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Qantas Asian expansion plans on a crash course with unions
In what has come as a surprise recent development and cost cutting measure Qantas Airways is planning to launch a premium airline based in Singapore. The move is aimed at boosting Asian growth and circumventing staff costs putting the airline on a crash course with its Australian employment unions, according to a news report released by the Australian Financial Review on Friday.
According to the secretive plans, Qantas would base as many as 20 aircraft in Singapore to secure a lucrative Singaporean airline licence. The nature of the aircraft are said to be narrow body A320’s which suggests that the plan is to focus on servicing the short haul Asian market pitting the airline directly against Singapore Airlines and Cathay Pacific who currently dominate the premium sector. It is understood that the new venture is not allowed to be called Qantas but will have the same look and premium feel as the current International services operated by the Airline.
Qantas has denied reports it had applied for an air operator’s certificate in Malaysia but said a range of options were on the table to try and recover its dwindling international market share.
However it has been confirmed that an internal team of employees has been set up to focus on how to reverse the airliner’s recent struggles, and have sought ways to duplicate the successes experienced by the low-cost carrier, Jetstar, that Qantas launched in 2003.
The new Asian airline would take direct aim at Singapore Airlines and Cathay for premium Asian market share, and risks inflaming strained relations between Qantas and its unions over the company’s plans to develop a lower-cost offshore base in Singapore with a local partner to increase flights to underserviced Australian hubs, such as Adelaide and Perth according to the AFR. The base could also be used to lunch an expanded European network.
“A project team has been established to look at Qantas’ international product and service, possible new routes and ways to reinvigorate our offering,” an airline spokesman said. “The team is considering a range of options but no decisions have been made about the direction Qantas will be taking at this stage. Recent media stories are purely speculation and based on rumour.”
The rationale behind the new offshoot is clear: Qantas needs to cut costs and expand into Asia without losing its high quality profile by damaging its brand. By moving its major International operations to Singapore it will be able to dramatically cuts costs, most notably in the area of staff where it is suggested that it will employ rotational regional crews. Flights for instance from Singapore to Bangkok would be staffed by Thai crew, where as a flight to Australia would be serviced by a Singaporean crew. This sets up an enormous battle with Australian unions and has even drawn the Prime Minister into the discussion.
The move has angered unions which were already threatening industrial action at the carrier. Aircraft engineers on Thursday called off plans to strike on Friday but there are plans for further industrial action next week.
Qantas says its international business has not been meeting expectations and market share had fallen in recent years but says it is too early to offer any details on what a taskforce has recommended to fix the airline’s ailing international operations “severe structural challenges”.
Qantas has a low-cost subsidiary Jetstar Asia which operates out of Singapore.
Look out for a more detailed report in the coming days.
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What’s going on with Tiger?
A Special Report by Urban Globetrotter
After bursting onto the Australian domestic air travel scene just a few short years ago, budget Airline Tiger Airways has never been too far away from controversy and always elicits a love or hate response from travellers.
From the beginning and especially in more recent times, Airline industry sources have claimed the sector has been rife with rumours about Tiger which is owned by Singapore Airlines.
The low-cost airline has triggered a price war with Qantas and Virgin forcing them to drop their domestic fares by 30 per cent. Since its 2007 entry to Australia, Tiger has targeted the tourism market and undercut its rivals with a range of “special” fares including 1c flights. This has been a boon for the local market and is a far cry from the completely and totally uncompetitive duopoly of the 1980’s when the choice was either Qantas or TAA.
However, Tigers introduction has also raised concerns that its profitability was taking priority over passenger safety and pilot training. Tiger has consistently ranked as the worst of the major airlines and had just a 72 per cent “on time” record for last year.
READ THE WHOLE REPORT AFTER THE JUMP
