Qantas continues winning streak

It’s happy days again for airlines, more specifically carriers in Asia Pacific which is identified as a growth potential for the industry.

Just over a week ago, Singapore Airlines announced Q3 (Jan-Mar 2018) group profit of S$330 million (US$250 million), increasing by S$37 million or 12.6 per cent (see Singapore Airlines does better without Tigerair, Feb 15, 2018).

Courtesy Qantas

This is now followed by Australia’s Qantas reporting record half year profits (Jul-Dec 2017) of A$976 million (US$761 million), increasing by 14.6 per cent. This came in the face of higher fuel costs, a competitive domestic market and challenges in international capacity growth. The result beat the previous first half record achieved in 2016.

Impressively, Qantas Domestic and budget subsidiary Jetstar’s domestic flying operations combined posted their highest ever first half Underlying EBIT of A$652 million. Qantas controls nearly two-thirds of the Australian market. However, Qantas International, in the words of Qantas chief Alan Joyce, “held its own” with a six per cent decline in profit against a slight increase in revenue.

Mr Joyce remained upbeat about future earnings propsects – the kind of sentiment that is not often expressed by many an airline CEO these days. Surely the airline must be doing something right, and Mr Joyce would remind you that the Transfomration program he introduced in 2014 has certainly borne good fruit.

As Mr Joyce put it, “After several years of turning this business around, Qantas now has a momentum behind it.” He added: “Today’s result comes from investing in areas that provide margin growth and a network strategy that makes sure we have the right aircraft on the right route.”

After Qantas, Air New Zealand is expecting to also announce record profit, boosted by tourism growth.


Air New Zealand tops again

Courtesy Air New Zealand has named Air New Zealand as the world’s best airline for 2018. Other airlines that make the top ten in descending order are Qantas, Singapore Airlines (SIA), Virgin Australia, Virgin Atlantic, Etihad Airways, All Nippon Airways (ANA), Korean Air, Cathay Pacific and Japan Airlines.

According to the editorial team, airlines must achieve a seven-star safety rating (developed in consultation with the International Civil Aviation Organization) and demonstrate leadership in innovation for passenger comfort to be named in the top ten.

The evaluation team also looks at customer feedback on sites that include CN which perhaps explain little surprise in both AirlineRatings and Conde Nast Travel naming Air New Zealand as their favourite. (See What defines a best airline? Oct 19, 2017) Four airlines, namely SIA, Virgin Australia, Virgin Atlantic and Cathay Pacific are ranked in the top ten of both lists. These look like consistently global favourites.

Notable absences from the AirlineRatings list are Middle east carriers Qatar Airways and Emirates Airlines. While these airlines scored for service in other surveys, they may have lost the lead in product innovation for which most of the airlines ranked by AirlineRatings are commended. Virgin Australia’s new business class is said to be “turning heads” and Etihad is said to provide a “magnificent product throughout the cabins.” Looking ahead, Air New Zealand will feel the pressure from Qantas and SIA for the top spot. (See Singapore Airlines steps up to reclaim past glory, Nov 3, 2017) In the same survey, Qantas is selected for best lounges and best catering services, and SIA for best first class and best cabin crew.

For those who think best airline surveys are often skewed by the halo effect of service provided in the upper classes, AirlineRatings has named Korean Air as best economy airline.

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).

Star power in British Airways’ new safety video

Ever since Air New Zealand (Air NZ) made the bold move to ditch the traditional safety video format for something more entertaining, some airlines have followed suit to be different. It started with the objective to arrest the attention of passengers who would otherwise be disinterested. It has certainly become a talking point that raises the profile of the airline – for as long as the script remains topical and appealing.

The pertinent question is at what point the new video ceases to be a safety demo and becomes pure entertainment with a life of its own. That depends on how well the safety message still comes through taken out of the normal environment of the aircraft. And when the production tries to do more than just educate and entertain but advertise or sell a third product, things can get pretty muddled up as in the case of a joint promotion by Qantas and Australian Tourism.

Courtesy British Airways

What appeals to the passengers? A good story or a favorite movie recall such as Air NZ’s adoption of the Lord of the Rings’ Middle Earth. Or, popular personalities, particularly movie idols, as British Airways (BA) has done with a new star-powered video to be launched in September. It features Chiwetel Ejiofor, Gordon Ramsay, Thandie Newton, Ian McKellen, Jim Broadbent and Gillian Anderson among others, not forgetting, of course, Rowan Atkinson aka Mr Bean! It is clearly British humor, and to the production’s credit, executed without shadowing the safety message.

BA chairman and CEO Alex Cruz said: “It’s extremely important to us that customers engage with our safety video, and involving some of the nation’s most well-know personalities has given us the chance to create something fun that we hope people will watch from start to finish – and remember.”

However, the old format, dull as it is, never gets out of date whereas the new format needs to keep up with the times to sustain the excitement. While many would just do something else instead of watching the old video, equally many others may sigh “not again” if the newly formatted version becomes an over-shown re-run. Passengers will therefore expect seasonal changes. Well, at least that’s something to look forward to.

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.

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 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. 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 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 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.

Chinese conglomerates beat SIA in Virgin Australia acquisition



IN a separate article I wrote about Singapore Airlines’ interest in taking up Air New Zealand’s stake in Virgin Australia, its concern being that “if it did not step into the void left by Air NZ, it might op[en the door to a competitor” (What price for SIA in its pursuit of a Virgin bride? TODAY, Apr 27, 2016), I mentioned the likelihood of Chinese carriers making that move. And so it has come to pass.

The HNA Aviation Group which owns China’s fast growing Hainan Airlines (the fourth largest in the country) was the first to move in, acquiring 13 per cent of Virgin Australia with plans to increasing its stake to almost 20 per cent. Virgin chief executive John Borghetti welcome the acquisition as “a big coup” that “sets us up for very, very good growth going forward in that very lucrative inbound but also outbound, traffic between Australia and China.”

Indeed, there has been a healthy growth in traffic between Australia and China in recent years. According to Mr Borghetti, more than one million Chinese travelers visited Australia in 2015 and this number is expected to grow to 1.5 million by 2020. Clearly HNA sees the potential and the opportunity could not have come a better time.

Now a second Chinese conglomerate Nanshan Group hopes to reap the benefit of increased tourism in Australia. The firm has bought a 20-per-cent stake in Virgin Australia from Air New Zealand. Air NZ chairman Tony Carter said: “We believe Nanshan Group will be a very strong, positive and complimentary shareholder for Virgin Australia. The sale will allow Air New Zealand to focus on its own growth opportunities, while still continuing its long-standing alliance with Virgin Australia on the trans-Tasman network.”

Both HNA Aviation Group and Nanshan Group will now join SIA and Etihad Airways as co-partners in the Australian carrier. While Etihad has not expressed any interest in buying off Air NZ, SIA appears once again to have lost the lead in a game that started out as the Singapore carrier’s to play.