Dreamliners to trim Jetstar costs
But despite the reduction in fuel and maintenance costs offered by the new aircraft, Qantas will not decide whether to commit to buying up to 50 of the stretched version of the Dreamliners - known as the 787-9 - for at least another two years. Even then, any purchase will be considered on a case-by-case basis.
The airline has purchase rights and options for the 787-9 aircraft from 2016 but Qantas boss Alan Joyce emphasised he would not make a decision on whether to buy them until some time after the company's international operations reached their target of breaking even by the 2014-15 financial year.
"Once we have seen the business on the path to that [better financial health] ... we think we have a case then to invest more money," he said in Seattle.
Mr Joyce made clear the airline wanted to maintain flexibility in buying new aircraft because of volatile conditions.
Qantas also emphasised that the overhaul of its fleet, brought about by the arrival of the 787s for Jetstar, would help close the gap in costs between its premium domestic operations and Virgin from 10 to 15 per cent to just 5 per cent.
Ending a five-year wait, the first of 14 Dreamliners that Jetstar will receive over coming years will arrive in Melbourne on Wednesday. A further two planes will be added to Jetstar's fleet by the end of the year.
The first 787 will be flown from Melbourne to the Gold Coast and Cairns until November, when it will fly on Jetstar's routes to Asia.
The delivery of the 787s will allow Jetstar's 11 Airbus A330 aircraft to be transferred to Qantas' domestic fleet. In turn, this will finally allow Qantas to retire its gas-guzzling 767 planes by early 2015.
Mr Joyce said a significant reason for Qantas' higher cost base was the fact that its fleet had too many types of aircraft. The 767s were also "very expensive" aircraft to maintain and operate.
The arrival of the first batch of 787s will allow Qantas' domestic operations to reduce its fleet from five aircraft types to just two in the Boeing 737 and Airbus A330.
Mr Joyce also sought to reassure passengers about the safety of the Dreamliners in the wake of several high-profile incidents early this year. The worldwide fleet of 787s was grounded for more than two months.
"The 787, like any new aircraft, has had a number of teething problems with its introduction," he said. "But it's actually had a smoother introduction than the 777."
Macquarie Equities analysts say the new Dreamliners will result in reduced maintenance costs, fuel savings and "improved employee productivity from fewer pilots and cabin crew pools" for Qantas.
The reporter travelled to Seattle courtesy of Jetstar.
Frequently Asked Questions about this Article…
Qantas is introducing Boeing 787-8 Dreamliners to Jetstar — the first of 14 Dreamliners will arrive in Melbourne and begin flying domestic routes before moving on to Jetstar's Asia services. The move is part of a fleet overhaul aimed at cutting fuel and maintenance costs for the budget carrier.
The new 787s are expected to deliver fuel savings and lower maintenance costs, and they should improve employee productivity by reducing the number of separate pilot and cabin-crew pools. Analysts say these savings will help narrow Qantas’s cost disadvantage versus competitors.
Qantas has purchase rights and options for up to 50 Boeing 787-9s from 2016, but the company will not make a decision for at least another two years. CEO Alan Joyce said any purchase would be considered only after Qantas’s international operations are clearly on track to break even (the target was the 2014–15 financial year) and then evaluated on a case-by-case basis.
Jetstar will receive 14 Dreamliners over coming years, with the first arriving in Melbourne and two more due by the end of the year. The first 787 will operate domestic routes (Melbourne to the Gold Coast and Cairns) until November, after which it will be deployed on Jetstar’s routes to Asia.
Delivery of the 787s allows Jetstar’s 11 Airbus A330 aircraft to be transferred to Qantas’s domestic fleet, which in turn enables Qantas to retire its Boeing 767s by early 2015. Overall, Qantas expects to reduce its domestic fleet types from five to just two — the Boeing 737 and the Airbus A330 — simplifying operations and lowering costs.
Yes. Qantas says the fleet overhaul, driven by the arrival of the 787s for Jetstar, should reduce the cost gap between Qantas’s premium domestic operations and Virgin Australia from about 10–15% down to around 5%, helping Qantas be more competitive on price and efficiency.
Qantas chief Alan Joyce acknowledged the 787 had experienced teething problems earlier in its introduction — including a worldwide grounding for more than two months — but he reassured passengers that the type has had a relatively smooth introduction compared with other new types. Qantas is proceeding with deliveries while monitoring safety and operational performance.
Qantas says a higher cost base stemmed from having too many aircraft types, and models like the 767 were particularly expensive to operate and maintain. Simplifying the fleet to fewer types (B737 and A330 domestically, plus new 787s for Jetstar) should cut maintenance and fuel costs and improve crew productivity — factors investors can view as potential drivers of improved margins and operational resilience.
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