Austrian Airlines long haul update

Danielle Gerrits, a senior manager in route planning at Austrian Airlines, discusses with The Mole changes to the carrier’s long haul network following a decision to withdraw flights to Australia: –

“We had to undertake an overall review of all our operations and while of course that influenced our decision, the main factor that made us reconsider our long haul product and in particular, deciding to withdraw our services between Austria and Australia was without doubt the increasing cost of fuel for our Australia operation, which was actually €70,000 per rotation, clearly a very considerable amount and one which dramatically affected the viability of the Australia services.

“Sadly even though the cost of fuel has come down though, it will not affect our decision.

“We know that we were nearly always full and the seat loads were good, but even then, we were only breaking even, if that.

“We also had to make a lot of changes after taking over Lauda and while they had established an excellent service to Australia, with a tremendous reputation in the market, which we believe we have maintained and improved, operating the Australia service still required us to allocate three 777 aircraft to the routes, constantly rotating solely on those routes and doing nothing else, which was extremely expensive.

“It also meant that each aircraft was away and utilised for 45 hours at a time, when in that same time we could more profitably operate the aircraft on quicker turnaround shorter routes, which offered high loads and yield, such as New York or Mumbai.

“We are very proud of our Australia routes and they were our flagship long haul routes, but at the end of the day we had to look at the cost of operating them and then secondly what we could do alternatively that might be more profitable and better utilise the aircraft.  During the review it was conceivable that Australia may have come out OK, but sadly that was not the case.

“The bottom line is that the Australia routes never really made money and while Australia was good from the network perspective with us making some money from passengers travelling on from Vienna on our services to elsewhere in Europe, that was not enough and the Australia services had to stand up on their own, which they did not.

“A number of other factors impacted on the viability of our services, not least of all Emirates operating to Vienna via Dubai and Singapore Airlines via Singapore, so we had started feeling the pressure which led us to decide that the last Austrian Australia flight will be on March 24.

“Australia is not the only route we have pulled off, as we also lost serious money on Shanghai for a whole host of reasons, including because our business class was not big enough and even then it was not high revenue corporate sales, but senior leisure.

“Other services that have gone or are going are Mauritius, Phuket, Kathmandu, Shanghai, Colombo/Mali becoming seasonal and of course Sydney via Kuala Lumpur and Melbourne via Singapore. 

“It is difficult for us having to say goodbye to some routes, but we had to make the decision to concentrate on those which are more profitable and they tend to be within 6 to 8 hrs flying time, which means that we can utilise one aircraft on the route, rather as in the case of Australia taking up three aircraft.

“Good examples are Toronto and Delhi and the message from the board and the CEO is simple, we have to not lose money in 2007 and by 2008 become profitable, so in that context, I am sure that your readers can see that we are under tremendous pressure and do not have any time to lose to fulfil those targets.

“So, the termination of the Australia services is part of a much bigger picture and our determination to move towards being a much bigger player in Europe with a core principle of our business becoming that in general we operate within 6–8 hours max of Vienna.

“We will also become a Boeing 777 and 767 only long haul fleet operator by the end of May, with all our Airbus fleet being disposed of and an additional 777 on order for delivery very shortly. Also our long haul fleet will all feature our new business class seats.

“The reality, and I suppose strange thing about all this, is that even though we are going off line in Australia, in many ways, we will actually be offering an improved service, with excellent connections, also reflecting the future for many operations and airlines through codesharing, minimising duplication and maximising revenue on routes and in our case maximising our Star Alliance relationships and networks.

“So, we are not leaving Australia and at the end of the day the decision had little to do with loads and nothing to do with the destination, we simply across the airline had to optimise our routes and have less unprofitable seats flying around.”

Report by The Mole