Qantas: Long recovery, delayed A350 order, and fares to encourage flying
Alan Joyce is expecting travel to take a long time to recover to pre-Pandemic levels, in fact at least a couple of years, according to statements published in the Sydney Morning Herald.
He is heartened by the possibility that restrictions on domestic travel will be eased soon, and hoping for travel within the trans-Tasman bubble to be permitted as the first step back to international travel for all.
He’s not getting overexcited though. As well as the differential in countries opening their borders, he also takes into consideration a fairly awful global recession in his predictions. Qantas will have to carefully consider what planes it will keep, what it will dispose of and what planes it will add to its fleet.
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He confirms that the ‘Project Sunrise’ order for extended range A350’s will be delayed. That presumably will roll on to a delay in the initiation of the project flights. Airbus will be able to build planes faster, because it will have a bit of a hole in its order book with airlines going bankrupt left, right and centre. But there is a limit to the speed Aibus can build a mini fleet for Qantas.
Joyce is promising that Qantas will do whatever it can to encourage domestic and international travel – when it returns. He thinks there will be some pent-up demand by holidaymakers and family visitors once the domestic travel restrictions are loosened. However, he is also factoring in a need to encourage people to travel domestically with some cut-price incentives, particularly through the Qantas Group budget airline Jetstar. He goes as far as to say you might find sub-AU$ 40, or even sub-AU$20.
Bit of aggressive competition
Joyce also sees the recovery process as an opportunity to gain market share both domestically and internationally. Domestically it will have less competition, probably from a re-constituted, and re-branded Virgin Australia, currently in voluntary administration. Say goodbye to those millions in branding license fees Mr Branson. Possibly, if the administration process goes badly, there will be no competition.
Internationally, there will inevitably be fewer players, and some of those will be wounded, so this is a once in a lifetime opportunity for a financially sound airline like Qantas. Joyce is open about his ambitions here, and is quoted as saying:
” . . . our intent would be to have a bigger share.”Alan Joyce, Qantas’ chief executive
He has also confirmed that Qantas will look to cut some of its 12 strong A380 fleet. There is a size at which running an A380 fleet at all will not be economic. The A380’s are worth very little on the resale market, and I can’t see that changing post Pandemic. In September last year, Joyce restated his commitment to the A380 through until 2030 and hence has a refurbishment program for the super jumbo’s, with a couple already completed. I dread an announcement that these A380’s will disappear from the fleet.
Well, I did predict this would happen soon, and it looks like they left it until the beginning of 2023 to make the announcements.
Delaying the order for the Project Sunrise A350’s could be a mistake. I would be tempted to accelerate the order. Here’s my reasoning. Planes will be full of ‘nervous flyers’ worried about catching COVID-19. They will probably have to pass some kind of test – temperature or a COVID-19 blood test – to get on the plane, so they will be comfortable that being on the actual plane will be low risk.
The risk will occur in airports, with those thousands of potential disease-carrying travellers! So, a direct flight with no transit airport, from the East coast of Australia to London, or New York, or Rio, or Frankfurt, or Paris would be ideal, and a missed opportunity if delayed.
Although I think it inevitable, I will mourn the loss of any A380’s, my favourite aircraft from the Qantas fleet.