3 Links I Love: Qantas’s Position of Strength, Making Money Where No Airline Can, Pittsburgh Spends A Lot to Save a Little

Links I Love, PIT - Pittsburgh

This week’s featured link:
Qantas extends Emirates deal, switches from Dubai to Singapore as Sydney-London stopoverABC Australia
When Qantas was in real trouble on its international routes, it tied up with Emirates and routed its remaining European flights through Dubai as well. This joint venture may have helped stem the bleeding back then, but Qantas is a totally different airline now, and it’s making a nice chunk of change. So, it will move its London flights back to routing via Singapore. (I find it interesting this article points out that travelers prefer connecting via Southeast Asia over the Middle East. They must like having the short hop first followed by the long one.) Combine that with the decision to fly nonstop from Perth to London and the request for aircraft that can fly nonstop from Sydney and Melbourne, and Qantas seems to be distancing itself from the Emirates crutch it once needed.

The comment from Neil Hansford in the article reminded me of Hugh Grant’s speech in Love Actually. It might be a stretch to compare Qantas to Hugh Grant, but, you know, the airline is looking a whole lot better now than it used to.

Two for the road:
This Airline Is Making a Profit Flying Out of CaracasBloomberg
Venezuela is a terrible place for airlines (and pretty much everyone else not in Maduro’s pocket). Since most airlines are unable to repatriate the funds from tickets sold in the country, they’ve had to stop selling there. The airlines that remained had to survive on sales from outside the country, and that has worked on only a handful of routes. Most airlines have dramatically cut service or pulled out entirely. Yet here’s this little airline from Chile that’s found a way to make things work. This could never happen with a US-based carrier since it must require some serious political ties. But for that Chilean airline, there is great money to be made.

Pittsburgh International Airport’s $1.1B project prepares for takeoffPittsburgh Tribune-Review
Pittsburgh’s airport terminal was built to be a major USAir hub. Then USAir walked away. Since then, it continues to have a terminal that’s bigger than needed with a train connecting the landside (which had been only for ticketing/baggage since the regional terminal was killed) to the airside. Now, the airport wants to spend $1.1 billion to build a new landside facility that would be attached to the airside terminal. The train would disappear and the number of gates would shrink. Then they’d redevelop the old landside. The only problem? It would apparently save only $23 million a year in operating expense. So, you know, unless they think there’s a billion dollar deal to be hand to redevelop the landside, it’s going to take nearly 50 years to pay it off. Right.

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20 comments on “3 Links I Love: Qantas’s Position of Strength, Making Money Where No Airline Can, Pittsburgh Spends A Lot to Save a Little

  1. Australian reader checking in. Dubai is a pretty awful stopover choice when compared with Changi which is probably why people lean towards an SE Asian airport. I’m based in Melbourne and soon the only direct Qantas flight to London will be either via Perth (787) or Sydney (A380). Given that choice, I’d rather avoid 20 hours in an economy seat and break it up, and if given *that* choice, I’d take SIN/HKG/BKK/KUL over DXB/AUH/DOH. For those with QFF status (and there’s a few of us around), the Emirates experiment has been middling at best. Qantas CEO Alan Joyce has called on Boeing/Airbus to deliver a plane that can do non-stop from east coast Australia to New York or London, so I guess that’s the way it’s going. We’ll always have other options, although probably not status credits.

    1. Starting in March, you can fly Qantas to Singapore (QF 37), and then connect to QF1 to LHR. It’ll be a fairly competitive option to get to London and to maintain your Qantas status credits.

  2. On the PIT project, the plan seems to be pretty well thought out, including full buy-in from all the airlines. They’re making a *lot* of profit these days and it has to be spent on themselves. The current facility is already strained landside as far as security goes with all the new O&D. If they have to spend the money, it makes sense to get it set up for the future and reconfigure properly.

    1. AC – If they’re making a lot of profit, then they should reduce operating costs for the airlines. Nothing gets more service from ULCCs than that.

      1. They’ll also be reducing fees quite a bit at the same time. Most of the airports debt is gone in 2018.

    2. I would tend to agree actually. While at first glance the project seems extravagant for an airport of its size, the situation as it is untenable for more than the immediate short-term. The facility is now 25 years old, approaching 30 years old by the time any current proposal would actually open, not to mention that it hasn’t been renovated (other than some very minor cosmetic updates) since it was built. As a former PIT-based traveler, the facility, in particular the landslide terminal and pre 9-11 designed security checkpoint, are definitely showing their age and no longer work well for the O&D airport that Pittsburgh has become.

      Cranky, I know you’re not a fan of large airport building projects, but as an architect myself, the building is approaching its end-of-life without significant reinvestment anyway (maintenance costs are only going to keep going up). This presents the opportunity for Airport Authority CEO Christina Cassotis to develop a proposal to renovate and reconfigure the entire facility to better fit the current and future needs of Pittsburgh, while right sizing the facility and eliminating the train to make it a efficient in-and-out O&D airport with full buy-in from the airlines. I actually think the plan is rather strategic and is far smarter than any limited renovation (that wouldn’t solve any of the problems the airport currently has) or any blank-slate proposal would be. Cassotis has done an excellent job thus far at controlling costs and attracting airlines since coming in as CEO and I trust that she would make smart decisions with regards to the future of PIT and its facilities. Pittsburgh is a great up-and-coming city undergoing its own renaissance, and a modern airport facility would go a long way to helping to attract businesses and keep the momentum going.

    3. the big deal here is that after 25+ years some expensive infrastructure (like the underground train connecting the land- and air-side terminals) is in need of serious overhaul. instead of spending money and keeping the airport as-is, with way more gates than needed and way more capacity, i think it seems wise to do something different and move on. i think this will result in a more right-sized, smaller capacity airport that will be easier to operate and more user-friendly.

  3. When Qantas switched its main Australia to London route to be via Dubai and hooked up with Emirates, an important part of the strategy was to provide a pathway for Australian travellers to get to a large number of European destinations via connections in Dubai that would have a Qantas code share and Qantas revenue share, via Emirates flights. Qantas had previously been unable to sustain adequate load factors on its own aircraft to virtually any European destinations except London. So, Qantas could make Dubai a hub, with QF flights from various Australian cities arriving at similar times, with one Qantas Airbus A380 carrying on to London (combining Aussie passengers from Melbourne, Sydney, Perth, etc.). The other 50% of Aussie passengers would get onto co-branded Emirates flights, and go to all sundry European destinations. All sounds good, and in fact it has worked quite well, aided by many Aussies choosing to have a stopover in Dubai ONCE.

    Why has the strategy now changed? Well, it didn’t have to, but gradually, most Aussie travellers have now had their ONCE 3 day stopover in Dubai. They liked it but don’t need to do it again for another 5 years! Secondly, Aussie passengers have discovered that connections in Dubai work more reliably when they are Emirates to Emirates rather than Qantas to Emirates, and many travellers (not me) prefer the Emirates product to the Qantas product. As a result, there has been an over-weight market share achieved by Emirates on the route, and better load factors for Emirates. Not a good look, but depending upon the revenue sharing / code sharing formula, Qantas probably still does quite well out of it.

    I understand that those code sharing / revenue sharing arrangements are going to CONTINUE even though Qantas now will re-route its flagship A380 service away from Dubai, back to being via Singapore. Hmmm, that is like having your cake and eating it too, isn’t it? Well, only partially, because I also understand that the Australia to Singapore routes, when operated by either Qantas or Emirates (most Emirates flights go directly to/from Dubai and Australian cities, but many others go via Singapore), Emirates will continue to code share and revenue share in the “Kangaroo Route” service for at least the Aust. to Singapore portion of the London journey. So, what does Qantas really gain by this change? Difficult to quantify.

    People still can’t understand why the Australian government has given Emirates “fifth-freedom” airline passenger traffic rights to fly between Singapore and Australian cities, and between Australian cities and New Zealand cities. Crazy, given that local airlines struggle to make profits competing on the same routes.



  4. Biggest problem with the new landside is that it cuts off those taxiway access for the D and C gates to the 12 L/R/C runways. Now aircraft there have to taxi all the way around the east side when departing from the 12’s.

  5. That article on LAW is very interesting. However, all it says is “They take care of the legal process of getting the dollars and it has worked spectacularly.” I wonder how Estelar accomplishes that when big airlines like UA, AA, etc. haven’t been able to make it work. I guess, as you say, they must have some serious political ties, or if they pay some sort of fee/bribe to smooth out the process.

  6. Interesting that Dulcinelli mentions the racism in Chile (also Argentina, from what I experienced). As context, almost all of the natives in the Southern Cone were killed or died off, so Argentines and Chlieans tend to be rather southern European looking, reflecting their mostly Italian and Spanish ancestry.

    Immigrants from norther South America (especially Bolivia, Peru, and Paraguay, but also other countries) tend to do the hard, low-paying jobs in Chile and Argentina, similar to the role of undocumented Hispanic immigrants in the US. There is a LOT of racism against Bolivians, Peruvians, etc in Argentina and Chile, both by the everyday public and (sometimes unofficially) by authorities. For example, it’s generally much easier to obtain citizenship in Argentina and Chile if you are an American or European than if you come from a poorer South American country.

  7. As a Pittsburgh native I am torn on what to think of this new project. It looks exciting but I can’t understand why Cassotis is so intent on getting rid of the landside terminal. She always talks about how we have too much “space” at the airport, I agree with her only in the case of the airside terminal though. I fly in and out often and a lot of times I do look around the airside terminal and think “wow this airport is dead” in addition the airside terminal is beginning to show it’s age, it looks very “90s”.
    What I can’t understand is that PIT’s connecting traffic is now non existent, while the origin and destination traffic has gone through the roof the past few years… so why decrease the amount of space dedicated to the things O&D passengers use, but still keep that giant connecting passenger midfield terminal?

    In my opinion the landside terminal is one of the nicest airport facilities I think I’ve ever seen, bright with lots of natural light, high ceilings, tons of space for people checking luggage and it really gives you the feeling that you’re in a world class airport (at least on the check in floor area, maybe not the baggage claim floor so much). It may be 25 years old, but I think it looks newer and less “empty” than the airside terminal. It was revolutionary in the early 90s and I would argue that it still is in some ways with the commercial curb and private curbs on opposite sides of the building (so you never have to cross sidewalks and lanes of traffic to get to your rental car shuttle for example, like in other airports). And with today’s Origin and destination market in Pittsburgh, the landside terminal rarely looks empty or gives you the feeling that PIT has “too much space”. I will agree the security checkpoint is too small….but still I think the airside is what truly looks dated and “empty”.

    1. i posted above, but i’ll reiterate here…

      i’m a relocated pittsbugh native , and i used to think that the “new airport” was amazing. it’s still really nice, but it is 25+ years old some really expensive infrastructure like the train connecting the terminals needs to be overhauled. i think that instead of just refurbishing what is already thereit makes sense to right-size the midfield terminal and make things flow more easily for passengers. at early-90s capacity, the separate terminal strategy made more sense, but i think it makes more sense now to do something like the described plan.

      when i first heard it i thought: WHAT?!?!?!?! but now that i see the rationale, i think it makes good sense. filling the empty space in the existing terminal will re-engineer the foot traffic, possibly resulting in better business for everyone trying to earn money inside also.

  8. As long as one can get to an airport an hour prior to flight time and have enough time to check a bag and board a flight without rushing, then the airport is fine. People don’t pick where they fly based on airport quality. I mean if niceness of airport was a huge factor, then no one would ever visit NY and its hell hole airports.

    A terminal built in the 1990’s does not need to be replaced or heavily renovated. I would not be happy to see my money used on a project like that.

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