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Qantas Airways is operated as part of the publicly listed Qantas Group. It is the national airline of Australia with major hubs in Sydney and Melbourne and secondary hubs in Perth and Brisbane. Utilising a large fleet of narrow and wide-body Airbus and Boeing aircraft, Qantas operates an extensive domestic and international network, with services to New Zealand, the Americas, Asia, South Africa and Europe. Regional services are provided by subsidiary, QantasLink. Qantas is a founding member of the oneworld alliance.
Location of Qantas Airways main hub (Sydney Kingsford Smith Airport)
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4,546 total articles
392 total articles
Why don’t women run airlines? It is one thing to recognise that gender imbalance is in no-one’s best interests. But shifting the status quo is more than a little troublesome, especially in an industry which is still embedded in a technical and operational environment.
The range of options, from full-frontal onslaught through to much more subtle trajectories, offers greater hope than in the past. Imposed quotas are controversial, informal and formal women’s networks are spreading quickly, but if there is one area where unanimity seems likely, it is in the formalisation of mentoring as a means to aiding women to access formerly male-only domains.
And here there is, as always, an essential requirement – a hospitable corporate culture.
Australia domestic airline market outlook: Qantas Group reins in capacity as Virgin continues growth
Throughout the global financial crisis, Australia's domestic market defied global aviation trends. Although LCCs made inroads and grew the market, short-haul corporate travel – mostly in premium cabins – remained strong. A domestic market serving 20-odd million people produced profits in excess of AUD1 billion. More recently those profits were slashed during a capacity war between Virgin Australia, seeking a larger position in the market, and Qantas, which fought to defend its position.
Qantas applied the capacity brakes in the first half of fiscal 2015, removing seats across both Qantas and Jetstar for the first time since the capacity growth spurt. Capacity forecasts show the group continuing to remove capacity in 2H2015. Qantas is forecast to end FY2015 with a 3.5% reduction in domestic ASKs and Jetstar a 2.3% reduction. The smaller Virgin Australia will meanwhile grow 2.2% and its smaller LCC unit Tigerair will grow 8.9%.
After Qantas' international division posted a profit for the six months to 31-Dec-2014, the division's first positive result since the Global Financial Crisis, the division needs to move from profit to sustainability and delivering returns. But Qantas is now considering international expansion after many years of reductions. A flight to Tokyo has been added, seasonal services to Vancouver have returned, there are supplementary long-haul services and Perth-Singapore may even be re-opened. Reports suggest a return to Sydney-San Francisco is even possible.
“We continue to operate below our full potential,” Qantas reported in a recent government submission. But as Qantas considers international growth, it confronts a markedly different international environment. Qantas argues that Australia viewed it as “expendable” and gave away international traffic rights without receiving enough in return. Qantas seeks to slow liberalisation under the justification of enforcing Australia’s legal duty to support a local aviation industry. This is effectively a mask for protectionism, begging the question: what is the value of a local aviation industry?
China Southern Airlines nearing target of 55x flights to Australia/NZ, continuing international push
Chinese aviation often features "light switch" developments: the sector can fumble along and then suddenly, as if a switch is flicked, change mindset to an ambitious target and work tirelessly to achieve it. Such was China Southern's 2010 plan to focus on Australia/New Zealand. After having not even a daily service to Sydney, the relatively unknown Guangzhou-based airline is to have 55 weekly flights in 2015. And China Southern now looks likely to achieve the goal as the airline will 53 weekly flights to the region beginning in mid-2015. Increases over the busier holiday season could tip it past the 55 mark threshold.
The next challenge will inevitably be sustainability. China Southern's Australia/New Zealand capacity fluctuates more than other major Asian airlines, with its strong outbound-China market having sharp peak and off-peak seasons. Operating a full year of 55 weekly flights may be some years away. But there is no doubt the aviation and tourism markets are forever changed, with more to come. Not so long ago China was a small blip for Australia but now there are services from the Big 3 as well as two smaller carriers, along with a proposed JV between Qantas and China Eastern as well as Air New Zealand and Air China, developments hardly on the radar a few years ago. China Southern's international push – in Australia and beyond – has pushed international capacity growth from 19% to 31% of ASKs.
Virgin Australia's results for the six months to 31-Dec-2014 suggest stability is returning to Australia's small but always dynamic air transport sector: the main airlines are making acceptable returns on their domestic networks while international is under-performing. In Virgin's case, its AUD103.8 million (USD81.3 million) domestic EBIT profit was cut in half by international's AUD49.5 million (USD38.7 million) loss. For the first time in many years, Qantas' international network is profitable while Virgin's is not.
Virgin's domestic profit more than tripled as Qantas and Virgin ended their capacity war; it had produced market growth, but damaged yields. The improving domestic result was in comparison to deterioration at Virgin's smaller international network. Virgin has a substantial virtual network, but only a small international operation of its own, mostly focussed on leisure flights, where competition is stiff - and ultimately these are not core to Virgin's new corporate, up-market focus. Perhaps an indicator of the challenges Virgin has faced restoring domestic profitability, the airline is only now turning its attention to international. Options include withdrawals or transfer of services to wholly-owned LCC unit Tigerair Australia.
There's no room to stand still in the airline business. Qantas CEO Alan Joyce's often controversial measures during a turbulent four years are being vindicated. His aggressive transformation of Qantas appears now to be showing remarkable dividends, with the prospect of going from a billion dollar loss in 2014 to a billion dollar profit just a year on. Next on the agenda will be growth.
Qantas International has returned to profitability for the first time since the global financial crisis (GFC); this is partially due to depreciation gains following large write-downs in FY2014, but there is a fundamental redirection too. Qantas Domestic has bounced back now that the domestic capacity war is over and with room for further improvement. Jetstar has returned to profit but is still under-performing compared to previous years, again with more upside.
Lower fuel costs will deliver Qantas a minimum AUD500 million benefit, setting the group up for a full-year profit around AUD1 billion. The fuel tailwind is an added bonus. Even without it, there are structural changes that will continue to flow through irrespective of that windfall. "Today we can see a bright future," Mr Joyce says.
Yet that proclamation means Qantas must address calls for it to return to growth now that its dark days of restructuring are, if not all behind it, at least nearing fruition. Initially growth is expected to be mostly in the international market as the relatively mature domestic market may be challenged by weak consumer sentiment. For the longer term international growth must be the goal; this will hinge on the synergies Qantas can gain with its key international partners, and if Qantas is successful in lobbying for a slowdown in foreign carrier growth.