tip off

Virgin and ‘Emiratichokers’ advance on Qantas

A contact — make that dead man walking — in Qantas sounded shattered but in good humour this morning. He referred to being under siege from the Virgins and the “Emiratichokers” in response to reports that Virgin Australia was carrying more passengers on domestic routes than Qantas, and that Emirates had run amok with a trebling of daily services out of Perth from next March, while it would start flights between its global hub at Dubai and Adelaide from November 1 (and make flights daily from February).

The Virgin story was in fact wrong, as Qantas pointed out in what has been an unruly morning in the Australian aviation playpen.

Virgin is only three quarters the size of Qantas on domestic routes and AAP, which provided The Australian Financial Review and The Daily Telegraph with the figures, is looking innumerate.

But going on the official yields and growth guidance from both Qantas and Virgin in the 12 months to the end of May, the former has seen its rivers of domestic gold shrink if not dry up. And the Virgins, no doubt aided by Qantas escapees from Jetstar’s torture machines, keeps making Delphic references (without all of the figures a sceptic would like to review) to strong performances at the till and in the jets when it comes to fares paid and passengers boarded.

All of which is a bit weird when there is a price war in progress, a classic, “bleed yourself to death less slowly than your competitor” sort of price war, going on between Qantas and said Virgins, and no — let’s not persist with that metaphor.

What consumers will find today is more discount fares at peak times on Qantas and Virgin Australia flights than they have ever seen before, which should make anyone paying anything like $200 or more to fly between Melbourne and Sydney feel like an idiot.

The truth about who is doing what to whom will not be quantified in profit and loss terms until Qantas and Virgin Australia publish their full year results late next month. In the meantime Virgin employees can amuse themselves trying to get their photos put on interactive Qantas video promotional stands or their names on the side of one of its A380s in the new crowdsourced marketing campaign, in which the jet will be turned into something like a giant flying Facebook page.

Keep a sharp eye out for Richard Branson!

What Emirates is up to is really serious for Qantas. Emirates is aviation’s largest food chain in operation. It has the world’s largest fleets of A380s and 777s, both in service and on order, and the world’s second largest order for A350s.

The A380s are now swallowing the 777s to cope with its growth on the busiest routes, with the big Airbus replacing the not exactly small 777s on services to Paris, which is going daily double with A380s. It is reported flights to New York will follow suit, with the biggest airliner in service also replacing a 777 frequency from Dubai to Moscow and apparently to be announced as replacing the Boeing on flights to San Francisco, as a result of evolving range and payload improvements.

There will be Emirates A380s daily through Melbourne by the end of year, fulfilling another part of its longstanding promise to cater for Australian growth with A380s on just about every route or existing frequency by the end of the decade, although it also has the hots for a new larger version of the 777, the –X, which has been a Boeing teaser act for the last year, and which might be given additional substance at next week’s Farnborough Air Show.

And those 777s swallowed up by the A380s are being … redeployed, to open flights to Lyon, Emirates’ third port on France. It is launching Warsaw with museum fleet A330s awaiting A350 replacement, it has just launched Barcelona in addition to Madrid, and other 777s will find a new life opening the Adelaide market and dominating the resource capital Perth’s international flights, where Qantas can’t even manage non-stop flights to China never mind the Middle East.

Qantas has long expected its shareholders and employees to accept the unique wisdom of fleet planning that derided 777s as outdated technology that was irrelevant to its needs, as long ago as 2003. It is just one of a set of bad decisions that has destroyed brand and shareholder value, and most likely, done irreversible harm to it in a future that appears to be the plaything of a strong domestic competitor and aggressive global carriers.

2
  • 1
    dooby
    Posted Thursday, 5 July 2012 at 2:12 pm | Permalink

    Ben, Emirates aren’t “trebling” daily services out of Perth, they will have treble daily services (ie three flights per day). Trebling daily services, considering they have 2 per day now would imply 6 services a day. No?

  • 2
    David Hand
    Posted Thursday, 5 July 2012 at 7:02 pm | Permalink

    Qantas can do themselves a favour by eliminating Jetstar from their booking system. It might look smart to a gen Y just learning to shave strategist, but the truly horrifying experience of turning up for a Qantas flight and experiencing the brutality of Jetstar service is creating a significant group of “never ever Jetstar” travellers who will turn to Virgin rather than face a repeat of the truly awful customer service designed for once a year travellers that is the Jetstar business model.

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