Private investors to take aim at Qantas, sell off frequent flyer scheme?

Private investors to take aim at Qantas, sell off frequent flyer scheme?

A group of investors is sizing up Qantas to take up a major stake, and a seat at the boardroom table, which would dramatically shake up the Australian flag-carrier.

The Australian Financial Review reports that the consortium "would push for the sale of ??Qantas Frequent Flyer and a ­partial float of Jetstar to return capital to shareholders", along with "a more aggressive expansion of the mainline carrier into Asia."

Read: Selling off the Qantas Frequent Flyer scheme

This is said to include more direct flights between Australia and Asian capital cities as well as "securing a tie-up with an Asian carrier such as Cathay Pacific to lock down the regional market."

Under the consortium's plans, the Boeing 787 would wing its way back to Qantas

Also on the to-do list would be to steer first deliveries of the Boeing 787 Dreamliner to Qantas International rather than Jetstar, in the belief that the 787's fuel efficiencies, reduced maintenance and travel-friendly attributes would help speed the Red Roo's loss-making international arm back into profitability.

The Qantas Group previously had 50 of the 787s on order, to be split between its primary Qantas fleet and Jetstar, but in August this year cancelled all but 15 of those orders to rein in costs, with those 15 Dreamliners slated for its low-cost sibling Jetstar.

For the full story, click through to The Australian Financial Review.

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David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
 

16 comments

  • Al Glidden

    AlG

    19 Nov, 2012 12:59 pm

    This actually sounds sensible! I'm not a fan of having the frequent flyer scheme "sold off", although I am curious as to exactly what that means. But more flights into more Asian capitals, closer cooperation with CX and Boeing 787s for Qantas instead of Jetstar? That all makes a lot of sense!

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  • KG

    KG

    19 Nov, 2012 01:41 pm

    This sounds interesting. Not sure what the consequences are of spinning off the FF scheme in terms of perks, availabilities etc. To make it even more profitable the new owners could squeeze the perks of a scheme which is quite frankly not too generous esp on the redemption side.

    However, the fact they want to boost the international destination, esp in Asia is a good step as well as recommending to put the 787's towards QF rather than JQ. Hopefully this is something that will be seriously looked at, I think that QF International would only be able to make money if they can operate at lower cost and add destinations in growth markets across Asia.

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  • kash

    kash

    19 Nov, 2012 02:20 pm

    It high time Qantas chose to partner with cathay rather than oppose them, it seems Cathay is not waiting and if Qantas does not make its decision fast may cose up more to Air NZ and perhaps Virgin.

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  • kash

    kash

    19 Nov, 2012 02:22 pm

    the group of investors are the last hope for QANTAS

     

    not to sure about the FF thing though , but overall is much better than what is currently happening ot the brand.

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  • kash

    kash

    19 Nov, 2012 02:31 pm

    The Jetstarification of QANTAS has to end if it wants to succeed

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  • Don Quixote

    Don Quixote

    19 Nov, 2012 03:03 pm

    Admittedly I don't like the idea of the 787s going to Jetstar. But it makes sense. 

     

    The qantas group needs a strong presence I Asia and between Jetstar HKG/Asia/Pacific and Jetstar Japan it is getting a strong foothold in the low end of the market. Which is where the most growth will be as the Asian middle class gets richer and decides to travel more often.  Jetstars long term growth should be looking at establishing itself within Asia in te sort of model Virgin Australia had here. Not quite full service but not...tiger... That way qantas can push through customers onto JQ without them feeling like they've been severely downgraded. That said the leisure travel market tends to mind about that sort of thing less than us snobs. 

    The proposed premium Asian airline is aimed at us snobs. And should do a nice fit at the other end of the market. Remember QF is supposed to have options to receive the 787-9 in 2016 which would suit QF mainline much better in pushing into Asia in any meaningful manner. By this time the premium qantasia may be actually on the cards. (It's a long shot but it would suit emirates to also have a strong premium feeder in Asia to complement their through services from BKK to HKG

    so try might be one of the potential investors Alan is looking for...)

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  • kash

    kash

    19 Nov, 2012 03:11 pm

    Jetstar cna expand but why can't they use a330's

    and leave the 787 to replace aging 767 for QANTAS, does that not make more sense??

    As for Asia, there is going to by heaps of growth in the premium market, heaps as more people move upward to the upper middle class, its probably the only place in the world where airlines should be investing in premium cabins.

    Jetstar Hong Kong is going to be interesting, history has shown that Cathay responds harshly to low cost competitiors, even airlines like Air Asia have not been able to take away market share on routes like SIN-HKG, if anything they have only affected Singapore airlines and other full service carriers.

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  • whipper

    whipper

    19 Nov, 2012 03:27 pm

    This appears to be the same crusty old deal that Geoff Dixon and Peter Gregg failed with last time with private equity [Allco Finance Group].  It is worth noting that company ended up going belly up with debts of more than $1 billion. No surprise they are keeping the dream (and delusion) alive.   I know everyone would like Qantas to fly everywhere with empty planes just to fill some nationalistic void that has existed since it was priviatised - but it is no longer viable.  Also on Cathay - one APAC airline teaming up with another APAC airline has limited utility in a global market. Kudos to Joyce for the EK partnership, it is going to be a winner. 

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  • kash

    kash

    19 Nov, 2012 03:53 pm

    The EK partnership will be successful, for Emirates

    Honestly, the way the flightw are timed and the fact that QANTAS is out of Europe and Dubai -Aus capacit yof Emirates eclipses QANTAS, the deal just sounds like QANTAS outsourcing their flying, only this time instead of Jetatar its Emirates. 

    The whole idea of establishing a realtionship with an APAC airlinesis because QANTAS is not one.

    Singapore airlines and Virgin Australia clearly do not believe their alliance is of limited utility

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  • spinoza

    spinoza

    19 Nov, 2012 04:00 pm

    Based on comments above and media reports, everyone hates Joyce but don't actually have any clue if anyone would be better. So everyone's comment is along the lines of, well that sounds great... (cos its not Joyce), but then I don't know about... (details of alternative). 

    Would be interested to hear from someone with more indepth knowledge of the industry - what has happened to other airlines which have spun off their FF arms? This is not a new idea from Qantas, what does it mean for frequent fliers? Will the value of points be diluted? Why are people so fearful of a spin off? My biggest fear is points losing its value (whether through inflation, deterioration of the production, or total collapse of the airline)

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  • KG

    KG

    19 Nov, 2012 04:16 pm

    Aeroplan is an example of where the FFP has been spun off from the airine completely (owned by third party). In  general one would do this to raise cash (generally speaking you value the FFP higher than the airline / the FFP grows faster and generates more cash than the airline). The latter seems to be the case with Qantas. Advantages are the capital one raises with spin of, growth accelaration of the spin off, in general it achieves economies ofscale (the psin off will try to maximise mileage selling partnering up with many more merchants). As disadvantages you can think of award inventory (mileage redemptions rely on linking up with booing systems and revenue management systems which may be delinked when FFP is stand alone), future of the partnership between FFP and airline might deteriorate (imagine if QF will clsoe its International arm or exit OW, redemptions and value for customers of FFP might decrease) and potentially the FFP could survive whilst the airine goes bust. Theoretically the FFP should be able to survive, but it is all very complex. Having said that, Aeroplan (Air Canada) seems to survive just fine, so it is possible.

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  • David Flynn

    David

    19 Nov, 2012 04:28 pm

    We're actually working up an article on this very topic for tomorrow AM, Spinoza :)  Air Canada sold off its Aeroplan freq flyer scheme some years back, not sure of others...

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  • KG

    KG

    19 Nov, 2012 04:30 pm

    Ask me anytime to contribute David :) Looking forward t the read tomorrow!

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  • whipper

    whipper

    19 Nov, 2012 04:55 pm

    Correction Kash, Qantas is an APAC airline.  Not sure what you call an airline that flies the PACIFIC and throughout ASIA - part of the EU perhaps? If Cathay is such a winning partner airline - why isn't any one else doing it?  Also airlines sell of the FF scheme for cash and nothing more.  Short term it works, but in the longer term you leave an airline without an important revenue stream in a volatile aviation market.

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  • kash

    kash

    19 Nov, 2012 05:01 pm

    flies the pacific sure,

    Throughout Asia???????? 

    I f your counting Jetstar sure, but QANTAS alone now way

    so many european airlines fly to more asian destinaitons than Qantas , that does not make them an Asian airline though

    Air New Zealand is one airline going with cathay

    Qantas is only Pacific not Asian 

    It does not have to be cathay, any true APAC airline is good enough,

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  • mb68

    mb68

    20 Nov, 2012 12:18 pm

    Poor Alan Joyce, I really feel (if you take a good look at who is on the board of QF) that he really has his hands tied. There is much more than meets the eye here , and I would suggest that it is, the "Board of Directors" that  (a) employ Alan , and (b) tell him what to do. Practically the same Board that rallied (pressured) Jon Anderson (Dep Priminster) to stop any sought of foreign sale happening to Ansett . It,s all very interesting considering that it will probably take a foreign airline (s) to save QF.

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17 Jun, 2019 09:20 pm

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