Qantas cuts Beijing, where to next

17 replies

Amt

Member since 12 Nov 2018

Total posts 3

Originally Posted by markpk

Originally Posted by djtech

IASC approved one Haneda slot to Qantas. They said they would likely add another frequency to Sydney to Haneda. Overall, the cancellation was because the route was not making any money and the aircraft could be used elsewhere. Alan Joyce's leadership in Qantas has meant focusing on profitable markets and if they aren't profitable, they get the cut. Conversely, Shanghai seems to be doing well for Qantas because it attracts more business travellers. Sometimes flying to the largest cities and captial cities don't work.

It's kind of Business 101 isn't it..!

Business 102... it might be financially sensible to take a short term operating loss on a route or a product that you've invested a large fixed cost in, and tweak factors (pricing, staffing, sales, corporate tickets, advertising, ancillary sales, cargo loads, capturing a greater chinese market) to minimise loss or break even vs. investing a whole new set of fixed costs in launching a route to elsewhere that will take years to achieve possible profitability.


Or as others have said, allocate the primary resource (the plane) to a second service on another route where demand exists and the set up costs are minimal.


djtech

Qantas - Qantas Frequent Flyer

Member since 02 Sep 2018

Total posts 323

Originally Posted by Amt

Originally Posted by markpk

Originally Posted by djtech

IASC approved one Haneda slot to Qantas. They said they would likely add another frequency to Sydney to Haneda. Overall, the cancellation was because the route was not making any money and the aircraft could be used elsewhere. Alan Joyce's leadership in Qantas has meant focusing on profitable markets and if they aren't profitable, they get the cut. Conversely, Shanghai seems to be doing well for Qantas because it attracts more business travellers. Sometimes flying to the largest cities and captial cities don't work.

It's kind of Business 101 isn't it..!

Business 102... it might be financially sensible to take a short term operating loss on a route or a product that you've invested a large fixed cost in, and tweak factors (pricing, staffing, sales, corporate tickets, advertising, ancillary sales, cargo loads, capturing a greater chinese market) to minimise loss or break even vs. investing a whole new set of fixed costs in launching a route to elsewhere that will take years to achieve possible profitability.


Or as others have said, allocate the primary resource (the plane) to a second service on another route where demand exists and the set up costs are minimal.


By 'short-term' loss do you mean 2 full years of underwhelming performance with 3 separate attempts at making the service viable? The truth is the chinese market is dominated by chinese airlines. You cannot attract business pax as Beijing is not as big of a business destination as Shanghai and you can't even attract leisure passengers with chinese tour groups going for mainland airlines.

The fixed costs of launching a new route is decidedly low in this one. If they are using it for Haneda, they already have infrastructure in place. All they needed was slots. That's it. Minimal investment.

Karl

Member since 10 Apr 2016

Total posts 3

Originally Posted by OZjames70

Interesting that people think Sydney - Dehli and Sydney - Kuala Lumpur are low yield.

Last editedby OZjames70 at Nov 13, 2019, 05:39 PM.

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