Qantas’ Asianisation thrust

Courtesy Getty Images

Courtesy Getty Images

Qantas is adding more flights between Australia and Hong Kong as well as Manila. From October 26, there will be four weekly services between Sydney and Hong Kong added to the current daily services from Sydney, Melbourne and Brisbane. Services between Sydney and Manila will increase from four to five weekly services, commencing early December to last until late March next year.

This is nothing quite surprising. It may even be said to be expected in response to increasing demand from travellers. But moving resources across the network to meet demands may not be as simple as it seems; it’s not as if there are spare aircraft sitting on the tarmac waiting to be assigned. But Qantas seems to have found a formula to work round the complications, or so it seems, particularly when it comes to seasonal demands.

Qantas International Gareth Evans said: “We’re pleased to add to the seasonal services we’re set to operate to Asia later this year, with the fifth weekly Manila flight again representing the dynamic nature of our network, which has the flexibility to offer our customers more flights during peak seasons.”

This apparently has been made possible by the airline’s continued focus on more efficient use of aircraft across its fleet. And the agility, one may add, in making adjustment to the schedule. To be not only reactive but also proactive ahead of change and the competition, so as to stay lean and mean

That aside, the operations in the last few years demonstrate Qantas’ increased focus on Asia. The airline has earlier announced an additional 140 services to Singapore, Jakarta (Indonesia), and Wellington and Christchurch (New Zealand) over the summer holiday.

Services between Perth and Singapore will be daily, competing directly with Singapore Airlines (SIA)’s four flights daily. It was only in June this year that Qantas resumed direct services between the two cities, operating five times a week. Mr Evans said: “Our customers told us they missed us.” So that forebodes well for Qantas, which is also looking beyond Singapore with connections on partner airlines to destinations such as Koh Samui and Phuket in Thailand, and even Tokyo in Japan, which testifies to the continuing importance of Singapore as a transfer hub. For travellers arriving from Singapore, Qantas will be offering direct onward services from Perth to Auckland from October to April 2016, the third year in a row that it is doing this.

Qantas executive manager international sales Stephen Thompson said: “A key part of our strategy is listening to and responding to our customers’ needs and developing an agile and flexible network which offers more options during peak periods.”

Good work there, and one then asks: What after that? There is a possibility that a temporary operation may become permanent, subject to regulatory approval, particularly if you believe in the industry wisdom that capacity creates demand or as a way to gain approval when demand justifies the case. Yet when you consider the short duration of the fifth weekly service between Sydney and Jakarta – from 2 December to 10 January 2016 – you may be persuaded to believe that Qantas is unlikely to sit its aircraft idle. Qantas has also announced additional services to Bali, a popular destination for Australian holiday travellers – four additional weekly during December this year and January next year, making a total of 33 return services between Sydney and Bali, adding to 65 services per week by Jetstar from Australia. Operating across the northern and southern hemispheres has given it a geographical advantage; it means catering to different peak seasons.

The transformation program that Qantas chief executive Alan Joyce said was the reason for the airline’s dramatic turnaround in profitability had identified Asia as its best bet for growth and expansion. (See Qantas is Asia Pacific’s new star performer, 27 Aug 2017). Australian politicians have long debated the toss of aligning their country with Asia (instead of Europe), at least economically. While the proposal to set up an Asia-based premium carrier never took off, that did not stop Qantas from expanding its reach into the Asian hinterland by other means.

No foreign carrier calling at Singapore more than Qantas has taken advantage of Singapore’s strategic location at the crossroads of international routes. For years until 2013, Singapore has been an important hub for Qantas flights. Although the airline has since shifted its hub for the kangaroo route to Dubai, in an alliance with Emirate Airlines, it continues to retain, even growing, the Singapore hub for connections to the rest of Asia, a strategy that Virgin Australia tries to replicate in a three-way tie-up with SIA and Air China.

However, the game continues to shift. In recent years, Qantas has been introducing more direct services between Asian and Australian destinations. This makes sense particularly when these destinations become tourist attractions in their own right and attract more traffic to justify direct routings. China for one has become Australia’s biggest inbound tourism market, projected to contribute up to A$9 billion (US$6.4 billion) annually to the Australian economy by 2020. Chinese carriers too have increased their frequencies to Australia.

In this connection, Qantas has strengthened its alliance with major Chinese carriers such as China Southern and China Eastern Airlines to deliver expanded services, better departure and arrival schedules, shorter transit times, increased frequent flyer benefits and a wider range of onward connections within China and Australia. Commencing April last year, customers on both Qantas and China Southern could travel on each other’s flights to the four destinations of Xiamen, Kunming, Fuzhou and Urumqi within China, connecting at Guangzhou, from Sydney, Melbourne, Brisbane and Perth, and on the Qantas Domestic network as well as on services between Sydney and Auckland.

More recently, a codeshare agreement with China Eastern not only further increases capacity between the two countries but also maximises Qantas’ presence within China. Mr Joyce said:
“We cannot fly to every destination in China. However, our deepened relationship with China Eastern supports our successful strategy to work with key partners around the world to offer the most comprehensive network and world class travel experiences for our customers.”

Being visible helps; Chinese travellers voted Qantas as having the “Best Cabin Crew” in the 2014 iDEAL Shanghai Awards, judged by more than 100,000 people in Shanghai across all categories, and evaluated by a jury of reporters, columnists and lifestyle writers.

Underscoring how partnerships are at the core of the Qantas strategy in Asia, the airline announced in Mar last year a codeshare agreement with Bangkok Airways which will significantly improve travel options for its customers travelling across South East Asia. Customers will be able to fly from Bangkok and Singapore to six new destinations including Ko Samui, Chiang Mai and Phuket. (See Air New Zealand poised for growth, Sep 10, 2015)

Qantas’ Asianisation thrust is not confined to the operations of the parent airline alone. The budget brand of Jetstar adds to its reach across the region, as can be seen in the set up of the Jetstar Group’s ventures in different locations – Jetstar Airways (Australia and New Zealand), Jetstar Asia Airways (Singapore), Jetstar Pacific Airlines (Vietnam), and Jetstar Japan. The only setback it experienced so far was the Hong Kong Air Transport Licensing Authority (ATLA)’s rejection of its application for Jetstar Hong Kong’s low-cost alternative at the doorstep of the large China hinterland, a move that met with strong objection from Hong Kong based carriers led by Cathay Pacific. (See The real battle behind Jetstar HK’s rejection, Jun 30, 2015)

Optimistically, however, Jetstar Hong Kong’s rejection may be compensated by the increased flights by Qantas between Sydney and Hong Kong. While stating the obvious that “customers travelling from Sydney will have the choice of double daily flights to Hong Kong on peak days of the week for business travel,” Mr Evans hinted that “we’ll look at expanding beyond that if the opportunity is available.”

Hong Kong will have more to be concerned about. As in the case of Singapore which has thrived as a transfer hub, more direct flights between Australian and Chinese destinations do not spell good news for it.

For an airline like Qantas based in a far corner of the world, it is blessed that geography has not deprived it of opportunities in other parts of the world. The ATLA’s rejection aside, while Mr Joyce prided himself as the master of a transformation program that has driven the airline’s dramatic recovery, Qantas too has much to be thankful for the largely liberal skies that loom over Asia. Something for Australia to consider when called upon to open its doors to foreign carriers that wish to mount transpacific operations from its ports to the Americas.

This article was first published in Aspire Aviation.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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