Pakistan

MAS will achieve its targeted 12% capacity reduction by February, to the delight of Gulf carriers

Gulf carriers and AirAsia will likely emerge as the main beneficiaries of the network restructuring at Malaysia Airlines (MAS). The Malaysian flag carrier has selected several routes to discontinue by early next month, resulting in a 12% reduction in system-wide capacity as it begins implementing its new business plan.

Qantas yields soar on Tiger's grounding

Domestic yields at the Qantas Group have soared in the first part of the financial year with the company recording a 9.4% yield increase year-on-year in Jul-2011, its second highest monthly growth in a decade. The period corresponds with the grounding of Tiger Airways Australia, which removed approximately 12,400 seats from the market daily and saw airfares significantly increase.

Yields – calculated across all of the Group's domestic operations – continued to show strong growth even after Tiger resumed services in Aug-2011, albeit with only 10% of its pre-grounding seats. Qantas domestic yields grew 5.8% year-on-year in Aug-2011, the 15th highest monthly growth in the 117 months Qantas has reported figures.

Bruce Buchanan, CEO of Qantas' Jetstar unit, has acknowledged the upward pressure. Domestic yields across all Australian mainline carriers can be expected to grow highly over the next few months as Qantas removes capacity due to union strikes, but will come at the expense of decreased revenue at Qantas. For Virgin Australia, yields will grow with revenue.

Jetstar, with Guangzhou, continues China expansion as Australia and SE Asia take back seat

Jetstar Asia is continuing what it sees as the decade of North Asian expansion with a service to Guangzhou, the third largest airport in China with 1.1 million weekly seats available. By comparison, London Heathrow has 1.7 million weekly seats available. Jetstar sees greater growth prospects in North Asia, which has a LCC penetration rate of under 5% compared to approximately 30% in Southeast Asia.

The Guangzhou route is the latest in a big push by Jetstar into China. It launched service to Ningbo last month and is launching service to Beijing next month. With Guangzhou, Jetstar Asia will have seven destinations in mainland China and 10 in greater China. Two more Chinese cities are expected to be added by the end of this year and many more in subsequent years. “There are many, many cities” in China that Jetstar is prepared to serve, CEO Bruce Buchannan previously remarked.

Australian air fares continue to climb post-Tiger grounding

The upward pressure on domestic Australian air fares, which started after low-cost operator Tiger Airways was grounded in Jul-2011, is showing no signs of relenting. Fare decreases are expected from the peak September period to the comparatively slower October, but the drop this year is lower than the corresponding drop in 2010, suggesting fares - which soared after Tiger's grounding - are not plateauing.

Fares in Oct-2011 dropped 11.3% from Sep-2011, a lower decrease than the previous year's drop of 15.6% from Sep-2010 to Oct-2010.

Although jet fuel has surged in the past year, and could explain an increase in ticket prices, Australian air fares were relatively flat until Tiger's grounding saw fares increase.

Boeing confirms 787 to visit Australia on 15/16-Nov-2011

Boeing has confirmed a 787 Dreamliner will visit Australia on 15-Nov-2011 and 16-Nov-2011, which coincides with Qantas' 91st anniversary on 16-Nov-2011. The Qantas Group has 15 B787-8s and 35 B787-9s on order. The first example, a B787-8, is officially planned for delivery to Jetstar in Dec-2012.

Qantas had been pressing for a 787 to visit Australia last year to coincide with the carrier's 90th anniversary. The events in Nov-2010 ended up being overshadowed by the 04-Nov-2010 uncontained engine failure of a Rolls-Royce Trent 900 powerplant on Qantas A380 VH-OQA operating as flight QF32.