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A380 deferrals, 747 retirements, job cuts and A320neos for Asian growth highlight new Qantas international strategy

written by australianaviation.com.au | August 16, 2011

The A320neo in Jetstar colours.

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.”

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Comments (25)

  • Chris


    The caption on the image reads “Qantas Colours” – its sadly in Jetstar Colours.

    • australianaviation.com.au


      Fixed, thanks

  • Rob


    Very glad that the changes all appear to be very positive. A real pitty that we can’t see all aircraft operating in QF colours and QF flight numbers, but a fair reflection on the times Qantas is operating in.

  • Blake


    Well that sux…

  • Kuma


    I wonder if the new Asian airline will be Singapore based? If so maybe it will take over routes like Adelaide and Perth? Then again if it’s all A320 fleet, would it have the range?

  • Josh


    A Very Very smart move by Qantas and the fellow One World Partner airlines, will cause much less competition in routes already shared, but will also make money with the code sharing agreement.

  • Jennifer


    Can someone please publish the actual information that confirms QF “Is suffering big financial losses and a substantial decline in market share.”? Or is Mr. Joyce pulling the wool over Australia’s eyes so that he can “let- go” more of the highly-trained, well-paid pilots and the highly-trained cabin crews and maintenance crews to make room for foreign workers who won’t be well-paid and will most certainly not be highly-trained? QF’s last financial report was all glowing praise for the profit targets that were hit and surpassed. Clearly there is a hidden agenda here.

    QANTAS’ position is unique in the international airline industry. Why doesn’t Mr Joyce use that to make QANTAS the envy of all the rest? As it used to be. The world wants and needs an airline with QANTAS’ reputation for service and safety. That is the trump card, Mr. Joyce. Don’t destroy it. Use it.

  • Robert T


    When will the Unions get the message? Times are indeed a changing. They have a lot to answer for.

  • John


    For the life of me I can’t understand Mr Joyce and co’s thinking starting up a new airline outside of Australia. There has tobe another reason, as the unions are saying, in time they (QF management) can move more jobs “offshore”
    Its a sad decline of a great airline, as long as people like Mr Joyce and co are in charge. Words fail me.

  • james


    since joyce took over no dividends have been released to share holders, why isnt this question being raised.

  • Chris


    I do get so very frustrated at how badly the general media misrepresents Qantas. Qantas needs to be profitable to survive. I always choose to fly Qantas and pay the extra to do so, but the majority of the people carrying on about saving Australian jobs choose to fly CX, SQ, MH, EK etc etc. It’s a fact of life. So yes, let QANTAS restructure so we have a QANTAS in 2020, 2030, 2090!!

  • Michael


    I belive Qantas should operate between Australia and America, South America, Africa and to Singapore. Qantas Asia should operate between Singapore and West Asia, Japan and Europe. Jetstar should replace Qantas on all its domestic operations and use the Qantas domestic fleet internationally. This is just my opinion of the ‘perfect’ Qantas. I do hope that Qantas Asia will be based in Singapore as I believe that Singapore has the resources and reliability for an airline to be based there.

  • Oliver


    May be a good plan to expand to Asia.

    To answer a question about the a320, the current model can reach Perth easily but may struggle to reach Adelaide…the neo would probably be used on these routes anyway due to the long length.

    Seems like qantas would try a different market then Singapore…they would be taking market share from jetstar (possibly) and there’s also the qantas routes to there…I think somewhere like Bangkok or kl will be better suited

  • @Jennifer


    Jennifer, there is a new website called “Google” where you can search for information on the Internet. You should use it in future.

    International market share declining (federal govt source): http://www.theaustralian.com.au/business/low-cost-airlines-bite-into-qantas-market-share/story-e6frg8zx-1225989847536

    Losses on international routes: http://www.businessspectator.com.au/bs.nsf/Article/Qantas-shares-placed-in-trading-halt-pd20110622-J32F7?opendocument&src=rss

    So Qantas’ domestic operations are subsidising international ones. The group as a whole makes a profit, but international operations loses money.

    Or was your question a rhetorical device designed to question the legitimacy of Qantas’ statements? Do you realise that making false financial statements is a civil and criminal offence? Oh, so you weren’t accusing Alan Joyce of committing criminal acts? That’s a good idea from a libel point of view.

    And from your language, I bet you are an interested party. Which is fine, but just state it. Qantas isn’t a national asset, nor is it a national icon or a sacred cow. It is a business, and it is one that is losing ground (and buckets of money) to cheaper low cost and full service competitors. Qantas is no longer “envied” when Middle Eastern and Asian airlines are considered to have better service and training, you know, those “foreigners” you deride as inferior.

    The thinly-veiled racism from the various unions is a massive turn off and does your cause a disservice. Maybe Joyce and Qantas are playing with figures, I have no idea, but lets stop with the raising of Qantas workers to sainthood, OK?

  • Andrew


    One can only imagine where Qantas would be today if senior management pursued it’s alliance with Etihad, forged a closer partnership with Cathay Pacific between Australia & Asia/China, redirected capital it has poured in to Jetstar toward a modern fleet of 777’s and A380’s for the higher yielding, premium brand.
    Today we have witnessed the bastardisation of our iconic national carrier that will only continue which has resulted in another 1000 employees being made redundant.
    We must now accept the change in direction and hope for a brighter future. With a significantly reduced international network, I hope this doesn’t further erode the international feed which provides massive amounts of additional revenue for the domestic operation.

  • James


    Well said Chris. I also fly Qantas and would be happy to see them expand overseas and use other markets to profit. If all Australians flew Qantas then they wouldn’t have to take the steps they are taking now because they would be more profitable. Qantas has to compete against airlines will lower salaries.

  • Peter


    Speaking of false statements, perhaps Mr Joyce can explain why QANTAS was fined over $180,000,000 for an illegal freight cartel. Oh i forgot we can all take Mr Joyce on his word, and believe this garbage he is telling us.

  • Murray


    Hind sight is 20/20 vision Andrew. We all could have done better if we knew then what we know now. You and others on this forum seem to believe that Qantas can operate in isolation and continue to do what it’s always done while all the other airlines are reacting to changing market conditions and vastly increased competition – a strategy that will ensure Qantas’ demise. You write of bastardiing of our nation carrier, without mentioning the role of the various unions in the barstardising process. Unions are in no position to point the finger at management. Just sayin’.

  • Peter


    Qantas is facing up to reality with its international operations and so should its engineers and pilots. Qantas International cannot compete on the world stage with the cost base it has. The workers wanting more and more money is only leading to a situation where they will not have a job at all! The gravy train is over, Qantas has to compete on the world stage and needs to improve its cost base. Workers have had a nice ride now it is time to face reality or not have a job at all.

  • Ryan


    This is bull crap they dont need to axe routes they need create routes especially from perth, adelaide , darwin and some small towns. Its the lack of routes thats why the profits down. Qantas international needs have more direct routes than a stop over. You use more fuel going an asian city than going on a dirct flight

  • Mark


    Another day in the life of Qantas, the only reason people are abandoning the brand is they don’t offer the same qulaity of network or service as the other ‘premium’ airlines. I fly Qantas both international and domestic flights I need to take for work/holiday as I have already invested in Qantas Club etc, but the service on Qantas does not come close to that of SIA or other hign end carriers. Not having John Borghetti as CEO was the worst decision Qantas made. Joyce is best in the budget airline sector.

  • Murray


    It is sad that cut-price airlines were ever created, and that people fly them. Who needs 30″ seat pitch and single aisle aircraft on long haul flights (1 hour is bad enough). Qantas has adopted the railways strategy – cut the branch services until the trunk services are unprofitable – then cut the trunk services. People will fly with an airline if the airline has at least daily flights, and connects with other convenient flights where required.

  • Ron


    It’s easy to get attached to things. The “immortal” Charles Kingsford Smith started an airline. It’s not around anymore. We had Ansett for decades, & were stunned when it fell. Employees aside, does anybody miss it? Compass went from hero to zero. Ozjet barely got off the ground. And just like ANA, Qantas could be gone in 20 years unless it continues to evolve & adapt.

    Have they made shrewd, cunning, brilliant strategic decisions, or have they totally stuffed it? How the hell would I know. Everyone is welcome to their opinion, but it will only ever be that; an opinion.Time will tell for real. But one thing is certain; there will never be a shortage of planes to fly in, around, & out of Australia on, both from dodgey LCC’s & trusted premium brands. The world is getting smaller folks, & the Asians that aren’t already smarter than us are catching up by the day. The white man is actually a minority on this planet. Maybe one day the advertising song will be “I still call Earth home” Untill then, we all just need to get over ourselves & accept reality.

  • Plane Sense


    Maybe if the service was better they’d have no international concerns. Just look at Air NZ – great product – creates advocacy – creates seats on a plane. Wood for the trees, wood for the trees

  • Capt 123


    For those saying to cut employees’ pay to remain competitive: Emirate pays the highest salary anywhere in the world. How could they compete so strongly anywhere in the world, including Australian market, including with Qantas?

    Get your product right and DON’T WASTE MONEY ON RUBBISH.

    Take a picture of Emirate’s A380 First class and one from Qantas, if you are paying the same money flying the same route to London, which one will you rather fly?

    Take a picture of SIA’s business class and one from Qantas, if you are paying the same money flying he same route to Singapore, which one will you rather fly?

    QF get a well paid designer to do the job, ultimately it was the senior management to make the decision. When your product not able to match your competitors, you are making blame of the Australian public not traveling on you while flying overseas?

    The domestic market is making so much money only because there are not much choices. Wait and see Virgin ramp up their products.

    Waste millions on the “Logo” while A380 first arrived. What is that good for a better QF image? General public do not even know the differences between old and new roo (with slightly more forward leg and straighter lines). The tens of millions of repainting across the fleet do only one good – for AJ’s own ego (wanker).

    Why spend so much money on John Travolta every year? Millions wasted again. Why is this movie figure help to promote QF profit, sales or safety image/service image? I guess the cost to get him showing up on A380’s arrival won’t be cheap, nor does the cost to get him shoot a QF inflight safety demo clip. (Scraped in a short time.)

    Worst decision is to let go a great senior manage with 33 years in Qantas across almost all department to your rival and then get an Irish account who only has experiences with LCCs to run your prime airlines. Oh, I just read somewhere else, V-Australia won best Business class product in the Pacific region. Surprise!!

    With this logic, every company in Australia that competes internationally have to pay a Asian based salary or shift job to Asia to remain in business. Who ever agrees with that, are you ready to take that for yourself as an employee in such company?

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