BA is upbeat on performance of London-Sydney route whilst Qantas is yet to show impact of Emirates partnership

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.

British Airways made it clear in its submissions to the Australian Competition and Consumer Commission that it would be severely impacted by the ending of its partnership with Qantas, specifically due to the lack of access to Qantas corporate and frequent flyer base which has meant it didn’t need to invest in local brand-building and marketing activity in Australia.

However, the airline has taken a number of measures to improve performance of the route including moving the route to Terminal 5 to improve connectivity to BA’s short-haul network and placing its Boeing 777-300 on the route which features the airline’s latest in-flight products and its most advanced Thales in-flight entertainment system.

BA CEO’s Keith Williams claimed in a recent presentation for analysis that the route is now delivering a positive return on sales. Whilst I wouldn’t take this as meaning the route will remain in perpetuity, it does provide some encouragement that the route will remain in the short to medium term.

In addition to offering connections on to Qantas routes to Australia from Bangkok and Singapore, BA now offers connections to Cathay Pacific from Hong Kong, details of which are provided in this update for travel trade partners. Whilst the partnership between BA and Cathay Pacific is only limited to codesharing and does not involve joint-activities on marketing and revenue-sharing, Cathay Pacific does offer a good number of frequencies to Australia from Hong Kong. Also, I would not rule out more codeshare options to Australia, with either recent Oneworld entrant Malaysian Airlines and imminent Oneworld member Qatar Airways.

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