British Airways: “Down under’s not over”

There’s a great modernity about British Airways’ simple but stylish Australian newspaper advertisement. Taking a subtle, cheeky swipe at Qantas following the ending of the Joint-Service Agreement in favour of Emirates, British Airways is keeping calm and carrying on.

BA will upgrade all its Australian services to new B777-300ER aircraft from March 30, 2012. Timed to match the commencement of the Qantas Emirates partnership, the introduction of the aircraft with upgraded long-haul product, and BA’s shift of Australian services from London Heathrow’s T3 to its T5 hub marks another competitive upgrade in the fierce Australian international market.

The move is part of BA’s renewed focus on the Asia-Pacific region. BA will commence five weekly services to Seoul from next month, and three weekly services to Chengdu from September 2013. In addition, BA is likely to recommence schedules to Kuala Lumpur and Taipei, markets the carrier exited in 2001, as well as new services to additional cities in mainland China.

British Airways served Taipei from London and Hong Kong as British Asia Airways (英亚航空) until 2001. British Asia Airways was incorporated to overcome a now overturned Chinese Central Government policy prohibiting national carriers serving mainland China from serving Taiwan. Image: Daryl Chapman.

There is also nothing delicate about British Airways’ new oneworld push. For many years oneworld has been quiescent, foundering without a meticulous leader as Star Alliance has in Lufthansa. But the signs are this has changed, limited by expansion options at London Heathrow, British Airways and its parent company International Airlines Group (IAG) are making an active effort to engage and mold oneworld into an entity that supports BA’s sustainable growth and underlying business goals.

British Airways has already formed a comprehensive JV partnership with oneworld member and long-time Qantas partner Japan Airlines, and invited Qatar Airways to join oneworld in 2013/14. Could BA’s Asian focus see the airline engage Malaysia Airlines in place of Qantas to expand in South-East Asia?

A British Airways led quadruple entente would secure a network between Australia and Asia to Europe covering all major traffic paths via Northern and South-East Asia and through the Middle East. Image: GCMapper and Carry-ON.

Malaysia Airlines has much to offer BA, with a South-East Asian network, services to every major Australian city, and code sharing agreements with Japan Airlines, as well as oneworld members-to-be Qatar Airways and SriLankan Airlines already in place. To leverage this through an alliance or a comprehensive JV between the three carriers opens up incredible network and traffic flow options as the map shows. The grouping would be well placed to gain a formidable position in the growing high yield markets driven by Asia’s growing middle class, and provide substantial traffic feed into BA’s long haul network in Asia, and connections to BA short haul services across Europe.

oneworld is on the brink of change, and British Airways is now firmly at the helm. Tally ho.

Qantas and Emirates conjecture. Why has Qatar Airways slipped off the radar?

Everyone loves a little will they, won’t they situation, and a ripper is brewing in Australia right now with talk of a Qantas-Emirates partnership. But why has Qatar Airways slipped off the radar?

In Perth in early July, Qatar Airways CEO Akbar al-Baker confirmed the carrier was in talks with Qantas. Though as focus shifted to the fruits of an Emirates partnership, forgotten were the benefits a relationship with Qatar could bring.

Buoyed by the Emirates speculation Qantas’ dismally low share price gained 10%, and the rhetoric regarding all the potential benefits flowed.  But, as Ben Sandilands noted “Emirates doesn’t actually need Qantas for anything it can’t do in its own right, including set up its own domestic entity in Australia if it ever felt so inclined”.

Qantas operates 28 services to Europe, assuming the unlikely event they cut Frankfurt (or move it to Berlin), 48 to Singapore, and only 7 to Bangkok, and 3 to Jakarta.

By March next year, Emirates will operate 84 weekly services to 5 Australian cities, most direct, and 28 via Bangkok, Singapore or Kuala Lumpur, and onward connections to 32 cities in Europe and almost the same in Africa. Emirates has better connections, an arguably better on-board product, and excellent lounges in Australian cities they service, so why would a passenger choose Qantas product over Emirates internationally?

Qatar Airways currently operates a comparatively small number of services to Australia – 10 a week, increasing to 14 in March 2013, and likely to increase further. Qatar also offers services to 32 destinations in Europe, and more than Emirates in Africa. Qatar’s currently serves Melbourne and Perth, not Sydney – originally not being granted permission to fly there.

What could a Q-Q relationship deliver?

1 – Connections.
An alliance with Qatar would offer significant advantages in terms of code shared network connections.

Qatar offers 14 weekly services to both Singapore and Bangkok, 11 to Hong Kong, and 10 weekly services to both Jakarta and Denpasar, neither of which Emirates serves – but which Qantas does. Although the airline doesn’t service Kuala Lumpur with it’s own metal, Malaysia Airlines’s expected post-Oneworld entry code sharing with Qantas could cover that.

2 – A boutique airline.
A boutique product and brand positioning exudes glamour and sophistication, Qatar’s focus is on building a boutique airline, consistently number 1 in the world, rather than a capacity dumping conglomerate. It does not offer passengers multiple service options that detract from Qantas’ limited services.

Anyone that has flown Qatar, knows that even in economy class, service is exquisite, and a step above what Emirates now provides. The airline does not offer lounges in Australia, and could use Qantas lounges in all major cities – another way to keep passengers engaged with Qantas product.

3 – Avoiding Sydney-centric pain
Qatar services avoid Qantas’ Sydney-centric operation. Passengers hate it, but Qantas continues to consolidate on Sydney. People in the Qantas ivory tower seem unwilling to acknowledge that forcing passengers through an airport they do their best to avoid does not keep them coming back.

Qatar’s offer of services to non-curfew airport cities of Melbourne, Perth and potentially Brisbane, which Qantas has neglected for years, could deliver Qantas passengers connections they have been screaming out for, while providing the flexibility to schedule complementary connections.

Yes, Emirates also services these cities with multiple daily services, but with relatively few services a week, there is little chance of Qatar cannibalising the Qantas passenger base. Ideally, Qantas would complement these services with their own daily service from Sydney to Doha.

4 – Oneworld
Qatar already codeshares with Malaysian Airlines, which will join Oneworld in 2012, sponsored by Qantas. It is known Qatar is in discussions with British Airways and IAG about developing a comprehensive relationship; the carrier recently abruptly cancelled its code sharing arrangements with United, and it is strongly believed Qatar will choose to join Oneworld when it announces a choice of alliance grouping later in 2012.

Qatar potentially possesses relationships that Emirates can not offer, has shown no interest in developing, and which would avoid setting in motion a potentially destructive breakup of Oneworld, should Qantas partner with Emirates.

5 – Equity
Qatar has never directly stated it is against equity partnerships, similar to those in which Etihad has engaged. Qantas is known to be lukewarm on the equity partnership front, and Emirates has consistently stated publicly that it has no interest in equity.

Qantas is in desperate need of innovation, starting with a viable network strategy that complements its shrinking international operation. There is no guarantee that with Emirates’ already dominant presence, Qantas won’t continue to haemorrhage once-loyal passengers it could carry itself to Emirates. But in Qatar, Qantas could find a glamorous partner that might just keep the loyal passengers that remain interested for the few years it would take to innovate its own product.

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