What defines a best airline?

What defines a best airline, considering the different surveys that rank them? Conde Nast Travel has just released its readers’ choice of the best in 2017, and it is no surprise the list is made up of Asian, Middle East, European and SW Pacific carriers.

Courtesy Air New Zealand

Of course, it depends on the readership, but recognizing that, it also points to what really makes these airlines stand out. It is clear that the premium class service weighs heavily – the seat comfort and the fine food.

Etihad Airways (ranked #16) offers “the future of first-class comfort: a three-room “residence” with a bedroom, private bath with shower, and lounge.” Emirates (#4) offers “posh perks for premium fliers – cocktail lounges, in-flight showers… part of the reason it scores so high among travellers.” And the suites on Singapore Airlines (#3) offer “a pair of fully flat recliners that can be combined into a double bed.”

Mention is made of the premium economy class in almost all the ranked airlines” KLM (#20), Lufthansa (#19), Japan Airlines (#17), All Nippon Airways (#13), Qantas (#12), Cathay Pacific (#10), Virgin Atlantic (#7), Virgin Australia (#6), Singapore Airlines (#3) and Air New Zealand (#1).

So it may appear to be the voice of the premium travellers that is being heard. Maybe coach travellers aren’t too concerned about the ranking, more driven by price and less frilly factors, although to be fair, the Conde Nast report did mention of at least one airline, i.e. Etihad Airways (#16), not ignoring “those sitting in the back.” While many travellers may resign to the belief that the economy class is about the same across the industry, it is reasonable to assume that an airline that strives to please its customers in the front cabins will most probably carry that culture or at least part of it to the rear.

Although you may draw consensus across many of the surveys, it is best best to treat each one of them in isolation. It is more meaningful to try and draw intra conclusions within the findings of the particular survey.

You will note in the Conde Nast findings, there is an absence of American (including Canadian) carriers, never mind that of African and South American carriers.

Asiana Airlines (#8) is ranked ahead of Korean Air (#11).

All Nippon Airways (#13) is ranked ahead of Japan Airlines (#17). V

Virgin Australia (#6) is ranked ahead of Qantas (#12).

The order of the “Big 3” Gulf carriers is as follows: Qatar Airways (#2), Emirates (#4) and Etihad Airways (#16).

Of European carriers, there is the conspicuous absence of the big names of British Airways (compare Virgin Atlantic #7) and Air France, and the pleasant surprise of Aegean Airlines (#9) while SWISS seems to be regaining its erstwhile status years ago as being the industry standard.

The best belongs to Air New Zealand as the quiet achiever.

Ultimately, the results also depend on the group of respondents whose experiences may be limited to certain airlines.

Other airlines ranked in the top 20 of the Conde Nast survey: Finnair (#14), Turkish Airlines (#15), EVA Air (#18).

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What Qantas’ strategy shift means for Changi, SIA

http://www.todayonline.com/commentary/what-qantas-strategy-shift-means-changi-sia

Qantas continues to fly high

Courtesy Getty Images

Qantas reported another good year ending June 30, 2017. The Australian flag carrier posted a profit of A$852 million (US$67.4 million) – its second highest in the airline’s 97-year history – although it declined by 17.2 per cent compared to last year’s A$1.03 billion.

The question to ask is how Qantas manages to turn in stellar performances when rivals such as Cathay Pacific and Singapore Airlines (SIA) are dipping into losses? Cathay lost HK$585 million (US$103 million) in 2016, and SIA incurred a loss of S$41 million (US$29 million) in Q4 of FY2016/17. (See Cathay Pacific axes 800 jobs: Is this the answer? May 27, 2017)

Qantas chief executive Alan Joyce points to the success of the Transformation Program introduced three years ago. The program is now complete with all targets met on time, having achieved asignificant improvement in financial performance, record customer advocacy and record employee engagement. Consequently the airline has incorporated a culture of transformation and continuous improvement goin forward.

“We operate in a very competitive environment, so continuous improvement is crucial,” said Mr Joyce.

The star performer is Qantas Domestic, advantaged by the booming domestic market. It earns an operating margin of 11.5 per cent on revenue of A$5.63 billion. With 90 per cent of the market, it is far ahead of its rival Virgin Australia.

Record earnings were also reported by the Jetstar Group with an operating margin of 11.6 per cent on revenue of A$3.60 billion. Outside Australia, these include Jetstar operations based in Singapore, Japan and Vietnam. The failure to set up base in Hong Kong as a consequence of protest from Cathay and Hong Kong Airlines has not stopped the budget carrier from growing.

Qantas International which used to be the bane of the airline’s financial performance has plowed back into the black in spite of the stiff competition it faces. It posted an operating margin of 5.7 per cent on revenue of A$5.70 billion.

Qantas’ Asian strategy that saw increased capacity to key Asian destinations has proven to be well-timed and placed. The airline will be increasing international capacity by 5 per cent in the first half of FY2017/18, mainly to desinations in the the growing Asian market.

Farther down the road, the airline plans to fly non-stop from Sydney to London and New York by 2022 subject to the availability of aircraft that can travel those long distances. In the near term, Qantas will be flying direct from Perth to London next year. This, said Mr Joyce,“is a huge leap forward” for the flying kangaroo.

Indeed, and it is likely to change the game somewhat, affecting not only would-be erstwhile transit points and competing off-shore airlines which must perforce make those stops. All the more so will airlines now find the need to be creative in influencing the traveller’s preference and enhancing brand loyalty in their marketing effort.

New Qantas safety video: Attraction or distraction?

Courtesy Qantas

Courtesy Qantas

Ever since Air New Zealand made waves breaking away from the conventional in-flight safety video, featuring among other things Middle Earth, a number of other airlines have taken up the challenge to “engage” the travellers, many of them who may find the old style too boring to deserve attention.

The new Qantas video features Australian destinations across every state and territory, ranging from the Victorian ski fields to sand surfing at Queensland’s Moreton Island, thus killing two birds with one stone promoting travel to these destinations at the same time. Qantas chief executive Alan Joyce admits: “This video doubles as a perfect tourism ad.”

While the main goal (as it should be) was to make the safety video “engaging as well as informative,” there are questions about the effectiveness of getting across the primary message as to what to do to keep safe and how to react in the case of an emergency. There is the important question of context. The order of priority in presentation is not necessary received in the same order. And, let’s face it, people get tired of most re-runs soon enough.

Qantas to fly non-stop Perth to London: Shifting the markets

Courtesy Qantas

Courtesy Qantas

FROM four days and nine stops when Qantas first launched its Kangaroo Route from Australia to London to just 17 hours when the airline introduces a non-stop service from Perth in March 2018. The 14,498 km route will be operated by Boeing 787-9 Dreamliner jets, making the world’s longest commercial flights until Singapore Airlines (SIA) launches its 18-hour non-stop service from Singapore to New York’s Newark Airport.

Until Qantas switched to using Dubai International as the hub for its Kangaroo runs in 2013 as part of a mega alliance arrangement with Emirates Airlines, Singapore (Changi Airport and its predecessor) was its traditional stopover point. Now the possibility of non-stop flights raises the relevance of Dubai in the equation, but a Qantas spokesman assured its partner that “Dubai will remain an important hub for onward services into Europe.” Presently Qantas flights from Sydney and Melbourne stop in Dubai for onward connections on Emirates to the rest of Europe with the exception of London.

But at the same time, Qantas chief executive Alan Joyce, referring to the new service as “a game-changing route”, said “the opportunities this opens up are huge.” Dubai will likely feel the same pinch that Singapore once felt as Perth becomes the hub for passengers from eastern Australia to Britain, even beyond. This too may hurt Singapore as a transit point for passengers from Perth. Mr Joyce also expected other direct-to-Europe flights from Australia to follow. The shifts can be significant considering that the UK is a major source of international visitors for Australia. According to Australian tourism minister Steven Ciobo, the UK ranked third with 660,000 visitors in 2015.

Qantas’ new Perth-London non-stop once again demonstrates how the geographical aviation map continues to shift as airlines re-strategize taking advantage of the capability of new technology.

Air New Zealand leads the pack

Courtesy Air New Zealand

Courtesy Air New Zealand

Air New Zealand is the world’s best airline according to AirlineRatings.com based on criteria that include fleet age, safety, profitability and leadership in innovation for passenger comfort. The agency’s Airline Excellence Awards program which lists the winning airlines is endorsed by the International Civil Aviation Organization.

Many travellers would recognize ANZ for its attention-grabbing in-flight safety video that takes them into Middle Earth, the kind of out-of-the-aircraft features that a few other airlines have tried to imitate but fared only poorly. AirlineRatings.com Editor-in-Chief Geoffrey Thomas said: “Air New Zealand came out number one in virtually all of our audit criteria, which is an exceptional performance.” The airline was favoured for its record-breaking financial performance, award-winning in-flight innovations, operational safety, environmental leadership and motivation of its staff.

Skycouch: Picture courtesy Air New Zealand

Skycouch: Picture courtesy Air New Zealand

But, of course, there are surveys and there are surveys that publish their own lists of favourites. Some airlines such as Singapore Airlines (SIA) and Cathay Pacific have a ubiquitous presence, and there also notable absences. This is where it is most telling, bearing in mind that the ranking is dependent on several factors such as the excellence-defining criteria and the population surveyed.

The other nine airlines ranked behind ANZ in the top ten list by AirlineRatings.com are in descending order: Qantas, SIA, Cathay, Virgin Atlantic, British Airways (BA), Etihad, All Nippon Airways, EVA Air and Lufthansa.

It is interesting to note that the top two airlines come from the remote Southwest Pacific. Qantas has in recent years been working on upgrading its product offerings, winning accolades for catering and airport lounges. Not surprisingly, innovation along with good service seem to be the driving winning streak going down the list – SIA and Cathay for their premium economy and revamped business classes, Virgin for its cabin ambience and friendly crew, BA for its leadership in in-flight entertainment, and Etihad for its equally impressive service in front and at the back of the aircraft.

Notable absences in the list are US carriers (no surprise there) and two of the big three Middle-East carriers (Emirates and Qatar).

Many survey rankings are skewed by the weight they place on service in the premium classes. However, Mr Thomas of AirlineRatings.com said: “We are looking for leadership and airlines that innovate to make a real difference to the passenger experience particularly in economy class.” Considering that the majority of travellers are seated in coach, it is time that airlines crowned with the halo of excellence pay more attention at the back of the aircraft, for this may well make the difference as the competition intensifies. And, it is where the differentiation becomes even more challenging. Perhaps too, this could be the reason why Emirates and Qatar, known for their lavish premium service, did not make it to the top ten of the list.

Cathay Pacific losing grip of China card

Courtesy Cathay Pacific

Courtesy Cathay Pacific

Cathay Pacific reported plunging profits of 82 per cent for half-year results up to 30 June. Revenue fell 9.2 per cent to HK$45.68 billion (US$569 million). For an airline that had boasted record margins in previous reports, it demonstrates the volatility of the airline business today in spite of the continuing low fuel prices.

While Cathay chairman John Slosar put the blame on competition and the slowdown of the China economy – what’s new, indeed? – it is worthy of note that Cathay also suffered hedging losses in the spot market. Many airlines are apt to extol their ability to gain from fuel hedging but will remain reticent when the reading goes awry.

Mr Slosar said: “The operating environment in the first half of 2016 was affected by economic fragility and intense competition.” Apparently premium economy, which since its introduction has been Cathay’s pride, and the long hauls were not performing to expectations, confronted by competition from Middle East carriers Emirates Airlines, Qatar Airways and Etihad Airways, and from China carriers such as Air China and China Eastern which are offering direct flights thus doing away with the need for Chinese travellers to fly through Hong Kong.

Competition from foreign carriers in a reciprocally open market is to be expected, and which may be augmented by those carriers offering an improved product. Cathay’s main woe is probably the falling China market on two counts: the reduced demand for premium travel and the diversion away from Hong Kong as the gateway to the region. Cathay and Hong Kong International Airport have benefitted from the growing China market, but while it was able to prevent Qantas from setting up Jetstar Hong Kong, it can do little to stem the growth of China carriers.

Courtesy Singapore Airlines

Courtesy Singapore Airlines

It would be more meaningful to compare Cathay’s performance with its major regional competitors. Singapore Airlines (SIA) reported Q1 (Apr-Jun) profit of S$197 million (US$144 million) (up from S$108 million) while the other carriers in the Group – SilkAir, Scoot and Tigerair – also did better on the back of lower fuel prices. But group revenue declined by 2.1 per cent because of lower contribution by parent airline SIA. In July passenger load was down 1.2 per cent (1.676 million from 1.697 million), and the load factor by 2.2 pts at 82.4 per cent from 84.6 per cent. Except for East Asia (with flat performance), all other regions suffered declining loads.

This may be indicative of the global economic trend. Like Cathay, SIA’s fortune has shifted from the longer haul to the regional routes. Europe suffered the highest decline (4.5 pts) followed by Americas (3.1 pts). The picture will become clearer when it reports Q2 (making up the first half year) results. According to Mr Slosar of Cathay, the business outlook “remains challenging”.

Courtesy APP

Courtesy APP

However, it is good news downunder as Qantas reported record profit of A$1.53 billion (US$1.15 billion) for the year ending June 2016, up 57 per cent – the best result in its 95-year history. Qantas Domestic, Qantas International and the Jetstar Group all reported record results: the domestic market chalked up a record A$820 million, up A$191 million, and the international division A$722 million, up A$374 million. The Qantas Transformation program seemed to have continued working its magic to “reshape the Group’s base and ability to generate revenue” according to its report. CEO Alan Joyce said: “Transformation has made us a more agile business.” And, unlike Cathay, effective fuel hedging saw the Group secure an A$664 million benefit from lower global fuel prices, leaving us to wonder what Cathay would say to that.

It is once again a feather in Mr Joyce’s cap. He added: “The Qantas Group expects to continue its strong financial performance in the first half of financial year 2017, in a more competitive revenue environment. We are focused on preserving high operating margins through the delivery of the Qantas Transformation program, careful capacity management, and the benefit of low fuel prices locked in through our hedging.” He believed the long-term outlook for the Group to be positive.

The contrasting fortunes of airlines may prompt one to ask how in the end that as much attribution of an airline’s performance is attributed to global influences, so too as much is balanced by its self-discipline in adjusting to the vicissitudes of the times, its astuteness in seizing shifting opportunities and, of course, its ability to read global and regional trends as unpredictable as they are.