Freight not overlooked in Qantas strategy

Qantas says it has not forgotten the role of freight in its new strategy for global transformation

Freight not overlooked in Qantas strategy
Freight not overlooked in Qantas strategy

By Anna Game-Lopata | August 17, 2011

Qantas says it has not forgotten freight in its new strategy for global transformation. As one of the Group’s four key brands, Qantas Freight will have an important role to play.

A Qantas spokesperson tells SCR the Group believes the freight market has recovered steadily from the global economic downturn and there is great potential in growth regions such as Asia.

"The new strategy will give us a better, more efficient global network and this will be beneficial as we market freight capacity on Qantas services and services operated by partner airlines," the spokesperson says.

Announced yesterday, the new Qantas strategy, is intended to "build a truly modern, customer-focused and competitive global aviation business."

In a statement, Qantas CEO Alan Joyce reveals the Group’s
growth plan primarily focuses on Qantas International, which is suffering big financial losses and a substantial decline in market share.

"To reverse that decline we need fundamental change," Joyce says.

"Qantas International takes up enormous amounts of capital, yet its cost base is around 20 per cent higher than that of its key competitors.

"To do nothing, or tinker around the edges, is not an option."

Qantas says it has established a five-year plan with the first objective being a return to profitability in the short term.

"In five years, the Qantas flying businesses, domestic and international combined, will exceed the cost of capital on a sustainable basis," Joyce says.

"It is a huge task but we start from a good position."

Joyce says Qantas’ core domestic operations, including Qantas Freight, are performing very strongly and generating good profits.

Qantas Freight is part of the "powerhouse portfolio" of brands which is expected to establish the group on a competitive global platform, with high growth potential across all markets, instead of being restricted to an Australian-base.

"We have a bedrock of 65 percent market share in the domestic market, driven by the combination of our two-brand flying model and Australia’s favourite loyalty program," he says.

"The Qantas Frequent Flyer program is the world’s best and most profitable loyalty program, with high potential.

"And Jetstar is one of the world’s fastest growing and most profitable low-fares airlines, set for significant future growth."

Among the strategies to achieve these goals announced yesterday are new collaborative agreements with airlines overseas such as British and American Airways, the launch of a new premium Asian airline in a location yet to be decided and the introduction of Jetstar Japan.

The Group will also invest in between 106 and 110 Airbus A320 aircraft to support capacity growth and expansion into new markets.

Of this order, between 28 and 32 aircraft will be current-generation A320s and the remaining 78 will be the highly fuel-efficient, next-generation A320neo.

The plan also involves the retirement of four Boeing 747s as a result of the international network restructure and the reconfiguration of B747s with upgraded A380 product to improve productivity by matching capacity to demand.

In terms of freight capacity, the Qantas spokesperson says there are no current plans to invest in new freighter aircraft.

"We currently operate four wet-leased freight aircraft and will review future aircraft requirements based on market conditions and demand," the spokesperson says.

"The order announced yesterday is primarily focused on building passenger capacity, however, it will allow us to maintain, and potentially increase, belly freight capacity across the Qantas Group."

Alan Joyce adds there will be an impact on employment from the retirement of older aircraft and network changes involving around 1,000 jobs, pilots, cabin crew, engineering and in management and airport administration.

These staff will be offered voluntary redundancies, leave without pay or the opportunity of alternative employment in the Group.

However the company spokesperson assures SCR the company does not envision
any restructure or job losses affecting Qantas Freight.

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