The flying kangaroos

With that kind of influence, CEO Alan Joyce recently explained the importance of getting its fleet right, something which it has long had success with. “Getting fleet strategy right is essential to airline success, and we have always been prepared to go straight to the aviation forefront,” he said in a speech to the Lowy Institute. “We did it with the B707s, again with the B747s and we were the first airline to sign on for the A380 in 2000.”

As Boeing’s vice president of marketing and sales told Australian Aviation recently, Qantas has consistently been thorough and considered with its fleet strategy.

“They’re looking for airplanes that will provide them superior value,” he said. “That means it’s not just about price, it’s giving them an airplane that ultimately will be the best decision for them to make from a financial and passenger perspective.

“It’s not just about the efficiency, operating cost or price of the airplane, it’s about the range capability of the airplane, the reliability and the passenger experience – all of those things are blended into their evaluation of an aircraft and they are extraordinarily thorough with that process.”

It is that process which has seen its fleet grow from largely being reliant on Boeing aircraft to one which has seen Airbus make major inroads with the A330 and A380, as well as Jetstar’s fleet of A320/321s.

The overall fleet is also in a state of flux, with a steady stream of A380s, A330s, A320s and Boeing 737s and 787s entering its fleet over the coming years. As those aircraft come into the fleet, the stalwarts which have served the airline for a number of years – particularly the 737, 747 and 767 fleets – are starting to be drawn down.

Despite the state of flux that the fleet is currently in, Qantas has been applauded for its fleet choice and being able to match the right aircraft to the right markets, while maintaining few types in order to keep costs down. As such, the airline’s fleet types make for an interesting analysis.

737

The backbone of the domestic fleet for nearly 25 years, Qantas’s Boeing 737s have proven to be the ideal aircraft on a number of trunk routes and increasingly large regional centres, while the introduction of the Next Generation model in 2000 will see it stay around for many years to come.

Qantas inherited the 737s by way of its merger with Australian Airlines, which had first ordered 737-300s in 1985 to replace its Douglas DC-9s and in 1988 ordered the larger 737-400 to replace its 727s. While providing sterling service for a number of years, the ‘Classic’ 737s are being drawn down with the smaller -300s already gone from the passenger fleet, while the -400s will be retired over the coming years.

In their place, Qantas has become a major operator of the Next Generation 737-800. Qantas’s 737-800 purchase came with incredibly good timing, coming just after the September 11 terrorist attacks. The resulting drop in air travel in North America saw American Airlines slash its capacity and also plan on cancelling a major order for 737-800s. That saw it take delivery of its first 737-800 in January 2002, with 41 now in service.

As well as their improved operating economics compared to the older 737-400s, the -800s have helped to bring in new capabilities. With new avionics, the aircraft have helped Qantas to introduce fuel-saving Required Navigation Procedures (RNP) operations in Queenstown and has positioned it to roll it out across Australia.

More recent deliveries of the 737-800s have seen the introduction of new technologies in in-flight entertainment, with the addition of the Panasonic eX2 seatback audio and video on demand (AVOD) system to the latest aircraft which are now flying across the Tasman. From 2012, newly delivered 737-800s for the domestic fleet will also be fitted with the system.

While the 737-800 now represents the domestic backbone of Qantas, there has often been speculation that it might look to the larger 737-900ER to provide an incremental increase in passenger capacity. However, internal sources have in the past indicated that the additional time to turn around the aircraft has, thus far, made it an unlikely selection.

767

Qantas’s 767s were originally bought to supplement the 747s on thinner routes into Asia, and for a number of years were the only twin engine aircraft in the fleet. Since then, they have transitioned to providing additional lift on domestic sectors, with the fleet being wound down in favour of A330s and soon 787s.

Qantas’s association with the 767 started in September 1983 with the carrier ordering seven 767-200ERs powered by Pratt & Whitney PW4000 engines. That order led to the first delivery in July 1985, with the aircraft entering service on medium haul international routes shortly thereafter. This was followed two years later with an order for the larger 767-300ER, which unlike the -200ERs were specified with GE CF6 engines. The first of these were delivered in August 1988.

Since then, 22 GE powered 767-300ERs have joined the airline’s fleet, while seven Rolls-Royce RB211 powered 767s were later acquired from British Airways to boost its domestic capacity.

Gradually, the 767’s international work has decreased as the Airbus A330-300 and -200 have picked up most of the load. This has seen the aircraft primarily switch to operating domestic and some regional international services. In the case of the former, the aircraft have allowed Qantas to boost capacity at peak times on the golden triangle routes as well as allowing for widebody capacity to be easily ramped up or down on services to and from Perth over the last few years.

As some of the oldest aircraft in the fleet, some 767s have already removed from service and sold. At least three aircraft have been sold to Air Logistics who are expected to convert them to freighters, whose subsidiary Air Transport International wet-leases a 767-200 Freighter to Qantas Freight.

717

Qantas’s 717s were a product of its buyout of Impulse Airlines in 2000, and the type has now grown into a niche aircraft serving a number of regional routes in WA, the Northern Territory and into northern Queensland.

While they initially continued to operate on a number of regional jet routes on the East Coast following the Impulse buyout, the type was somewhat of an orphan, particularly as Southern Australian Airlines and Airlink were already operating similar capacity BAe 146s on a number of regional services.

But it gained a reprieve in 2001 with the aircraft used to start Jetstar’s domestic services ahead of the arrival of its Airbus A320s. This was a natural solution given that Jetstar’s operations started from the shell of Impulse. After being replaced by A320s, the aircraft have now gone on to operate on QantasLink on long-range regional services, with the aircraft flown by Cobham in a 115 seat, all economy layout.

The operations of the 717 have not been without their trials, with a number requiring software changes to the engine control software to operate in the harsh conditions of the north-west. The 717 almost became the first jet aircraft operating in Australia to be written off, with one of the type experiencing a hard landing at Darwin in 2008. That caused significant crumpling to the aircraft’s fuselage as well as other structural damage which saw it remain static for some time, although this was repaired and the aircraft is now back in service.

747

As Qantas is iconic, so are the 747s which have played a key role in helping to open up longhaul services, although the type is now playing second fiddle to the A380.

Qantas’s association with the 747 goes back to November 1967 when it placed its first order for the 747-200B. In 1983, it then ordered the 747-300, the first aircraft to feature the extended upper deck. Qantas was also among the select number of operators of the 747SP. Based on the -200B, the SP featured a shorter fuselage and longer tailplane, giving it the capacity to operate nonstop to the US. Although an orphan type in the fleet, the aircraft later played a key role in providing for nonstop routes to other destinations such as Johannesburg.

Since the early 1990s, the backbone of the longhaul fleet has been the 747-400, which has been given the ‘Longreach’ name. First ordered in 1987, the aircraft were a step-change technologically for the 747 fleet, with the aircraft featuring a glass cockpit as well as bypass turbofans. The aircraft have allowed Qantas to grow seat capacity and frequencies to the US and UK markets, firmly cementing it into a competitive position at the hubs of Heathrow and Los Angeles.

Qantas soon expanded its fleet of 747-400s, buying additional aircraft from Malaysia Airlines and Asiana Airlines in the late 1990s. These were somewhat unique in that they were powered by GECF6 engines rather than the Rolls-Royce RB211s which powered its other 747-400s.

In December 2000 Qantas also announced that it was buying six 747-400ERs, and has so far been the only airline to operate the passenger variant of the aircraft. Powered by GE CF6s and featuring a number of small enhancements to boost its range to 8060nm with a full load, the aircraft were appealing to Qantas due to its ability to operate year-round on trans-Pacific services without restrictions.

Lately, they have also allowed Qantas to open up a nonstop service from Sydney to Buenos Aries.

As with the 767s, the 747 era is beginning to draw to a close at Qantas, with three already removed from service, while most are earmarked to be drawn down over the coming years as they are replaced with A380s on most trunk routes.

Nevertheless, the airline will retain a fleet of nine 747s for future years, including the six 747-400ERs. These are being refitted with new interiors featuring the Panasonic eX2 in flight entertainment system and a three-class configuration featuring business, premium economy and economy classes, and it is expected that they will continue to operate on services to Johannesburg, Buenos Aries and San Francisco.

A330

While for a number of years Qantas was seen as a rusted-on Boeing operator, it broke that mould in December 2002 when it took delivery of its first new Airbus aircraft, an A330-200. This was followed by the delivery of the first A330-300 in October 2003.

The A330 purchase came as part of its order for the A380 in 1999, and initially was for seven A330-200s and six A330-300s. Nowadays, it operates a fleet of 14 A330-200s (including seven flown by Jetstar) and 10 A330-300s.

Initially it was expected that the A330s would replace the 767s completely. However, the four A330-200s which operated domestically proved somewhat troublesome on the high-frequency domestic services where they took longer than the smaller 767 to turn around, resulting in them largely being quarantined to longer routes with longer turn times, while the 767s continued to ply the domestic trunk routes.

The A330-200s were then handed over to Jetstar to commence its long haul low cost services in 2006. Initially, the aircraft were to operate on an interim basis until the delivery of the first 787s in 2008, but the subsequent delays to those have meant that the A330s are now the sole widebody operated by Jetstar. Jetstar is also planning to take delivery of the first of five higher gross weight A330-200s which will enable it to fly from Singapore to destination in southern Europe such as Rome and Athens which Qantas has long abandoned.

Despite their initial troubles on domestic services, Qantas has now taken delivery of two A330-200s dedicated to services from Sydney and Melbourne to Perth where they have replaced 767s. The A330s uniquely feature the Panasonic eX2 AVOD system, which has helped Qantas to offer a superior product to its rivals on the longer route, while also opening up more capacity at peak times.

In recent years, the range capabilities of the -200 have been put to good use with the type increasingly being put on to longhaul international services. Qantas now flies the aircraft on the Auckland-Los Angeles-New York operation, while it also used it to operate nonstop Sydney-Mumbai services until they were suspended earlier this year.

The larger A330-300 has also played a key role on Qantas’s international network, having taken over most of the services into Asia. With increased capacity for both passengers and cargo over the 767, as well as the ability to carry the Skybed business class seat, they have proven to be the right aircraft for markets such as Singapore, Hong Kong and Tokyo.

A380

Now clearly holding the place of the flagship of the longhaul fleet, the A380 has given Qantas additional capacity to slot-constrained airports, while it has also brought in new standards of onboard product across all its cabins.

At the time of ordering the aircraft in 1999, then CEO designate Geoff Dixon said that they were ordered for their “payload capability, operational and economic advantages and its developmental potential as the start of a new aircraft type.” Given the ageing that the 747-400 fleet would undergo and the lack of a new option from Boeing, it was also a logical choice to replace the 747s and provide for further growth at the increasingly congested hubs at London Heathrow and Los Angeles.

Although long delayed – the original aircraft were expected to be delivered in the second half of 2006 – they are now firmly the flagship aircraft of Qantas’s fleet. The airline’s six A380s are now operating from Sydney and Melbourne on the key London and Los Angeles routes where the added capacity has helped it to address the constraints at operating at those airports.

A key part of the introduction of the 450 seat A380 has been brining in updated products, such as new seats, a self-service area in economy and a bar area in the business class section. As such, the A380 has given Qantas a competitive offering against the likes of Emirates and Singapore Airlines, while also offering a yield premium to services operated by the 747 fleet.

Some reports claim that the entry into service of the A380 has not been without its hiccups. In 2008, media reports claimed that some passengers had labelled the aircraft the ‘A-3-Lately’ due to teething problems which caused some delays on flights operated by it.

However, with the fleet growing and the airline’s experience growing, the A380 is now achieving maturity for the airline.

In late 2009, the airline announced that the final eight A380s will be delivered in a three class arrangement featuring an enlarged business and premium economy class areas at the expense of first class for up to 550 seats. The airline will also reconfigure its first eight aircraft for around 490 passengers. This will have the dual affect of opening up more revenue opportunities through an enlarged seat count as well as lowering the per-seat costs.

A320

While the Boeing 737 is the staple of Qantas’s domestic services, its rival from Airbus, the A320 Family, has also gained a place within the wider Qantas Group, forming the basis of Jetstar’s domestic and shorthaul international fleet.

Interestingly, the A320 could have pipped the 737 fleet’s growth early on. TAA was originally an A320 customer, ordering the type to replace its 727s, but later cancelled that in favour of Boeing 737-400s, leaving Ansett as the only A320 operator in Australia until it finally ceased operations in early 2002. The type then lost out to the 737-800 in 2001 thanks to the ability to secure early delivery slots, with some reports that Qantas came very close to ordering the A320 to replace its fleet of 737 Classics.

With the decision in 2003 to launch Jetstar, Qantas again opened competition for a fleet to replace the 717s it initially would operate, resulting in an order for 23 A320s and 20 options to form the base fleet for Jetstar. Then in 2008 it added the larger 216 seat A321, which has allowed it to marginally grow capacity on some of its busier and longer routes.

A key appeal of the A320 has been the flexibility it offers for Jetstar, with the aircraft equally suited to transcontinental operations as much as Sydney-Avalon sectors while in a 177 seat all-economy configuration. The aircraft have also been used to open up shorthaul international routes from Perth and Darwin to as far away destinations as Ho Chi Minh City under its northern hub strategy.

The carrier currently still has a number of A320s on order with Airbus, with many to be delivered over the next year to Jetstar Asia in Singapore and Jetstar Pacific in Vietnam. In the case of the latter, these will replace its fleet of 737-400s, allowing for a standardised fleet across all the Jetstar operations.

Despite the strong backlog, Jetstar is already looking to the eventual replacement of these aircraft. As part of its alliance with AirAsia which was revealed in January, the two airlines are working on a joint specification for new narrowbodies which they hope to take to the manufacturers in coming years.

787

Qantas was one of the earlier customers for the 787, and as such has been through the highs and lows of the program, but has kept faith in the airliner which will become the main widebody in its fleet over the coming decade.

Qantas placed its order for the 787 in March 2006, with a contract for 45 firm and 20 options for both the 787-8 and larger 787-9 and with subsequent orders could be boosted to 115 aircraft. Under the timetable put forward at the time of the order, the first 787-8 would have been delivered at the end of 2008 to commence longhaul service with Jetstar. However with the well documented delays to the aircraft, Jetstar will now receive its first 313 seat 787-8 in 2012, with the first -9 to be delivered in 2014.

Since the initial order, Qantas exercised a number of options for more 787s, but last year cancelled orders for 15 787-9s as part of measures to cut capital expenditure. This has now left it with firm orders for 15 787-8s and 35 787-9s.

Initially, the 787-8s will take over from the A330-200s used by Jetstar, allowing those aircraft to return to domestic Qantas service before they are also replaced later in the decade by more 787s. The range capability of the 787-9 is also likely to support Jetstar expanding to North America as well as giving it wider reach through Europe.

Despite the delays to the program, the 787 has been an astute choice for Qantas as it will allow it to replace the long-serving 767s and also supplement and likely later replace the A330s. The extended range of the aircraft, particularly the larger -9 variant, will also give Qantas the combination of range and seating capacity to grow thin longhaul routes – potentially lucrative markets which have not suited its fleet so far.

The aircraft should also deliver superior operating economics and fuel efficiency which will be key to Qantas and Jetstar’s longhaul operations where they will be competing against other 787 and A350 operators in the region.

Qantas has also previously indicated an interest in the proposed 290-310 seat 787-10. While Boeing has not yet committed to launching the variant, it is understood to be highly favoured within Qantas to succeed the A330-300 should it become a reality.

Dash 8/Q400

As the only turboprop aircraft in the Qantas Group’s fleet, the Dash 8 and later Q400s have formed the backbone of QantasLink’s east coast network.

Initially Southern Australia Airlines started Dash 8-100 services in 1992. Over time, it and Sunstate added the similarly sized but more capable -200 model, while it also added the 50 seat Q300 and 74 seat Q400s. Nowadays, QantasLink operates a fleet of five -200s, 16 Q300s (one is currently leased to Cobham) and 21 Q400s, while the Dash 8-100s have been sold.

Most of the growth being targeted now is through the 74 seat Q400s, with the first arriving in 2006. Since then, the it has become the main turboprop operated by Qantas on regional services, with the carrier exercising options for a further seven of the type in July this year.

The Q400s have presented the opportunity for QantasLink to take over a number of former jet routes while being able to offer block times similar to jets thanks to the aircraft’s performance. As a result, the aircraft are now used extensively on services throughout Queensland and now also between Cairns and Port Morseby. The Q400s have also been vital in providing economical incremental growth on a number of other routes, such as Sydney-Canberra while also catering to growth in markets across south-eastern Australia where they have replaced the smaller Q300s.

“The aircraft really suits QantasLink’s operations and is extremely popular with the airline’s customers,” said Joyce when announcing the new order.

With many of QantasLink’s routes continuing to show strong growth, it appears natural that the carrier may step up into a larger 90 seat turboprop if and when the time comes. While ATR is reportedly in advanced talks to potentially launch a 90 seater, Bombardier has yet to commit to a timetable for its own 90 seater, which would be the likely candidate for QantasLink. Nevertheless, it would be expected that Qantas may be an early customer for a further stretch to the Dash 8.

Looking forward

With the A380 and 787 set to roll through over the coming years, Qantas has again shown that it is a technological leader with its aircraft. Nevertheless, despite the major capital outlay of the airline on these new types, there are others that will

Replacement of the 747s will be a major issue for Qantas in the coming years. While it plans to keep nine aircraft in service over the short to medium term, competitive pressures are likely to mean that it will need to find an aircraft with the seating capacity to match the gap between the 787 and A380 going forward.

One possibility could be the 747-8 Intercontinental, where Qantas could follow Lufthansa’s intentions of operating the type as a step between its larger widebodies and A380s. Given the 787 fleet will be powered by GEnx engines, there would be some commonality between the two types. However, with a typical three class capacity of 467 seats, Qantas’s fleet planners may pass on it due to its similarity in size to the 450-550 seat A380 unless the economics prove compelling.

More likely is that the carrier will turn to larger twinjets to come in and replace the 747s, a role which some speculate would be ideal for the 777-300ER. But indications are that the airline is more interested in the Airbus A350-1000 or a possible 777 successor further down the track.

Another area likely to see some movement in coming years is in the 100 seat segment to replace the QantasLink Boeing 717s. The aircraft are understood to be leased until 2012, after which time it is expected that they will be replaced by another similar aircraft.

Although a number of routes in WA are likely to go to the 737 fleet, the growth of regional routes and demand for jet services elsewhere is likely to keep up the need for a 100 seater aircraft, potentially opening the way for the Bombardier CSeries to come into play. CEO Alan Joyce has said that the CSeries is a “great aircraft” but also noted that the airline was keeping an open mind, and would also likely evaluate possible competitors from Embraer and Mistubishi alongside the CSeries.

Longer term, there is no doubt that Qantas is keeping a close eye on the eventual successors to the 737s and A320s which have formed the backbone of the shorthaul fleets of Qantas and Jetstar. While the latter has already indicated that it plans to work with AirAsia to define a new narrowbody aircraft suited to both carriers’ needs, Qantas has not indicated that it plans to replace its 737s any time soon.

Nevertheless, the carrier is expected to show more than a passing interest in a new narrowbody design when they become available in the mid 2020s, at which point some of the 737 fleet will be over 20 years old. That could see it become the launch customer for an A320 or 737 successor, and no doubt spark a hot competition between Boeing and Airbus when it happens.

In the meantime though, the airline will certainly have its hands full over the next few years, with over 150 aircraft on order, representing more than one new aircraft delivery every month for the next eight years. With that in mind, it appears that Qantas is again returning to its position as a fleet leader, and will do for some time to come.