June 2011 Archives

For some, a recent Hitler parody video explains all that is wrong with Qantas. But for those wanting a more insightful and accurate account, look no further than 13 words chief executive Alan Joyce delivered last week about Qantas International: "It has achieved its required returns only three times in the past 15 years."

And if you think the figures are cooked, Joyce adds that "the good years have not been good enough to offset the bad."

The statement begs the question how Qantas managed that record and did not think it prudent prior to February to announce it would return its international division to profitability.

It also partially exonerates Joyce as Mascot's persona non grata since the problems he face are not ones he exclusively created but rather inherited from predecessors including Geoff Dixon and James Strong, the latter of whom resides on the Qantas board. Perhaps that explains why Joyce chose to reveal such an unflattering record.

Joyce was barely two and half years into his tenure when he announced a turn-around for the international division, details of which will be made public at the carrier's 24 August annual results briefing. While it can be asked why Joyce waited 2.5 years, it should also be asked why Strong and Dixon, let alone the board, never bothered.

Perhaps the answer is complacency. Qantas had a domestic monopoly, and more recently a frequent flyer programme, that could prop up a loss-making international network. Cue the statement, "The Qantas Group has made an annual profit every year since 1995, a claim only two other major full service carriers can match."

The international network was critical as it gave the staple domestic passengers and corporations international flight options, thus creating a seamless single-carrier preference. As Qantas said in its application to the ACCC for a joint business agreement with American Airlines, "the viability of Qantas' entire portfolio of businesses depends on a viable international business."

But the status quo is no more. The trans-Pacific duopoly has ended and Asian and Middle Eastern carriers with lower cost bases have entered. What is not said is the future of Qantas domestic. While it may continue to be profitable, the yields and revenue volume should shrink as a result of Virgin Australia's entry into the corporate market.

Qantas, however, spent years--at least 15--being complacent. That is how a middle seat almost became standard in business class, enhanced benefits are only now being implemented with American Airlines, and, for an anecdotal reference, how flight attendants failed to pick up a dirty spoon.

As we head into the third day of the Paris air show (our fourth day covering the show), it is interesting to compare the local and global perspectives of the show.

Case in point: the Ryanair and Comac announcement. In Australia the Sydney Morning Herald is running with the headline "Ryanair steals spotlight at airshow". Let me give you a behind the scenes look at this event: in downtown Paris, a half hour away from Le Bourget, the Ryanair and Comac press conference kicks off...with only one member of the media present.

That journo happened to be my colleague, Ghim-Lay Yeo, who got told by Ryanair chief Michael O'Leary, "You're the only media here. You must have some influence." (Cheers. We'll be expecting lots of interview opportunities.) The air show buzz has a Boeing executive saying they expect to work with Ryanair for many years to come, so form your own opinion of the Comac partnership.

No single event has yet to capture the air show's attention. Airbus as usual is riding on its stockpile of order announcements while Boeing hopes to woo the crowds with its three new jets: the 747-8F, 747-8I, and 787-8.

The notable occurrences have been Garuda Indonesia's order of A320neos for its Citilink division, making the carrier the first major 737 customer to go for the neo. Pressed on reasons for the switch, Garuda chief executive Emirsyah Satar made general statements during a press conference.

I got the impression the order was a reflection of Airbus discounting and not a clear-shot capability and performance win over the 737 for the neo. TransAsia and Airbus announced an order for A321neos, adding to the type's growing popularity in the region.

And then of course there was the meet-and-greet between an  A380 wing and a hangar, typical witticisms from Airbus sales chief John Leahy (he said the Airbus employee responsible for a "sloppy" press release should go "work for Bombardier"), and a display poster accidentally left out in the open showing the special livery that will adorn ANA's first 787.

The air show may change pace on Wednesday during one of the few commercial announcements Airbus has lined up. One of those announcements could be from AirAsia for A320neos in a record-breaking order.

One item this air show has lacked, as far as I've heard, is any mention of the ashcloud. Sorry about that.

The series of bio-derived jet fuel demonstration flights that commenced in 2008 with Virgin Atlantic and later Air New Zealand left no doubt biofuels could be a reality in aviation, and the flights helped start the biofuel certification processes.

As certification is now expected imminently, there is a debate emerging over what the next step should be.

If you're a government, you would follow US Representative Jay Inslee of Washington's view that airlines need to establish supply chains with feedstock farms to start the commercialization of biofuels. As he told Platts: "We know this works; we know we can fly airplanes. We've flown 747s; we've flown F-18s."

Airlines and supply chains agree that is a step, but not the next step. First they want the government to kickstart commercialization via funding and other financial means of support. They argue the investment risks are too high for them to swallow and if government funded biofuels, there would be large economic gains for the country. For that, see the recent CSIRO report that delivered a roadmap for the commercialization of biofuels, and a similar push underway in Germany. The first step?

The report says that now that the technical and commercial viability of biofuels is proven, "it is appropriate to take stock and review the range of government support mechanisms available." Although it noted that such a review was outside its scope, it added: "Mechanisms that directly target early stage commercialisation of the supply chain will be of most value as this is a priority for the sector."


The airlines delivered their verdict too. Here's Qantas head of risk and resilience John Valastro: "The government has said that it will back sectors that have the potential to create green jobs that help move Australia to a low-carbon economy. The report we're launching today clearly shows that aviation, through the use and development of sustainable aviation fuel, has the potential to be one of those sectors."

And Virgin Australia corporate advisory executive Merren McArthur: "None of us can solve this problem alone. Developing sustainable aviation fuel involves significant investment and research development. The solution will only be found through industry-wide initiatives and government support."

The report was a long-winded but substantiated argument for government to fund biofuels. Although a number of other steps were included on the roadmap--contract purchasing, infrastructure integration--the stakeholders knew those steps. Including them sends a message to government the industry has a plan and any funding received will not entail a large check with no destination or oversight, unlike the recent housing insulation initiative.

The CSIRO report eagerly touts economic gains of a biofuel industry: 12,000 jobs, particularly in rural areas along the eastern coast and much of Queensland, where there is potential for sugar to be a biofuel feedstock. Another gain is a potential industry that if some country--ideally Australia in this region--does not become a leader of, with knowledge and skill export capability, another country will be.


The CSIRO has fired the biofuel race shotgun, but the bullet will not hit for a while: an initial 500 jobs will be created, rising to 3,500 by 2020, and then 12,000 by 2030. Government is being asked to fund a worthwhile project that will not be realized in their term of office.

"Virgin Australia is seeking innovative ways to support the scale-up of biofuels and we hope to announce our investment in one of these projects in the coming months," said Merren McArthur, Virgin Australia's group executive for corporate advisory.

The airline is finalising an agreement for a land-based project with a "single type of process that can be used right across Australia with a range of feedstocks," said David White, the sustainability and climate change manager for Virgin Australia.

Virgin expects to soon announce an "aspirational target" of how much renewable energy sources could constitute its fuel needs in the short/medium-term, White said. "We're a member of IATA now and IATA has a whole of industry target. We support that, but we do have to look at the local context. We may be able to go beyond that. It may be less."

Like Qantas, Virgin's partnership will develop the biofuel locally. "[The project] has a strong regional connection in helping regional economies," White said. "We want to favour local, regional development when possible."

The project will also refine the feedstock locally, both for to drive a local industry and for logistical reasons.

Virgin airlines--including America, Australia, and Atlantic--are looking to collaborate on a biofuel industry serving their common port of Los Angeles.

One could observe based on the report that airlines now know what it is like to be today's passenger who desires service frills and a cheap ticket: airlines want biofuels but do not want to pay for them. Or as @enviroaero, an industry-funded group, succintly Tweeted: "Exciting times... We are just a few steps away from biofuels in passenger flights... now for the $$$ challenge!"

This week Qantas has seemed helpless responding to Air New Zealand's assertion that the Australian carrier, unlike Air NZ, opted not to spend extra money on fuel to fly around or below the ash cloud, sometimes increasing the flight route's distance by 10%. Qantas was adamant with its short "safety over schedule" maxim while Air New Zealand's chief pilot David Morgan went into limited detail about its flight operations to circumvent the ashcloud. To that Qantas responded with a meager #safetyfirst hashtag on Twitter.

Now Qantas has pulled out all the PR stops, making a four minute video with its chief pilot, Peter Wilson, as well as head of operations Alan Milne. (Virgin Australia in its statements, which mainly announced it would fly routes, unlike Qantas, had non-inflammatory quotes from its head of operations, Sean Donohue.) The video is below.

The key statement is from Wilson, who says: "[With] the base level of the ash cloud, there were question marks as to was there ash below this base? Ash is subjective to gravity, like most other things, and there may well be ash falling out beneath it. Therefore the decision was taken that we would not operate in known areas of ash. We do not want to go near volcanic ash."

A similar debate about the actual, not projected, location of ash has occurred in Europe during its two past ash clouds. To that airlines including KLM, Lufthansa, and British Airways conducted demonstration to probe the area of ash, and found operations were safe. No demonstration flights are known to have occurred in this region.

Australia is one destination Philippine-based low-cost carrier Cebu Pacific will be able to serve thanks to its order today of 30 Airbus A321neos (above), with 10 options due for delivery from 2015. The carrier also firmed options for an additional seven A320s.

"Cebu Pacific has made the largest firm order for the Airbus A321neo aircraft in the world. These 220-seater aircraft will be a real 'game changer' for Cebu Pacific because the A321neo will have a much longer range. We will be able to serve cities in Australia, India and Northern Japan, places the A320 cannot reach," said the airline's CEO and president Lance Gokongwei.

Oman Air's plan to codeshare to Australia with Malaysia Airlines (MAS) has been put on hold following the latter's intention to join the Oneworld alliance from late 2012, as we reported on our Air Transport Intelligence service.

The Omani national carrier had been in discussions with MAS to establish a virtual network serving Australia, a spokesman said. Oman Air intended to place its WY code on MAS' flights to Australia from Kuala Lumpur, where Oman Air flies to four times a week. Oman Air already codeshares with MAS from Kuala Lumpur to other Malaysian and regional destinations.

"They have just announced their plan to join the Oneworld alliance in 2012 and have told us that they cannot discuss new codeshares at the moment," the spokesman said.

He affirmed the carrier's "preference would still be to serve Australia by code sharing. We don't have any plans to fly there with our own equipment".

Oman Air's long-range fleet comprises four Airbus A330-200 aircraft and two A330-300 aircraft, shows Flightglobal's ACAS database. While the A330s do not have sufficient range to serve Australia non-stop, the carrier has six Boeing 787-8 Dreamliners on order for delivery no earlier than 2014.

In April the Omani and Australian governments signed a memorandum of understanding permitting Omani carriers to operate up to four direct flights a week to Sydney, Melbourne, Perth, and Brisbane with additional frequencies for services that stopover or end at regional airports. Australian carriers were permitted four weekly flights from the same four cities to Oman, and additional frequencies for services operating or originating from a regional airport. The MoU included codesharing arrangements.

Oman Air's far east network also includes eight weekly services to Thailand's Bangkok, schedules in Innovata show.

Although the Qantas Group's domestic network--mainline and Jetstar--is not as glamorous as its international network, it is profitable and, along with the frequent flyer programme, props up Qantas's loss-making international network. It thus seems especially concerning when Qantas announces, as it did today, that it will curtail Qantas and Jetstar's domestic growth from 8% to 5.5%, cancel or defer 12 aircraft between now and end FY2012, and reduce the number of leased aircraft next financial year.

But Qantas has been brought back to the reality of another domestic downturn and having an overly ambitious expansion plan. Although Virgin Australia in May 2010 downgraded its financial outlook on account of a weakening leisure market, Qantas this February pressed ahead with aircraft acquisitions, despite in the previous few months experiencing earthquakes in New Zealand, cyclones in Queensland, and floods elsewhere in Australia.

Qantas announced that the end of FY2013 Qantas mainline would lease five additional Boeing 737-800 aircraft and extend leases on a further two. Jetstar saw even more growth with new leases on 10 A320s and lease extensions on 11 A320s (plus a new A330-200 for its international division).

The disparity between Qantas and Virgin was further evidenced a month later when Virgin announced it would post an annual loss. In the same market, how could one airline be signing for aircraft while another expects a loss of A$30-80m? Virgin is incurring costs as part of its business transformation, but Qantas was too bullish on a resilient market while also banking on filling the void Virgin would create by going after a greater share of the corporate market.

Qantas's reckoning appears to have been that Virgin's cost would rise with its transformation, which would make its leisure seats more expensive and thus ripe for Jetstar to capture while Virgin's premium product would also see costs increase, making Qantas's business product more viable to Virgin passengers.

As Qantas chief executive Alan Joyce said when announcing the leases in February: "We see great opportunities for Jetstar, particularly in the domestic market as our competition changes their focus. It is an opportunity Jetstar is seizing."

It has so far ended up being a non-opportunity. Virgin's simplified fare structure has relatively maintained fares, although they could rise--creating the opportunity Qantas saw--as Virgin keeps spending and settles in to its new position once the new brand launch excitement dies down. Virgin's business transformation, as detailed to a Macquarie investor conference, calls for the airline to re-position itself this and next financial year and then start to achieve better yields in the 2012-2013 financial years timeframe.

Trimming overly-ambitious growth is better than cutting moderate growth, which could explain Qantas emphasizing in a statement its "strong funding position": cash balance over A$3b, and, Qantas says, being the highest-rated airline in the world with a BBB/Baa2 investment grade rating. Qantas all but says it will still be fine after trimming growth.

The downturn is not confined to Qantas and Virgin. Tiger Airways during its annual results conference last month announced it would maintain capacity in Australia this year as its Australian division incurred a loss. "That was primarily due to the weather events that we saw in Australia from December through February," chief executive Tony Davis remarked at the time. But since then, Tiger's decision to axe Australian routes show it too is seeing a downturn, and not just a one-off bad period from natural disasters.

To add context to the Qantas Group's figure of now taking delivery of 34 aircraft in FY2012 instead of the 43 previously planned, in February Qantas expected to take delivery of six 737-800s by the end of FY2011 and a further 15 737-800s in FY2012, when Jetstar would also take delivery of 15 A320s.

Finally, Qantas trimming its domestic fleet is noteworthy given Joyce's comments last week Qantas would consider cutting its international fleet, whatever merit the proposition has.

The war of words continues between Qantas and Air New Zealand about who is and is not right to fly even once CASA clears airlines to fly but leaves decisions with individual airlines. These arguments are all PR control and still do not definitively answer why Qantas is not flying routes other airlines are, but Air NZ has its theory.

In the last installment Qantas justified its decision not to fly as being based on guidance from ICAO. Air New Zealand's chief pilot David Morgan struck back, saying: "The authorities are providing excellent information about the ash which is at high altitude and very predictable in its movement. By adjusting cruising altitudes of our aircraft we are able to continue to safely deliver customers to their destinations."

Morgan also more directly stated previous connotations about Qantas not wanting to burn extra fuel in selecting alternatives routes that would avoid ash but required extra fuel. "Lower cruising altitudes mean we need to burn around 10% more fuel than normal, but we don't believe that's a reason to stop flying when there are perfectly safe flight paths available below the level of the ash," Morgan said.

He also treated us to a game of spot-what's-missing with his statement: "The travelling public will be pleased to know that almost all carriers including Air New Zealand, Virgin Blue, Emirates, Singapore Airlines, Air Asia X, Air Pacific, Malaysia Airlines, Thai Airways, Cathay Pacific, Korean Air and others are today operating international services to and from New Zealand."

Qantas in turn offered an even shorter response than its "safety before schedule" maxim by appending its Tweets with the hashtag #safetyfirst.

Conspicuously absent from this debate is Virgin Australia, who has made no commentary about it flying when Qantas has not.

Photo: Andy Wilson / Mood Board/Rex Features.

It is day four of the ash cloud disrupting flights to, from, and between Australia and New Zealand and it is clear the situation has progressed from combating ash to waging PR warfare justifying decisions to fly aircraft or keep them grounded.

"It would have been far easier to simply cancel flights and it's taken a lot of effort by our Operations teams to develop alternative flight plans to continue to get passengers to their destinations," was the first swipe, made by Air New Zealand yesterday announcing it had operated 473 flights around New Zealand and across the Tasman on Sunday.

The quote was attributed to Chief Pilot David Morgan and undoubtedly in reference to Qantas, who over the past few days has cancelled all trans-Tasman flights and scores of domestic flights.

Air NZ explained domestic services had been operating only to a maximum of 5500 metres (18,000 feet) while trans-Tasman flights "were given new flight paths heading much further north than normal before crossing the Tasman".

This provided for another swipe at Qantas. Morgan said: "The extra distance involved required the use of 10% more fuel, but has meant customers were able to safely get to where they needed to go."

Swipe number three was retaliatory from Qantas. In an opinion piece in the Herald Sun, Qantas chief executive Alan Joyce defended the airline cancelling flights: "Qantas does not decide to cancel flights lightly. I have no doubt that our actions over the past few days have been correct."

Joyce explained Qantas's policy, based on guidance from ICAO, was "not to fly into areas where the concentration of volcanic ash is unclear. This is the key test that Qantas has used over recent days."

Morgan made it clear Air NZ "will not fly through ash", so where is the disconnect? The same meterological information showing the altitude of the ash cloud is above 18,000 feet, upon which Air NZ made its decision, is available to Qantas.

Does Qantas have further information, such as how the ash concentration below 18,000 feet is "unclear"? Or, buying into Morgan's connotations, Qantas is not willing to foot the bill for extra fuel required to permit safe, albeit less operationally ideal, flying?

As Chile's Puyehue-Cordon Caulle volcano eruption brings operations to a halt at Melbourne airport and causes disruptions across the country, New Zealand, and to South America, the question to keep in the back of the mind is: has the Southern Hemisphere learned from the north about ash and its impact on flying?

It is an open-ended, not rhetorical, question. Europe, after all, remains divided on how accurate scientific data can be in predicting no-fly zones as well as the affect, or lackthereof, on aircraft flying through ash. (If you find yourself flying through ash, here is what Boeing said in a 1999 article are the nine steps to handle the situation.)

This region may only be entering day three of its ash cloud, but there are already some questions.

First, Jetstar and Qantas started cancelling domestic and trans-Tasman flights on Saturday and Sunday while Air New Zealand elected for its domestic services to fly below 20,000 feet, the lowest altitude the ash cloud was expected to be at. For its trans-Tasman services, Air New Zealand re-routed aircraft to avoid the ash.

"We can operate quite clearly, in the domestic airspace at altitudes below 20,000 feet quite safely and across the Tasman we initially start off at a low altitude then once clear of the predicted ash zones climb to normal cruising altitude," Air NZ chief pilot David Morgan said in a statement.

Qantas states its "approach to flying is based on our own high standards of safety and risk assessment. It is always safety before schedule. Qantas has significant experience in managing and assessing the impact of volcanic ash on flight operations."

Second, Virgin Australia declared it would halt all operations at Melbourne airport at 7pm Sunday night while Qantas selected 6pm. If the two are acting differently on the same information, why is there not coordination to maintain safety and operations? And if the two have two sets of information, why is there not one set?

Fortunately this region will not encounter Europe's main problem last year with Eyjafjallajökull: sever lack of information and coordination across borders. Just two air navigation service providers--Airservices and Airways--cover the bulk of the antipodean geography compared to the dozen-odd providers in Europe.

From a business, not operational, perspective, European airlines came out of the ash cloud with two key lessons learned: the need for large cash reserves and loosening of cross-border merger regulations. The former is obvious for airlines here, as they experienced over the past year with the New Zealand earthquakes and Queensland floods. The latter is not as direct and will lack thrust unless the Chilean ash cloud replicates Iceland's prolonged and widespread presence. Also, this region is well-liberalized compared to Europe, although Air New Zealand and Virgin may very well like foreign ownership restrictions lifted while Tiger would like to see its Australian business be permitted to fly internationally from Australia.

Some worthwhile links around Flightglobal about Europe's experience with ash cloud:

• Video: last year's ash cloud created the largest disruption in the history of air travel
• Last year's ruption upset could have been avoided
• Europe practices for next ash event
  
• European procedures coped with last month's small ash cloud
• Archive of all ash cloud reporting
  

Recent Boeing 737-800 deliveries to Virgin Australia have been notable not for their all white scheme or new livery but rather a small hump on the rear crown of the fuselage that Virgin will not comment on what it is, such as a radome for connectivity to use mobile phones or Internet in-flight. See this closeup of VH-YFC:

VH-YFF, the most recent 737-800 delivery to Virgin, also sports this hump. No, it is not the radome for the LiveTV antenna, which is larger and more forward on the fuselage:

It is also not a standard 737 fitting. Have a look at this radome-less Qantas 737-800:
The hump on Virgin's 737s is typical in shape to the radome used on aircraft to protect an antenna receiving a satellite or ground-based signal the aircraft then uses to supply connectivity to passengers. However, it is smaller in size than existing radomes to supply Internet, such as by Row 44 on Southwest 737s, but larger than the radome to cover mobile phone-only connectivity, such as on Air New Zealand's OnAir-equipped Airbus A320.

In Qantas's statement on the ACCC granting interim approval for the carrier's joint business agreement with American Airlines (so much for taking a close look) is a poke at the Virgin Australia-Singapore Airlines alliance announced this week.

In that deal Virgin Australia chief executive John Borghetti highlighted the significance of gaining access to China and India: "If we look at the link between China, Australia and the mining industry, it makes a lot of sense. China is deeply involved in the Australian mining industry, and many mining companies have their offices in Singapore. Flying to China or India yourself is always going to be difficult, but this gives us a great link."

The Qantas statement, below, specifically mentions the carrier's partnership with China Eastern, but strangely not Cathay Pacific, who expects to rely heavily on Chinese traffic--a further sign of weak relations between Cathay and Qantas? Indian carrier Kingfisher Airlines also receives a mention.

Membership of the oneworld alliance gives Qantas customers access to a group of world-class airlines in all regions of the world. This week we announced that Malaysia Airlines will join oneworld in 2012, increasing its reach in Asia, and following India's Kingfisher Airlines and Germany's Air Berlin.

During 2010 we also added a number of new destinations to our codeshare partnership with China Eastern. These partnerships increase choice and convenience for customers, and alliances will remain a key focus for Qantas in coming months.

The prospect of Qantas culling kangaroos in the form of new aircraft deliveries warrants a closer look.

As Qantas chief executive Alan Joyce told The Australian, "everything is on the table" when it comes to reviewing the airline's loss-making international operations, including aircraft deliveries. "We have to review the capital we are putting into it because the business is not performing."

Joyce makes clear it is aircraft destined for its international operation that could face the axe. So Qantas's outstanding order for Boeing 737-800 aircraft, 23 according to Flightglobal's ACAS database, are safe, as to be expected since the carrier is selling its 737-400 fleet. The 44 A320s on order for Jetstar are also safe.

That leaves the A380 and 787 deliveries on the block. But Joyce told the Australian the carrier will take fully delivery of its 20-planned A380 fleet, so the remaining 10 A380s face no risk. As for the Group's 787s, the first trove of deliveries, 787-8s, will go to Jetstar from 2012. As 787-9s come off the Everett and/or Charleston lines around 2014, they will be delivered to Qantas and Jetstar, who will then send its lower-performing 787-8s back to Qantas for domestic use where payload and range restrictions are not as significant.

Jetstar desperately needs the 787s to profitably open up European routes from Singapore since it faces competition from AirAsia X, who is looking at serving more European cities from late next year, and Singapore Airlines' new LCC. It will also need the 787-9's better performance, so it is implausible to see cancellations on the initial batch. While later 787s could theoretically be cancelled, as Qantas did in 2009, one hopes that by 2014 Qantas has its international operation in order and needs the aircraft. If not, Qantas would still be pressed to relinquish undoubtedly a steal of a sale: a 787 for less than US$76 million.

So Qantas cutting aircraft? Unlikely.

Hot air to bring the unions to table? Likely.

Poor Qantas Group. Someone, PR or reviewer, tries to make a joke but only ends up praising Virgin Australia. First there was Jetstar and seat colours and now it is espresso.

The Sun-Herald review of Qantas' (over-hyped) 747 service to Perth concludes:

Sky Report's only black mark was our flight attendant's (albeit gentle) mocking when we put in our coffee order as "a long black".

"A long black. Would you like a twist with that?" he quipped with a friendly smile.

It took us a while to puzzle it out. Then we realised: there was no espresso on board, as many international services do have in business class these days.

This might be a largely international configuration. But there are still some things you can't get when you're not leaving Australian airspace.

Clearly Virgin Australia has not flown the Sun-Herald's reporter in its trans-con business class. In that cabin there would be no "albeit gentle mocking" from the cabin crew if asked for a long black.

The cabin crew would bring it out.

After all, Virgin Australia's A330s flying between Sydney and Perth have an espresso machine on board:
It is too easy to further pick apart that review.

The Sun-Herald reviewer champions the 747 being "substantially faster than the Airbus Qantas has most commonly used on the route". The 747 is so faster, the writer says, that despite an hour delay at Sydney, the flight arrived only 15 minutes late. But ah the wonders of schedule padding in which airlines include extra time in the block time so a minor disruption will still allow an aircraft to arrive on time.

For normal operations, Qantas's schedule shows the 747 Sydney-Perth flight is 15 minutes faster than on an A330-200 (the 747-400 typically cruises around 913 km/h while the A330-200 cruises at 880 km/h). But in the scheme of a 5 hour block flight, 15 minutes does not seem that substantial.

American Airlines says its suboptimal long-haul fleet and pilot contract restrictions prohibit it flying to Australia.

The oneworld partner discussed its network strategy in its application to the US Department of Transportation for approval of a joint business agreement with Qantas.

AA says the six Boeing 777-300ER aircraft it has on order (thrice the number it had on the books in January) "are not yet committed to particular routes" but "given that American is currently short on long range aircraft to serve its existing routes, American will be carefully considering where these assets will be deployed and how they will be configured".

Furthermore, AA says:

the terms of American's current collective bargaining agreement with the Allied Pilots Association would not permit service to Australia/New Zealand. That agreement contains a 14:30 flight time limitation. According to block times published by Qantas, service from Sydney to Los Angeles has an elapsed time of 14:35 to 15:00 depending on equipment type flown. Service from Sydney to Dallas/Fort Worth has an elapsed time of 15:25.

But as colleague Dan Webb points out on Things in Sky, AA can request exemptions from its pilots union as their agreement "contains language governing extended long-haul flying...on a city pair-specific basis only, which means airline management must secure an agreement with APA".

AA secured such an exemption for its Dallas-Beijing proposal (which did not materialize), and furthermore, as Dan points out, AA's Chicago-Delhi route has a block time of 14 hours and 40 minutes, five minutes longer than the 14:35 Qantas block time cited.

Regulators say permission to coordinate business, be it this proposed JBA or other anti-trust immunity cases, should be granted to carriers who show a commitment to the respective market and will bring public benefit. While there may be some benefit, is AA really showing its best commitment by saying new, range-opening aircraft are better used elsewhere and failing to disclose the full extent of its agreement with pilots?

The carriers are trying to brush off the notion of AA not serving Australia, but it is a significant matter and needs close scrutinizing by the DOT and ACCC.

Qantas and AA previously applied to the ACCC in an application that made it explicitly clear, but did not explain why, American Airlines would not enter the trans-Pacific route--sometimes saying so twice on one page. The application concluded the two "are not true competitors on the these routes and there can be no detriment to competition resulting from the implementation of the Proposed JBA."

Approval for the JBA, which targets schedule and fare coordination, would grant AA not just advantages of codesharing but also many of the benefits of serving the route without actually flying it. That seems to give AA no reason to enter the market, which invalidates their "no detriment" argument about the JBA.

The prospect a few years ago of a motley of airlines including Air New Zealand, Delta, Etihad, Singapore Airlines, and Virgin Blue working together would have seemed odd if not farfetched, but we now understand it to be an enemy's enemies working against it. Or as Air New Zealand general manage Australia Cam Wallace told sister publication Travel Today: there is "a pool of airlines working in a cooperative manner to create a powerful competitor to Qantas".

Singapore Airlines joined that pool today when the carrier and Virgin Australia announced at the IATA AGM their intention to form an alliance that will allow the carriers to coordinate schedules between Singapore and Australia and beyond (expect next February's Brisbane-Abu Dhabi route to be served on an A330 and routed through Singapore, as Etihad currently does). The two will also codeshare on each other's international and domestic flights but not V Australia's trans-Pacific services. Reciprocal frequent flyer programme benefits and lounge access, engagement in joint sales, marketing and distribution activities are also planned.

The partnership has large implications for the corporate market balance. By combining a new business-oriented premium domestic class with a venerable international partner with a wide reach, Virgin Australia creates a viable alternative to companies who currently use Qantas for all travel. That is critical as Virgin Australia looks to double its corporate market share to 20% as it chases higher yields.

But Singapore Airlines benefits too. Virgin Australia will put on Singapore Airlines flights its corporate, and thus high-yield, passengers wooed from Qantas. This will enlarge Singapore's already sizable corporate base.

Singapore Airlines has a far larger network in Asia than Qantas--although not non-stop from Australia (but expect Virgin Australia to serve key Asian cities with its A330s)--and Virgin Australia's lower cost base will enable it to offer a premium seat for less than what Qantas charges, a selling point for companies looking to reduce cost.

Partnering with Singapore Airlines would fill the Asian void in Virgin Australia's network and give it access to every major market from Australia, creating a virtual network in the continent that will see the largest air growth anywhere in the world over the coming years. As Virgin Australia chief executive John Borghetti told us in Singapore, the deal is especially important for access to, and to grow market share to, China and India:

"If we look at the link between China, Australia and the mining industry, it makes a lot of sense. China is deeply involved in the Australian mining industry, and many mining companies have their offices in Singapore. Flying to China or India yourself is always going to be difficult, but this gives us a great link."

This hugely beneficial deal had been in the works for some time and goes hand in hand with Virgin Blue's transformation to Virgin Australia. It is understood Borghetti early on favoured an alliance with Singapore Airlines as well as the rights to use the "Virgin" name internationally. But Singapore Airlines, sources say, was hesitant to be directly associated with a low-cost and rambunctious, if you will, carrier.

Although that seems ironic now that Singapore Air will start a low-cost carrier, Singapore made that move under its new chief executive Goh Choon Phong, who took up the post on 1 January this year and made the LCC his first major strategic move. Last year Borghetti would have been in discussions with then-CEO Chew Choon Seng.

Borghetti wiped Singapore's concerns away with his plan to move Virgin upscale and introduce a business class: a low-service carrier no more. That led, sources say, to Singapore granting Virgin the right to use "Virgin Australia" across its entire network, which Virgin will do so by the end of the year, and also included a mutual understanding for the two to develop their relationship.

The partnership announcement's press release has a telling quote attributed to Borghetti, who says his carrier and Singapore are suited to be partners "with the recent re-positioning of our brand and the launch of our product enhancements, including domestic business class."

V Australia this morning joins 42 airlines around the world considering their next steps after the Federal Aviation Administration issued an airworthiness directive overnight for airlines to determine if their passenger seats meet safety specifications and, if not, to bring them up to standard or replace them within 2-6 years.