Issue 350: Boeing’s third-gen twin ready to fly

Although Qantas has not announced which routes the A380s will operate, it has said the aircraft will be used around Asia in peak periods, with some maintenance work able to be performed at other times of the year.

“We also need to make sure we shape our capacity to meet demand and that’s what we’ve been looking to do right across our network,” Evans told reporters on the sidelines of the International Air Transport Association (IATA) annual general meeting in Cancun on June 6.
“Putting the A380s into Asia gives us the opportunity to do that because we’ll have A330s predominantly but we’ll also have A380s and some 737s so you can ramp up in the peaks and double up maintenance in the troughs and take ASKs out.

“We haven’t yet fully announced exactly where we are going to schedule those aircraft because we are still working through the shaping that we want to do, but you know, places like Hong Kong, places like Singapore are certainly going to get a reasonable amount of that capacity.”

Evans noted Qantas had 50 per cent of its capacity, measured by available seat kilometres (ASK) currently pointed to Asia. And when the wider Qantas group of airlines is concerned, that figure is more than 50 per cent.

Further, the forecasts from manufacturers Airbus and Boeing all point to a doubling of passenger traffic every 15-20 years, with Asia Pacific expected to be the fastest growing region for air travel.

Indeed, the 2017-2036 Airbus global market forecast (GMF) published after the IATA AGM on June 9 showed the Asia Pacific would represent 38 per cent of global revenue passenger kilometres (RPK) in 2036, up from 30 per cent currently.

While the likes of Singapore and Hong Kong, among others, are increasing airport capacity through new passenger terminals, additional runways and improved air traffic management systems, access to slots and gates is expected to get more challenging.

And in what should be music to the ears of Airbus’s veteran chief operating officer for customers John Leahy (see separate story), Qantas chief executive Alan Joyce said the world’s largest commercial passenger aircraft will have to be part of his airline’s the solution for Asia.
“What’s very clear is there is going to be slot problems in a range of airports. We already can see in Shanghai, Beijing and Hong Kong,” Joyce told reporters at IATA.

“For growth in a lot of the Asian markets, the A380 is going to be a vehicle of the future.”

Evans added: “Hong Kong is a slot constrained airport. Getting more slots in Hong Kong for the next eight years or whatever it might be is very very difficult so you’re going to want an A380 into Hong Kong,” Evans said.

“You might not want it today, but in a year’s time or two years’ time or three years’ time you are going to want it as demand grows and the capacity of the airport is not increased.”

Asked if Qantas’s 12 A380 will be more than is optimal, Evans said: “Twelve is the right number for US.”

“I think there remains, you know, substantial opportunities for our fleet of 12 A380s around our network, but clearly if we’re looking for new aircraft we want the new technology aircraft that have the range and the capability to do our missions – the 787s or 777Xs or the A350s.”

Ambitions Based On New Aircraft Technology

The decision to replace A380-operated Melbourne-Dubai-London Heathrow with Melbourne-Perth-London Heathrow using a premium-heavy 787-9 is unlikely to be the first change to the Qantas’s network of destinations served with the Boeing medium twin.

More immediately, the first four Dreamliners on firm order will arrive by March 2018, allowing for the commencement of an aircraft pattern where the 787-9s will operate daily London Heathrow-Perth-Melbourne-Los Angeles, as well as the retirement of two 747-400s.

A further four will join the fleet by the end if calendar 2018, which will lead to the a further three 747-400s being withdrawn.

In its investor day presentation to the financial community on May 5, Qantas said the second batch of four Dreamliners would be used on “new route opportunities”.

The list of potential routes that Qantas has raised previously includes Melbourne-Dallas/Fort Woth (7,815nm), Brisbane-Dallas/Fort Worth (7,216nm) or Sydney-Chicago (8,023nm). Perth-London Heathrow is 7,829nm.

“We’ve built the aircraft with the capability that it can do Melbourne-Dallas in terms of a full payload,” Evans said.

Should Melbourne-Dallas/Fort Worth take off with 787-9s some time in the second half of 2018, the aircraft could then be a candidate to potentially replace the A380 that currently operates Sydney-Dallas/Fort Worth, given its payload limitations on the westbound return leg and the reduced need for so many seats out of Sydney.

In conversations with Qantas employees who spoke to Australian Aviation on the condition of anonymity as they were not authorised to speak with the media, it was understood there are days where up to 100 seats are blocked off on the A380 for the flight from Dallas/Fort Worth to Sydney.

While Evans did confirm at Qantas’s IATA briefing with media there were payload restrictions on the route, flights with up to 100 seats blocked off happened “very, very rarely” and only at certain times of the year.

Further, he said there were no plans to announce about the use of the 787-9 on Sydney-Dallas/Fort Worth, adding that switching from the 747-400ER (which made a technical stop in Brisbane on the westbound leg), to the A380 had “transformed” the route.

“How that develops over time, I don’t know but the A380 works on that route extremely well for us,” Evans said.

As Evans noted earlier, Qantas has been clear in the past that it plans to maintain its A380 fleet at 12 aircraft, with any new long-haul or ultra long haul equipment to come from the Boeing 787, 777-X or Airbus A350 product line.

The still-in-development 777-X or A350-900ULR, will potentially allow Qantas to offer nonstop service from Sydney and Melbourne to London and New York.

Asked if one day Qantas may operate its Sydney-Dubai-London Heathrow through Perth instead, Qantas chief executive Alan Joyce said: “Hopefully we can fly direct from Sydney to London.”

Hopefully we can fly direct from Sydney to London. Alan Joyce

“We do believe aircraft technology is going to be our friend into the future,” Joyce said. “We’ve been waiting 97 years to be able to fly direct from Sydney and Melbourne. These are the aircraft that Qantas has always wanted.”

“We do believe aircraft technology is going to be our friend into the future.” Alan Joyce

Joyce said Qantas has been in ongoing talks with both manufacturers about the capabilities of the 777-8X and A350-900ULR for Sydney to London and New York. In other words, being able to fly from everywhere to everywhere.

And the Qantas chief executive says his ambitions on nonstop flights from Australia to London do not end with the just Sydney, noting the airline has kept four slots at London Heathrow for future use.

“Hopefully one day we can get back to having a Perth, a Sydney, a Melbourne and a Brisbane direct service to London,” Joyce said.

“That’s why we have four slots because we’d love to be able to grow direct services into that market.”

Singapore Airlines is the launch customer for the Airbus A350-900ULR and planned to use the aircraft to operate nonstop flights from the city-state to Los Angeles and New York. Its chief executive Goh Choon Phong told reporters at IATA the Star Alliance member planned to receive the first of seven aircraft on firm order in the “middle to later part of 2018”.

Dubai Still To Play A Role

All this talk of ultra long haul nonstop service suggests a diminished role for Dubai – the hub of its alliance partner Emirates.
Not so, according to Joyce.

“Even when we start flying direct from Sydney and Melbourne to London, I think still Dubai will play a big role because Emirates has 40 destinations in Europe,” Joyce said.

“We’re never going to fly direct to places like Venice, Prague. What that does is we get the best of both worlds.”

Evans added: “Even with this new technology, which will enable us to really compete in the long-distance point-to-point market we are still going to need gateways.”

“There is no secret that the UK and Europe is the most competitive and challenging part of our network.

“While the Emirates partnership has been increasingly successful for us in allowing us access to a huge network in continental Europe that we would never be able to service ourselves, we are still competing there in probably the most competitive aviation market in the world.”

Counting Down To The Dreamliner

Closer to home, there will be flow on effects of the use of the 787-9 to London and A380 to Asia.

That would potentially free up some A330 widebody capacity to be used for adding frequencies to the likes of Manila and Jakarta that are currently less than daily or extending seasonal routes such as Auckland-Perth to offer New Zealanders a another option to London.

“We want to make sure we’ve got a good level of connectivity going through Perth,” Evans said.

“There is opportunities to connect in New Zealand as well.”

Meanwhile, Evans said Qantas had decided to complete the refurbishment of the remaining two A330-200s VH-EBM and VH-EBG that still feature the SkyBed business class seats and older generation inflight entertainment system.

Separately, Qantas announced in late May plans to use Airbus A330-200s between Sydney and Auckland on a permanent basis from July as its alliance partner Emirates withdraws A380 tag flights between Sydney and Auckland.

The Qantas A330s will operate on a double daily weekday schedule starting July 13 2017, replacing Boeing 737-800 narrowbodies that are used currently. There will be six widebody flights over the weekend. Emirates will codeshare on these services.

Meanwhile, Emirates will end its EK481/419 Sydney-Auckland-Sydney offering that operates as part of a Dubai-Bangkok-Sydney-Auckland rotation.

Qantas has reduced some A330 services to Perth and deployed the aircraft on better-performing routes along Australia’s east coast, as well as its recently resumed Sydney-Beijing flight.

Evans said the use of A330s on the Auckland-Perth route comes from the “ongoing strategy of driving utilisation across networks”.

Further, he said the use of the A330-200s, which primarily operate on domestic services, on more international services was part of the interchangeability with the larger A330-300s that have been mainly deployed overseas.

“The way we think about them is they are a resource to flexibly use across the entire network and we are doing that, so you are seeing on a daily basis some aircraft that are doing some domestic flying and then will take off and do some international flying as well,” Evans said.

“We don’t have a domestic fleet and an international fleet, we have a Qantas fleet and we are going to be used that flexibly, same with the 737s. That is a good way to think about it.”

We don’t have a domestic fleet and an international fleet, we have a Qantas fleet. Gareth Evans

Domestic Market Healthy

On local trading conditions, Joyce described the Australian domestic market as “a tale of two cities nearly”, with weaker demand in mining states such as Western Australia and Queensland and strong growth along the east coast.

This was reflected in Qantas’s revenue per available seat kilometre (RASK) metric experienced so far in the 2016/17 financial year. Joyce said RASK fell in the first quarter, was neutral in the second quarter and rose in the three months to March 31 2017.

“And we are seeing that trend continue so as far as we are concerned the domestic market is pretty healthy, we are very happy with the performance of that and we see that trend continuing into the next financial year,” Joyce said.

Meanwhile, Jetstar group chief executive Jayne Hrdlicka said it was a similar experience at the Qantas-owned low cost carrier’s Australian operations.

“We are seeing continued momentum in people wanting to travel to really interesting places in Australia to have fun,” Hrdlicka said.
“We are also increasingly carrying lots of small businesses who are able to cross geographic boundaries now because it is affordable to do that. So the domestic market we see as being really stable and underlying health.”

Hrdlicka said the Jetstar would soon announce details of a Chinese charter partnership. The airline partnered with Chinese company Dalian Wanda Group group to operate Gold Coast-Wuhan services in a 12-month period in 2015-2016.

Figures from IATA chief economist Brian Pearce showed the Australian domestic market traffic fell 0.6 per cent in the first four months of calendar 2017.

“It has been fairly slow growth,” Pearce told reporters at the IATA AGM.

“That is probably more of a reflection of the fact that it is quite a mature market.”

Qantas said in a trading update on May 4 it anticipated reporting a fall in underlying profit of up to 11 per cent for the full 2016/17 financial year as competition on international routes and weakness in the resources sector pressured revenues.

Underlying profit before tax (PBT) for the 12 months to June 30 2017 was expected to come in between $1.35 billion and $1.40 billion.
The 2016/17 figure would be between 8.5 per cent and 11 per cent lower than underlying PBT of $1.53 billion achieved in 2015/16, which was the highest result in the company’s history. Underlying PBT excludes one-off items and was regarded as the best indication of financial performance.