The latest traffic figures for Qantas continue to pile the pressure on to its full service domestic product, which is losing altitude steeply as Virgin Blue, its own Jetstar and Tiger all continue to grow strongly at its expense.
A larger screen friendly analysis and extracts from the reports appears on Plane Talking, and the bottom line is that Qantas is very fortunate to have Jetstar, yet so is Virgin Blue, which is where some of its customers are going to avoid it.
In April, Qantas domestic carried 2.4% fewer passengers (with RPKs down 2%) while Virgin Blue lifted 3.1% more (RPKs up 5.1%).
That is a big spread between a shrinking Qantas Cityflyer franchise and a growing Virgin Blue one.
But Virgin blue also competes domestically with Qantaslink (down 2% by passengers and down 4.8% by RPKs) and Jetstar up 10.6% in passengers and 8.6% in RPKs.
In the 10 months to end of April, which should wipe out the Easter holidays effect because they fell in March in 2008, we find Virgin Blue growing domestically by 5.6% in numbers and a similar 5.8% margin in RPKs while Qantas full service went backwards by 4.4% in both measures, Qantaslink was off by 2.3% but up by 1.3% in RPKs and Jetstar was up 8.7% in passengers and 7.2% in RPKs.
What conclusions are allowed by these figures?
The first is that Virgin Blue is gaining market share at the expense of the full service Qantas brands.
The second is that Jetstar is out performing the Qantas full service offering too, and by a big margin which further erodes their credibility in the economic downturn.
However the figures do not allow any firm conclusion to be made as to how much the introduction of V Australia flights to the US is harming the overall performance of Virgin Blue, except that all the signs and guidance have pointed to real harm being done.
Unlike Virgin Blue, Qantas also includes guidance on yields, and says that in the those 10 months (excluding foreign exchange considerations) its three domestic brands, Qantas mainline, Qantaslink regional and Jetstar made 4.3% less on sales.
This is not a good number, unless Qantas is compared to airlines abroad, in which case it is stellar, but there is no comparable Virgin Blue guidance as to how its domestic profitability is tracking in the same period.
Compared to its major international rivals including Singapore Airlines and Cathay Pacific, there is a good news but still bad news side to its overseas figures.
In April and also in the ten months to the end of April the number of passengers flying those routes with Qantas fell by the same 10.1%, which means it has comparatively done very well in a world where most comparable airlines are down by between 18-30% in their latest monthly figures.
Jetstar International like Virgin Blue’s V Australia is also growing numbers sharply from a small base, but any growth in today’s conditions is remarkable.
Virgin Blue’s results for this nearly finished financial year are hostage to what happens to V Australia. Loads are up apparently, helped by a decision to cut back on frequencies to Los Angeles, but no-one sees any sign of margins that will claw back the start up costs, nor would have expected to even in good times.
The hidden factor as well in the Virgin Blue numbers will be its regional and NZ operations under the Pacific Blue banner, which includes a stunningly profitable single jet operation called Polynesian Blue, and shows signs of attacking the Air New Zealand internal market with smaller E-jets later this year, which would free up some 737s to come back to Australia in an ultra-low cost format to target Jetstar and Tiger on leisure routes.
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