Virgin Blue is running amok (and on time) on domestic routes in the latest traffic figures posted to the ASX this morning and it is clear Qantas has to do something to stay competitive.
Coming on top of yesterday’s declaration by Tiger Airways at a Singapore briefing that it will press ahead with significant expansion in Australia while its competitors retreat, the heat will be on Qantas CEO Alan Joyce to do come up with some answers.
Qantas hasn’t yet reported its provisional operating results for April, but it is tipped to cut back further on its full service domestic services, which have fallen way behind in key metrics compared to its own Jetstar subsidiary and Virgin Blue.
In April, Virgin Blue passenger numbers grew 3.1%. Its revenue passenger kilometres rose 5.1% and its load factor or proportion of seats sold rose 3.3%, all compared to the same month in 2008.
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For the 10 months to the end of April Virgin Blue’s head count is up 5.6% and its RPKs up 5.8% and load factor down 0.4% to 81.8%.
It was also had the best record for punctuality in April, just ahead of Qantas and well ahead of Jetstar and Tiger.
These are dreadful numbers for the Qantas group, which risks slipping from a reduced market share on domestic routes of around 62% in March to below 60%, despite growth in Jetstar which is being wiped out by declining demand for Qantas domestic and Qantaslink flights.
A similarly disadvantageous set of metrics for Qantas were posted by both carriers in March, which in the previous nine months, was going backwards in two out of three of its domestic brands while Virgin Blue overall was growing its head count by 5.9% and RPKs by 6.9%.
Both carriers face the “real” Tiger from 3 July, when it begins flying Melbourne-Sydney, with Qantas already said to be planning to respond by allowing head-to-head scheduling by Jetstar. This will in turn damage its full service Cityflyer services which depended disproportionately on large corporate accounts that have downsized.
But how can you damage something that is loosing its relevance anyway?
The Qantas answers to these challenges will be substantial, but none were available before deadline.