The Aviation IndustryAviationisrecognisedasoneoftheworld’smostcomplexandchallengingindustries,inwhichitcanbehardtomakeasustainedprofit.Anumberoffactorscontributetothis:
– High Costs —Highfixedcosts(e.g.aircraftandairportinfrastructure)andunstablevariablecosts(e.g.fuel)
– Labour Intensive —labourcostsaccountforaveryhighproportionofoverallcosts(around25percent)
– Low Margins —airfareshavecontinuedtofallinrealtermssincetheSecondWorldWar,andthemarginonthesaleofaticketislowincomparisonwithotherindustries
– Perishable Product —whenaflightleaveswithemptyseatsthereisnofurtheropportunitytosellthoseseats
– Low Barriers to Entry —itisrelativelyeasyforanewairlinetosetupinAustralia
– Over-Capacity —competitionfromlower-costandgovernment-supportedairlines
Inparticular,thereisaverystronglinkbetweenpremiumyields(travelonFirst,Business,PremiumEconomyorfull-fareEconomytickets)andASX(AustralianSecuritiesExchange)top200companyshareprices.ThisisbecausethisindextrackstheexpectedfutureearningsofcorporateAustralia—ifhigh,thencorporatebudgets,partofwhichincludesspendonairtravel,willbemoregenerous.
The Impact of Exchange RatesForeignexchangerateshaveanimpactonairlinerevenue.
A stronger Australian dollar leads to:– More outbound travel —Australianschoose
toholidayoverseasratherthanathomebecausetheirdollarswillbuymoreabroad
– Less inbound travel —Australiabecomesrelativelyexpensiveforoverseasvisitors
– Less foreign earnings —thevalueofmoneyearntfromticketssalesoverseasisworthlessonceconvertedintoAustraliancurrency
Funding our BusinessIntheinternationalarena,QantascompeteswithsomecarriersthatpaynocorporatetaxandwithmanyGovernmentownedcarriers,someofwhichbenefitfroma‘SovereignRiskRating’allowingthemtocarrydebtlevelsfarhigherthanprivately-ownedairlines.Manycarriersarealsosupportedindirectlybygovernments,forexample,airlinesintheUScanrelyonChapter11bankruptcyprotection.
TheQantasSaleAct,designedbytheGovernmenttoprotectQantas’positionasanAustraliancompany,limitstotalforeignownershipofQantasto49percent.Aside-effectofthislimitistoconstrainQantas’accesstoglobalcapital,makingitharderandmorecostlytoraisefundsforexpansion.
AllofthismeansthattogrowandprosperQantashastoworkmuchharderandbeleanerandmoreefficient.ItisacredittoQantas’financialstewardshipthatitistheonlyairlineintheworldtohavecontinuallyheldaninvestment-gradecreditratingwhichenablesthecompanytoborrowmoneyatapreferentialrate.
Aviation Knowledge
– Regulatory Constraints —accesstoroutesandtimeslotsisconstrainedbygovernmentsandairportauthorities
– External Shocks —economicdownturns,securitythreats,healthpandemics,extremeweatherandnaturaldisasterscanallaffectindustryreturns
Airline EconomicsThe Link between the Global Economy and Airline TravelThestrengthoftheeconomygreatlyaffectsdemandforairlinetravel.Insimpleterms,inastrongeconomywithlowunemployment,morepeoplewillhavemoredisposableincomeandarethereforeabletoaffordtospendmoreontravel.
2006Jetstarlauncheslong
haulinternationalservicestoAsiaandHawaii,andfurther
extendsthebrandin2008withJetstarPacific(Vietnam)
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FAST FACT
AFTER FUEL, foreignexchangemovementsare
Qantas’secondlargestfinancialrisk(Qantasisexposedto80different
foreigncurrencies)
AlliancesAirlinesenterintocooperativearrangementswitheachotherinordertoexpandtheirnetworkreach,improvethecustomerexperienceanddeliveroperationalefficiencies.Customersbenefitfromabroaderrangeofflightdestinationsandfrequencies,plusenhancedservicessuchasreciprocalfrequentflyerprograms.Airlinesbenefitfromcostsavingsthroughmoreefficientuseofairportfacilitiesandotherresources,andtheopportunityforrevenuegrowth.
Thethreelargestpassengerairlinealliancesareoneworld,StarAllianceandSkyTeam.Theoneworldalliancewaslaunchedin1999byfoundingmembersQantas,BritishAirways,CathayPacificandAmericanAirlines.Inadditiontooneworldpartners,Qantashascodesharerelationshipswithmorethan25otherleadingairlines,andinterline/baggagethrough-checkagreementsinplacewithover200airlinesglobally.
AJointServiceAgreement(JSA)withBritishAirwayshasbeeninoperationsince1995,andgivesQantasandBAregulatoryapprovaltocoordinatenetworks,schedulesandpricingontheir‘KangarooRoute’servicesbetweenAustralia,AsiaandEurope.Thepartnershipincludescodesharingonbothcarriers’flights,reciprocalfrequentflyercustomerbenefits,sharedloungesandjointairportoperations/salesoffices.TheJSAscopealsoincludesbothcarriers’freightoperations.
Aviation Industry and Governing BodiesICAO —InternationalCivilAviationOrganisationIATA —InternationalAirTransportAssociationIASC —InternationalAirServicesCommissionASA —AirservicesAustraliaCASA —CivilAviationSafetyAuthority(Australia)ATSB —AustralianTransportSafetyBureauOTS —OfficeofTransportSecurity(Australia)DIT —DepartmentofInfrastructureandTransport(Australia)
Air Services Agreements AirServicesAgreements(ASAs)arenegotiatedbetweengovernments,typicallybilaterally,andsetouttheentitlementsofeachcountry’srespectiveairlines,regardingwhichcitiesmaybeserved,frequency,routing,aircrafttypeandlimitationsonpassengerandcargotrafficthatmaybecarriedbetweenparticularpoints.
Inrecentyears,manyofAustralia’sASAshavebeenprogressivelyliberalised,asmanycountriesmovetowardsmore‘openskies’.However,Australia’sASAswithsomecountries,includingFrance,remainveryrestrictivewhichlimitstheQantasGroup’sabilitytoexpandintootherwiseattractivemarkets.
Onceairservicesrightsaregranted,Qantas’GovernmentandInternationalRelationsdepartmentgenerallyappliestotheInternationalAirServicesCommission(IASC)foranallocationofcapacitytoenablepassengerand/orfreightservicestobeoperatedbyQantas,JetstarorQantasFreight.
The three largest passenger airline alliances are oneworld, Star Alliance and SkyTeam
2008ThefirstQantas
AirbusA380commercialflightfromMelbourne
toLosAngeleson20October
AVIATION KNOWLEDGE40 41
FAST FACT
THE AIRLINE INDUSTRY is a low-margin business — Australian banks
produce similar revenues to Qantas, but enjoy profit margins 10 times greater than Qantas
‘Freedoms of the Air’EverwonderedwhyQantasdoesnotpickupdomesticpassengersonitsLosAngeles–NewYorksector?Tolandanaircraftinaforeigncountry,oreventoflywithinitsairspace,isaprivilegegrantedbythegovernmentofthatcountry.Historically,internationalagreementsrecognisedeightlevelsofprivilege,knownas‘FreedomsoftheAir’,whicharestillreferredtotodayintheairlineindustry:
First FreedomTherightofanairlinetooverflyanothercountrywithoutlanding,forexample:
Australia Singapore
Indonesia(Overfly)
Second FreedomTherighttomakealandinginanothercountryfortechnicalreasonsonly,e.g.torefuel—withoutpickinguporsettingdownpassengersorfreight.
(Airlines do not usually exercise this right due to cost reasons)
Third Freedom Therighttocarrypassengers,mailandfreightcargofromtheairline’shomecountrytoanothercountry,forexample:
Australia Singapore(Pick-up) (Set-down)
Fourth FreedomTherighttocarrypassengers,mailandfreightcargofromanothercountrytotheairline’shomecountry,forexample:
Singapore Australia(Pick-up) (Set-down)
Fifth FreedomTherightofanairlinetocarrypassengers,mailandfreightcargofromoneforeigncountrytoanotherforeigncountrywhileenroutetoorfromtheairline’shomecountry,forexample:
UnitedAustralia Kingdom(Pick-up) (Set-down)
Singapore(Pick-upandSet-down)
Sixth FreedomTherightofanairlinetopick-uppassengers,mailandfreightcargoinaforeigncountryandtransportthemtoanotherforeigncountryhavingstoppedoffenrouteattheairline’shomecountry.ThisisacombinationofFourthandThirdFreedoms.
Seventh FreedomTherightofanairlinetocarrypassengers,mailandfreightcargobetweentwoforeigncountriesonarouteoutsideofitshomecountry,forexample:
Singapore Bahrain
(Qantas does not currently exercise this right)
Eighth Freedom (Cabotage) Therightofanairlinetocarrypassengers,mailandfreightcargobetweencitieswithinaforeigncountry,forexample:
NewYorkAustralia (Set-down)
LosAngeles(Pick-up)
(Qantas does not currently have this right)
2009JetstarcommencesdomesticNewZealandservices
AVIATION KNOWLEDGE42 43
THE COMPOSITION OF MARKET SHARE has changed over time, with mid-point hub carriers, such as Singapore Airlines and Emirates, expanding share at the expense of end-of-line carriers such as Qantas
FAST FACT
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Plane Spotting Time ZonesTheearth’ssurfaceisdividedinto24timezones.Timedifferencesbetweenthezonesaremeasuredeastorwestofthe0degreemeridian(orlineoflongitude)whichpassesthroughGreenwich,England.Thetimeonthismeridianisreferredto
asGMT(GreenwichMeanTime)orUTC(UniversalCoordinatedTime)orjust‘Zulu’,andistheinternationallyagreedstandardtime.Manycountriessettheirclocksaheadonehourduringsummer(DaylightSavings).
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ROME
DUBAI
FRANKFURT
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MANILA
JOHANNESBURG
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LONDON
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DALLAS FORTH WORTH
LOS ANGELESSAN FRANCISCO
NEW YORKWASHINGTON
BUENOS AIRES
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ADELAIDE
HOBARTMELBOURNE
AUCKLAND
WELLINGTONCHRISTCHURCH
HO CHI MINH CITY
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BEIJING
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PARIS
MUMBAI
JAKARTADENPASAR
ROME
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FRANKFURT
TOKYOOSAKA
MANILA
JOHANNESBURG
TAIPEI
BANGKOK
LONDON
CHICAGO
DALLAS FORTH WORTH
LOS ANGELESSAN FRANCISCO
NEW YORKWASHINGTON
BUENOS AIRES
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Airport Codes
AustraliaAdelaide ADLAliceSprings ASPAvalon-Melbourne AVVAyersRock-Uluru AYQBrisbane BNEBroome BMECairns CNSCanberra CBRDarwin DRWGoldCoast-Coolangatta OOLGoveNhulunbuy GOVHobart HBALaunceston LSTMelbourne–Tullamarine MELPerth PERSydney SYDTownsville TSV
Asia-PacificAuckland AKLBangkok BKKChristchurch CHCDenpasar DPSHoChiMinhCity SGNHongKong HKGJakarta CGKManila MNLMumbai BOMNadi,Fiji NANNoumea,NewCaledonia NOUOsaka–Kansai KIXPhuket HKTPortMoresby,PNG POMQueenstown ZQNShanghai-Pudong PVGSingapore SINTokyo–Narita NRTWellington WLG
Europe, Americas and AfricaBuenosAires,Argentina EZEDallas,FortWorth DFWFrankfurt FRAHonolulu HNLJohannesburg JNBLondonHeathrow LHRLosAngeles LAXNewYorkJFK JFK
Aeroflot SUAerolineasArgentinas ARAirCanada ACAirChina CAAirFrance AFAirIndia AIAirNewZealand NZAirPacific FJAlitalia AZAmericanAirlines AABritishAirways BACathayPacific CXChinaAirlines CIChinaEastern MUContinentalAirlines CODeltaAirlines DLDragonair KAEmirates EKEtihadAirways EYFinnair AYGarudaIndonesia GAHawaiianAirlines HAIberia IBJapanAirlines JLJetstar JQJetstarAsia 3KJetstarPacific BLKLM KL
KoreanAir KELAN(LatinAmerican) LALufthansa LHMalaysian MHMalev MAMexicana MXNorthwestAirlines NWPakistanInt.Airlines PKPhilippineAirlines PRQantasAirways QFRoyalJordanian RJS7Airlines(Russia) S7SingaporeAirlines SQSouthAfricanAirways SASouthwestAirlines WNThaiAirways TGTigerAirways(Aus) TTTigerAirways(Sing) TRUnitedAirlines UAUSAirways USVarig RGVietnamAirlines VNVAustralia VAVirginAtlantic VSVirginBlue DJ
Phonetic AlphabetA—AlphaB—BravoC—CharlieD—DeltaE—Echo
F—FoxtrotG—GolfH—HotelI—IndiaJ—JulietK—KiloL—LimaM—Mike
N—NovemberO—OscarP—Papa
Q—QuebecR—RomeoS—SierraT—Tango
U—UniformV—Victor
W—WhiskyX—X-ray
Y—YankeeZ—Zulu
Airline CodesAirlinedesignatorsaretwo-charactercodesassignedbyIATA.Thecodeformsthefirsttwolettersoftheflightnumber.Thecodesforsomeoftheworld’sairlinesarelistedbelow.
2010Qantas
celebratesits90th
birthday
PLANE SPOTTING 4746
IN 1945, it cost 2.5 times the average annual salary to fly Sydney-
London return, today it costs less than two weeks’ wages
FAST FACT
FAST FACT
Airline Acronyms and TermsAASK —AvailableSeatKilometres—availableseatsmultipliedbykilometresflownATB —AirTurnBack—whenanaircraftmakesanunscheduledreturntothedepartureportBBlocks —WhenanaircraftcomestoacompletestopandthechocksareplacedunderthewheelsBlack Box —FlightRecordersareactuallyorangeCCodeshare —AnarrangementwherebytheMarketingCarrieristheairlineonwhichthepassengeristicketedandtheOperatingCarrieristheairlinewhose‘metal’performstheserviceCRS —ComputerReservationsSystemDDirect Flight —Aflightwhichmayincludestopsenroute,butnochangeofaircraft(aNon-Stopflightisadirectflightwithnostops)DG—DangerousGoodsEETA/ETD —EstimatedTimeofArrival/Departure
FFOC —FreeofChargeGGDS —GlobalDistributionSystemGreat Circle Route —TheshortestdistancebetweentwopointsontheglobeGSA —GeneralSalesAgent—aperson/organisationrepresentinganairlineinanothercountry/regionwheretheairlinedoesnothaveitsownsalesofficeHHold —Sectionoftheaircraftforbaggage,mailandfreightHub —Anairport/citywhichisacentralpointforpassengertransfersIInterline —TravelonanotherairlineInventory —ThenumberofseatsavailableforsaleandseatssoldJJump Seat —TheseatsbehindtheflightcrewinthecockpitLLoad Factor —Theproportionofseats/freightspacesoldandusedversusthetotalseats/freightspaceavailable
SSeat Factor —Thepercentageofseatsoccupiedbypassengerse.g.80%:measuresanairline’soverallutilisation(RPKsdividedbyASKs)Seat Pitch —ThedistancefromthebackofoneseattothebackofanotherSlip —OvernightcrewlayoverSlot —Aconfirmeddate/timeatanarrival/departuregate(anairporthasalimitednumberandairlinesmustapplyforthem)TTariff —ThefaresandratesapplicabletothetransportationofpersonsandpropertyandtherulesgoverningthemThrough Check-in —ApassengerchecksinandreceivesaboardingpassforanonwardconnectingflightfromanotherairportUULD —UnitLoadDevice—pallets/containersusedforupliftingfreightandbaggageUM —UnaccompaniedMinor(childtravellingalone)WWet Lease —Whenaircraftisleasedoutwithcrew(adryleaseiswithoutcrew)Wide Bodied Aircraft —Aircraftwithmorethanoneaisle(e.g.AirbusA380)YYield —Theamountofrevenueearnedperpassengerperkilometre(netrevenuedividedbyRPKs)ZZero Fuel Weight —Theweightofanaircraftwithpassengersandcargo,butwithoutfuel
MMCT —MinimumConnectingTime—aMisconnectioniswhenanarriving/departingflightdoesnotmeettheminimumtimerequiredtotransfertoanotherflightNNarrow Bodied Aircraft —aircraftwithasingleaisle(e.g.Boeing737)Net Fare —Publishedfarelesssalediscount(andrebate)No Show —Apassengerwhoholdsareservation,butdoesnottravelontheflightOOCS —OnCompanyService:internalmailOffline Station —Acitytowhichanairlinedoesnotfly,butmaintainsitsownrepresentationPPayload —Passengers/Freight(Load—anyotheritemscarried)PAX —PassengersPNR —PassengerNameRecord:thedetailsheldinthereservationssystemQQantas Paper —TheticketstockissuedbyQantasforwhichQantasreceivespayment:travelmaybeonQantasoranothercarrierRRamp —TarmacareawheretheaircraftisparkedRegistration —UniqueidentificationcodeofanaircraftallocatedbynationalaviationauthorityRPK —RevenuePassengerKilometres:thenumberofpayingpassengerscarried,multipliedbythenumberofkilometresflown
2012ThefirstoftheQantasGroupBoeing787Dreamlinernextgenerationaircraftduetobedelivered
PLANE SPOTTING 4948
Ifcallingfromoverseas,usetheinternationaldialingcode+61.
Ambulance (Australia only) 000APC Reception Mascot (02)96919411(internal29411)Brisbane Administration (07)33079153(internal79153)Building A Reception Mascot (02)96914445(internal24445)Building C Reception Mascot (02)96912884(internal22884)Building E Reception Mascot (02)96910238(internal20238)Corporate Communication (for all Media Enquiries) (02)96914773(outofhours0418210005)Customer Care (02)96913399(internal23399)Employee Assistance Program (counselling) 1300360364(overseas+61282952292)Fire (02)96918888(internal28888)ID Services (02)96911199(internal21199)IT Helpdesk (Global Service Centre) (02)96916666(internal26666)Jetstar Telephone Sales 131538Joey Club Brisbane (07)31141270Joey Club Melbourne (03)93365050Joey Club Sydney (02)96932599Melbourne Administration (03)83364190(internal64190)PeopleConnect 1300303411(internal86111)Qantas Centre of Service Excellence (02)95784900(internal84900)Qantas Staff Credit Union 1300747747Qantas Superannuation 1300654384(overseas+61293743930)Qantas Switchboard (02)96913636(internaldial9)Security (02)96911818(internal21818)Staff Travel (02)83034444(internal34444)orqantas.com/stafftravelTelephone Sales 131313Uniforms (02)96911450(internal21450)Whistleblower Hotline 1800855212(overseas+61282661453)
Useful Telephone NumbersRegistered AddressQantasAirwaysLimitedBuildingA,203CowardStreetMascotNSW2020Australia
Contact NumbersPhone (02)96913636Fax (02)96913339Website qantas.comIntranet http://qfintranet.qantas.com.auABN 16009661901
Contact Details
OTHER USEFUL INFORMATION 5150
Publication DetailsProduction: PeoplePerformanceandCulture,QantasDesign: Surveillance.net.auImages: QantasMediaBinPrinting: TMAGroupPaper: Impact100%recycled(100%post-consumerwaste,ForestStewardshipCouncilcertified)
Information correct as of June 2011
QantasStationeryItemCode:91D00067
A Guide for Employees of the Qantas Group
The Little Book
A G
uide for E
mp
loyees of the Qa
ntas G
roup
thelittle book
