ANALYSIS: Jetstar welcomes first 787, as Qantas remains coy on options

Singapore
Source: Flightglobal.com
This story is sourced from Flightglobal.com

As Jetstar Airways’ first Boeing 787-8 touches down in Melbourne on 9 October, many will be asking when the 787 will appear in the colours of parent carrier Qantas Airways.

The first Jetstar 787, registered VH-VKA, has been a long time coming. The aircraft is part of Qantas' 65 aircraft order in December 2005, but delays to the programme resulted in it only being delivered this month, four years later than planned.

Nevertheless, Qantas has been upbeat about the arrival of the new aircraft, with chief executive Alan Joyce saying the 787s will “set up Jetstar for another decade of growth.”

The budget carrier expects to have three 787s in service by the end of the year, and a total of six in service by June 2014. It has a total of 14 787-8s on order.

“We will introduce the 787 on services from Melbourne to the Gold Coast and Melbourne to Cairns for just over four weeks before we launch international services towards the end of the year,” says Jetstar chief executive Jayne Hrdlicka.

That will see the aircraft fly from Australia's east coast to destinations in Thailand, Japan, Honolulu and other Asian cities.

Beyond the 14 787s for Jetstar, the status of the other 787s for Qantas remains uncertain.

Qantas was originally a strong backer of the 787, placing an order for 65 aircraft and 50 options following a contest against the original A350. Then chief financial officer Peter Gregg said at the time that the airline would exercise all the options as it replaces its two medium widebody types – the 767 and A330 – with 787s.

However, in the eight years since, Qantas has been undergoing a number of changes, particularly in relation to its struggling international services.

Last year, it restructured its 787 order, cancelling a majority and leaving only the 14 787-8s for Jetstar as firm orders. It also brought forward 20 787 options and 30 purchase rights by two years, with delivery slots available from 2016. The purchase rights locks in its prices on aircraft right out to 2025.

Qantas International chief executive Simon Hickey said in May that the carrier was evaluating routes in Asia that it could deploy the 787-9s on from 2016. There has even been talk that it could use the type to replace the 747-400ERs used on its flights from Sydney to Dallas.

Joyce later told reporters in August that it was no closer to exercising its options for 787-9s.

"Our view is that we maintain complete flexibility on those aircraft," he says. "These decisions can be made on an aircraft by aircraft basis dependent on where we are."

He added that the airline will only convert the options once Qantas International returns to profitability, which is expected to happen in 2015.

In the interim, Qantas will continue to rely on its A330 fleet to operate most of its Asian services. These aircraft are scheduled for a cabin refurbishment between the end of 2014 and 2016, which reduces the urgency to replace them with 787s.

As Jetstar takes delivery of its 787-8s, Qantas will take back the 10 A330-200s the budget carrier now uses on its long-haul services. Following their cabin upgrade, these aircraft will re-enter service with Qantas Domestic, allowing it to retire its 19 767-300s by the middle of 2015.

Still, Qantas could be in the frame to order more 787s in the long-term. In a recent presentation on the carrier’s fleet, chief financial officer Gareth Evans noted that it is considering the 787 along with the A350, A380 and 777-X as possible future replacements for its remaining 747-400s.

Interestingly, rival carrier Virgin Australia is also examining the 787 and A350 as long-term replacements for its A330s and 777-300ERs. Its alliance partner and major shareholder Air New Zealand is the launch customer for the 787-9, which could sway it towards the type.

Given the reliability issues that have plagued the 787, Boeing's hope will be for Jetstar's 787 experience to be smooth, and that Qantas exercises its options and purchase rights for more aircraft sooner rather than later.