RedQ stuck at the gate

Instead of working with Singapore, which has a known and very successful hub and is South-East Asia’s main centre of business, Qantas tried to navigate through Malaysia’s labyrinthine politics in talking to Malaysian airlines, an ailing airline that had just down a share swap — and with AirAsia, which has its own agenda and an unknown quantity in its hub.

Signals from Qantas were mixed with some reporting that there wasn’t a plan B, while sources at Qantas told Contrails there was a plan B and indeed a plan C – but that no details would be made public until the deal was done.

CBA Equities analyst Matt Crowe told The Australian’s aviation editor Steve Creedy that he was “surprised that they haven’t been able to come to an arrangement because I think it’s a good deal, potentially, for both parties”.

Crowe told The Australian he did not see a logical alternative partner: “You can’t operate in Asia as an Australian-owned business so you’ve got to have at least an equity partner.”

However, one thing is clear – the airline landscape has changed since the strategy was announced last August.

The Red Q project started in Singapore with A320s but apparent difficulty in getting traffic rights to China killed off that option and the focus moved north. Steve Creedy wrote that it morphed into a “capital-lite” plan to “kit out Malaysia Airlines Airbus A330s based in Kuala Lumpur with Qantas product”.

Clearly the staggering losses of $780 million at Malaysian Airlines is a major factor, with its company chairman saying it was a company in crisis.

According to The Weekend Australian “the complex negotiations foundered mainly on questions of what each airline would contribute to the start-up and whether the Kuala Lumpur-based airline could devote resources to the project at a time it was restructuring core operations.

Other issues included what would happen on routes to Europe and other codeshare operations into Asia”.

A very different perspective comes from the Sydney Morning Herald’s Ian Verrender: “It was a plan that was never going to fly. For it was first and foremost a threat – a hollow one – to its workforce rather than a legitimate blueprint to turn around the company’s fortunes.

“If there was strategy in the plan, it was as part of an ideological battle over trade unionism in general and Fair Work Australia in particular, which culminated in management shutting down operations for three days last November.”

Setting up an Asian-based premium operation is a smart move, just as setting up Jetstar Asia was and still is a very smart move that is being replicated in Japan.

but there’s so much misinformation being spread around that when the truth does emerge it is barely recognisable.

The Sydney-based Centre for Asia Pacific Aviation’s (CAPA) Will Horton suggests that AirAsia’s Tony Fernandes’s influence may have derailed Malaysian’s plans, saying: “Input from a former outsider inevitably means new ways of thinking which do not always align with those of the entrenched management.”

There’s also an interesting perspective from Horton on why the Singapore option failed: he suggests that the Singaporean policy of not publishing what routes are available, with airlines playing a guessing game, adds risk.

He said: “It was certainly an issue when Jetstar Asia first started there, something Mr Joyce would have known as the CEO of [Jetstar] at that stage. This may be one reason that the Singapore option became too hard for Qantas.”

There is no question that Qantas needs to be in Asia – just as there is no question it will be difficult to establish a premium brand.

The mathematics of the proposition add up but the relentless criticism, much of it ill-informed, makes Joyce’s flight path a challenge almost impossible for a lesser man. However, he is fiercely determined and he should be knighted for establishing Jetstar and its Asian arm against all the odds and naysayers.

One sobering fact remains: if the 787 had been on time Qantas would have 43 in service as this is read – and Qantas International would be flying high.