Qantas CEO Alan Joyce celebrated the departure from Sydney to Dallas Forth Worth of its inaugural (and somewhat payload limited) non-stop 744ER service today with another declaration that its international business was losing money.
His reported comments came only only days after Singapore Airlines joined Cathay Pacific and Emirates in declaring soaring profits.
The service marks the exit of Qantas from the San Francisco-Australia routes, and a fresh opportunity for both its leisure brand Jetstar and other competitors, including the newly anointed Virgin Australia/Delta trans Pacific entity, to enhance their California offerings to include a better airport than LAX.
Joyce is reported as saying “Our international business is loss making. It has severe structural challenges.”
However there was no mention of those challenges including widespread employee disengagement, uncompetitive product offerings, absurd network planning and deficient fleet planning.
In the Sydney Morning Herald, Joyce is quoted as saying:
Joyce would not be drawn today on speculation that Qantas is planning to base a premium airline in Singapore or Malaysia, as part of a review of its international operations.”There are lots of potential talks about different destinations, different locations,” he said. “But it’s too early to confirm or go into details about what those plans are to correct the very important issue for us which is the decline of our international operations. It’s too premature to rule anything in or out at this stage.”
He reiterated earlier comments that Qantas’s premium international operations faced big challenges, including a significant decline in market share over the last 10 years. He said the decline in share was particularly evident in the high-growth Asian market.
Several things stand out from that story. It confirms that the airline’s key strategy for dealing with its failings is to shift assets and jobs offshore, adding to such key earlier disclosures as the operating of its 787 fleet (for both Qantas and Jetstar) by a new entity, and the basing of Australian registered A330s in Jetstar livery in Singapore, as well as the ‘Spirit of Australia’ painted NZ Jetconnect 737s that Qantas at times insists are not really Qantas aircraft but just the offerings of a fully independent 100 percent owned New Zealand subsidiary run by a managing director who recently told Fair Work Australia he didn’t know if it had a New Zealand bank account!
The story is also damning in that Qantas is acknowledging that the Asian market was not only high-growth but one in which Qantas is failing to defend or expand market share.