Qantas caught hopping as China bargains land

Travellers flying between Australia and Europe now have a markedly cheaper option - through China.

China Southern Airlines is offering standalone flights from Sydney-London at prices up to 34 per cent lower than Qantas, just as the Australian national carrier seeks to shore up its Australia-Asia routes with discounted tickets.

From April 1, the Guangzhou, China-based airline will also operate more flights to Europe than Qantas in a bid to lure traffic from Singapore and Hong Kong, and says it is willing to sacrifice profitability to carve out a place in the market.

China Southern's cheapest economy-class fare between Sydney and London for a two-week trip starting May 4 was $1442 on travel booking website webjet.com.au yesterday.
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The lowest price for a non-Chinese airline, on Malaysian Airlines, was 19 per cent more expensive at $1721. Emirates tickets started at $1896 while Singapore Air's was at $1940.

The cheapest Qantas ticket was 51 per cent more than China Southern, at $2180.

And there are other benefits for travellers. Air China and China Eastern put an inch more leg room than Qantas in economy class while China Southern put massage chairs in first-class cabins.

The sheer volume of Chinese travellers means that "China can be the most powerful transit country in the region, probably the world", CAPA Centre for Aviation executive chairman Peter Harbison said.

“They will be able to price very, very competitively.”

More flights

China's three biggest carriers - which include Air China and China Eastern Airlines - have tripled flights and upgraded services from Oceania to Europe over the past five years.

The Kangaroo Route is meant to serve as a learning platform for the airlines, which plan to expand further into North America and Europe as annual spending by Chinese tourists exceeds $US100 billion ($97 billion).

China Southern flies five Airbus A380s and has 10 Boeing 787 Dreamliners on order. It has recruited Australians as cabin crew and is setting up a school for elite stewards.

“If we want a good future, we should develop worldwide,” China Southern's managing director for Australia and New Zealand, Henry He, said. “Napoleon said: if the soldier doesn't want to be a general, he won't be a good soldier.”

Cheaper Qantas flights to Asia

Meanwhile, Qantas is attempting to lure more passengers on to its flights to Asian cities such as Singapore and Hong Kong with up to 40 per cent cheaper ticket prices.

Its recent alliance with the Middle Eastern airline Emirates, which will be officially launched at Easter, will see 40 per cent more seats on the Australia-Singapore route. The tie-in with Emirates is part of a bid by Qantas to reduce unprofitable flights to Europe.

Simon Hickey, chief executive officer of Qantas' international unit, said in an interview on Monday that the carrier still had a lot of capacity to fill on the aircraft flying to and from Asia.

One-way fares to Singapore, Hong Kong and Bangkok were cut to $350 each way last week, Qantas spokeswoman Sophia Connelly said. The fare discounts are effective next month.

“We've got a lot of capacity increase going through ports like Singapore and Hong Kong,” Mr Hickey said.

Discount fares are being used to fill those seats, he said. “We've got to sell into that capacity. You've got to think about things a little differently.”

Mr Hickey added that the Chinese carriers “are on our radar”.

Airlines closely watch capacity on their routes to make sure seating supply do not exceed customer demand. When it does, carriers have to cut their fares to entice passengers on-board, narrowing profit margins.

Asian hubs

Macquarie Group analyst Russell Shaw said that did not appear to be a risk for Qantas at this stage. Qantas's ability to provide connecting flights beyond the main Asian hubs will be decisive, he said.

“They're trying to stimulate the market,” he said. “A lot will depend on the connections they're able to establish.”

The shift is squeezing carriers on the route, which started in 1935 with a 12-day trip between London and Brisbane.

Revenue passenger kilometres - a measure of traffic - declined for ten months at Qantas and five at Hong Kong international airline Cathay Pacific on reduced capacity between Europe and Oceania, according to data compiled by Bloomberg.

Growth of Chinese travel

But Paul Sheridan, chief Asia consultant at Ascend Worldwide, said Chinese carriers' services fell short. First-class passengers get on-board showers on Emirates and sheepskin mattress covers on Qantas' beds. Singapore Airlines' cabin crew train for 15 weeks.

“At the beginning of the operation we might lose some money,” said Mr He. “The most important thing for us is experience.”

China Southern has 42 weekly flights out of Australia. Qantas will reduce its service to 28 a week as part of the Emirates alliance.

China Eastern said there was “huge potential” for routes to Australia and planned to “deploy better aircraft” and add flights to Melbourne and Sydney.

Read more: http://www.smh.com.au/travel/travel-news/qantas-caught-hopping-as-china-bargains-land-20130313-2fzaq.html#ixzz2NNEHU434

I've flown with China Eastern, China Western, China Southern ...

The Heartless Felon wrote on Mar 13^th, 2013 at 10:26am:


Did you feel like flying again 30 minutes later?

Would you get on a China airlines flight? I wouldn't!