Business-class competition ups the pressure on Qantas

Discussion in 'Qantas Airways | Frequent Flyer' started by sobore, May 6, 2012.

  1. sobore
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    sobore Gold Member

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    QANTAS' loss-making international operations are under rising pressure as discounting of fares moves from the back end of planes and into the business-class cabins on long-haul routes.
    Chinese airlines are ramping up their capacity on routes to Australia, leading to return business-class fares between east-coast cities and Europe selling for about $5000 compared with about $7000 historically.

    Flight Centre's chief financial officer, Andrew Flannery, told investors last week discounting that had been commonplace for economy tickets had reached the business class. He cited return business-class fares from Melbourne to Europe selling for less than $3500 in the high season.
    The country's largest travel agency said the Chinese airlines had been aggressive in discounting fares as they attempted to build market share on routes to Australia. China Southern has vowed to more than triple flights to Australia to more than 110 within the next four years.

    Flight Centre also said economy fares on routes to destinations including Bangkok, Paris and Rome remained well below levels during the global financial crisis in late 2008.

    While a boon for travellers, the emergence of heavy discounting of business fares threatens to put a dampener on Qantas' attempts to turn around its premium international operations, which lost more than $200 million last financial year. Other airlines, including Air New Zealand, are also struggling to stem losses from their long-haul operations due to intense competition and high fuel prices.
    A Qantas spokesman said there had been large increases in capacity on routes to Australia in recent years, spurred by Middle Eastern and Chinese airlines. ''The more airlines that come in, and the lower fares go, the harder it is to sustain yields,'' he said.
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  2. trippin_the_rift
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    trippin_the_rift Silver Member

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    Interesting read and it's true QF are going to struggle for a few reasons if they choose to compete in such the red aviation waters.

    Good thing that QF realise making money off seats isn't the way forward for the business.

    Qantas's business is in points and brand loyalty. It's not about filling seats. Other airlines need to do this and that's why we see intense price competition. So any comparision of the entire business to China Southern or Middle Eastern airlines is largely irrelivant because the business models are vastly different.

    Apples and oranges.

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