23 July 2008

Qantas boss predicts "new world order" in aviation

100,000 aviation jobs will be slashed as fuel prices and the economic slump accelerate industry consolidation on a massive scale, according to Qantas boss Geoff Dixon.

The chief executive officer, making some wide ranging predictions about the aviation industry in a recent paper, said that the fuel crisis would be the catalyst for a seismic shift that would see the market populated by a few huge highly efficient global airlines, niche carriers that served individual markets and wealthy flag carriers from the oil nations.

Describing a ââ¬Åâœnew world orderââ¬~, Dixon said: ââ¬ÅâœOver time, consolidation will transform aviation. It will produce a few, very large and extremely efficient global airlines with a portfolio of interests and brands - like Air France and KLM. These players will have enormous power in marketing, in fuel buying and hedging, in aircraft purchasing, and in reach. There will still be niche airlines with specialist offerings - whether for business or leisure travellers - but these will need to be run very skilfully, and any weakness will lead to a quick death. And there will also remain those powerful, government-backed airlines, particularly from the oil rich states. These governments will continue to use aviation services as instruments of national economic development.ââ¬~

Dixon also revealed his optimism about Marchââ¬â¢s EU-US open skies agreement, saying ââ¬Åâœeveryone was watchingââ¬~ the second stage talks regarding investment liberalisation, adding that the US ââ¬Åâœmay at last be prepared to accept airlines from Europe - and potentially other countries - based on their ââ¬Ëœprincipal place of businessââ¬â¢ rather than their ownershipââ¬~.

Dixon predicts that by 2020 ââ¬Åâœmany moreââ¬~ airlines will disappear because they wonââ¬â¢t be able to deal with the ââ¬Åâœpermanently highââ¬~ fuel costs or they will be taken over by the bigger players.

By Dinah Hatch

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• At last a CEO who understands what is happening
  
  

  I would suggest anyone with slightest interest in the travel industry reads Geoff Dixons statement in full on the QANTAS website : http://www.qantas.com.au/regions/dyn/au/publicaffairs/details?ArticleID=2008/jul08/Qxxxx It is Mr Dixon's recognition of the paradigm shift in the availability and future supply of oil that marks this as a landmark statement from a global carrier. The past 60 years of the aviation industry are no road map to the next 5 to 20 years. Forward availability of oil will become increasingly restricted and the current contaction of the industry is only a marker to future trends. By acknowleding this Geoff Dixon will be putting QANTAS ahead of the game in very difficult circumstances.

  By Karl Skerstins, Wednesday, July 23, 2008