Sunrise for Qantas

Blue Skies Ahead for Airlines in Australia and New Zealand

Pushing Back: Inside the Issue

September 1 marks the beginning of spring in Australia and New Zealand, two airline markets, appropriately enough, now springing back to life. Demand for Qantas and Air New Zealand is in many respects just as strong if not stronger than it was pre-crisis, aside from some markets like China and Japan. Capacity, however, hasn’t returned to the same extent, pushing up yields and — less welcomingly — causing operational distress. Both airlines lost money in the first half of this calendar year. But both are optimistic about the months and years ahead.

Qantas, in particular, is betting big on ultra-longhaul. Its latest route announcement — Auckland-New York — strikes directly at Air New Zealand. Once the appropriate planes arrive, the Flying Kangaroo will head nonstop to New York, and to London, straight from eastern Australia. But that’s several years out.

In Europe, SAS doesn’t have the luxury of planning several years out. It’s busy trying to negotiate its way out of bankruptcy, eager to wrest itself free from surplus widebody aircraft. Nordic rival Norwegian, like SAS, unveiled quarterly losses. TAP Air Portugal more encouragingly, produced a solid second quarter operating profit. It won’t be pleased, however, to hear that EasyJet is expanding from Lisbon. Ryanair, meanwhile, is expanding from the UK. Wizz Air is expanding from the deserts of Saudi Arabia. And Frontier, the Denver-based LCC, is expanding from a different desert, namely the one in Phoenix.

AirAsia X hopes to rise like a Phoenix after restructuring its debt. Alas, it has a long way to fly, having spilled more red ink last quarter — spilling red ink is something it’s been doing throughout its tenuous existence. Back in the U.S., American hopes to gain a competitive advantage in regional markets, aided by a new contract with Air Wisconsin. The regional carrier ExpressJet had an Aha! moment, succumbing to financial reality. Lufthansa hopes to avoid a pilot strike. And the U.S. and China are at each other’s throats again, this time over air service. It’s one more reason to question China’s role in the future of global aviation. And that’s perhaps the single biggest question the industry faces.

Airline Weekly Lounge Podcast

Flying through London is getting a little better with the end of capacity caps at Gatwick Airport. But constraints remain in place at Heathrow until the end of October, and British Airways has already reduced schedules through the winter. And an always-eager Ryanair is ready with more seats to grab market share, Edward Russell and Jay Shabat discuss the situation. Plus, they review American’s new regional strategy. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.