Qantas Eyeing A Joint Venture With Japan Airlines

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There was a sign of life from Qantas regarding its international services today. The Australian airline announced it wanted to team up with Japan Airlines on flights between Australia and Japan from July 2021. Qantas has applied to local regulatory authorities to form a joint venture with Japan Airlines, asking to upgrade the existing relationship and even suggesting a new route is on the radar.

Qantas wants to team up with Japan Airlines and form a joint venture. Photo: Qantas

A sudden burst of activity from Qantas International

Aside from some repatriation flights and some recent New Zealand services, Qantas’ international services have been largely dormant since March. The airline has flagged mid-2021 as a tentative resumption date for some international services. But today’s announcement is the first burst of activity to come from Qantas regarding its international services in quite some time.

Qantas has a longstanding relationship with its Japan Airlines oneworld partner. Both airlines have long plied the routes between Australia and Japan without standing on each other’s toes. Both airlines also took stakes setting up Jetstar Japan ten years ago.

Qantas and Japan Airlines already have a big slice of the pie

Over 2019, Australian Government statistics reveal 1,562,465 flew between Australia and Japan. There were 6,698 direct flights on offer. After a significant boom in previous generations, traffic between the two countries had stagnated for time. However, there was a noticeable uptick in both flights and passenger numbers between the two countries in recent years.

Last year, Qantas, Jetstar, Japan Airlines, and All Nippon Airlines plied the skies between Australia and Japan. Virgin Australia was set to begin flights between Brisbane and Haneda earlier this year.

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In 2019, Qantas owned 43.5% of the market between Australia and Japan. Photo: Getty Images

Between them, Qantas and Japan Airlines carried 914,226 passengers on flights between Australia and Japan. Qantas connected Sydney, Melbourne, and Brisbane to Tokyo and Sydney to both Osaka and Sapporo. Japan Airlines flew from both Sydney and Melbourne to Tokyo.

Qantas carried 679,189 passengers (or 43.5% of total passenger numbers) on flights between Australia and Japan last year. Japan Airlines carried 234,037 passengers (or 15% of total passenger numbers) back and forth to Australia last year. Between them, the two oneworld airlines had a tidy 58.5% market share.

The oneworld buddies argue the joint venture would deliver significant benefits

Now, it seems they’d like to improve on that share, or get it back in Qantas’ case. Japan Airlines and All Nippon Airways have largely kept up services to Australia in 2020, albeit on a slimmed-down basis.  Last year All Nippon Airways had an 11% overall market share on the sector, operating services to both Sydney and Perth. In 2020, with Qantas International grounded, All Nippon Airways has now grabbed a bigger slice of a far smaller pie. All Nippon Airways would like to carry that market share into the future. Qantas is probably not so keen on the idea.

Both Qantas and Japan Airlines argue the joint venture would deliver substantial benefits for customers and help accelerate the recovery of the tourism, trade, and corporate travel links between Australia and Japan. The joint venture proposes the following;

  • An expanded codeshare relationship and optimized schedules on flights between Australia and New Zealand, and Japan. Qantas passengers would have access to 14 new codeshare destinations in Japan. Japan Airlines passengers would have access to 15 new codeshare destinations in Australia and New Zealand;
  • Enhanced frequent flyer benefits for Qantas and Japan Airlines passengers;
  • Streamlined processes for disruption management and investments in product and service inflight and on the ground; and
  • Coordination of pricing, schedules, sales, and tourism marketing to develop new and improved travel products.
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Japan Airlines normally flies to both Sydney and Melbourne. Photo: Getty Images

Likely to raise the ire of ANA and Virgin Australia

In a nutshell, it is your standard joint venture proposal and one that’s likely to raise the ire of both All Nippon Airways and Virgin Australia. The latter airline retains ambitions of flying to Japan, although it no longer has the aircraft to do so. As for Qantas’ low-cost subsidiary, Jetstar, they’ve always stuck to leisure routes between Japan and Queensland, staying away from the more premium traffic chased by Qantas and Japan Airlines.

“The joint business means we’ll be able to build on our existing relationship with Japan Airlines through oneworld to offer more routes, better flight connections, and more benefits to frequent flyers,” said Qantas CEO Alan Joyce today, “It will be a win for our customers.”

There’s no guarantee this joint venture will get the tick of approval, although it’s less than even money odds that it will. Either way, it’s a spark of light from Qantas’ international services, and that’s a good thing to see.

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