Don’t pop the champagne yet on Qantas returning to Beijing

SYD JQ A330 TO Feb 11.JPG

News of the Qantas Group returning to Beijing, after the mainline carrier withdrew in 2009, should be embraced cautiously rather than with a wide-armed ni hao.

And that is not because the Airbus A330-200 route, via Singapore, is another example of the familiar protest concerning Qantas shuttling routes and anything new to Jetstar. The route raises concern about the Australia-Chinese market and Qantas’s viability in it.

A year ago this month Qantas chief executive Alan Joyce flagged the potential of Jetstar to let the Qantas Group return from Australia to mainland China–Qantas also cut its Melbourne-Shanghai route–and expand even further.

Such routes, Joyce said, would be ideal for the 787 as the aircraft “opens up that range of routes that we wouldn’t see to be economical today”.

Maybe Jetstar is opening the route via Singapore because it does not have the 787 yet and so cannot be profitable on a direct service from Australia. But is the alternative better? The outbound service from Melbourne takes 15h 50m while the inbound service has an 11h layover, giving a total journey time of 25h 5m.

You may as well go to Europe or fly direct on a mainland Chinese carrier.

But maybe that is all besides the point because the route is geared primarily for the Asian, not Australian, market. When Joyce last month announced his turn-around strategy for Qantas International, he said “we will be establishing a platform for future success, which means Asia.”

He continued: “As a nation we used to fly via Asia, now we fly to Asia, and the future will be about travel both to and within Asia.”

Alas, the only Melbourne-Beijing route Jetstar is launching will be in press materials for the Australian market. It’s really a Singapore/ASEAN-Beijing route.

Further, is the route designed to compete with, or even preempt, Singapore’s forthcoming LCC that plans to capture the low-cost growth it has lost? Surely Singapore is tuned in to the potential traffic to China’s capital and second-largest city?

Where then, does that leave Jetstar and Qantas serving China from Australia? Perhaps waiting for the 787 is still necessary, or perhaps Qantas and Jetstar cannot compete with the Chinese carriers to and from the comparatively small Australian market and so instead are focusing on the larger intra-Asia traffic. The latter is definitely the initial case but remains to be seen if it will also be the precedent.

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