A familiar sight for anyone passing through Heathrow during the day is a pair of Qantas A380s parked at a remote stand near Terminal 3.
Whilst providing those on a mundane business trip to Frankfurt or Geneva the opportunity to dream about going somewhere else, it serves as an illustration of the hard economics for Qantas of competing against Middle Eastern and Asian airlines in the London to Australia market.
Currently, Qantas’ twice daily flights to Australia depart late in the evening and arrive in the morning at London Heathrow meaning hugely expensive assets are left on the ground all day doing nothing.
From 20 July 2014, as part of a broader restructuring of Qantas’ network in response to a deteriorating financial performance, Qantas flights to Melbourne will be retimed from a late evening departure to an early afternoon departure.
Qantas has just published its half year results. In the past week there has been a frenzy of speculation in the Australian media following prior warnings from Qantas that it would incur heavy losses resulting in a significant restructuring of the airline and possibly drastic changes to its route network.
The losses themselves are as feared with Qantas reporting a loss before tax of AUD$252 million. Qantas has announced significant job cuts and disposals of aircraft and deferrals of aircraft deliveries.
There has been much speculation about the future of Qantas daily Airbus A380 services from London Heathrow to Sydney and Melbourne, following anecdotal reports of weak demand on the London Heathrow – Dubai sectors of the London – Melbourne routes.
Qantas has today confirmed that the two daily London Heathrow services will remain. However, the London – Melbourne route (currently a late night departure from London and early morning arrival, resulting in significant downtime of nearly 17 hours for the aircraft) will be retimed from November 2014.
We do not yet know what the new times are. One possible option is to retime the departure to late morning, as Qantas used to have to Sydney and Melbourne when it had four daily services from London Heathrow.
Virgin Atlantic has today announced that it is to suspend its daily London Heathrow-Sydney service from 5 May 2014. The airline will continue to fly to Hong Kong, where the Sydney flight currently stops en-route.
International Airlines Group held its annual Capital Markets Day on Friday 15 November 2013. This is an event where a very large volume of financial and strategic material is presented to institutional investors and analysts. However, there are small items of news (more to follow) of interest to the public at large.
One concerns the London-Singapore-Sydney route. Ever since Qantas jettisoned its partnership with BA in favour of a joint-venture with Emirates there has been speculation as to whether BA would be able to continue to serve Australia directly.
Qantas published its annual results for the year ended 30 June 2013 last week. The airline posted a modest net profit of AUD$6 million after tax, which was a significant improvement over last year’s loss of AUD$206 million.
This was primarily due a reduction in losses at Qantas’ International division, which prompted a significant reduction in capacity to Europe and the jettisoning of Qantas’ partnership with BA in favour of Emirates, by almost half to AUD$246 million.
Whilst the partnership between Emirates and Qantas is still very much in its infancy, it is curious that Qantas seems to have declined to give any clear revenue guidance on the partnership. In its results it gave only vague operational measures such as “2 times increase in codeshare bookings on EK network” and “3 times increase in EK bookings on Qantas Domestic network” compared to the partnership with British Airways and others. It is hard to draw any conclusions from such claims without seeing the detail behind the headlines.
Meanwhile, British Airways has remained upbeat on the performance of its last remaining Australian route, London-Singapore-Sydney.
On the morning of the announcement, as per standard protocol, it held a webcast for analyst and the question and answer session that follows provides a lot of useful insight into current strategic developments at the airline group.
Here is a summary of some points of interest from the call:
Sir Richard Branson complains about the “Big Three” US airlines and the competitive activity by United against Virgin America. This is the same Richard Branson that owns 51% of Virgin Atlantic, with the remaining 49% owned by its forthcoming joint-venture partner Delta.