Qantas files new flight plan landing ailing airline in Asia

By Greg Ansley

Qantas will create a new premium, Asian-based airline, launch another Jetstar operation in Japan and buy a new fleet of Airbus A320 aircraft in a huge overhaul of its ailing international operations.

Chief executive Alan Joyce also announced plans to revamp its alliance with British Airways, switch its South American operations from Argentina to Chile and spend A$400 million ($502 million) on new international lounges, inflight entertainment and aircraft refurbishment.

Joyce said the group's strategy would include the continued introduction of next-generation Boeing 737-800 aircraft on transtasman flights and new high-tech check-in procedures for flights between Australia and New Zealand.

But the plans, which will include the loss of up to 1000 jobs across management, pilots, cabin crew and engineers, have infuriated unions and may face a legal challenge.

Pilots and engineers are already fighting Qantas through the workplace relations tribunal Fair Work Australia, alleging that plans to move operations to Asian-based airlines - similar to the New Zealand-registered Jetstar - were designed to cut costs by reducing wages and conditions abroad.

Unions may challenge the airline's drive into Asia under the Qantas Sale Act, enacted when the former state-owned carrier was privatised to ensure the majority of its facilities remained in Australia.

Joyce said Qantas had no option but to make drastic changes.

He said Qantas International was a steadily fading business, suffering big financial losses and a substantial decline in market share because of the progressive deregulation of its domestic market, a surge of competition and a cost base 20 per cent higher than its key competitors.

"To do nothing, or tinker around the edges, would only guarantee the end of Qantas International in our home Australian market," Joyce said.

He said the airline's focus would lie heavily in Asia, the world's largest, fastest-growing and most profitable aviation market, which within 20 years would be home to 16 per cent of the world's middle class.

"There is nowhere like it," Joyce said.

"It has massive untapped potential [and] we need to act now because our competitors are circling the opportunities."

Qantas will join Japan Airlines and Mitsubishi in the launch next year of a 12 billion yen ($190 million) Jetstar Japan, initially flying Japanese domestic routes but later expanding to short-haul international services.

Qantas also intends establishing a new Asian-based premium airline initially with a fleet of 11 A320 aircraft, but operating under a different brand with same-day services to and within Asia.

Under the strategy the group will buy up to 110 Airbus A320s, with a further 194 purchase rights and options, to support fleet renewal and growth for the next 10 to 15 years.

It will also temporarily cap its Airbus A380 fleet at 14 aircraft in mid-2013, deferring orders for a remaining six aircraft by up to six years.

Joyce said the five-year plan would return Qantas International to profitability in the short term and establish the airline on a competitive global platform, with high growth potential.

- NZ Herald

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