Qantas has announced the “first phase” of changes to its international operations, which will see it further develop a long haul hub strategy based around 14 A380s and nine upgraded 747-400s and some consolidation of the international network, launch a new premium airline in an as yet undecided Asian hub to operate intra-Asian flights and services to Australia, the establishment of Jetstar Japan, and the acquisition of more than 100 Airbus A320 series aircraft, including the A320neo, for both Jetstar and the new Asian operation.
Qantas Group CEO Alan Joyce said in Sydney today that Qantas International “is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change.” To address that, Joyce said the airline has developed a five year plan.
“At the end of this process, we expect that we will be established on a competitive global platform, with high growth potential across all markets. Instead of being restricted to an Australian-based international airline, Qantas International will be participating in regional Asian opportunities, and in the world beyond.”
Key among the changes to the airline’s international operations are the deferment of the delivery of the last six of the 20 Airbus A380s it is buying by five to six years to the 2018-2021 timeframe, when they will be used to replace the last of the airline’s 747-400ERs. In the meantime the long haul fleet will, by June 2014, be focussed on 14 A380s and nine 747-400s (including the six -400ERs) which are being upgraded with new A380 style interiors, with the airline looking to accelerate the retirement of the remainder of its currently 26 strong 747-400 fleet, with four aircraft to be retired this financial year.
With that Qantas will make significant changes to how its serves the ‘Kangaraoo Route’ to London, in partnership with British Airways. Qantas will consolidate its operations around serving London via Singapore, and withdraw from the Hong-Kong-London and Bangkok-London sectors in its own right, and instead serve those legs via codesharing with British Airways. In turn British Airways will drop its Sydney-Bangkok services, increase London-Hong Kong frequencies, and upgrade its London-Singapore-Sydney service from 777 to 747 equipment.
Another international network change is dropping services to Buenos Aires in Argentina in preference to flights to Santiago, Chile, while Joyce has also flagged a potential partnership with Malaysia Airlines to serve new European destinations such as Amsterdam and Istanbul.
Other existing Qantas international destinations are safe, at least for now, with Joyce dismissing as “rumours” reports that Qantas would drop ports like Frankfurt and Johannesburg from its network.
Nontheless, the planned reduction in A380 and 747 capacity means Qantas will make around 1000 employees – some management positions plus pilots, flight attendants and engineers – redundant.
Instead, growth for the airline is intended to come from a new, as yet unnamed airline to be established in an as yet undecided Asian hub city, plus the new of Jetstar Japan operation.
The new “premium” Asian airline, which will use neither the Qantas nor Jetstar brands, will operate some of the up to 110 A320/A320neos on order on both intra-Asia and Australia-Asia services.
“The Qantas Group will invest in a new premium airline based in Asia, building on Qantas expertise but with a new name, new aircraft and a new look and feel,” the airline said in a statement. “The location for the new carrier is being finalised and will be announced at a later date.”
Twenty-four of the A320/A320neos have been allocated to Jetstar Japan, which will launch in late 2012 with an initial fleet of three A320s and will be established under a joint-ownership model together with Japan Air Lines and Mitsubishi. It will initially operate flights from Tokyo-Narita and Osaka-Kansai, with destinations under consideration including Sapporo, Fukuoka and Okinawa, with the airline also to serve short haul international destinations in the longer term.
To facilitate the establishment of the new premium Asian airline and Jetstar Japan, plus growth and replacement of leased aircraft in the existing Jetstar operations, the Qantas Group has announced plans to order 106 A320 and A320neo aircraft, with a further four to be leased or purchased “subject to availability”. Of those, 78 will be A320neos, with the Qantas Group to take options and purchase rights on a further 194 neos.
“The first of the A320s will be allocated to the new Jetstar Japan venture between the Qantas Group, Japan Airlines and Mitsubishi,” Joyce said. “We are using the Qantas Group’s scale in the aircraft purchasing market to establish this exciting new airline. Financial management of the fleet will rest with Jetstar Japan and will be funded independently of the Group’s balance sheet.
“The remainder of the A320 order will go to other new ventures, including Qantas’s premium airline serving the Australia-Asia market, and to renewing Jetstar’s global fleet – giving us the flexibility to meet growth requirements where needed.”
Qantas has yet to announce an engine decision for the neos, which will be delivered through to 2020.
Finally, the airline announced the continued roll-out of its 737-800 fleet for trans-Tasman services with the introduction of new “smarter check-in technology” for Australia-New Zealand flights, plans to build three new premium lounges at Hong Kong, Singapore and Los Angeles, and “Continued focus on increasing points-earning opportunities and rewards for Qantas Frequent Flyers through bonuses for Qantas’ most regular customers, network improvements, [and] airline partnerships.”