BOC Aviation CEO Robert Martin, speaking at CAPA's Financing the Asian Aviation Revolution conference, stated (07-Sep-2012) the Asia Pacific region needs to enhance the number of cross-border leases. Excluding Japan, Asian banks tend to lease within their country, Mr Martin said. Notable exceptions include the inroads Cathay Pacific and Emirates have made in Singapore. Critical to improving this is the need for local cross-border currency swap markets.
Asia must have greater cross-border leases: BOC Aviation
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Qantas achieves financial sustainability, now takes on Singapore Airlines and Cathay Pacific
Qantas on 24-Aug-2016 delivered its second consecutive AUD1 billion annual profit, indicating that the long restructuring under the tenure of CEO Alan Joyce has not only worked but created a stronger Qantas. The group has weathered the boom and bust of the Australian resource economy and times with Asian LCC JVs; has turned Gulf and Chinese competitors into partners; and has risen above a key competitor's influx of foreign shareholding, which fuelled an unsustainable capacity and product war.
The question for Qantas is what next. Domestic has returned to a comfortable duopoly and growth is on the wane, while international partners will contribute higher growth by putting passengers onto the domestic Qantas network. Loyalty, a stable business, is growing and profitable but does not capture Mr Joyce's passion. Internationally, North America is Qantas' anchor. The continent accounts for one third of Qantas' now profitable international capacity. Qantas and its proposed partner American Airlines dominate, holding 42% of the Australia/New Zealand-North America market. It is a profitable but not very emotional business, although it could move to new 787-9 routes to Dallas or Chicago. Where Qantas remains strategically keen is to Asia and Europe, where its historical deficiency helped rivals Singapore Airlines and Cathay Pacific to rise to their powerhouse status.
The competition with SIA and Cathay is longstanding but reinvigorated: SIA has reiterated its desire to operate between Australia and the US, while Qantas blames Cathay for squashing the proposed LCC Jetstar Hong Kong. Qantas may not be able to beat SIA and Cathay entirely, but for the first time in its history Qantas believes it can compete with them on cost. Qantas seeks mainline and Jetstar growth to and within Asia. Qantas is weighing a European restructuring that could result in the launch of 787-9 flights between Perth and London – the first nonstop flight between Australia and Europe. Qantas may not be as big as it used to be, but it is smarter, more agile and more profitable. Qantas has evolved, but its competitors appear less stable. This is a time to seize momentum and rebuild Qantas' flagship status.
Qantas' first 787 routes, Perth-London nonstop and Melbourne-LA, address urgent strategic needs
Qantas' first regular 787 services are a year away, but the airline is already announcing the initial routes so it can increase its proposition in deeply significant markets (and also begin preparations while avoiding possible media leaks). The well-flagged Perth-London nonstop service was announced first, but the first route to be flown will be Melbourne-Los Angeles from 15-Dec-2017.
Perth-London nonstop is less about the actual market between Perth and London (it is small) and more about Qantas connecting the rest of Australia with a one-stop proposition via an Australian port with an experience that Qantas can intimately control. Even with Qantas' successful restructuring and cost base reduction, it will still need to command a yield premium.
Nonstop to London, an unprofitable market not expected to turn to black in the short term, is also about the prestige and marketing value of being the only airline to operate Australia-Europe nonstop. Melbourne-LA was likely a late change, prompted by US rejection of its proposed JV with American Airlines. The JV would have resulted in American entering the Melbourne-LA market; Qantas' 787 will instead provide the necessary boost in presence of a market that has become more competitive.