Qantas eyes Singapore hub
By Scott Rochfort
August 18, 2003
Qantas plans to investigate the viability of establishing a low-cost operational hub in Singapore as the Australian and Singaporean governments prepare to resume talks over a long-awaited open skies agreement on September 22.
With Singapore Airlines keen to secure rights to fly the high-yielding Australia-US route, Qantas is understood to be working on battle plans to take the fight to Singapore Airlines in its home port.
Qantas and major shareholder British Airways already have "seventh-freedom" rights which allows them to set up bases in Singapore. Talk of Qantas's plan - dubbed Operation Calypso - reignited last week when the Flying Kangaroo revealed plans to restructure its various operations into separate business units.
In a move reminiscent of the Singapore Airlines restructure several years ago, the Qantas units will include aircraft operations (covering engineering and crew), maintenance, freight, catering, the Qantas airline and the Cairns-based budget carrier, Australian Airlines.
It is understood the Qantas airline will be divided into International (Asia, Europe and the Americas), Domestic, City Flyer, Leisure and, significantly, Asia.
It is the additional "Asia" segment that has raised talk of a possible move into Singapore.
The speculation comes as Qantas and Air New Zealand get a final opportunity to put their case for an alliance to the New Zealand Commerce Commission. A five-day hearing in Wellington starts today, with Air New Zealand's Ralph Norris and Qantas chief executive Geoff Dixon due to address the commission.
The hearing adds to a hectic week for Qantas. The airline is expected to report on Thursday a full-year profit for 2002-03 of around $348 million, down $80 million from a year ago due to a drop in demand caused by the SARS crisis and the Iraq war.
Qantas public affairs manager Michael Sharp said he was unaware of plans for a move into Asia.
But with Qantas set to cut labour and maintenance costs by diverting 25 per cent of its trans-Tasman capacity through its New Zealand subsidiary, Jet Connect, a move to Singapore could help Qantas lower costs to Europe and Asia through what is its largest international hub. The main obstacle could be the response of the 14 unions that cover its workforce.
Singapore Airlines said it would "naturally not stand in the way" if Qantas set up a base at Changi Airport.
"For a long time we have opposed protectionism and championed liberalised markets because we believe it brings out the best in all of us in the industry," Singapore Airlines public affairs manager Innes Willox said.
"We have never sought to block or oppose any carrier from competing against us anywhere because that is not our style. Any consumer or in-bound tour operator in Australia would agree that competition can only be good for anybody who wishes to travel anywhere by air," he said.
Singapore Airlines has held off setting up a third domestic carrier in Australia as the SARS crisis and Iraq war battered the aviation industry. However, the airline's Sydney-based spokesman, Stephen Foreshaw, said the plans were back on the radar.
Centre for Asia Pacific Aviation consultant Ian Thomas said the main obstacle for Singapore Airlines would not be costs, given the relatively small amount of cash for Virgin Blue to take off, but access to Sydney Airport.
Sounds really interesting. This would give QF
an even stronger position in Oneworld, they would be the south east asian & australia partner.
I like work: it fascinates me. I can sit and look at it for hours. Jerome K Jerome