Jetstar receives Australia's first Boeing 787 Dreamliner

by BA Staff

Boeing (NYSE: BA) delivered to Jetstar Airways of Australia the carrier's first 787 today, which is also the first Dreamliner for the nation of Australia.

Jetstar Australia Boeing 787-8 Dreamliner VH-VKA

Jetstar, is the Qantas Group's low-cost brand. Like every other airline which has taken delivery of this new type of aircraft, Jetstar too will introduce the 787 Dreamliner first on domestic routes, to ensure its pilots achieve the required number of landings, its cabin and ground crews get familiar with the aircraft, and then move the Dreamliners to its international network. The airline has a total of 14 787 Dreamliners on order and expects to fly an all-787 long-haul fleet by 2015.

Qantas Group CEO Alan Joyce said

"Today is a historic milestone for the Qantas Group and Jetstar as we welcome the most advanced passenger aircraft ever constructed to the fleet," "In just 10 short years, Jetstar has grown to be the largest low fares carrier in the Asia Pacific, carrying more than 100 million passengers. The 787 will set up the airline for another decade of growth."

The aircraft departed Monday morning local time from Boeing's Everett, Washington state delivery centre for Melbourne, Australia where it will be greeted by airline employees and special guests.

Boeing Commercial Airplanes President and CEO Ray Conner said "

We're proud to deliver the revolutionary 787 Dreamliner to our partners at Jetstar," "The 787s unmatched fuel efficiency will give Jetstar an advantage in the marketplace and its passengers will travel with the world's most advanced in-flight experience."

"Jetstar customers will have the chance to fly in a larger and more spacious cabin, enjoy gate to gate in-flight entertainment and arrive at their destination more refreshed thanks to a lower cabin altitude to reduce the impact of jet lag," said Jetstar Group CEO Jayne Hrdlicka. "The entire Jetstar team is very excited to have the 787 take to Australia skies."

Boeing Aerostructures Australia manufactures the movable trailing edge on the wing of every Dreamliner.

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Analysis: Qantas more than doubles full year profit as rival Virgin Australia loses money

by Vinay Bhaskara

Image Credit: Paul Spijkers

Australian airline group Qantas Group has reported an underlying pre-tax profit of AUD 192 million (US $171.5 million) for the year ended 30th June 2013, more than doubling from AUD 95 million for the year ending 30th June 2012.

Broken up by segment, profit for Qantas mainline domestic fell 21% year-over-year (YOY) to AUD 365 million thanks to a fare war with Australia's second largest airline, Virgin Australia. Profits also fell 20% YOY at Qantas freight on Asian demand weakness to AUD 36 million, while Jetstar Group saw a deep 32% YOY decline in profit to AUD 132 million thanks to the start up costs of Jetstar Japan and Jetstar Hong Kong. Profits at the loyalty (frequent flyer) division remained strong, rising 13% YOY to AUD 260 million, but the biggest improvement came from the reduction in losses at Qantas' international division, with losses halving to AUD 246 million from AUD 484 million YOY.

Group operating revenues rose 1% to AUD 15.9 billion while operating costs remained essentially flat thanks to a 2% reduction in fuel costs. This contributed to a 5% reduction year over year in unit costs excluding fuel (cost per available seat kilometer - CASK ex. fuel), which was partly offset by a 2% decline in yields.

For the year, capacity as measured by available seat kilometers (ASKs) was essentially flat YOY, while passenger traffic in revenue passenger kilometers (RPKs) was down around 1%. However, passengers carried actually grew 3% YOY to 48.3 million as the Group re-balanced capacity towards shorter haul routes.

For Qantas, the strong improvement in its international results was a partial validation of the turnaround plan announced last year with an eye towards returning the international division to profitability by fiscal year 2015. The biggest part of that turnaround plan, a tie-up with Emirates, has also been partially validated, as it contributed to the results via a doubling of bookings onto code share services to Europe (versus the previous partnership with British Airways). And the partnership's contribution should continue to improve into FY14 as much of the partnership has not been fully implemented and FY13 had to deal with the start-up costs of launching operations in Dubai.

Moreover, the cost-base on international operations improved 5% thanks to reduction of loss-making routes, aircraft retirements, and the reconfiguration of 9 Boeing 747s and 12 A380s improving fleet economics. Qantas International has certainly paid the price for poor strategic vision in the sense of not taking advantage of the rise of Asia over the past decade. But the decision to join hands with Emirates and cut loss-making routes from the international network was the right decision. Bigger is not always better. By reducing some of the lower yielding destinations like Frankfurt and Buenos Aires, Qantas has cut its way towards profitability.

And the turnaround domestically has allowed Qantas to re-focus efforts on the group's primary profit center; Domestic. As Qantas struggled to re-make its international operations over the past few years, Australia's second largest carrier, Virgin Australia evolved from a low cost nuisance into a true full service rival. Having reconfigured its short haul fleet of Boeing 737s and Embraer E190s with a business class cabin, Virgin Australia even took a major shot across Qantas' bow by introducing Airbus A330-200 aircraft with lie-flat business class seats on lucrative transcontinental routes from Perth in 2011.

New Qantas A330-200 business class - Image Credit: Qantas

But Qantas now has the funds and shareholder confidence to fight back. Earlier this month, they announced a new updated product on its own fleet of 10 transcontinental A330s with lie-flat suites aimed at clawing back market share from Virgin Australia. Qantas also announced a new premium product for five Boeing 717-200s, to be flown by subsidiart QantasLink in competition with Virgin Australia Embraer E190s out of Australia's capital Canberra.

Even as Qantas is revving up for a fight, Virgin Australia continues to struggle. With a jumbled strategy of acquisitions aimed at modeling Virgin Australia Holdings after Qantas Group (including the transformation of regional provider Skywest into Virgin Australia Regional and the purchase of a 60% stake in ultra low cost carrier [ULCC] Tigerair Australia) weighing on results, Virgin Australia reported a post-tax loss of AUD 98.1 million for FY13. The competitive tide in the Australian market, for the moment, appears to have shifted back in Qantas' favor.

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Japan Airlines and Jetstar Japan start codeshare and mileage tie-up

by Devesh Agarwal

Japan Airlines (JAL) will start code-share and mileage program partnership with Jetstar Japan (airline flight code: GK) - a joint-investment with the Qantas Group, Mitsubishi Corporation and Century Tokyo Leasing Corporation.

JAL, which started code-sharing with Jetstar (the Australian LCC) in 2007, on routes between Japan and Australia, will now be codesharing with Jetstar Japan on all its domestic flights for customers connecting to and from JAL's international services at Tokyo (Narita) and Osaka (Kansai) and Nagoya (Chube). JAL will not be selling segments on flights operated by Jetstar Japan that are without connections to JAL's international services.

Customers will be able to create a single itinerary with international and domestic flights with the "JL" code, operated respectively by JAL and Jetstar Japan. This provides a network with a wider choice of flights and timings, as well as faster transfers for customers.

Reservations, sales and JAL mileage redemption of flights operated by Jetstar Japan will begin from February 27, 2013, for flights commencing from March 6, 2013.

JAL Mileage Bank (JMB) members can utilise their accrued mileage to redeem tickets on Jetstar Japan flights. Jetstar Japan will be the 17th airline that JAL has similar arrangements. Other airlines with which JAL has mileage tie-ups are all the oneworld alliance members and their subsidiaries, Air Berlin, American Airlines, British Airways, Cathay Pacific, Dragonair, Finnair, Iberia, LAN, Malaysia Airlines, Qantas Airways, Royal Jordanian, S7, and Air France, Emirates, China Eastern, Hokkaido Air Commuter, Bangkok Airways beyond the alliance.

For more details on eligible Jetstar Japan routes and required mileage for redemption, visit the dedicated page on JAL's website.

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MAP: All of the announced routes by airlines for the Boeing 787 Dreamliner

To date, the only carrier to enter the new super-efficient Boeing 787 Dreamliner into service is Japan-based All Nippon Airways (ANA). However, numerous airlines have announced their planned operations for the Boeing 787 as follow:

1. ANA (already in service)
2. Japan Airlines (already delivered; will enter service in March)
3. Air India (already delivered; entry into service [EIS] TBD)
4. Ethiopian Airlines (planned operations begin in June)
5. Jetstar
6. Qatar Airways
7. Hainan Airlines
8. United Airlines

This map summarizes all of the international 787 routes announced by these operators. See more 787 articles.



The launch operator of the Boeing 787 is All Nippon Airways (ANA), who operates the aircraft on a host of domestic services within Japan (centered on their Haneda hub), as well as on a select few global routes from their dual Tokyo hubs at Haneda and Narita (Beijing and Frankfurt from Haneda). ANA has 55 787s remaining on order, with 5 already delivered.





Africa's fourth largest airline Ethiopian Airlines will be using the Dreamliner on services within Africa/Middle East, as well as to the Far East and Guangzhou. Ethiopian has ordered 10 Dreamliners.



The world's largest airline, United Airlines, had previously announced Houston-Lagos on the 787, but due to delays, it has already commenced that route on Boeing 787 equipment. The only currently planned route for the 787 is Houston-Auckland. United has an even 50 Boeing 787s ordered.



Japan's second largest airline, Japan Airlines has announced a host of international routes from both Narita and Haneda; the route to San Diego is notable as San Diego's first ever nonstop Asian flight (Philippines Airlines has served it in the past with a one-stop flight). JAL has 45 787s on order, and will become either the first or second carrier to induct 787 operations to India(Delhi)depending on the new timeline for Air India's 787 integration.



India's beleaguered national carrier Air India is currently "planning" to induct its 787s first on the long rumored Delhi-Melbourne route. However, it is still uncertain whether the airline will take full delivery of its order for 27 787s. We have pictures of the planned Air India 787 interior here.



Middle East heavyweight Qatar Airways has 30 787s on order, but has only announced service on Doha-London Heathrow thus far.



China's fourth airline, Hainan Airlines has applied for long haul services to the US from Shanghai for their first batch of 787 routes (out of an eventual order of 10), a curious choice given that their primary hubs are located in Haikou and Beijing.



Finally, the low cost wing of Australia's Qantas, Jetstar, has announced a series of 787 routes from its Asian hub in Singapore. It is eventually planned that all Singapore widebody operations by Jetstar will become 787s, with the currently used A330-200s being transferred back to parent carrier Qantas. Qantas Group as a whole has ordered 55 Boeing 787s.



In addition to these announced routes, LAN, the third largest South American airline, will announce its initial planned 787 routes at the International Air and Space Fair, FIDAE, in Chile this month on March 27th. Meanwhile, fellow OneWorld member British Airways has said that it will use the Dreamliner on services to Asia without denoting specific destinations.

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Qantas has the best wine cellars in the sky

Photo by Flickr user Star5112.

Australian carrier Qantas is the big winner at Business Traveller’s 2011 Cellars in the Sky airline wine awards, winning in six categories. Other winners include Delta, Jetstar, LAN Chile, Qatar Airways, TAM, Emirates, Air France and Cathay Pacific.

The awards recognise the best business and first class wines served by airlines worldwide, with around 250 wines entered by a total of 32 carriers.

Wines were selected via blind tastings with five judges independently scoring them. The five judges were:

• Charles Metcalfe, TV wine presenter and co-chairman of the International Wine Challenge
• Tim Atkin, Master of Wine
• Sam Harrop, Master of Wine and winemaking consultant
• Peter McCombie, Master of Wine and accredited tutor for the Wine and Spirit Education Trust (WSET)
• John Worontschak, leading winemaker and wine business development consultant

The detailed winners list is:

FIRST CLASS

First Class White
1. Emirates – Leeuwin Estate Art Series Chardonnay, 2006, Margaret River, Western Australia
2. Qantas – Tyrrell’s Winemaker’s Selection Vat 1 Semillon, 2005, Hunter Valley, Australia
3. Malaysia Airlines – Frédéric Magnien Meursault Coeur de Roches, 2009, Burgundy, France

First Class Red
1. TAM – Clos Canon, 2008, Saint-Émilion Grand Cru, Bordeaux, France
2. British Airways – St Hallett Blackwell Shiraz, 2006, Barossa Valley, South Australia
3. (JOINT) All Nippon Airways – Charmes-Chambertin Grand Cru, 2007, Labouré-Roi, Burgundy, France
AND British Airways – Château Smith Haut Lafitte, 2004, Pessac-Léognan, Bordeaux, France
AND Singapore Airlines – Louis Jadot Griotte-Chambertin Grand Cru, 2007, Burgundy, France

First Class Sparkling
1. (JOINT) Air France – Champagne Taittinger Comtes de Champagne Blanc de Blancs, 2000, France
AND Qantas – Champagne Taittinger Comtes de Champagne Blanc de Blancs, 1999, France
2. Cathay Pacific – Champagne Deutz Amour de Deutz Brut, 2002, France
3. (JOINT) All Nippon Airways/Qatar Airways – Champagne Krug Grand Cuvée, NV, France
AND Emirates/Malaysia Airlines – Champagne Dom Pérignon, 2002, France

First Class Fortified and Sweet
1. Cathay Pacific – Ramos Pinto Quinta da Ervamoira Ten Year Old Tawny Port, Portugal
2. Qantas – Morris Old Premium Rare Liqueur Rutherglen Muscat, NV, Victoria, Australia
3. (JOINT) British Airways – Jackson Triggs Proprietors’ Reserve Vidal Icewine, 2007, Niagara Peninsula, Ontario, Canada
AND Emirates – Quinta do Noval Vintage Port, 2000, Portugal
AND Qatar Airways – Domaine Weinbach Clos des Capucins Furstentum Grand Cru Vendanges Tardives, 2008, Alsace, France

First Class Cellar
1. Qantas
2. Qatar Airways
3. Air France

Most Improved First Class Cellar
TAM

BUSINESS CLASS

Business Class White
1. (JOINT) Delta Air Lines – Wente Riva Ranch Chardonnay, 2010, Monterey, California
AND Jetstar – Waipara Hills Sauvignon Blanc, 2010, Marlborough, New Zealand
2. (JOINT) All Nippon Airways – Spy Valley Sauvignon Blanc, 2010, Marlborough, New Zealand
AND Qantas – Leo Buring Leopold Riesling, 2008, Tamar Valley, Tasmania, Australia
AND Qatar Airways – Markus Molitor Zeltinger Sonnenuhr Spätlese, 2007, Mosel, Germany
3. (JOINT) Eva Airways – Maximin Grünhäuser Herrenberg Riesling Kabinett, 2008, Dr Carl Von Schubert, Ruwer, Germany
AND Malaysia Airlines – Stonier Chardonnay, 2009, Mornington Peninsula, Victoria, Australia

Business Class Red
1. Qantas – Mount Langi Ghiran Cliff Edge Shiraz, 2008, Victoria, Australia
2. (JOINT) All Nippon Airways – The Lucky Country Shiraz, 2010, McLaren Vale, South Australia
AND Emirates – Domaine des Sénéchaux Châteauneuf-du-Pape, 2008, Rhône, France
3. (JOINT) Eva Airways – Valduero Reserva, 2006, Ribera del Duero, Spain
AND Virgin Atlantic – Ottoventi Nero D’avola .20, 2009, Sicily, Italy

Business Class Sparkling
1. LAN Airlines – Champagne Louis Roederer Brut Premier, NV, France
2. Qantas – Champagne Charles Heidsieck Brut Reserve, NV, France
3. Qatar Airways – Champagne Veuve Clicquot, La Grande Dame, 1998, France

Business Class Fortified and Sweet
1. Qatar Airways – Kopke Colheita Port, 1974, Portugal
2. Qantas – Seppeltsfield Para Grand Tawny, NV, South Australia
3. (JOINT) Emirates – Dow’s Ten Year Old Tawny, NV, Portugal
AND Korean Air – Inniskillin Icewine Vidal, 2007, Niagara Peninsula, Ontario, Canada

Business Class Cellar
1. Qantas
2. Jetstar
3. Qatar Airways

Most Improved Business Class Cellar
Cathay Pacific

Photo courtesy Flickr user Star5112.

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Airbus A330 gets birthday boost from Boeing 787 Dreamliner delays

On its 15th anniversary, the Airbus A330 is getting a major birthday gift, and from none other, than its major competitor, the Boeing 787 Dreamliner.

Thanks to the 2 year delay on the Boeing 787 Dreamliner, airlines who had previously ordered the aircraft, are rushing to fill the gap with the Airbus A330.

Qantas which has placed firm orders for 65 Dreamliners with options for an additional 50, has leased six A330's for its low cost subsidiary JetStar. Ironically, Qantas is funding the lease with compensation it is receiving from Boeing as liquidated damages towards the delay in delivery.

The story is being repeated by other major Dreamliner customers, like Singapore Airlines and Etihad Airways who are rushing A330s in to their fleets to fill the gap.

Two weeks ago, December 30, marked the 15th anniversay of the first A330 to be delivered. In 1993, Airbus delivered the first A330-300 to Air Inter, registered F-GMDB. The aircraft, construction number 037 test registration F-WWKE, is now with Brussels Airlines as OO-SFN accumulating a total of more than 50,000 flight hours.

There are some 250 A30-300s in service today, with more than 130 firmly-ordered aircraft still to be delivered.

A growing proportion of the A330-300 fleet is now employed on extended-distance regional routes, such as those linking Middle East destinations with European capital cities. Similar flight lengths characterise the segments flown between Australia and Asia or from Europe to North America.

In 2009, Singapore Airlines, Etihad, Gulf Air, Oman Air, Saudi Arabian Airlines, Aeroflot, Finnair and Swiss will receive delivery.

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A real deal for Qantas - Malaysian Airlines

As I indicated in my previous article, there are strong rumours of a "merger" or "tie-up" between Australian carrier Qantas and Malaysian Airlines (MAS). Given the regulatory stranglehold and national politics involved in Asia, a full merger is next to impossible.

Not only do I feel that this tie-up will happen, I strongly believe that it will result in positive results for all the players, not just the airlines.

The future for Qantas is Asia, but either due to a difference in business culture, or national ego, or economic and/or market positions, Qantas really has no serious potential partners in Asia, other than Malaysian. A tie-up with either Singapore Airlines or Cathay Pacific or Japan Airlines and can be written off due to culture or ego reasons. Garuda, Thai, Philippines, Eva, China Air, Air China, or any of the Taiwanese or Chinese airlines are too small or do not offer adequate economic benefits to Qantas.

Qantas CEO, Alan Joyce, had said that Qantas was looking to be the senior partner in any merger or similar relationship that the carrier entered into. The recent failure of the merger talks with British Airways highlights Joyce's desires.

Under the able stewardship of Idris Jala, Malaysian has staged a phenomenal comeback. After years of losses, government intervention and its resultant inefficiencies, Jala has moved MAS in to profitability, for the last 3 years. Even until the third quarter of 2008, despite the economic crises, he has delivered profits. Driven by its formidable low cost carrier (LCC) competitor AirAsia, and Jala, MAS has undertaken ruthless cost cutting and route rationalisation. Despite this, Jala recognises, MAS will never meet the cost base of AirAsia, and has moved the airline up the value chain, focusing on the higher end of the market, instead.

Financially, Qantas has been in good profit for many years, thanks to the "Kangaroo Run", and has a decent cash balance sitting ready, should a deal with MAS come about.


At the same time, liberalisation is spreading through the region, may be in fits and starts. On December 1, the 70 year old duopoly of Malaysian Airlines and Singapore Airlines on the lucrative Singapore-Kuala Lumpur sector was opened up, after 5 years of lobbying by the LCCs of both countries, but Malaysia predominantly. Capacity has trebled virtually instantly.

Kuala Lumpur International Airport (KLIA) has much to offer. The airport was built and promoted by former Malaysian Prime Minister Dr. Mahathir Mohammed, as a competitor to Singapore's famous Changi Airport, a base for many international airlines, including Qantas.

Despite trying as hard as they could, KLIA could never match the economies of scale, and frequencies of Changi, which brought in increasing numbers of passengers. For many years, KLIA lagged, almost becoming a colossal white elephant. The poor situation at KLIA was further aggravated by its own government. For years, Malaysia resisted liberalisation of the KL-Singapore route. Apart from being one of Malaysian Airlines' most profitable routes, there was a constant fear of the undermining of KLIA as a hub, since Changi is easily the more preferred hub by both airlines and passengers.

Thanks to the fast growing AirAsia, KLIA is now making a comeback, as a low cost hub, but we should keep in mind, the airport still has high end facilities as well. KLIA is also a spacious airport, and with its planned expansion, will offer considerable growth opportunities to any global scale airline.

This low cost positioning is important. While Qantas withdrew from KLIA, due to low yields, and preferring to build economies of scale at Singapore, it has two low cost subsidiaries JetStar and Singapore based JetStar Asia. Jetstar Asia already flies to KLIA, and Jetstar used to fly the Sydney-KL route, but has withdrawn temporarily during the economic slow down.

Jetstar Asia has only a narrow body fleet, but is already reaping benefits from the recent KL-Singapore route liberalisation. Jetstar has a fleet of six Airbus A330's, two of which fly Australia to Japan (service due to terminate in December 2008), and can easily use KLIA as a base to expand the Qantas brand in to India, south-east Asia, the middle east, Europe, and especially the United Kingdom, in response to the challenges of the ever busy AirAsia who is making KLIA as a low cost hub for Australians, with its upcoming UK service. Once Jetstar receives its Boeing 787 Dreamliners, hopefully in 2010, the KLIA base will blossom as an alternate "Kangaroo run" route.

A well established base in the backyard of arch-rival Singapore Airlines, while still maintaining its presence at Changi will suit the Qantas/Jetstar group just nicely, affording them and potential partner, Malaysian Airlines, more options, with Qantas still maintaining presence at Changi.

Unlike the talks with British Airways, in case of Malaysian Airlines, the Malaysian government are serious and any deal will have their blessing. So it will behoove Qantas to proceed. In the near future, Qantas and Malaysian can extend their Oneworld alliance membership further with code sharing and various joint strategies. In the medium term, to overcome the restrictive regulatory framework in South-East Asia, I expect that Qantas and Malaysian Airlines will have to enter in to some time of cross-holding and also for Qantas buy a significant minority share in Malaysian.

A deal, if consummated, with help re-define the south-east Asian skies, and benefit not just the airlines, but also KLIA.

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