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#11
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QFA (Qantas) to invade Asia
AJC wrote:
Low-cost carriers stimulate new business. Nowhere is this more evident than in Europe. The same has, and will continue to happen in Australia Yes, Ryannair is now world famous for allowing football hooligans to travel a to many more games even outside the UK. (but yes, i know that they carry more folks). But in Canada, Westjet and Jetsgo haven't really created much of a new market, they just stole passengers from Air Canada. Air Canada's share has dropped by 20% in about one year because traffic went to Westjet and Jetsgo. Europe is a very large market. Neither Australia nor Canada are very large markets. And even in the USA, the legacy airlines are being hurt by the low costs. The low cost carriers do open a new market. But once they have captured that market, any remaining growth happens at the expense of the legacy operation. Europe has been lucky because the arrival of the low cost carriers coincided more or less with the demise of some legacy carriers, and severe downsizing by BA. Virgin Blue grew because of the demise of Ansett creating instant demand for capacity. JetBlue in the USA grew by stealing pax from legacy airlines. And Legacy airlines lost their high yield pax on which they relied for survival because the later saw the price difference between United and Southwest/Jet Blue for last minute business travel. Before the low cost carriers were taken seriously, they were limited to their "new market" niche that had stolen pax from cars, buses. But it is when the legacy carriers started to overcharge, be plagued by delays etc, that Southwest really started to be taken seriously and then it grew by stealing pax from the legacy airlines. The fact remains that it would be far more efficient for an existing Qantas to provide low-cost service on its existing flights compared to setting up a totally different entity with additional planes. The additional capacity will lower load factors especially at the legacy carrier unless it drops capacity to compensate for the added capacity at its new subsidiary. When Air Canada started Zip in western canada, it essentially gave the territory to Steve Smith and dramatically reduced old legacy AC flying in the region. There just isn't enough room for Westjet AC and Zip. |
#13
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QFA (Qantas) to invade Asia
On Tue, 06 Apr 2004 21:50:30 -0400, nobody wrote:
A Guy Called Tyketto wrote: carrier based in Singapore, despite concerns the venture is risky and the Flying Kangaroo is over-extending. Has Qantas done anything serious to make its mainline operations more cost efficient ? Or is it doing like more "old legacy" airlines, giving up on its core operations and starting low cost carriers in the hopes that it will magically fix their mainline operations ? They have done plenty to reduce costs and improve productivity, it is just that in Australia's labor market and labor laws there is only so far they can go with the current operations, and starting up a brand new carrier and starting from scratch means that they are effectively starting with a clean sheet of paper, without any of the restrictions that the old workforce would have had. Dave ===== NSW Rural Fire Service - become a volunteer today. http://www.rfs.nsw.gov.au/ |
#14
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QFA (Qantas) to invade Asia
On Wed, 07 Apr 2004 04:01:39 -0400, nobody wrote:
AJC wrote: Is there a problem with QF's mainline operations then? They are doing the same as European airlines, diversifying. They set up Australian as a long-haul leisure airline, a bit like Martinair, LTU, and so on. They then set up Jetstar just as bmi set up bmibaby to compete in the low-cost market. If you compare QF's current position with the mess AC is in, you've got to say they are doing just fine. If Qantas was unable to compete against Virgin Blue and thus had to setup a different company, then that tells me that Qantas' mainline domestic operations have a problem. And of course, its own domestic low cost carrier will steal pax more from Qantas mainline than from Virgin Blue. Which means they will stay with the Qantas group - they will be the SLC's who want to pay low amounts of money, and with DeathStar's greatly reduced costs will result in increased profits for the Qantas Group as a whole. In the end, it just doesn't make sense to operate two airlines on the same route with different planes. Why not? Instead of dividing the market 70/30 it will probably be 60/25/15, with Qantas/DeathStar getting the 85% - which is 15% more than they have now. And this applies especially for long hauls where Qantas will compete against its own airline on some long haul routes. They won't be competing on long-hauls. Qantas will be making the decisions about where and when DeathStar will fly, NOT DeathStar management. There is no reason that a mainline could not be *operated* as efficiently as a low cost carrier. There is under Australia's arcane labor laws. It is way too difficult to reduce entitlements to current employees, and impossible to put new employees on at conditions way below those which current employees are entitled to. Far far easier to just set up a new operation. Dave ===== NSW Rural Fire Service - become a volunteer today. http://www.rfs.nsw.gov.au/ |
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