Fleet Of Fleet

Fast forward to 1999 and Air New Zealand, finally on the ropes, touted it was buying brand new 737s – not the new -800s but the last six -300s to be built.

Qantas is now touting its youngest fleet age ever which is true, in part thanks to Jetstar’s youthful fleet profile – but the 787s have been deferred again and there is no sign of an order for 737 MAXs.

Contrasting this Virgin Australia has access to Boeing 787s and A350s from well-heeled shareholder Etihad and is bringing forward its 737 MAX order by over a year.

However, make no mistake, the Qantas fleet plan is music to analysts’ ears and since FY09 it has taken delivery of 140 aircraft and retired or returned leases for 80 aircraft, resulting in an average fleet age of 7. 7 years – the youngest for twodecades and significantly below the average in North America, Europe and the Asia Pacific.

But one can’t help think that much of Qantas’s fleet plan is based on the hope that Virgin Australia does not source 20-plus 787s from Etihad’s vast orders.

At the full results Qantas CEO Alan Joyce said that the Group’s focus now is “on maximising the advantages of this young, competitive fleet and completing the retirement of older aircraft types. ” The guiding principles are: »» Increasing fleet utilisation in the international and domestic markets.

»» Putting the right aircraft on the right route.

»» Offering the best experience in every market for customers.

»» Realising the cost benefits of new-generation aircraft.

»» Continuing to simplify the Group’s fleet over time.

“We are using our fleet more efficiently to help deliver the goals of our accelerated Qantas Transformation Program,” Joyce said.

“Of the $2 billion permanent cost reductions we are seeking over three years, $600 million will come from fleet and network initiatives. At the same time, we continue to invest in new and upgraded aircraft to help our people deliver the fantastic service that has earned record customer satisfaction over the past year. ” In February Qantas announced that more than 50 aircraft on order would be deferred or sold.

Now the airline has gone further, with two 737-800s to be sold, no renewal of the leases on two A330‑200s, five A320s on order for Jetstar have been sold and two Q300s will be disposed of.

In addition orders for 21 A320s have been deferred by four years and converted to A320neos.

The 787 deferment of a year to 2017 may more reflect a desire to avoid another stoush with the Qantas long-haul pilots whose EBA is under discussion now and expires in December.

There is little doubt that the airline wants and needs to start afresh with its pilots on the 787 so that the contract reflects what its competitors are paying in wages and conditions.

As one analyst put it: “It can’t be an A380-styled contract. ” In previous EBAs the “787 question” has been put in the too hard basket and pushed into the next EBA. The economics of what the airline needs to do look sound and are necessary, but the airline is vulnerable on fuel costs and passenger experience.

For instance while Qantas will replace Boeing 747 services to Singapore with A330s saving fuel, it will be head-to-head with Singapore Airlines’ A380s for passenger experience.

On the flipside, the fuel burn on the 747s and A380s is a heavy burden against 777s and 787s.

The stark reality is Qantas cannot afford to buy the best and most fuel-efficient aircraft.

However, the airline is sprucing up its inflight product in response to competition from Virgin Australia.

All the 737-800s will be refurbished from mid-2015, with improvements to inflight entertainment systems and an increase in capacity.

All the 737-400s have now left the fleet and all the Boeing 767s willleave the fleet by December.

The domestic A330s will get very smart lie-flat business class beds and the international A330s will also get the new product to replace the Skybeds.

As a result of the retirements and simplification, the Group’s mainline fleet will be reduced from 11 types in FY13 to seven in FY16.

Due to harmony with its pilots’ ranks, Virgin Australia is in a far better position to move forward with fleet acquisitions.

And its equity partner Etihad Airways has orders in for 71 787s and 62 A350s and when those orders were placed the airline said that it was a “group order” for partner airlines.

So it would appear, despite Virgin Australia’s CEO John Borghetti being coy about widebody plans when asked by Australian Aviation, that the airline has many options.

In fact Borghetti highlighted enhancing procurement with

What is needed at Qantas is a ‘grand compact’ between management and its pilots and cabin crew.

alliance partners as part of a $1 billion efficiency drive.

That push also includes increased utilisation of the Boeing 737 fleet and the retirement of two 12-yearold A330s as well as bringing forward the Boeing 737 MAX deliveries from 2019 to 2018.

By the time this has been published Virgin would have also announced a major upgrade across its fleet of its domestic and international business class offering which is expected to be rolled out in April.

One gets the overriding impression that the fleet future for both Qantas and Virgin Australia lies with their partner – or future partner – airlines.

In that regard Virgin Australia is far more advanced. Equity partnerships are in place, orders placed and pilot agreements locked away in reality of today’s market.

A fast track of 15 787-9s for Virgin Australia from Etihad’s 787 commitment for both domestic and international operations would be a relatively simple affair with pooling of spares with Air New Zealand.

For fleet commonality the 777‑300ERs could be sold off or swapped to Etihad Airways or Air New Zealand.

By way of contrast, Qantas needs to deliver on its announced cost savings before it could entice an overseas airline partner to buy into the yet-tobe spun off Qantas International.

Again, the key is the long-haul pilots. It is certain, say a number of analysts, that any investor would want a deal done with pilots that reflects the reality of the marketplace today.

“It’s not a matter of what someone is worth; it’s a matter of what the market will pay,” said one analyst.

The problem for Qantas International is twofold. It faces intense competition from more and more 787s in the colours of United, Air New Zealand, Thai International and Etihad Airways to name but a few.

And it faces daunting fuel bills from four-engine giants when its competitors are flying 777s and 787s. There is no question it is facing major challenges.

It beggars belief that the airline group, including TAA, that was among the first to order the Constellation, Vickers Viscount, Convair 240, Boeing 707, 727, Douglas DC-9 and Boeing 747 is now struggling to invest in the latest technology that can deliver the ultimate in passenger experience and fuel economy.

Qantas needs to get back on the front foot with its fleet.

The argument that its fleet is the youngest it has ever been may resonate with an accountant but it does not wash with passengers who are being wowed with the latest and greatest in cabin innovations and experiences that only a 787, A350 or 777X will deliver.

What happened to the grand 787 plan of fragmenting the Pacific? Sydney to San Francisco, Sydney to Vancouver, double daily to Dallas or Brisbane to Seattle? Over and over passengers tell you they do not want to fly via a hub – they want to fly nonstop. How much more traffic could the 787 generate for Qantas with nonstops? What is needed at Qantas is a ‘grand compact’ between management and its pilots and cabin crew as outlined by former National Secretary of the Australian Workers’ Union – and perhaps future PM – Paul Howes. Perhaps this could include performance goals and profit share incentives. Without it Qantas International is in for severe turbulence.

Today the Qantas Group’s grand 787 plan of 55 orders and 60 options has yielded firm orders for just 11 787-8s being delivered to Jetstar.

Has Qantas pushed its future too SCROLL DOWN far back?

Qantas Group fleet

at June 30 2014
Qantas 131
A380 12
747-400ER 6
747-400 7
A330-300 10
A330-200 13
767-300ER 13
737-800 70
Jetstar 90 A330-200 7
787-8 4
A321 6
A320 73
QantasLink 67 717-200 18
Q400 30
Q300 17
Q200 2
Network Aviation 15 Fokker 100 12
EMB-120 3
Qantas Freight 5
767-300SF 1
737-300SF 4
Total Qantas
Group 308
Virgin Australia 104
777-300ER 5
A330-200 7
737-700/-800 74
E190 18
Virgin Australia Regional 33
ATR 72 13
A320 2
Fokker 100 10
Fokker 50 8
Tigerair Australia 13
A320 13
Total Virgin Australia
Group 150
Virgin Australia
Group fleet
at June 30 2014