Qantas this morning released the first part of its international restructuring, cutting its frequencies into London Heathrow by almost half in favour of handing Bangkok and Hong Kong services to British Airways, and says that this will save it the need for four Boeing 747-400s and about 1000 jobs.
It also confirmed that there would be an Asia-based Qantas premium product airline set up using an initial fleet of 11 Airbus A320 single-aisle jets in a joint venture with another Asian carrier using a name and city base yet to be announced.
A 42%-owned Japan Jetstar low-cost franchise would also begin services next year, in conjunction with Japan Airlines (42%) and Mitsubishi (16%) starting with a fleet of 12 Airbus A320s.
It would double in size within two years and go international throughout south-east Asia, where Qantas already has low-cost Jetstar franchises in Singapore (Jetstar Asia) and Vietnam (Jetstar Pacific).
On one hand Qantas said it was deferring the delivery of six giant Airbus A380s until after financial year 2019, but on the other, it said it had ordered up to 110 new Airbus A320 single-aisle jets (including 78 of the higher technology NEO model available from 2016) to feed the anticipated growth of current and future Jetstar franchises.
This is the very first part of a broad Qantas restructuring aimed to eliminating the claimed losses of its international business and its plummeting market share, and ironically, it will deprive many Qantas customers of the opportunity to fly the airline all the way to London, and possibly other destinations as more changes are rolled out.
Buenos Aires flights would be replaced by services to Santiago next April where one-world alliance partner LAN will provide it with a South American gateway, and the recently announced joint business venture with American Airlines would be further extended on services to the US, where Qantas recently dropped daily services to San Francisco in favour of four weekly flights to AA hub, Dallas-Fort Worth, using a 747 that can’t actually do the route reliably in terms of getting passengers and their change of clothes in checked luggage to their connections on the same day!
In a note to investors earlier this week, Macquarie Bank raised the possibility that Qantas would cancel its current daily A330 flights between Auckland-Los Angeles and connecting Los Angeles-New York flights to American Airlines, which hasn’t flown to Australia or New Zealand in its own metal since the mid-90s.
The underlying message from Qantas CEO Alan Joyce this morning was that if you were one of the 18 out of 100 Australians who still used Qantas when flying overseas, you would have to get used to flying only part of the way on many routes using new gateways set up with, or given to, its foreign airline friends.
Which is why many Australians already fly all the way to international destinations through the single airline alternatives offered by Singapore Airlines, Cathay Pacific, Emirates, Thai International and Etihad.
Joyce said the airline couldn’t continue to exist if it remained an entirely Australian international airline trying to fly to every point on the globe (although it hasn’t tried to do that for some time).
By handing to British Airways its flights between Bangkok and Hong Kong to London, for example, it trades a potential capacity of up to 28 flights a week on those routes to the British flag carrier in return for BA dropping its shorter capacity for up to 14 Bangkok-Sydney flights.
Qantas has four daily slots at London Heathrow but will in the restructuring, “store” half of them, reducing the Qantas presence in London to twice-daily A380s via Singapore.
This morning’s announcements are only stage one of a range of restructuring initiatives in the Qantas group, and there will be a further press conference late this afternoon.
Additional reports will be posted on Crikey blog Plane Talking later today.