Qantas flies in its 767s to elbow holiday rivals
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Qantas flies in its 767s to elbow holiday rivals
Sat "Melbourne Age" 24/8/02
Qantas flies in its 767s to elbow holiday rivals
By Clive Dorman
August 24 2002
Qantas will begin using its biggest domestic jets, Boeing 767s, on key holiday routes in a few months in a strategic move to win more of the local market.
Whether an air fares war will ensue remains to be seen.
Qantas Boeing 767s, reconfigured with an all-economy layout of about 280 seats, will serve the most popular holiday destinations from Sydney and Melbourne, such as the Gold Coast, Hamilton Island, Cairns and perhaps Alice Springs and Darwin.
The bigger jets can move people for a fraction of the cost per seat of the smaller 737s used by Qantas and Virgin Blue on many Australian routes.
Industry analyst Peter Harbison, of Sydney's Centre for Asia Pacific Aviation, said the Qantas move added a new dimension to the Australian airline scene.
But Qantas warned that the introduction of the 767s did not signal a new air fares war.
Qantas chief executive Geoff Dixon said it was all about the bottom line.
"We're segmenting our business; that is, aligning certain of our aircraft and our routes to the ability for those routes to give us a proper return," he said. "We need big aircraft. Big aircraft give us the cost base we need to compete against those airlines that have an overall cheaper base.
"What we are trying to do is protect the overall profitability of the company. And we do better because of our overall cost base being higher than the likes of Virgin when we're flying twin-aisle aircraft."
But will air fares come down? While Mr Dixon conceded that there were some routes where air fares needed to be reduced, he said there were others where the airline simply needed to reduce the cost of flying to sustain fares that were already in the market. He would not be specific.
However, the Qantas executive general manager of sales and marketing, John Borghetti, said the wide-body operation would mean more of the cheapest seats available to the most popular destinations.
Only about 20 per cent of the seats Qantas sells are heavily discounted Internet specials. About 40 per cent are partially discounted and the other 40 per cent are full business and economy fares.
Qantas sells about 20 per cent of its seats on the Internet and the more it does the more it saves on its heavy distribution costs, such as its call centres and travel agents fees. Mr Harbison said Internet bookings could save Qantas as much as $30 per seat.
But he said he believed that if Qantas was to fill its 767s with holiday-makers, there will have to be price stimulation, with fare deals of 30 to 40 per cent below what was now available.
He said it also changed the competitive situation in the industry. Mr Harbison said Virgin Blue was concentrating on raking in as much profit as it could in advance of a public offering of its shares and was in no mood for a fares war against a competitor that might for the first time be able to match or better its fares.
The Qantas move also further closed the window on any potential third competitor in the industry, he said. Nevertheless, Mr Harbison said it was inevitable that the powerful Qantas rival, Singapore Airlines, would set up a domestic operation in Australia in the near future.
Singapore not only needs a feeder service for its international operations, which it lost when Ansett collapsed, but also needs a domestic airline in Australia to fuel its long-term growth plans.
Qantas flies in its 767s to elbow holiday rivals
By Clive Dorman
August 24 2002
Qantas will begin using its biggest domestic jets, Boeing 767s, on key holiday routes in a few months in a strategic move to win more of the local market.
Whether an air fares war will ensue remains to be seen.
Qantas Boeing 767s, reconfigured with an all-economy layout of about 280 seats, will serve the most popular holiday destinations from Sydney and Melbourne, such as the Gold Coast, Hamilton Island, Cairns and perhaps Alice Springs and Darwin.
The bigger jets can move people for a fraction of the cost per seat of the smaller 737s used by Qantas and Virgin Blue on many Australian routes.
Industry analyst Peter Harbison, of Sydney's Centre for Asia Pacific Aviation, said the Qantas move added a new dimension to the Australian airline scene.
But Qantas warned that the introduction of the 767s did not signal a new air fares war.
Qantas chief executive Geoff Dixon said it was all about the bottom line.
"We're segmenting our business; that is, aligning certain of our aircraft and our routes to the ability for those routes to give us a proper return," he said. "We need big aircraft. Big aircraft give us the cost base we need to compete against those airlines that have an overall cheaper base.
"What we are trying to do is protect the overall profitability of the company. And we do better because of our overall cost base being higher than the likes of Virgin when we're flying twin-aisle aircraft."
But will air fares come down? While Mr Dixon conceded that there were some routes where air fares needed to be reduced, he said there were others where the airline simply needed to reduce the cost of flying to sustain fares that were already in the market. He would not be specific.
However, the Qantas executive general manager of sales and marketing, John Borghetti, said the wide-body operation would mean more of the cheapest seats available to the most popular destinations.
Only about 20 per cent of the seats Qantas sells are heavily discounted Internet specials. About 40 per cent are partially discounted and the other 40 per cent are full business and economy fares.
Qantas sells about 20 per cent of its seats on the Internet and the more it does the more it saves on its heavy distribution costs, such as its call centres and travel agents fees. Mr Harbison said Internet bookings could save Qantas as much as $30 per seat.
But he said he believed that if Qantas was to fill its 767s with holiday-makers, there will have to be price stimulation, with fare deals of 30 to 40 per cent below what was now available.
He said it also changed the competitive situation in the industry. Mr Harbison said Virgin Blue was concentrating on raking in as much profit as it could in advance of a public offering of its shares and was in no mood for a fares war against a competitor that might for the first time be able to match or better its fares.
The Qantas move also further closed the window on any potential third competitor in the industry, he said. Nevertheless, Mr Harbison said it was inevitable that the powerful Qantas rival, Singapore Airlines, would set up a domestic operation in Australia in the near future.
Singapore not only needs a feeder service for its international operations, which it lost when Ansett collapsed, but also needs a domestic airline in Australia to fuel its long-term growth plans.
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Could it just be qantas using reconf Aust Airlines 767(previously mentioned) till Oct as there would have to be a lead in period(can't do 4 overnight) and we will see this trend continue with even more 767 for AA and as the 767 go from domestic to AA new 737, 330 or 717 fill the void as they arrive.
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Predictions
1) Some (if not all) 717 services on Mel-Ool, Syd-Ool (possibly even Adl-Ool) to be replaced by 76Y (all economy B767!)
2) 76Y to also service some Cns routes, and a selection of services to a range of the following ports: Tsv, Drw, Asp, Ayq, Hba, Hti (is runway sufficient for 280 seat jet?)
3) Excess 717 to service intra QLD holiday routes (Bne-Ppp, Rok, Mky, Hti etc)
4) B737 to replace B146 on Cbr-Bne, thus the termination of the east coast B146 department!
Comments?
2) 76Y to also service some Cns routes, and a selection of services to a range of the following ports: Tsv, Drw, Asp, Ayq, Hba, Hti (is runway sufficient for 280 seat jet?)
3) Excess 717 to service intra QLD holiday routes (Bne-Ppp, Rok, Mky, Hti etc)
4) B737 to replace B146 on Cbr-Bne, thus the termination of the east coast B146 department!
Comments?
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hobay3 -
Loads to HBA are 'healthy' on some flights at the moment but not enough to warrent a 280 seat plane! Maybe at Christmas???
AN used to fly 767s into HTI so it could be possible. I don't know. As far as OOL - Impulse only do 1 flight a day from MEL and we have been told that OOL flying is to continue at least until March next year and the base there will remain open.
Also I don't think they'd fill 280 seats ADL-OOL just yet. Maybe in summer?
Good predictions though all the same.
Loads to HBA are 'healthy' on some flights at the moment but not enough to warrent a 280 seat plane! Maybe at Christmas???
AN used to fly 767s into HTI so it could be possible. I don't know. As far as OOL - Impulse only do 1 flight a day from MEL and we have been told that OOL flying is to continue at least until March next year and the base there will remain open.
Also I don't think they'd fill 280 seats ADL-OOL just yet. Maybe in summer?
Good predictions though all the same.
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Because I am limited to flying the routes that he mentioned. That's all I do. Ofcourse I am going to know how many pax we have on certain routes depending on days/times based on past experience.
Re. the OOL base/flying comment -
We were told by the GM of Airconnex himself that OOL base/flying was to remain until March at least. (Though they said similar last time that OOL opened then closed!) Some CSAs at OOL said the other morning that (from comments they recieved) the pax were pleased with the higher frequency of flights this year and that they were told by their managment the 717s were flying to OOL over summer.
And I know that AN used to fly 767s into HTI from SYD up until about 2000 I think. They were 200s. I have also seen pics of Condor 757-200s there.
Anyway, back to "coffee and seatbelts"... Douglas they were just personal observations/opinions of mine.
Re. the OOL base/flying comment -
We were told by the GM of Airconnex himself that OOL base/flying was to remain until March at least. (Though they said similar last time that OOL opened then closed!) Some CSAs at OOL said the other morning that (from comments they recieved) the pax were pleased with the higher frequency of flights this year and that they were told by their managment the 717s were flying to OOL over summer.
And I know that AN used to fly 767s into HTI from SYD up until about 2000 I think. They were 200s. I have also seen pics of Condor 757-200s there.
Anyway, back to "coffee and seatbelts"... Douglas they were just personal observations/opinions of mine.
Last edited by ditzyboy; 27th Aug 2002 at 10:00.
And just which terminal in Sydney would Australian Airlines be using? Remember Geoff saying that some of the "leisure flights" would be transferring to the 6 gates at the Ansett terminal? And that was interpreted as meaning the Link 717s?
