Monday, 16 January 2012

Why Qantas wants to set up a premium airline in Asia


In a telling article in the Business Section of the Sydney Morning Herald, Matt O'Sullivan gives a great insight into why Qantas thinks that a premium airline base in Asia could be a real earner:
The Asia-Pacific region eclipsed North America as the world's largest aviation market in 2009 by a few million people, notching up 647 million air travellers at 26 per cent of global passenger traffic.
By 2015, the International Air Transport Association is forecasting, travel within the Asia-Pacific will account for almost a third of the total. Although predicated on what happens in Europe and the US, the peak body for airlines is forecasting annual traffic growth of almost 7 per cent in the region by that year.
And - Qantas is talking to the leading lights of AirAsia about a partnership. They already have a working relationship - so its no surprise that the two CEO's: Alan Joyce from Qantas, and Tony Fernandes for AirAsia;  are chatting about a partnership based out of Kuala Lumpur. So with the downturn in Europe, a struggling USA, and too much competition on the trans pacific route, appealing to Asia's new nouveau riche is an obvious choice.

The trick will be for the Australian airline Qantas to beat the leaders in luxury travel already based in the financial hubs of Asia: Cathay Pacific in Hong Kong, and Singapore Airlines in the city state of Singapore with an airline based in the non-financial hub of Kuala Lumpur in partnership with the struggling Malaysian Airlines.

To me and a number of industry insiders –  the cards appear stacked against Qantas.  Too much investment will be required in infrastructure (planes, training, lounges and limousines) over too long a period ( a year to set up, a year for certification, and any number of years for flyers to change their alliance loyalties), spread to widely (Asia is a big place - will it be KL to Beijing, or KL to Bali that will be the big earner for a premium airline?) And besides what does Qantas bring to the table that Asian airlines don't have who already lead the world in levels of service? Koalas? Miranda Kerr?

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