Reece

If you are contemplating a good look at what is on offer in the QF prospectus then you no doubt will be interested in our seven page in-depth analysis commencing on p27 of this issue. Author Paul Couvret has gone to great pains to explain that the attitude to investing in the airline should really be about getting a solid return on your investment, not for mere patriotic reasons. After all, if you want to show your support for the airline then fly with them on your next trip, but never invest your hard earned after tax dollars for anything other than purely mercenary reasons.

The article also explores some of the many opportunities that the airline seems to be superbly good at missing. Just why we don’t know but one does get the impression that more time is spent by senior management continuously rejigging each and every department rather than looking to aggressively exploit new (and even existing) market opportunities. After all, the airline’s real function is to transport people from A to B, not necessarily ensure that every desk has the minimum number of widgets on it compared with rival airlines.

And this raises an interesting point on just why nobody at the Qantas senior management level seems to be able to grasp the medium to long term potential of the benefits of pioneering new routes. In Australia it is, for instance, extremely difficult to get to South America, an area of limitless untapped potential. Qantas is now looking to fly there, using American Airlines out of LA via Miami for the long haul south.

As there is little option but to do this presently it probably doesn’t make much difference. However, no business traveller, let alone economy classed tourist is going to hack what would have to be a mammoth 40 hour trek to the top of the world and back just to get from Sydney to Santiago, Buenos Aires or Rio. It is actually significantly faster getting to a village in Norway than Santiago via this new route yet that is what Qantas is promoting in all seriousness as a ‘great idea’.

Why not go to South America by way of a codeshare using Qantas 747s from Australia to the three primary South American capitals via Tahiti, or over the Pole? That cuts the average journey time by more than half – that must enhance profitability as surely nobody could argue that it actually costs less to fly a passenger for all that distance when you can reach the same destination in less than half the time. After all, you don’t fly to London via Delhi, Lagos and Tenerife, so why go to Rio via North America?

Lan Chile presently serves Santiago out of Tahiti (another QF port that could be a real earner if only it had decent schedules) whilst Aerolineas Argentinas operates to Buenos Aires nonstop over the Pole out of Auckland. On their own each airline’s Australian marketing presence is almost non-existent but if they linked with Qantas to develop the route (with viable frequencies, not the once a week stupidity we presently see as an excuse for serving Beijing) then who knows, in a few years it could be a highly profitable service with Qantas entrenched as the dominant carrier.

But will that ever happen? Well, don’t hold your breath. Senior management seemingly is too interested in promoting the arrival of yet another battalion of young academic trained, ever so well dressed and usually dramatically overpaid consultants to tear yet another layer off the airline to save a few more cents.

Hey guys, something really different – instead of using all that candlepower to save two cents in the dollar, why not spend just a few moments considering how to make that dollar into something far greater than it presently is by serving the markets that 18 million Australians actually want to fly to. It’s just an idea but when you consider that each year more than a third of all Australia/Europe traffic goes to European capitals that Qantas doesn’t consider viable (yet once did when the airline was merely a shadow of its present self) then the question begs – why aren’t they viable now? Is the equipment wrong, is there really insufficient traffic, or isn’t the airline interested?

Qantas of course would say that there isn’t enough traffic to warrant the service. Sort of like when it said the same about its San Francisco/Sydney service. A real doozey that one! United took it with gusto and couldn’t supply enough seats from day one using the original thrice weekly QF schedule and is now going to daily 747s. So much for no market! That is almost 3000 seats a week given carte blanche to a major competitor without even flinching.

How can anyone call that marketing, let alone pay these people the incredible salaries they demand whilst the lower echelons of this great airline continually get decimated as a reward for their years of hard work, loyalty and pride.

I guess what we are saying is that Qantas needs to really be more proactive if it is to be taken seriously as a free market non-government owned airline. It really needs to look to opportunities, not spend all its time penny pinching to the point where you ring reservations and talk to computers and listen to jingles rather than conversing with a dedicated and trained human being.

Undoubtedly the float will be a great success, it deserves to be and those who invest hopefully will see an even better long term return if and when the national carrier really gets cracking in serving the markets that are Australia’s entree to the 21st Century.

Battle of the Giants

Elsewhere in this edition is an analysis of the proposal by Airbus Industrie to go it alone and build its own mega-jet.

The teaming of Airbus, Boeing and most of the European AI partners in studying just what a future 600 to 900 passenger long range jet should look like has just ended. There is now a period of about nine months whilst the various participants discuss their next move and if history is any judge then they will all probably agree to disagree and Boeing and Airbus will launch into yet another headlong battle building competing airliners.

Nothing unusual about that you say, but this time there is a very interesting sidelight in that if one of the two does not proceed with a mega-jet then it will be condemned to playing second fiddle till at least 2020. This is precisely what occurred when Boeing developed the 747 more than a quarter century ago. Though a slow seller to begin with, the 747 has proven to be Boeing’s cash cow extraordinary and has made enough money to help fund development of a wide range of highly competitive Boeing jets including the 757, 767, the numerous 737 derivatives and more latterly the 777 twinjet. Boeing also rules the roost in the very large long range jet transport market with the 747-400, literally the Queen of the Skies.

If it loses that market position to Airbus early next century, as it could, then AI will pull away from the Seattle manufacturer just as Boeing buried McDonnell Douglas and Lockheed in the seventies.

A lot rides on this most interesting project, catch up with all the intrigue on page 38.