Hong Kong International Airport

Jetstar Japan plans more aggressive launch than competitor Peach, reflecting Japanese LCC market

The launch schedule of Jetstar Japan, the LCC to commence services on 03-Jul-2012, is more aggressive than the Mar-2012 launch of competitor Peach, reflecting not only a market that will see tremendous and competitive growth in a very short period of time, but also the greater freedom enjoyed by the country's second wave of LCCs like Jetstar Japan.

While Jetstar in its first week will operate up to six daily return flights, one less than Peach launched with, the carrier will quickly ramp up operations, ending its first two months with 14 daily flights, more than the 11 daily flights Peach will have at the end of its first 3.5 months.

Jetstar Japan's launch will see four more of the world's 20 most populous routes have competition from LCCs, leaving only three routes served exclusively by full-service carriers in a reminder of greatly shifting tides. While LCC presence in China is the next objective, so too is domination: the world's most populous route is already controlled by LCCs. 

Qantas expands Asian strategy with Jetstar Hong Kong venture with China Eastern

Qantas has announced a bold initiative to set up a new low-cost carrier joint venture in Hong Kong with its long-time Chinese partner, China Eastern Airlines. Jetstar Hong Kong will operate short-haul routes within Asia – including to mainland China, Japan, South Korea and Southeast Asia – from 2013 with an initial fleet of three A320s, growing to 18 A320s by 2015.

It is a key stepping-stone for the Qantas Group as it grows its Jetstar brand across the region. Jetstar currently has entities in Singapore with Jetstar Asia/Valuair and in Vietnam with Jetstar Pacific. Jetstar Hong Kong will be the group's fourth Asian affiliate as Jetstar Japan, a new joint venture with Japan Airlines that was announced last year, will be launching services in Jul-2012.

The Jetstar group will bring considerable low-cost experience to the new venture, which will become the first short-haul low fares airline to be based in Hong Kong. The LCC model is, however, a new concept for China Eastern, which is following the pattern of several of its full service counterparts in Asia in working with an experienced partner in the establishment of a LCC offshoot.

Cathay Pacific profit falls, but from a record level as it manages very well in a tough environment

Cathay Pacific’s financials in 2011 were never going to compare well to a fantastic 2010. Headline revenue were up 9.9%, but net profits fell 60.8% and profit margin dived 10.1 ppts to 5.6% from the previous year’s record 15.7%. Cathay cited the the instability of the global economy, the weakness of the air cargo market, the reduction of yields in economy class, the impact of natural disasters in Japan and Thailand, unrest in the Middle East and continued high jet fuel prices for the result – and predicted tougher times in 2012.

But in the circumstances, and relative to its peers, Cathay is performing well and is an extremely well managed airline. Over the past three years, management has reduced unit costs per ATK by 9.2%. Singapore Airlines has seen a 0.5% increase over the same period.

Hong Kong Airlines swaps Qantas for Virgin Atlantic as Australian partner

Hong Kong Airlines in Jan-2012 signed a deal with Qantas allowing Hong Kong Airlines to sell its new all-premium A330 Hong Kong-London flights to Australia with Qantas covering the Hong Kong-Australia sector. Hong Kong Airlines is pitching its all-premium service, which offers business class and premium economy seats, as offering a high quality product at a lower fare level. Not too long after the Hong Kong Airlines-Qantas deal was completed more senior managers at the Australian carrier became fully aware of the contract and realised giving traffic to a competitor was not in its best interest.

Hong Kong Airlines has now done a deal with Virgin Atlantic, which operates between Hong Kong and Sydney. Australia-London tickets offer Hong Kong Airlines segments in either premium economy or business between Hong Kong and London with a Virgin Atlantic economy sector between Hong Kong and Sydney. While the Qantas deal included business class, Virgin Atlantic is not offering its business class or premium economy product, and Virgin Atlantic's flights are only available from Sydney whereas the Qantas agreement also brought Brisbane, Melbourne and Perth destinations online.

Air New Zealand hones in on long-haul restructure as first half profit falls

Air New Zealand is nearing a conclusion of a restructure of its loss-making long-haul network. At the peak of losses in the six months to 30-Jun-2011, the operation lost in excess of NZD1 million (USD833,700) a week. While the losses were exacerbated by high fuel prices and weakened demand from the Feb-2011 Christchurch earthquake and the Mar-2011 Japanese earthquake and tsunami, ANZ has seen the entrance of price-aggressive long-haul carriers that give reason to strategically enhance its position across all markets.

CEO Rob Fyfe has said no long-haul market has been significantly positive or negative, unlike with Qantas’ Aug-2011 restructure in which losses had been heavy in Europe and Asia. Adjustments to the long-haul network, some already implemented with others to be announced in coming weeks, comprise adjusting frequency and capacity to existing and new routes, working with partners, bolstering ancillary revenue and evaluating aircraft capacity as well as fare and product structure.