In the excitement of various firsts by Boeing and Bombardier last week, overlooked was Airbus’ first: its widebody family test aircraft, the A330 (rear), A350 (foreground) and A380 flew in formation for the first time before continuing on their own test sorties. Magnifique.
Today, after years of production and bureaucratic delays, China Southern marked a significant milestone with the arrival of its first Boeing 787-8 in Guangzhou. The airline having taken delivery of the aircraft registered B-2725 on May 31.
The 787 delivery marks the next chapter in the transformation of China Southern. B-2725 will enter revenue service on 6 June, operating the inaugural service from Guangzhou to Beijing. Initially the aircraft will also be deployed on Guangzhou – Shanghai services. The 787s are expected to be deployed internationally by the end of 2013 on the ‘Canton Route’ between Australia and Europe, and to Vancouver. China Southern will receive five of the ten 787′s it has on order by the end of 2013.
President & CEO Tan Wangeng has previously said he “will spare no effort in building the Canton Route into a premium product” to be operated by Airbus A380s and Boeing 787s.
China Southern in 2015
Already big and getting bigger; China Southern is the largest passenger airline in Asia, carrying over 85 million passengers in 2012. The third largest by market capitalization. The sixth largest by fleet size. And, Skytrax’s most improved airline of 2011.
International operations currently account for only 18.4% of the carrier’s Available Seat Kilometres (ASKs), the smallest of China’s ‘big three’ airlines. 80% of its domestic route network, and 81.6% of its ASK capacity competes directly against high speed rail. The result? China Southern is turning to international markets with the aim of increasing its international ASKs to 35% by 2015.
Chairman Si Xianmin noted in a 2012 interview that “[we’re] looking at route expansion into South America, Africa and other emerging markets to expand our hub network. The broader vision of the Canton Route is to build Guangzhou as a global, comprehensive, long-haul aviation hub”.
Currently operating 35 weekly services to 5 Australian cities, Tan says that “More than 30% of the passengers travelling on this [Canton] route are from Australia and Europe”. Plans see this increasing to 55 weekly return services (110 total segments) to Australia by 2015. In addition, South American services are likely to operate through Nairobi, home of Skyteam partner Kenya Airways, linking three of the world’s largest developing markets.
However, if it is to win greater market share from other ‘Kangaroo route’ carriers, the airline will need to substantially improve the transfer experience at Guangzhou’s Baiyun Airport. One of those ‘only in China’ experiences, transferring at Baiyun remains a messy affair and while the carrier is developing a winning onboard product, the result of substantial focus and investment, its ground services lack the polish of competitors.
Ürümqi is China Southern’s strategically located second international hub. Ürümqi acts as a western entry point, one of the focus airports that the CAAC uses to efficiently distribute airline traffic across the China. A cooperation agreement signed in 2011 by China Southern – with its 75% international market share – and the Xinjiang Autonomous Region government, has seen Ürümqi Airport’s passenger traffic grow to become China’s fourth largest international airport. From Ürümqi the carrier offers services to the middle east, Turkey and following the resumption of services to Tashkent in July all of the CIS republics (except Moldova). Supported by expanding minerals exploration in the region, could China Southern leverage Ürümqi’s strategic location to reshape sixth-freedom traffic flows across Asia?
Deploying the Airbus A380
In late 2012, almost a year after after taking delivery of the A380, international operations commenced with daily services from Guangzhou to Los Angeles. To date, this remains the sole international A380 route, with the aircraft otherwise restricted to domestic services.
Sources say upon EIS in 2011, the Civil Aviation Authority China (CAAC) restricted operations over concerns that cockpit flight crew English levels were insufficient to operate in a monolingual English environment, particularly in relation to the aircraft’s Electronic Flight Bag (EFB). An extensive and successful flight crew training programme during 2011-2012, resulted in the CAAC lifting operational restrictions.
China Southern originally planned to use the A380 on new services from Beijing, however the CAAC has long restricted competition between the ‘big three’ on international services, particularly direct competition with Air China in Beijing.
In 2012, China Southern entered into negotiations with Air China and it’s powerful coterie of interests, to operate joint-services from Beijing to Paris, and Frankfurt. Initial negotiations shaped the operation as a revenue sharing joint-venture with Air China code sharing on China Southern operated services. However by early 2013 talks were faltering; Air China changed its position, negotiating only to wet-lease the aircraft, to operate and market the proposed Paris services as Air China only services. In early May, China Southern Chief Financial Officer Xu Jiebo reported “the discussions were suspended as many issues arising during the negotiations couldn’t be resolved”.
Central to this was disagreement on Terminal access at Beijing. With Air China operating from Terminal 2 and China Southern Terminal 1 at Capital Airport the carriers would be unable to offer seamless connections. This would only be compounded further when China Southern relocates its operations to the new Beijing Daxing Airport when it opens in 2017.
The result? China Southern will now operate the A380 daily from Guangzhou to Sydney from October 27, preferring not to compete head-to-head with Air China. Tan says “on our current Sydney route we operate [a] double daily using our A330 aircraft and the load factor has been very satisfying, which means we can operate a triple-daily service. We have studied if the market will be big enough to digest this capacity”.
China Southern’s ambitions for Australia are big, but just how realistic these ambitions are remain to be seen. China Southern is on the verge of being unleashed in the same way Emirates was 10 years ago. A blue dragon is rising, and it’s winging its way to a city near you.
It’s been a long wait. After years of delays, the Civil Aviation Administration of China (CAAC) today issued the Chinese type certification certificate for the Boeing 787-8.
A team from China Southern is currently in Seattle undertaking preparatory work and customer acceptance flights before formally accepting the carrier’s first 787 LN 34, registered B-2725, on or before May 28. Hainan Airlines will follow, taking delivery of its first 787-8 in June.
The opaque nature of Chinese bureaucracy has muddied the official reason behind the CAAC’s delay in issuing the Chinese type certificate. Industry sources suggest that the 787 type certificate was ready for issue in late 2011, however due to development delays the preparatory work expired before the 787 could enter service under the old certificate. It is also suggested that Air China’s political connections in Beijing played a hand in delaying the paperwork, waving their magic wand to reduce the competitive pressure on the Chinese flag carrier which couldn’t secure early delivery positions for its 787-9 order, and didn’t order the A380.
Each carrier holds orders for ten 787-8s; China Southern will receive five aircraft, and Hainan seven, by the end of 2013.
Check out Carry-on’s profile of China Southern
*This post has been amended as we mistakenly wrote Air China had not ordered the 787. Air China has 15 787-9s on order. Thanks to one of our readers for pointing this out.
British Airways’ new video gives a sneak peek into the onboard refinement of their chic new A380. BA has twelve A380s on order to be delivered by 2016, and will receive with the first three aircraft to be delivered in July, September and November. Configured in a four class 469 seat layout with , BA’s A380 will be deployed between London – Los Angeles from 15 October and daily London – Hong Kong services from 15 November.
British Airways is likely to deploy its A380 to other destinations in Asia including Beijing, Shanghai and Singapore; in line with strategic moves to increase its presence throughout Asia, particularly mainland China. In support of this, BA has signed a codeshare agreement with Cathay Pacific to take affect from 31 March, the final day of the Qantas/BA Joint Service Agreement (JSA). BA will initially place it’s flight code on Cathay Pacific’s services from Hong Kong to Cairns, Sydney, Melbourne and Perth.
“The best refinements are those you hardly notice. Deceptive in their simplicity, you may not notice them at all. Truly great design steps aside, leaving you with a sensation, a feeling. This was our ambition when designing the interiors for our next generation aircraft. Soon, our A380s will fly between London Heathrow, Los Angeles and Hong Kong. We hope, when you step on board, you can’t put your finger on exactly what makes flying in them so pleasurable.
More than 90 years of experience has taught us how to get things right and our intention is to make sure – on every second of every flight – you realise how flying with us makes you feel.” – British Airways
This is the label Tim Clark gave to today’s announcement of the partnership between Qantas and Emirates. For Emirates, it is merely an endorsement that its strategy and positioning has worked. For Qantas, the agreement represents a considerable strategic shift, forcing the airline to finally acknowledge many of the operational issues that should have been acknowledged up to a decade ago.
From 1 April 2013, Qantas’ services to London will operate ‘The Falcon Route’ via Dubai. Subject to regulatory approval, the centerpiece of this strategic is an 10 year operational partnership with Emirates Airlines which includes integrated network collaboration with coordinated pricing, sales and scheduling as well as a benefit-sharing model. Akin to having fully metal-neutral Anti-Trust Immunity, the agreement also provides scope for further expansion, Alan Joyce saying “the two airlines can do a lot more together into the future.”
The partnership “representing a step-change for the aviation industry” while true, is ironic. Qantas has essentially endorsed Emirates strategy and positioning, something it has vehemently fought against and accused of everything from receiving subsidies to capacity dumping for years. Even after the Qantas rhetoric, will passengers buy this sudden strategic shift? Perhaps.
Why? Sure, it doesn’t deliver Qantas operated services to passengers outside Melbourne or Sydney. What it does represents a fundamental change in airline thinking, that Qantas recognises the importance of the mature and continuously developing expectations passengers have of airline alliances. It recognises that passengers will fly if the alliance can take you where you want to go, with the benefits you deserve with full reciprocity. Something which has become murky in the wider world of airline alliances.
The alliance is risk averse, it allows Qantas to minimise its exposure to the European market and the trans-Tasman market, where Emirates with its much lower margins and cost structure is more competitive. The association with a brand considered to be one of the world’s best, will also dramatically enhance Qantas’ international exposure.
“It’s not you, it’s me”. On 31 March 2013 Qantas will end the 17-year Joint Services Agreement with British Airways, the breakup an indication that in today’s operational environment the alliance wasn’t delivering from an operational, passenger experience or yield perspective. Qantas will also cease to fly the Kangaroo Route to Europe, just over 65 years after the airline first started flying the route on 1 December 1947. Services to Frankfurt will also be suspended, a route that has long not been profitable because of high jetfuel prices, the Boeing 747-400s full burn and high-aircraft weight.
The following slide from the Qantas presentation gives an idea of the significant markets the Qantas-Emirates partnership will open up:
The partnership doesn’t extend across Asia, with QF/EK connections only available to Emirates services through Singapore and Bangkok. In addition, Qantas codeshare services with Cathay Pacific and Air France to Rome and Paris respectively will also be cancelled. Changes have also failed to address Qantas’ neglected international markets from Perth, Adelaide and Brisbane.
Perhaps more important than the partnership, is Qantas acknowledgement that its Asian services need to be transformed. For many years Qantas has neglected the region home to our biggest trading partners and inbound tourism markets. Services to the region will be enhanced, with new flights and changes to schedules in recognition of a need to be more business friendly. Will Qantas actually receive a portion of the 15 Boeing 787-8s it subsequently directed to Jetstar in support of this? Time will tell.
Back in 1996, Qantas entered into a partnership with an emerging carrier, Emirates. When it ended, no one noticed. How things change in 15 years. Now the world is watching, and it seems everyone else, especially John Borghetti, was right.
Who remembers the glamour era of air travel when travel was fabulous and happened on a 747 or Concorde? People living, visiting and doing business in Perth are reminded everyday as they travel through Perth Airport’s International Terminal, circa 1984.
Undertaking its first substantial redevelopment since 1984, the Airport has now made available artists’ impressions, of the expected interior of the completed international terminal and Virgin Australia’s new domestic pier at the airport. Some analysts have even labelled the redevelopment as providing Western Australia with the ‘best in airport design’.
Original plans promised a “world-class” 3 pier, 40-gate redevelopment that would be “one of the best in Asia” akin to Hong Kong or Seoul’s Incheon. These were subsequently reduced to:
All built to unexceptional IATA service C standard as extensions to the substandard circa 1984 terminal. Best in Airport design indeed.
Virgin Australia’s domestic pier does look snazzy and it will be the first airport terminal in Australia specially designed for the airline. The terminal will feature definitive Virgin elements passengers including a signature lounge “which will be the best that Western Australia has seen” says John Borghetti.
From March 2013, Emirates will fly 3 times daily to Perth. Images of the redeveloped Gate 51 are heavy with Emirates branding. Will this become a dedicated Emirates gate given the location adjacent to the Emirates lounge? Quite possibly. WAC redevelopment priorities see the redevelopment of Gate 51 to an A380 capable stand expediting for completion in 2013 to meet Emirates requirements. Perth will likely become Emirates third Australian A380 destination.
These developments aside passengers travelling internationally will still be required to go from the ground floor up to the level three departure lounge, before walking down stairs to aerobridges on level two. In addition, our measurements on the scale plans put the unaided walking distance between check-in and the furthest international gate beyond both 265m or 300m, industry guidelines for an airport serving 20 mppa or 25 mppa respectively. Figures Perth Airport may surpass by the end of the decade if growth continues at current rates.
CEO Brad Geatches says “our vision is to ensure all customers and visitors…enjoy a superior customer experience”. I doubt that. At an airport with exponential traffic growth, superior service in a facility designed for ‘good service’, does not deliver the ‘best in airport design’.
A further supplement to this article can be found here.
When I was young I wanted to be a Qantas pilot. Growing up I was granted the privileged opportunity of being invited into the cockpit for landing in various Qantas aircraft at various airports around Australia. The dedication and enthusiasm with which staff undertook their jobs was an inspiration to me.
20 years later, and I don’t know how I feel about Qantas. Today’s Qantas just goes through the motions. The timid annual result announcement is a reflection of the diminishing presence Qantas is playing in the lives of Australians. It is also a reinforcement of the distinct strategy which Qantas has chosen to follow.
The annual results also show a distinct change in Qantas rhetoric. Gone are the battle cries of a “65% line in the sand”, replaced by “The Group aims to maintain a profit-maximising 65 per cent domestic market share”. Brave faced Qantas executives are worried.
Where once an airline was highly respected and always the object of choice, Qantas today is increasingly the bane of our lives, unable to provide the services Australians want. Its big foray into social media attracted 60,000 responses, yet the airline has 7 million frequent flyers. An airline shouldn’t need to give 91 reasons to passengers to board a Qantas plane, they should only need one ‘we are the best’ or a variation thereof.
Yes, Qantas International has suffered from some serious structural issues and needs reform. Virgin Australia does with 6,500 people what Qantas needs 30,000 to do, and Australia’s operational environment is fiercely competitive. But, Qantas’ adoption of American style bankruptcy strategy to cut deep, shrink and grow later in an Australia with extensive open skies agreements and an economy increasingly intertwined with Asia seems inappropriate and uncompetitive.
In the 2000s, Air New Zealand suffered from similar structural problems and undertook major structural reform but continued to grow and expand as it cut. ANZ realised new opportunities and became a leader in industry innovation. Since the 1980s Qantas has avoided innovation like the plague. Qantas has had the money, but why has it been so scared?
Qantas today cancelled its firm commitments for Boeing 787-9s, pushing its firm options to 2016. It’s worrying that Qantas can’t afford its Boeing 787 capital expenditure even with the heavy discounts offered during purchase, and the substantial delay compensation the airline received from Boeing. Qantas A380s are substantially cheaper to operate and return yields up to 3% better than its 747 aircraft yet they have also been deferred until 2016, indicating Qantas no longer believes efficient aircraft are a viable short-term fix for its operations.
Tomorrow is a long time in aviation. Yet with these moves Qantas has hand delivered the impetus, opportunity, and four years, for Virgin and premium international carriers with arguably better product to fill the Qantas void and reinforcing their market positions with once loyal Qantas passengers. What does Qantas International do in the meantime?
As Qantas shrinks Jetstar continues to be given growth priority. But why is a low-cost brand being given brand new 787s and the premium parent being returned close to eleven year Airbus A330s? Alan Joyce sings efficiency, but isn’t really trying hard to achieve it with aircraft. Qantas management seems unwilling to realise the flying public doesn’t want to be forcibly reduced to flying Jetstar, but increasingly have little option. Perhaps Qantas’ return to Coolangatta this month was a wake-up call to this.
Qantas management isn’t only to blame. Unions that represent the airline need to realise, the airline industry has fundamentally changed and we no longer live in the 1960′s when people had a ‘job for life’. They play an important role, but having union officials standing in-front of the media bellowing that passengers shouldn’t fly the carrier only hurts Qantas potential and members’ jobs further.
I hope that in 20 years time Qantas is still there for the aspiring pilots of today who stand with their noses pressed against the airport windows watching planes, as I was 20 years ago. Unfortunately, if current trends are anything to go by I doubt there will be anything left to watch. Qantas needs to become the little airline that can.