Qantas To Reconfigure International Aircraft

[Nick Te Mata]

767s still run on a few (long) services internationally; QF3/4 SYD-HNL, QF19/20 SYD-BNE-MNL and QF79/80 PER-NRT. It's pertinent to note that the 767s are hanging around on some of the lowest yield long hauls QF still runs.

Very right Ash. Although it's certainly not ideal to have different products across the longhaul fleet, it's an issue that stretches right across the airline industry and QF certainly aren't the worst. The opportunity the A380 provides in terms of floorspace makes it a very attractive aircraft for PR and marketing purposes; it's no coincidence every A380 operator has made some big changes to their onboard product with the arrival of new frames.
Obviously the converse to that is a product inconsistency, a challenge every A380 operator faces, but when you're looking at bottom lines the A380 isn't just a new aircraft, it's a real opportunity to strengthen the brand and value-adding this way far outstrips any customer dissatisfaction. All this new floorspace is very reminiscent of the EIS of the 747 four decades ago.

Anyway, the difference between MKI and MKII Skybeds isn't enormous and the F product on the 744 is still wonderful (and recently revamped). For most flying F, the soft product (service, catering etc) is probably just as, if not more important than the seat. And from many reports, the 744 experience edges the 380 in that area.

QF are no match for EK, especially in J and F; they have a plethora of completely different products flying around at any one time. Spare a thought for EK's frequent premium flyers; a return trip SYD-Europe via DXB could potentially net four different J/F products across all the legs.

[Kelvin R]

There has been some interesting articles and letters in the Fin Review over the last few weeks regarding this issue. Specifically the main point from the corporate paid premium class frequent flyers has been that QF has fallen behind in product on international service while charging a premium compared to other carriers.

It appears that Y+ is the only product on the QF fleet which is the same regardless of aircraft and destination. In business (which is still according the the Fin Review what the majority of corporates are flying) is lagging compared to carriers such as EK, EY, SQ, CX and so on. Comments have been made that even the new UA J is better than QF and far cheaper as well.

As an example, if you are willing to tolerate the 6 hrs of extra flight time (traded with not having to transit LAX) for around $8k less you can fly EY in a full flat bed to JFK over QF angle flat. For $6k less you can fly EY First versus QF J.

Trans tasman you can fly LA or EK J for the same price as QF Y and get AVOD and either a flat bed or angle flat bed versus 32 inch seat pitch and main screen entertainment.

In last months Harvard Business Review there was a feature on Qantas and Jetstar as a fighter brand, praising QF for what a great job they had done keeping DJ contained in the market through Jetstar while maintaining a profit. It will be interesting to see how QF respond to the premium market as simply hoping PAX return to a lesser, higher priced product doesn't seem like a good strategy. In this case the fighter brand of JQ wont work against premium carriers such as EK and EY who offer a better product for less money.

For those in control of who they fly (and these are typically the same people who pay the published fare and therefore from a yield perspective are worth the most) the move away from QF is easy. Why would you pay more to get less?

So while it may be technically difficult to retro fit the 744 and 330 fleet with the A380 product (including Y+, but excluding F) what choice do QF have if they are to remain competitive?

[Nick Te Mata]

QF's mysterious premium pricing it may well be getting noticed by the pax to whom it really matters. QF have long been able to maintain (some would argue exhorbitant) prices ex-Aus by virtue of an incredibly strong brand and loyal FF clientele to whom the move is effectively impossible; the gaining of status credits and points is worth more than whatever difference is paid in airfare. Anybody who's booked a QF service beginning overseas will tell you the airline is quite competitively priced for foreign departures inbound to Australia.

For so long now, QF's pricing ex-Aus has been a brand rather than a product premium, but whether the tide is turning is a question that could only be answered quite some time from now. Is there a new generation of Australian corporate types more aware of greener pastures on EK, EY, TG, UA than was the case in the past? How many more will follow their lead into the future? The generation currently at university, spending much more time on the net rather than watching TV will certainly play a role -- they won't recognise 'I Still Call Australia Home' like an older generation does. New media degrade existing brands, and so much of QF strategy is based around traditional branding. It'll probably keep working for some time too, but eventually it will catch up with them -- and QF are very aware of that.

Responsibilities to stockholders will always give the balance sheet the final say. QF won't keep premium pricing if they're haemorrhaging money, but for the moment they're among the strongest players in a troubled industry. If J/F customers are leaving in droves, they'll do something about it, but I suspect they're satisfied with their position, even with multiple products up front. It's just the problem you'll always have when you're introducing new products to stay competitive --customer satisfaction is a means to an end; getting their money in the QF bank. Aircraft downtime costs money too so refits will only be carried out when and if it's financially feasible.

Getting the new Skybed into the A330/744 doesn't matter so long as people keep paying for what is now an old product, and enough are for now. The case may be that, in 3-4 years, a new J friendly to the A330/744's floorspace may be necessary to continue to compete with UA etc, but QF's biggest concern seems to be getting the right amount of (= more) Y on board.

[Brad Myer]

767s still run on a few (long) services internationally; QF3/4 SYD-HNL, QF19/20 SYD-BNE-MNL and QF79/80 PER-NRT. It's pertinent to note that the 767s are hanging around on some of the lowest yield long hauls QF still runs.

Rumour has it some of the above listed B763 Intl routes will be moving to A330 from early next year.

[Brad Myer]

Hi,

Page 31 of the investor presentation lists some info about reconfigs/upgrades:

http://www.asx.com.au/asxpdf/2009112...9drs40tf76.pdf

Says B744 product will be upgraded. Nothing about the A330 though?

Thanks

[Gareth U]

Originally Posted by Brad Myer

Rumour has it some of the above listed B763 Intl routes will be moving to A330 from early next year.

On Tuesday I asked a Fleet Planner about this and (another rumour) 332s LAX-JFK and she would not say either way. Top secret apparently.

[Malcolm Parker]

top secret....usually means neagtive news to consumer. I would say then it will be downgraded, stay tuned I guess.

[Jason A]

Airbus A330 LAX - JFK is definitely happening.

330 techies have been offered 2 month port swaps to LAX.

[Brad Myer]

That doesnt mean the A330 will operate to JFK.

The 332s could just be doing AKL-LAX-AKL?

Thanks

[Anthony T]

Is the 737 on the MEL-AKL-MEL leg of QF25/26 working?
Maybe the plan is A330 MEL-AKL-LAX-JFK & v.v