22 AUSTRALIAN AVIATION DECEMBER 2017GEOFFREYTHOMAS
ContrailsBeyond the hype
Will Qantas realise the 787’s full potential?
Q
uestion is, does Qantas really
understand the Boeing 787 and
its game changing potential?
Perhaps it’s a silly question
to ask after all the extraordinary
media coverage surrounding
the aircraft’s arrival in Sydney late in
October.
But there are some signs that the
airline does not.
The most obvious is the very slow
pace of delivery of four by March and
four more in the second half of 2018.
Just a paltry eight on order with
Qantas management saying it has to
prove [to the markets] the business case
of point to point flying.
The next batch of four from the 45
options and price rights will not be
delivered till late 2019 according to
Qantas executives.
But the Australian markets have
already given it an enormous tick of
approval.
When Qantas finally received
approval in December from Perth
Airport to base its Perth-London non-
stop from its domestic terminal for a
hub operation, the airline’s share price
was just $3.37.
On the news there was an uptick
and the shares rose to $4.10 in April
when Bank of America Merrill Lynch
upgraded its recommendation from
neutral to buy solely on the economics
(fuel savings) of the 787.
This is the first time in recent
history that a stock market analyst has
changed a rating for an airline solely ononly has 28 seats.
This was based on the take-up on
A380 but an ultra long-range flight
begs more PY seats as the value case
becomes more compelling.
Air New Zealand is now deploying
its 787s on Houston and it’s fitting 33
PY seats, although it has fewer business
beds than on the QF 787.
But the pioneers of premium
economy, British Airways and
Virgin Atlantic, have the mix right
in their 787-9s with 39 and 35 seats
respectively.
PY is the future of air travel for
legacy carriers because of the huge
number of baby boomers who want to
continue to travel in retirement – but
not in economy.
While the population grows in
height and width, airlines are being
forced to reduce the personal space
for passengers to meet the price points
set by an ever-increasing number of
low-cost airlines.
And the move by airlines like Scoot
and Norwegian onto long-haul routes
adds further pressure on traditional
airlines’ offerings.
Qantas chief executive Alan Joyce
and his management team have done
a superb job turning Qantas around,
and the 787 has arrived at the right
time with the airline in great shape
financially and importantly, culturally.
Staff are onboard, the markets are
onboard and the 787’s credentials are
top of class.
There never has been a more ideally
suited aircraft – except the 777 – for
Qantas.
If Qantas can’t convince the markets
of its true potential then there is
something very wrong.
And if Boeing was to build Qantas’s
perfect aircraft from scratch, they
would have built the 787 or the 777-8.
So, is Qantas going to switch 787
options and price rights for the 777-8
and -9?
Either way these types of aircraft are
its future and the sooner the better.the basis of a new aircraft.
Qantas shares shot up and peaked at
$6.45 before settling back to $5.90 on
a more modest outlook forecast from
the airline.
The Merrill Lynch report said that
“the Dreamliner could make a material
impact to International, which we see as
a structurally difficult market for QAN.”
“We think the aircraft range should
help QAN compete with hub airlines,
and turn around loss making routes like
Melb/London and LA/New York.”
Qantas is a conservative company,
which is important in aviation, but is it
being too conservative?
The 787 is not new and Qantas has
the advantage of all the other operators’
experience and route developments.
Ticket sales on the Melbourne-
Perth-London route are said to be “very
strong” and there are so many routes
begging for the Qantas 787 non-stop
capability.
And most are not the ultra long-haul
like Perth to London.
Adelaide-Los Angeles, Sydney-
Seattle, Cairns-Los Angeles,
Melbourne-San Francisco, Sydney to
Chicago and the list goes on and on
with Perth to Paris, Berlin and Rome
all no brainers.
The 787 – and A350 – are a new
breed of aircraft. Total game changers
and the market is convinced of the
business case.
Another sign that Qantas doesn’t
quite get the 787’s potential is the size
of the premium economy cabin, which@GeoffreyT_Ai
S
irThere are so
many routes
begging for
the Qantas
787 non-stop
capability.
Qantas’s first Boeing 787-9
visits Melbourne. ROB FINLAYSON