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South Pacific: 2017 shows signs of far-reaching change

Airline Leader

It is rare in the South Pacific to have such a momentous year for fleet, but 2017 promises airline, network and hub changes as Qantas receives its first of 11 Boeing787s. After a half century of acquiring successively larger flagship aircraft - variants of the 747 and then the A380 - the 787 reflects the new Qantas transformed, post-Emirates partnership, under CEO Alan Joyce.

It is rare in the South Pacific to have such a momentous year for fleet, but 2017 promises airline, network and hub changes as Qantas receives its first of 11 Boeing787s. After a half century of acquiring successively larger flagship aircraft - variants of the 747 and then the A380 - the 787 reflects the new Qantas transformed, post-Emirates partnership, under CEO Alan Joyce.

Qantas will target trunk routes that were too difficult to fill sustainably on the A380. Less is more: Qantas is aiming for high yielding passengers.

From 1Q2018, Qantas will link Australia with Europe non-stop, via a Perth-London 787 service. Perth becomes a new international hub with a dedicated transfer area for Qantas as it seeks to take greater control of the passenger experience. Perth, with parallels to Air Canada's growing Asian springboard at Vancouver, is expected to see at least another European non-stop flight.

The 787s will also enable Qantas to improve its position in America, its largest market by far.

More Dallas flights are expected. Experience with the 787 will shape Qantas' next fleet decision, albeit one still some time away: replacement of the final 747-400s and eventually its A380s. Qantas needs to make amends with Airbus over eight cancelled A380s, a scoring point for the A350 that Airbus would like to establish in the South Pacific. But Boeing is equally eager to have Qantas finally operate the 777 in the guise of the modernised 777X. Sydney-London and Sydney-New York non-stops are next decade targets for Qantas routes that these next generation aircraft promise to deliver.

The long-awaited Dreamliner at Qantas has suffered delays, cancellation and re-order. Air New Zealand meanwhile took its first 787 in 2014 and now has nine with three more on order. Air New Zealand has no further widebodies on order, but needs to address future growth and replacement of its 777-200ERs. There is a clear narrowbody re-fleeting underway with A320neos and ATRs.

The situation is similar at Virgin Australia, which has 737 MAXs on order but no widebody aircraft - not that Virgin needs to re-fleet. Its A330s will begin to move out of the domestic market, after Qantas did so over a year ago, when Virgin expands into greater China in partnership with new shareholder HNA.

Virgin's LCC, Tigerair Australia, is progressively replacing its A320s with 737s. Overall fleet expansion at Tigerair is expected to remain low.

Qantas LCC Jetstar holds 99 orders for the A320neo/A321neo, far more than the 61 inservice narrowbodies.

Many of these orders will be delivered to Jetstar's Asian units. Jetstar's widebody fleet of 11 787-8s is not expected to grow but the airline will be able to grow internationally and re-jig its 787 network as it takes delivery of longer-range A321neos.

Despite its small size (with a combined population of less than 30 million), the Southwest Pacific is an active user of aviation. It has more aircraft on order than the whole of Africa, even though its replacement rate - ratio of aircraft on order to existing fleet - is at a similar low level to that of the US, at 1:4.6.

A big difference is the average age of the US fleets, compared with e.g. the Australian fleet. This contrasts with the Asia Pacific replacement rate of 1:1.7 and the Middle East, at 1:1.1, almost one for each aircraft in service.

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