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or some, 16 Aug ust 2011 marked
the point at which Qantas’
fortunes changed for the better,
while others warn it heralds the
end of the Australian carrier as
we know it.
On that day, Qantas Chief Executive Officer
Alan Joyce announced a raft of changes to
the carrier, including 1,000 redundancies, a
110-aircraft order, strengthened alliances, a new
Asia-based premium carrier, a new low-cost
carrier in Japan, the deferral of Airbus A380
orders and the retirement of Boeing 747s. Much
of Joyce’s strateg y is focused on Asia, in an effort
to benefit from the enormous, still-untapped
potential of the region.
Outlining his plans, Joyce made clear that
Qantas had little choice but to undergo a major
transformation . The airline’s dual-brand domestic
product – comprising Qantas and Jetstar – is
performing well, with 65 percent market share.
The problem, according to Joyce, lies with Qantas
International, which is “a steadily fading business,
suffering big financial losses and a substantial
decline in market share”.
“Qantas International faces serious structural
challenges, to do with the progressive
dereg ulation of our market at home, the influx
of competition here and abroad and our high
cost base [20 percent higher than many rivals’],”
Collapsing market share
About 82 out of e very 100 people flying out of
Australia fly with an airline other than Qantas,
resulting in the airline’s share of the Asian
international market collapsing to 14 percent.
“Competitors are piling in, many with substantial
foreign government backing , meaning we have
some of the fastest capacity growth of any market
in the world,” said Joyce, pointing to Asian and
Middle Eastern carriers in particular. Many of the
airline’s Asian and European routes are unprofitable,
while those that are profitable cannot make up the
shortfall, he says.
“ We don’t have the option of pretending that
things will change if we stay the same. They won’t. To
do nothing, or tinker around the edges would only
guarantee the end of Qantas International in our
home Australian market. That would be a tragedy,”
His plan is a five-year one, designed to return
Qantas International to profitability in the short-
term. Asia – “the most important region in the
world for Australia and for Qantas” – is the key
to Joyce’s strateg y. Qantas is seeking to access the
“massive untapped potential” and “many millions of
premium travellers in-waiting ” through the creation
of a new Asia-based premium airline.
The carrier will not operate under the Qantas
name, but will leverage Qantas know-how, and will
operate under a new name, with a new brand and
new aircraft – initially 11 single-aisle Airbus A320s.
Joyce said the airline ha s narrowed down the
choice of possible locations, with Singapore and
Kuala Lumpur believed to be the frontrunners.
Singap ore is considered the favourite by many
analysts, with such a move set to further intensify
competition with Singapore Airlines (SIA).
“For the first time in our histor y, Qantas intends
to fully participate in the benefits of an Asian
aviation hub,” said Joyce, adding that the new airline
will operate same-day ser vices to and within Asia,
while connections between Asia and Australia will
“Until now Qantas has been a ‘home and away’
business,” the airline chief said. “Now we are making
the transition to a regional and global business.”
Before deciding to launch a premium Asian carrier,
Qantas commissioned the Lowy Institute to look at
Qantas at the crossroads
Alan Joyce’s plans to restructure Qantas have been described as everything from a bold move to a sham,
writes Emma Kelly.
“Qantas International faces serious structural challenges, to do
with the progressive deregulation of our market at home, the
influx of competition here and abroad and our high cost base.”
– Qantas CEO Alan Joyce
Qantas’s restructuring plan addresses “serious” challenges faced by its international business.
18 AsianAviation | SEPTEMBER 2011
2/09/11 5:52 PM
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