Dalecary From , joined Dec 1969, posts, RR: Posted (14 years 9 months 2 weeks 6 days 18 hours ago) and read 3131 times:
D-day looms for Qantas cut-price airline
By Mark Todd
Qantas Airways' board will this week consider a detailed plan to launch a low-cost international airline as the company tries to identify ways of expanding in a fiercely competitive aviation market.
The new airline would target markets, mostly in Asia, that are not profitable for Qantas to serve under its current cost structure. It is believed the proposal calls for the creation of a new entity operating under a separate management team and using a fresh logo, leaving the Flying Kangaroo to the main brand.
Analysts believe Qantas could launch the airline for relatively little outlay. Aircraft leases will comprise the bulk of the costs, as the company already has all the requisite terminal and administrative infrastructure in place.
It is estimated Qantas could start a service of six Boeing 767s using only $400 million in capital. Qantas would inject as much as $100 million in equity into a new subsidiary and raise $300 million in debt funding.
Qantas would put employees of the new carrier on separate, presumably inferior, awards and conditions. The airline's planes would have only one class of seating.
Macquarie Equities suggested in a recent research note that Qantas needed to expand its international business away from the traditional routes of the US, Europe, and Japan to increase revenue at better than the 5 per cent to 7 per cent at which the market is growing.
A low-cost carrier could open "at least" another 10 routes for Qantas. Potential routes include Malaysia, Greece, Vanuatu, Vietnam, Korea, China, United Arab Emirates, Sri Lanka, and secondary ports in Thailand and Japan.
Macquarie estimated a low-cost carrier could break even with a load factor of only 54 per cent, or a little more than half a plane load. Qantas's current threshold on its international business is 66 per cent, meaning it is restricted to flying the busier routes.
Earlier this year, Qantas was forced to suspend uneconomical services to Canada and China.
Qantas's board will meet this Wednesday to discuss the proposal. Some analysts are expecting a decision on a cut-price airline to accompany the full-year financial results scheduled for issue on Thursday.
A year of tough domestic and international competition, spiralling fuel prices and a weak dollar have extracted a heavy toll on the company. On average, analysts forecast Qantas earned a net profit of $320 million in the 12 months to June 30, 2001, down more than 25 per cent from a year ago.
The board is also expected to consider the outlook and whether to further investigate a partial float of the company's wholesale travel division, Qantas Holidays, and its $500 million worth of terminal assets.
On another front, Qantas remains busy trying to garner support for its proposal to take a substantial stake in Air New Zealand as a precursor to closer relations between the two carriers. Late last week, Qantas chief executive Mr Geoff Dixon held talks with Mr Rob Cameron, representing the joint committee established by the Australian and New Zealand governments to consider the issue.
Air NZ has favoured a plan for major shareholder Singapore Airlines to increase its stake to help provide funds for a much needed $4 billion fleet upgrade. The deal requires NZ government approval. A decision is expected by the end of the month.
Gardermoen From Australia, joined Jul 1999, 1529 posts, RR: 1
Reply 8, posted (14 years 9 months 2 weeks 6 days 1 hour ago) and read 2982 times:
Ceilidh, Actually, I have always thought that the Impulse brand would be a good one for its low-cost start up. That cockatoo logo is very impressive, yet has this "low cost"/leisure-like feel to it, without it looking trashy. It looked really good on the 717s, so imagine it on a bigger long haul jet.
Perhaps they could bring that brand back to the skies....
Zizou From Australia, joined Oct 2000, 1536 posts, RR: 4
Reply 10, posted (14 years 9 months 2 weeks 5 days 17 hours ago) and read 2961 times:
Interestting that they are looking at routes to Sri Lanka (of all places!) and the UAE. Would they fly direct? Or stopover in Singapore, Kuala Lumpur etc? With what aircraft? I suppose the B767-300s are probably the frontrunners...
Aussie_ From Australia, joined Dec 2000, 1767 posts, RR: 4
Reply 11, posted (14 years 9 months 2 weeks 5 days 16 hours ago) and read 2955 times:
I wonder whether they'll be a totally seperate entity or still hosted in the QF reservations system with a QF flight number code.
Another interesting question is whether QF Frequent Flyer will apply to the airline's services. Perhaps 0.5 FF miles per mile flown???
I noted Greece in the list of destinations - one of the obvious gaps in the QF network. However 763s into ATH maybe difficult using 767s if a stop is made in SIN or BKK as most QF flights do today. Perhaps the idea is to use Sri Lanka as a stopover for Europe services.
I would also tip Rome becoming a destination for this airline, as QF have often stated they have bumper loads but minimal profitability on these flights, due to Italys VFR destination status.
I also wonder whether QF might start flights to LON or elsewhere in the UK with this airline (also big VFR market), transferring all cheap seats on their current flights onto this new airline (say 2x QF to LON, 1x QFlite daily) thus allowing QF-proper planes higher yields.
Perhaps some of the remaining 742s or 743s could be used for FCO, ATH...
Mark_D. From Canada, joined Aug 2001, 1447 posts, RR: 5
Reply 12, posted (14 years 9 months 2 weeks 5 days 16 hours ago) and read 2956 times:
It would be nice if Impulse came back somehow, but.. probably too soon after the takeover, and anyway Qantas probably wouldn't be the ones to do such a thing either. Seems like they're really throwing around the flak with the timing of this, so overlapping the big AN/SQ etc. decision still being pondered, in Wellington.
OdiE From United States of America, joined Jan 2001, 1641 posts, RR: 1
Reply 15, posted (14 years 9 months 2 weeks 5 days 11 hours ago) and read 2938 times:
With this low-cost carrier, does this means that the service and the seats of this aircraft is compromised? Like those in the charter flights where the seat pitch is only 30" and stuff? And no PTV's and stuff? I don't think that an all Coach Class thing will do, at least have some Business Class seats.
I don't think they will fly into London or even Singapore as well as they do generate high yields for Qantas with their high load factor for their premium passengers!
QantasAirways From Australia, joined Mar 2001, 1280 posts, RR: 3
Reply 16, posted (14 years 9 months 2 weeks 5 days 6 hours ago) and read 2926 times:
I completely support this idea!
I heard that they did it just to compete on levels with Singapore Airlines (though not the quality). But I am sure Asia is an excellent place to locate a budget airline - a lot of passengers would choose it!
I am excited
I really hope they name it something like Australian Airlines (Though I would have liked that better for Qantas) or even better Qantas Asia