Qantas chief executive Alan Joyce announced to shareholders Friday he has completed his plans to return the beleaguered airline to profitability for this financial year, despite just barely surpassing expectations in the last two months of the fiscal year.
During the next four quarters the Australia airline predicts a bigger return on equity in the year to June 30, 2019 at 9.25 percent, while full-year net profit in the year ending June 30, 2020 is forecast at A$525 million ($446 million).
Qantas is undergoing the largest turnaround in its 117-year history. Joyce has announced a new fleet upgrade aimed at putting the airline into a position to compete with Emirates and Singapore Airlines in the lucrative trans-Pacific market. But Joyce may face more challenges still to come.
Airlines are looking to create long-haul routes to Australia, China and Southeast Asia, said Joyce in a call to reporters, but there has been a “lack of enthusiasm.” Qantas’ response to this uncertainty: We may need to take a significant aircraft order that will take us to anywhere from 15 to 20 aircraft over 10 to 12 years, he said.
“That is the view that we will come to in the coming weeks and months as we are undertaking this strategy, which is to win more attractive fares and grow our volume by up to 1.5 billion dollars per annum by 2025,” he added.
Last year, Qantas announced it was planning to increase its Asian passenger market share to 20 percent of the airline’s total market share by 2025, from 12 percent as of December 31, 2015. This is an ambitious goal for the airline, because Singapore Airlines is already the largest long-haul operator to Australia.
Will the world need more ultra long-haul flights?
Operators that have been undertaking ultra long-haul flights into the Pacific, Southeast Asia and the Middle East are questioning the market’s demand for such flights.
On Friday Qantas announced it was planning to change its codeshare agreement with Singapore Airlines to a codeshare with Emirates. Under the Emirates code, Qantas plans to fly a Boeing 777-300 on its Sydney to Dubai route, the first new route on Qantas’s network since 2009.
Any benefits of the codeshare will not come into effect until the two airlines are formally in the partnership.
Since the 1970s, several airlines have tried to tap into the Gulf market. In 2015, Dubai-based Emirates became the first carrier to operate the longest commercial flight from a European destination to the Middle East, travelling 8,288 miles nonstop from Dubai to Auckland. It follows that up by flying the Middle East-Sydney-Los Angeles route nonstop from Dubai to Los Angeles.
Will there be a second 9,118-mile flight from the United States to Dubai?
Richard Aldridge, Head of Business Sales at Travel Agent Monday believes that the success of the Dubai route is “all about the flight time – 5 hours and 45 minutes.”
Aldridge told The WorldPost that ultra long-haul flights are popular with very long haul destinations, since they offer greater flexibility to avoid traffic jams during peak times.
“Longer routes allow people to choose their own times and avoid congestion,” he said. “The relative value between planes of different sizes on such routes, as well as the size of the flights, plays a big part in the cost of flying.”