A Quick Update on Qantas and the Australian Market

Cranky did a solid job explaining the crazy situation in the Australian airline market (here) so I’m not going to rehash that, just know that Qantas has been in some serious trouble in its long-haul operations and its short-haul business, which isn’t too bad, is facing some serious competition from a newly rejuvenated and re-named Virgin Australia.

I bring this up because today Qantas announced some major changes in its operations as they look to slow the bleeding in its long-haul business. In short:

They will launch a low-cost carrier in Japan as a 1/3rd owner along with Japan Airlines and Mitsubishi. This new airline will operate under the Jetstar Japan banner and quickly grow to 24 A320s.

They will eliminate Hong Kong and Bangkok to London flights (BA will serve those routes) and move Sydney- Buenos Aires service to Santiago early next year.

They will launch a new premium airline somewhere in Asia (likely in Singapore or Kuala Lumpur, the latter of which would depend on Qantas’ relationship with AirAsia, which recently took a stake in Malaysia Airlines). They would likely start this new carrier with 11 A320s.

They will increase flying from Australia to Asia, as they see Asia as their primary hope for growth.

They’re updating 9 747s to the standards found in the A380s and they’re deferring delivery of 6 A380s.

So, to sum up, they’re making some drastic moves, eliminating some long-time long-haul routes to focus on Asia while hoping to grow the business in the region by setting up 2 new carriers. That’s a big risk. I’m not going to pretend to know a ton about the Australian market, but I do know that launching 1 carrier-within-a-carrier has proven difficult (though it’s worked to some extent in Asia), but launching 2, each with different strategies, is going to be a bear.

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