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Tuesday, August 16, 2011

Qantas and BA halve London-Australia direct capacity

Today's announcement from Qantas is ominous for those who like having a choice of through services between London and Sydney or Melbourne on Qantas and British Airways.

At present there are four direct one-stop Qantas/BA services between London and Sydney, and two direct one-stop Qantas services between London and Melbourne.

The London-Sydney route is operated via Singapore and Bangkok, with Qantas and BA each flying a service through each airport.  The Singapore route has Qantas operating an A380, with BA operating a 777-200ER.  The Bangkok route has Qantas and BA both operating 747s.

The London-Melbourne route is operated via Singapore and Hong Kong, with Qantas operating an A380 via Singapore, and a three-class 747 service via Hong Kong.

The changes will see:
- The termination of through London-Bangkok-Sydney services by both Qantas and BA, although Qantas will maintain a Bangkok-Sydney service, and BA a London-Bangkok service, these will connect, so whilst passengers can still travel Qantas/BA via Bangkok, they will not get the same airline the whole way.

- The termination of through London-Hong Kong-Melbourne services, although again Qantas will maintain a Hong Kong-Melbourne service, and BA its frequent London-Hong Kong service (increasing in frequency).

- The single remaining BA service to Australia (LHR-SIN-SYD) will be upgauged to a 747.

- The two remaining Qantas services to London will both be full time four-class A380s via Singapore.

- Qantas will install a new First Class lounge at both Singapore and Hong Kong airports.

Effectively with Qantas cutting two daily flights to London and BA one to Sydney, it is a halving of the current six daily to three daily.  Qantas will obviously try to avoid concerning frequent flyers by still selling tickets London-Bangkok-Sydney as a codeshare, and the same London-Hong Kong-Melbourne and Sydney.  Yet it has implications for different classes of travel:

First Class:  Both Qantas and BA have new First Class products, but these will only be available for sure on the direct routes.  The indirect routes may or may not have first class cabins on the Qantas side, as Qantas has said it is removing First Class on all aircraft except A380s.  This would appear to be a reduction in first class capacity on the Kangaroo route.

Business Class:  Both the Qantas A380 and BA have lie flat seating in Business, but will the Bangkok/Hong Kong services by Qantas have the fully lie flat Skybeds that are on the A380s? Qantas has announced a refurbishment of some 747s to install this, but it appear they are intended for routes to the Americas.  The lack of fully lie flat products on connecting services would be a negative.  It may also be considered a negative for passengers to have considerably different products between BA and Qantas.

Premium Economy:  Qantas is generally considered to have the superior product because of newer seating and having a distinctive catering offering, unlike BA which has economy class service in its World Traveller Plus cabin.  This means connecting services will be different for passengers.  Although it may be expected that BA's refurbished World Traveller Plus cabin might be made available on the route, it will still be inferior soft product to Qantas.

Economy:  Little real difference should be noticed here as the airlines have broadly similar products.

It is obvious that by cutting the second leg of three daily flights, the airlines can save a lot of capacity.  Qantas can make four aircraft available (as it takes three aircraft to maintain a daily service between Australia and London), BA will have two free (although one will be used to boost London-Hong Kong).  The cost savings in capital, and in staffing will be considerable, and in an age when they compete with state owned airlines with bottomless pits, low tax structures and far more flexible labour conditions, they need to make such savings.

Yet it will mean both are a shadow of their current selfs at both ends. BA once flew to multiple Australian airports, and will be down to one daily flight - like its chief rival Virgin Atlantic.  Qantas with its current four daily flights, sees Heathrow inundated with three A380s/747s at once.  It will be down to half of that, only slightly more than Air NZ (which is double daily four days a week), from a country with a sixth of the population.

However, if you only have 18% of the outbound international market from your home country, you do need help, especially since the once lucrative Pacific route (where it was only Qantas and United a couple of years ago) now has two new competitors.

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