Efficiency allows Qantas to compete: Alan Joyce

New technologies are allowing Qantas to keep up with the price wars on the kangaroo route, according to CEO Alan Joyce.

The Qantas Dreamliner QF9 leaving Perth, making it's first ever direct flight to London.

New technologies, including the Dreamliner, are allowing Qantas to keep up with the price wars on the kangaroo route, according to chief executive Alan Joyce.

Amid fiercely-competitive prices for flights to Britain as Qantas launches its direct Perth to London service that for the first time links Australia and Europe by a direct flight, Mr Joyce said “the efficiency of new technology has allowed us to keep up with that”.

“So Qantas is making more money than it ever has, despite the airfares being lower than it’s ever been,” he said.

“We have just got more and more efficient to be able to give more and more lower airfares to people. These aircraft, the efficiencies we have, allow us to do it at a profit.”

The Boeing 787 Dreamliner uses up to 20 per cent less fuel than other aircraft of the same size.

Qantas took delivery of its first 787-9 last year, has four now and expects to have eight of them by the end of the year. As well, Qantas has 45 options and purchase rights for growing the Dreamliner fleet, either for no-frills subsidiary Jetstar or Qantas. The Dreamliner is gradually replacing the carrier’s “queen of the skies” 747s, which are being retired over time.

Asked about the discounting on airfares to Britain, Mr Joyce said this has “always been the case”.

“The whole history of the kangaroo route is that the airfares have come dramatically down. So, in 1947, the number we use is that the average airfare was 2½ years of a person’s income, which is the equivalent today of $150,000. Then in the 1960s when the 707 came in, it came down to 22 weeks of an average person’s income. Now it’s one week of an average person’s income.”

Qantas International chief executive Alison Webster said the airline was “very happy with forward bookings for Perth to London and London return”.

$6 Qantas closed down 8¢

“We are seeing a strength of performance in early days where this will actually start making a good contribution from a cash perspective for us. That’s quite unusual for early days on a new launch route.”

Mr Joyce said the business class cabins were filling up to 90 per cent in bookings that went beyond the early days.

“Those are the cabins you need to fill. The reaction from the corporate market, the business market is extremely strong.”

Asked about the idea of direct Perth to Paris flights being next, Mr Joyce said: “We do have to show that this does work.

“Anything that we do to continental Europe is subject to future aircraft orders,” Mr Joyce said.

“But we do have the rights to fly to Paris daily from Perth. We’ve never had those rights before. When we last did Paris it was from Singapore to Paris and it was three a week. It was hard to make it economically work because we didn’t have the rights to go to daily.

“We are keen on it, we are interested in it,” he said, adding that there would have to be a good return on the cost of the aircraft needed for the route.