malaysia Airlines with the ultimate aim of a revenue-sharing agreement similar to those it has with BA and AA.

The tone of the article suggests that this is far from a done deal: indeed we might speculate that its appearance is part of a Qantas strategy to gauge reaction or prompt some firming-up from the Malaysian end. The story indicates that Qantas still has a Singapore option in reserve, requiring $500m capital and using the A320neo aircraft already ordered.

I'm skeptical about the market for a new ultra-premium airline based in either Singapore or KL. I think it's very hard to see established customers being prized away from Cathay Pacific and Singapore Airlines. The big growth in wealthy Asian travellers is going to come from China and India, but why would those passengers want to travel via Kuala Lumpur rather than direct to their destination on existing carriers?

In related news, Air Asia X has apparently received Malaysian regulatory approval to fly to Sydney.

28 replies: All unread, showing first 25:
 
User currently offlineOzGlobal From France, joined Nov 2004, 2732 posts, RR: 4
Reply 1, posted (2 years 11 months 1 week 4 days 8 hours ago) and read 7660 times:

I doubt this will work or happen. Conor McCarthy. As soon as I heard the name and that he is a friend of Joyce, I knew they must be Irish and Ryan Air mates. Sure enough, McCathy's Linked-in account indicated he is past Director of Group Operations at Ryanair. So two Irish characters who made it big at the world's most hated low cost carrier are going to woo the Asian premium market away from direct O&D services on SQ and CX to fly between the key business capitals with involuntary stops in KL under the QF Australian brand, resented as 'non-Asian' in the region?

As someone has already proposed (Lufthansa?) RedQ should hub in SIN and do direct, 3 and 4 class Asian and European destinations on 787's and A330's, integrating with A380 services from Oz and providing direct access not offered by the bulk A380 services to LHR.



When all's said and done, there'll be more said than done.
User currently offlineAngMoh From Singapore, joined Nov 2011, 504 posts, RR: 0
Reply 2, posted (2 years 11 months 1 week 4 days 8 hours ago) and read 7608 times:

Quoting OzGlobal (Reply 1):
As someone has already proposed (Lufthansa?) RedQ should hub in SIN and do direct, 3 and 4 class Asian and European destinations on 787's and A330's, integrating with A380 services from Oz and providing direct access not offered by the bulk A380 services to LHR.

RedQ had their license application rejected in SIN, thanks to protests by SQ. This was reported in November or December.


User currently offlineDocpepz From Singapore, joined May 2001, 1971 posts, RR: 3
Reply 3, posted (2 years 11 months 1 week 4 days 6 hours ago) and read 7395 times:

AngMoh:

RedQ didn't even apply for a new AOC in Singapore, according to CAAS. Which means they did not start the process. There was nothing for Singapore to reject.

QF already holds TWO AOCs through Jetstar Asia and Valuair. They can easily convert Valuair into RedQ, and have Valuair operate under Jetstar Asia's AOC if they wished, and no further licence applications would be required. I wonder why they haven't done so.


User currently offlineAngMoh From Singapore, joined Nov 2011, 504 posts, RR: 0
Reply 4, posted (2 years 11 months 1 week 4 days 5 hours ago) and read 7298 times:

Quoting Docpepz (Reply 3):
QF already holds TWO AOCs through Jetstar Asia and Valuair. They can easily convert Valuair into RedQ, and have Valuair operate under Jetstar Asia's AOC if they wished, and no further licence applications would be required. I wonder why they haven't done so.

Ownership: RedQ was intended to be >50% QF owned. Jetstar Asia and ValueAir are 49% QF owned which is the limit under the AOC. Jetstar Asia has to tread carefully to remain a "Singapore owned and controlled carrier". They are pretty successful in that up till now, because they compete with Tiger, not SQ/Silkair. Once they start eating SQ lunch, politics and lobbying will go into high gear.


User currently offlineDocpepz From Singapore, joined May 2001, 1971 posts, RR: 3
Reply 5, posted (2 years 11 months 1 week 4 days 2 hours ago) and read 7093 times:

Quoting AngMoh (Reply 4):
Ownership: RedQ was intended to be >50% QF owned. Jetstar Asia and ValueAir are 49% QF owned which is the limit under the AOC. Jetstar Asia has to tread carefully to remain a "Singapore owned and controlled carrier". They are pretty successful in that up till now, because they compete with Tiger, not SQ/Silkair. Once they start eating SQ lunch, politics and lobbying will go into high gear.

3K is in theory 49% owned by QF, but for all intents and purposes it is 100% owned. THey consolidate 3K accounts into QF accounts, showing that under IFRS they have effective management control for consolidation purposes.

Of course SQ will lobby. SQ lobbied against the QF SIN hub in the 1990s and failed. SQ's parent Temasek provided initial seed money for Jetstar, but Temasek have since cashed out. Arguably, 3K is doing much better today without Temasek ownership than they ever did with Temasek ownership.

SQ lobbying against QF's new premium airline is no different from QF lobbying against SQ starting SYDLAX. Ultimately, the Singapore government thought that the gain to Singapore's economy through the QF Group's presence in Singapore outweighed any potential loss to SQ itself. Just as the Australian govt didn't think that SQ's presence on SYDLAX would give any incremental benefit to Australia.


User currently offlineJQflightie From Australia, joined Mar 2009, 1010 posts, RR: 1
Reply 6, posted (2 years 11 months 1 week 4 days 2 hours ago) and read 7025 times:

Quoting AngMoh (Reply 2):
Quoting Docpepz (Reply 3):
Quoting AngMoh (Reply 4):

Can i just say, RedQ hasnt even been decided as the name yet. Nothing has been announced yet internally, so all of this is pure speculation.
In regards to the A330's, would it be possible that they are the ones that AirAsia have on order, and as they are now pulling out of long haul ops, these are the ones being used for QF's Premium Carrier??
Also

Quoting OzGlobal (Reply 1):

Why cant this work? DL and UA do it out of Japan? Although the planes and crew remain under the DL and UA banner, the the underlying operation is alot cheaper to run! Which is what QF's plan is, just with a new name because the QF name cannot be used in the markets they want to be based.



Next Trip: PER-DPS-KUL-BKK-HKT-CNX-BKK-SIN-PER
User currently offlineIndianicWorld From Australia, joined Jun 2001, 3028 posts, RR: 0
Reply 7, posted (2 years 11 months 1 week 4 days 1 hour ago) and read 6957 times:

Seems like a big call to try and fill A330's and what happens with all those A320neo's they ordered?

KUL is not an easy market to work from, nor is it a particularly strong premium market, so there are many question marks around this.

D7 and MH have been cutting routes of late, trying to find profitability, so it will be interesting to see how all this pans out.


User currently offlinebill142 From Australia, joined Aug 2004, 8466 posts, RR: 8
Reply 8, posted (2 years 11 months 1 week 4 days 1 hour ago) and read 6914 times:

Quoting IndianicWorld (Reply 7):

I think the point is to sell seats beyond KUL, with KUL simply being a transit point.


User currently offlineAusA380 From Australia, joined Jan 2009, 310 posts, RR: 0
Reply 9, posted (2 years 11 months 1 week 4 days ago) and read 6820 times:

Quoting AngMoh (Reply 4):
Ownership: RedQ was intended to be >50% QF owned.

I don't think that could happen based on bilaterals needing the airlines to be majority owned by the country.

Quoting JQflightie (Reply 6):
Why cant this work? DL and UA do it out of Japan? Although the planes and crew remain under the DL and UA banner, the the underlying operation is alot cheaper to run!

My understanding these additional "freedoms" as post WWII outcomes (sames as the internal rights US carriers had in Europe), but countries are not likely to provide these additional freedoms as much these days.


User currently offlineJQflightie From Australia, joined Mar 2009, 1010 posts, RR: 1
Reply 10, posted (2 years 11 months 1 week 4 days ago) and read 6820 times:

Quoting AusA380 (Reply 9):
My understanding these additional "freedoms" as post WWII outcomes (sames as the internal rights US carriers had in Europe), but countries are not likely to provide these additional freedoms as much these days.

But are still used as a lower cost base then their North Asmerican based counterparts.



Next Trip: PER-DPS-KUL-BKK-HKT-CNX-BKK-SIN-PER
User currently offlineNUAir From Malaysia, joined Jun 2000, 1181 posts, RR: 0
Reply 11, posted (2 years 11 months 1 week 4 days ago) and read 6733 times:

Quoting bill142 (Reply 8):
I think the point is to sell seats beyond KUL, with KUL simply being a transit point.

Because premium passengers like connections? Maybe it makes sense for Europe-Australia/NZ services where you need to stop somewhere but as far as the rest of Asia nobody is going to want to fly from London to KL to Hong Kong when they can take CX directly.

You would have to have a pretty severe price difference to overcome the connection time and lack of price elasticity of a premium passenger...which sounds like a money losing proposition. It seems like the money could be much better spent on upgrading current premium services on Qantas long-haul in coordination with Etihad (rumored Oneworld) and BA so they can really take on Emirates. Taking on STAR and SQ in Singapore from KL with premium service is suicide.



"How Many Assholes we got on this ship?" - Lord Helmet
User currently offlinebill142 From Australia, joined Aug 2004, 8466 posts, RR: 8
Reply 12, posted (2 years 11 months 1 week 4 days ago) and read 6688 times:

Quoting NUAir (Reply 11):
Because premium passengers like connections?

And if the demand for a direct connection doesn't exist, you have to connect don't you? Sometimes connecting is an inevitable part of flying.

You also fail to see that this venture for Qantas is about capitalising on an emerging market. Simply upgrading its product won't solve the issues that Qantas faces.


User currently offlineJQflightie From Australia, joined Mar 2009, 1010 posts, RR: 1
Reply 13, posted (2 years 11 months 1 week 3 days 23 hours ago) and read 6559 times:

further to all this, 3K/VF already share maintainence costs and ground handling cost at each of their ports with AK ... so a tie up has been in force for a couple of years now.


Next Trip: PER-DPS-KUL-BKK-HKT-CNX-BKK-SIN-PER
User currently offlineOzGlobal From France, joined Nov 2004, 2732 posts, RR: 4
Reply 14, posted (2 years 11 months 1 week 3 days 21 hours ago) and read 6370 times:

Quoting JQflightie (Reply 6):
Quoting OzGlobal (Reply 1):

Why cant this work? DL and UA do it out of Japan? Although the planes and crew remain under the DL and UA banner, the the underlying operation is alot cheaper to run! Which is what QF's plan is, just with a new name because the QF name cannot be used in the markets they want to be based.

Mainly due to KL being a poor business hub for O&D travel to compete on premium traffic which is their target. Second because CX and SQ are better placed geographically and already have the market and the alliances they need to dominate. How will RedQ differentiate itself and win market share? Price only? Not enough if routing, frequency, alliance and brand are not established or correctly positioned.



When all's said and done, there'll be more said than done.
User currently offlineNUAir From Malaysia, joined Jun 2000, 1181 posts, RR: 0
Reply 15, posted (2 years 11 months 1 week 3 days 21 hours ago) and read 6355 times:

Quoting bill142 (Reply 12):
And if the demand for a direct connection doesn't exist, you have to connect don't you? Sometimes connecting is an inevitable part of flying.

I fail to see how connecting through KL from Bangkok or Manila to Europe is shorter than Dubai. If you live in most "developing" Asian countries you have direct connections to Europe via your national carrier already. And with the exception of Indonesia and the Philippines most countries in Asia already have pretty great premium service options or the option to take any other national airline from a neighboring market.

As far as countries in Asia that require a stop over on the way to Europe I can only think of Australia and NZ which I wouldn't really call developing.

Quoting bill142 (Reply 12):
You also fail to see that this venture for Qantas is about capitalising on an emerging market. Simply upgrading its product won't solve the issues that Qantas faces.

Correct. I'm looking at it from the perspective of MH/Air Asia who stand to lose big time on this venture.

KL just isn't a big enough O/D market to support a premium carrier and the premium options in Asia are actually already pretty good. I have been flying business in Asia for years and I can't remember the last time I had to connect in business class. I think 2 years ago I had to connect in Taipei going from Hanoi to Kaohsiung (but I did that by rail). Maybe between Australia and the other markets its a different story but would you rather connect via KL vs. Singapore/HK?



"How Many Assholes we got on this ship?" - Lord Helmet
User currently offlineordjoe From United States of America, joined Aug 2010, 746 posts, RR: 0
Reply 16, posted (2 years 11 months 1 week 3 days 13 hours ago) and read 5011 times:

KUL has light premium business traffic as it is, and business travelers never voluntarily schedule flights with stops, this will never work.

User currently offline9MMPQ From Netherlands, joined Nov 2011, 316 posts, RR: 0
Reply 17, posted (2 years 11 months 1 week 3 days 12 hours ago) and read 4699 times:

It is safe to say this story is borrowing from several things happening in Malaysia right now & it seems to tie in more with the expected further cooperation between QF & MH once the latter has fully entered the OneWorld alliance. Let's ignore the fact that premium traffic for MH ( & Kuala Lumpur ) has always been weaker compared to that of SQ & CX...

Quoting cbrboy (Thread starter):
The story claims that Qantas is pursuing a 'capital-light' deal under which a new ultra-premium airline based in Kuala Lumpur would:

RedQ has been floating now for some time & has so far been painted as another competitor to AK & MH in Kuala Lumpur. The notion that RedQ will be allowed to operate in this way while MH is already under severe pressure is ridiculous. Even with all the political BS going on in Kuala Lumpur i'd highly doubt anyone would be so stupid as to expose MH to even more competition on the home front.

The new ultra premium airline mentioned here to me seems to be the one MH is intending to start itself, to be known for now as MAS.

Or alternatively, AK's founder Tony Fernandes is also playing with Carthem Jet. A super-premium carrier proposed to use business jets.

Quoting cbrboy (Thread starter):
Use 15 A330 aircraft due to be delivered to Malaysia Airlines

So MH would transfer it's latest equipment for medium to long haul operations to this new airline effectively leaving it with only the A380, B777 & last few B747s while their short haul operations becomes MAS ? Don't buy it...

Quoting cbrboy (Thread starter):
Provide multi-class service, not just business

Are we still talking ultra-premium or is this story now contradicting itself ?

Quoting cbrboy (Thread starter):
Complement Malaysia Airlines' plans for a short-haul premium carrier.

Again i think this should be viewed more as the perceived further cooperation with QF in OneWorld.


All in all i'd say Alan Joyce & Tony Fernandes had another moment in the media & this article needs to be viewed against everything else now happening in Malaysia.



I believe in coincidences. Coincidences happen every day. But I don't trust coincidences.
User currently offlinebehramjee From Canada, joined Aug 2003, 4849 posts, RR: 44
Reply 18, posted (2 years 11 months 1 week 3 days 11 hours ago) and read 4580 times:

KUL-India premium? LOL no chance of that ever happening. KUL as a market overall is no where close to being premium as SIN/HKG/PEK/PVG/ICN/NRT are.

All MH needs to do is to abolish its F class cabin, update its J class long haul product on board its A330s/777s and 744s to a standard matching SQ/CX/EK/QR and it will be an attractive option for pax to consider. Until this happens, the same game of musical chairs shall continue.


User currently offlinetravelhound From Australia, joined May 2008, 1002 posts, RR: 12
Reply 19, posted (2 years 11 months 1 week 3 days 10 hours ago) and read 4352 times:

Quoting 9MMPQ (Reply 17):

I have a sneaking suspicion there has been mutual benefit in AirAsia and Jetstar competing with each other. For every marketing dollar spent 50% maybe spent on trying to persuade customers to fly your airline. The other 50% maybe spent on trying persuade customers to fly in the first place. Now if you have two airlines trying to persuade customers to fly for every marketing dollar spent there is an immediate gain of 50%.

On one hand QF, Jetstar, MH and AirAsia are forging strong business relationships with each other. On the other the are fierce competitors. What gives? These guys aren't silly.


User currently offline9MMPQ From Netherlands, joined Nov 2011, 316 posts, RR: 0
Reply 20, posted (2 years 11 months 1 week 3 days 4 hours ago) and read 3757 times:

Quoting travelhound (Reply 19):
On the other the are fierce competitors. What gives? These guys aren't silly.

Well, the jury is still out on that one...

A lot is happening in Malaysia & within MH & i doubt QF is looking to place itself directly in these situations with anything other then a cooperation framework as part of the OneWorld alliance.

This share swap between AK & MH was done just prior to the Malaysian competition law coming into effect at the start of this year, which is rather convenient. Concerns are being voiced that the Malaysian consumer will be facing increased airfares & less services domestically in the future, the airfare concern being fueled further by AK/D7s announced termination of routes to Europe & some in India.

The Malaysian competition commission is now looking into this merger while the securites commission is reviewing all trading data on the share swap. Insider trading has been rumored since the swap was done.

AK would seem to be gaining the most from the share swap while the benefit to MH remains to be seen. The notion that some people with strong links to AK have gained a seat on the MH board is already rather dubious.

[Edited 2012-01-14 20:36:09]

[Edited 2012-01-14 20:36:35]


I believe in coincidences. Coincidences happen every day. But I don't trust coincidences.
User currently offlineISTGRU From Australia, joined Jun 2011, 42 posts, RR: 0
Reply 21, posted (2 years 11 months 1 week 3 days 2 hours ago) and read 3598 times:

Quoting ordjoe (Reply 16):
and business travelers never voluntarily schedule flights with stops, this will never work.

If this is the case (and lots of evidence to suggest it is), its a major flaw in the Joyce SE Asia-hub plan. Why would anyone want to fly MEL - CAN with a change of plane in SIN or KUL when they can take a non-stop option on China Southern?

But the reality is that Australia is too big to connect everyone through SYD, and yet the population isn't big enough to support O+D hubs in each major city - so an Asian hub does have its merits. The QF / MH discussions are not a new thing and it is clear that the only way that QF's Asian venture could ever obtain permission to be based in KUL is if it is in cooperation with MH.

In 10 years time my personal view is that QF and MH will be in the same holding company. Thats my two cents anyway


User currently offlinejetlag73 From France, joined Sep 2011, 68 posts, RR: 0
Reply 22, posted (2 years 11 months 1 week 2 days 23 hours ago) and read 3430 times:

Quoting ISTGRU (Reply 21):
Why would anyone want to fly MEL - CAN with a change of plane in SIN or KUL when they can take a non-stop option on China Southern?

Well, a lot of people flying MEL-CAN don't use CZ direct flight. I know quite some, and they mostly use SQ via SIN, TG via BKK, or CX via HKG (then boat/car/plane).

Also, even if travelers connect in SIN/BKK/HKG, what would make them connect in KUL instead ? Prices ? Not sure about this when it comes to J/F pax.

Don't forget many frequent flyers have long time membership and good perks from their FFP/Alliance, and might not be willing to ditch them just for a couple of $$$, or just for the sake of flying thru KUL.

Same applies to Y pax, though granted to a lesser extent. Being a little cheaper than competition does not guarantee you the lion's share on a market. Many more elements should be taken into consideration (schedule, global network, FFP, alliances, comfort level...).
Some Y pax ARE sensitive to these elements, price can be only part of the equation here.

So overall, it seems to me a bit risky on AJ's part, but then again, what do we know ?


User currently offlineISTGRU From Australia, joined Jun 2011, 42 posts, RR: 0
Reply 23, posted (2 years 11 months 1 week 2 days 20 hours ago) and read 3234 times:

Quoting jetlag73 (Reply 22):
Also, even if travelers connect in SIN/BKK/HKG, what would make them connect in KUL instead ? Prices ? Not sure about this when it comes to J/F pax.

Don't forget many frequent flyers have long time membership and good perks from their FFP/Alliance, and might not be willing to ditch them just for a couple of $$$, or just for the sake of flying thru KUL.

All good points. One of the things that a QF / MH venture would have in its favor is the huge QF FF pool in Australia. QF may have had some troubles in 2011 but Australia still very much remains QF-land, especially for business travelers. DJ has only had a business class product for a few months and it will take them a lot of time to catch up. So QF frequent flyers would likely be willing to fly via KUL on a QF / MH oneworld airline.

Going back to CAN (just one of many examples), the Australian market cannot sustain non-stop QF flights from SYD, MEL, BNE and PER and funneling everyone through SYD just doesn't work. So an Asian hub that brings people from SYD, MEL, BNE, PER, ADL and DRW and then connects them across Asia has its merits - i hate to admit it but i'm a reluctant convert to the Joyce plan.


User currently offlinejetlag73 From France, joined Sep 2011, 68 posts, RR: 0
Reply 24, posted (2 years 11 months 1 week 2 days 8 hours ago) and read 2866 times:

Quoting ISTGRU (Reply 23):
So an Asian hub that brings people from SYD, MEL, BNE, PER, ADL and DRW and then connects them across Asia has its merits - i hate to admit it but i'm a reluctant convert to the Joyce plan.

But that would mean drop SIN as a QF hub in favor of KUL ?
Or use both KUL and SIN as hubs, at the risk of internal war ?
Better one strong hub than 2 weaker hubs, especially in SEA's fierce competitive environment.
Hmmm...all this looks a bit dodgy to me...


25 koruman : Wow. Each successive rumour about Qantas' activities in Asia makes them sound more clueless and vulnerable to being taken for a ride. Which is why Red
26 Post contains links Docpepz : And at the same time, Jetstar says it is going to boost its presence in Singapore, and is expected to invest SGD500 mil over the next few years: Jetst
27 jetlag73 : Pretty much everyone on this thread seem to agree. QF just looks like a headless chicken running. "We got to do something, we got to do something !".
28 Post contains links cbrboy : The replies here have more or less reached a consensus that it is hard to believe that existing players in Malaysia would partner with Qantas to launc
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