Two Qantas 747's parked side by side at Heathrow

Qantas has announced an overhaul of its international operations to try to right the ship from the tough position it currently sits in. These changes were announced in a document entitled “Building a Stronger Qantas” released to investors on August 16th. Having read the document (twice) my outsider’s assessment is that there appears to be a bit of a lack of coherent focus.

Qantas services to London Heathrow will be dropped to two daily flights via Singapore. Existing services via Hong Kong and Bangkok will terminate in those cities. Passengers will transfer onto flights operated by British Airways. Not too long ago there was talk of Heathrow becoming an all A380 station for Qantas. The newly released document now states Heathrow will be served by “A380 aircraft or equivalent product.” This, I presume, is in reference to the 9 747s Qantas plan to retrofit to “A380” standard.

Sydney – Buenos Aires flights will be dropped in favour of a Sydney – Santiago service. This makes sense. Santiago is alliance partner, LAN’s biggest hub. This switch makes numerous places in South America accessible with a single stop. Add to this the fact that Aerolineas Argentinas is destined to join Skyteam, SYD-EZE makes less sense than ever.

Delivery deferral of 6 A380s by 5 years (FY’14 to FY’19) This decision was likely based on a simple total cost of operation calculation. There is no doubt that the A380 is the sexier offering but the fact that the 747s are paid off make them more viable at this time.

Qantas will focus on Premium International Travel ex-Australia. Given the lower cost of labour and (perceived?) better service on the numerous Asian carriers that service Australia, is this wise? Qantas is no slouch but topping titans like Singapore Airlines is not going to be easy. I fear that this may be too big a hill for Qantas to climb.

The document also indicates that Qantas will set up a “new premium, full-service airline based in Asia under a new brand.” At the time of writing, no “base” has been chosen. I would imagine any base would have to be chosen with some synergies with Qantas and/or its OneWorld partners in mind. This would suggest that it would have to be Hong Kong, Bangkok, Kuala Lumpur or Singapore. Given the scale back in both Hong Kong and Bangkok, neither of those appears to be the frontrunner. Singapore is already quite a ferocious market and I have a hard time believing Qantas has the stomach for it. This leaves Kuala Lumpur. Geographically speaking it’s well placed to serve most of Asia but given that it’s in a region with an appetite for LCC flying isn’t this too a bloodbath waiting to happen?

In addition, Qantas plans to launch Jetstar Japan in 2012. Japan is not an easy marketplace at the best of times but the current economic climate and the fact that the key partner in this venture is JAL – a carrier with deep problems of its own – really make me wonder if this is ever going to be anything more than a pipe dream.

Good luck Qantas, you’re going to need it!

Emirates A380 coming into YYZ by BriYYZ on Flickr

Let’s be honest 58 A380s was never going to be enough for Dubai’s ambitions. In case you think I’m being sarcastic, I’m not. Once you get over the shock of such a massive order and start to think about it, 58 is not that many. Currently the ten strong A380 fleet serves London (LHR x2 daily), Paris (CDG), Bangkok, Toronto (x3 weekly), Sydney, Auckland (via SYD), Incheon as well as doing some intra-gulf flying mainly to Jeddah. Assuming that the current complement is well utilized that would leave (only!) 48 frames. Placing these 48 across EK’s currently served destinations will not be that difficult. Many of these destinations already enjoy multiple daily frequencies from DXB. Examining that list would be a good starting point.

Cape Town, Dhaka, Düsseldorf, Frankfurt, Gatwick, Hong Kong, Johannesburg, Karachi, Kuala Lumpur, Male, Manchester, Manila, Mauritius, Melbourne, Moscow, Singapore and Shanghai are all strong candidates to become A380 destinations. Whether all of these spots are A380-ready and whether the authorities/treaties that govern these airports will just take this lying down remains to be seen but EK’s intentions should be clear. At this point it’s just a case of guessing in what order these will come online. Add the additional 32 frames into the mix and only then will you start to struggle to find routes for EK to put them on, but even then not really. At the current dismal delivery rate natural fleet renewal will mean that older 77W frames will be finding new homes and being replaced by A380s.

Beyond the additional 32 A380s the rumored/sort-of-announced intention to order more frames at Farnborough makes things interesting. In all likelihood it will be a modest (by EK standards) 777 renewal order (yes even they acknowledge not every city on earth can support a daily A380) and/or an additional 10 A380s to bring the fleet count there to 100. Say what you will about EK they understand PR!

This “better to have it and not need it” philosophy will work for EK. After all any spares can find homes with EK’s cousin organization DAE and even Senegal Airlines (aka Sri Lankan: the sequel) could probably take one or two for flights to Paris and Marseille in a pinch. Perhaps most importantly by jamming up the order books at Toulouse. EK’s competitors will not be able to get a meaningful A380 fleet put together any time soon.

To me EK’s biggest problem is not going to be finding places to fly the A380, it’s going to be getting foreign governments to yield to their will. I have no doubt that some governments will force addendums to existing bilaterals – replacing frequencies with seat capacities – or at the very least refuse to change existing agreements. If that happens things will get very messy indeed. The UAE-India bilateral is already restricted in this way but more countries will follow suit. Already in battles of attrition with Australia, Canada, Germany and India, Emirates might have to hire as many PR and lobbyist hands as they do pilots to get all those A380s in the air.