FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
2003
2003 - 0250.PDF
uct of strategic thinking and industry awareness. "There are very few large companies that have had to manage such huge and rapid growth without the benefit of a well- thought-out long-term plan," he says. Ansett had been on track by our estimates to lose close to $400 million annually. Virgin was struggling and, on our model ling, had lost considerable sums in April, May and June [2001], and Qantas, despite good international and subsidiary results, had only broken even on its domestic oper ations between January and June. In other words, with four airlines being urged on to ever greater price competition by a gaggle of self-interested parties, including some state governments, tourism authorities and hotel and resort operators, the industry in domestic Australia had lost over $500 mil lion in little over nine months. "The speed and relative efficiency with which Qantas stepped into the fray when Ansett collapsed may have created a false impression in some quarters that the col lapse was not as traumatic an event for Australian aviation and the broader econ omy as it really was. Travellers...have already paid $70 million for the Ansett fail ure through the Ansett ticket levy [a contro versial $10 ticket tax to guarantee outstand ing Ansett employee entitlements after distribution of liquidation proceeds]. Aust ralian travellers will continue to pay around $11 million a month for the Ansett collapse. These costs of failure vastly outweigh the short-term benefits of extreme price compe tition, which despite all the talk of manage ment and other failures at Ansett, ulti mately brought the airline down." In the same period that saw Virgin more than treble its fleet, Qantas increased its core fleet from 108 to 122 (including four Boeing 767-300ERs leased to its new leisure arm Australian Airlines), but this apparently modest growth has translated to a consider ably higher capacity increase as smaller air craft were replaced by those with more seats. Eleven more Airbus A330s, three Boeing 747-400ERs and, later, 12 Airbus A380s will swell capacity, which Qantas will match to demand by controlling the rate at which it retires older aircraft. Dixon has cautioned the government, the market, industry and the travelling pub lic neither to interpret Qantas's A$631 mil lion profit for 2001-2 as a windfall from Ansett's collapse nor to expect Qantas to sacrifice margins in the longer term. "The market will expect us to do much better [in the current year] because of the billions of dollars of assets we utilise," he says. "If Qantas had not been relatively strong after years of constant change and hard work; flexible enough to make massive scheduling and people changes almost over- Qantas added the equivalent of about seven years' capacity growth virtually overnight and launched a leisure arm - Australian Airlines night; and prepared to spend $60 million to lease in capacity quickly, then Ansett's col lapse would have had a huge sustained impact across the Australian economy, affec ting tourism, business and national life." Unsustainable grip Gregg admits Qantas's 80% grip on the Australian market "is not something that we would say is long-term sustainable". Qantas's fleet situation is now almost stabilised. Firm orders are in place to pro vide for projected domestic and interna tional growth and to reduce average fleet ages. Leased capacity will soon be reduced to five 737s operating in the domestic New Zealand market with JetConnect; and two aircraft wet-leased to boost capacity on the trans-Tasman routes. Internationally, much of Qantas's cau tious expansion is now expected to be through its low-cost Australian Airlines sur rogate, based at Cairns in Queensland. Marketed primarily as an inbound carrier, Australian's outbound potential will also be promoted when its route network grows, placing it head-to-head in its cho sen markets with Virgin Blue. With a start-up fleet of four 767-300ERs leased from Qantas, Australian's role is to revisit Asian ports and win back markets lost to Qantas when it abandoned them in the face of rising costs. In its final form, Australian is expected eventually to fly out of each state capital, reaching a fleet of about 12 aircraft. Gregg says: "We'd like to keep it to a single fleet type - the 767- 300ER. In terms of routes, it comes down to whether [Australian's chief executive] Dennis Adams can convince Geoff and myself that he can get a viable operation going. The beauty of the Australian concept is that it's also a single-sector airline, which keeps the costs down." • www.fliqhtinternational.com FLIGHT INTERNATIONAL 4-10 FEBRUARY 2003 35
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
