Why did KLM cease flights to Australia ?

Old Jan 26, 2016, 11:04 am
  #1  
Original Poster
 
Join Date: Dec 2009
Posts: 540
Why did KLM cease flights to Australia ?

Before 1990 KL and LH had more times weekly flights to SYD and MEL.
Probably they ceased because of the codeshare formula.

But currently, EK, EY and QR (SQ, MH, KE, CZ and CX in a lesser extent) are the greatest threats to KL and other major European airlines.
And all these airlines have flights to AU destinations with only a few hours transfer at their respective hubs.
So why does KL tot attack them by offering direct flights (i.e. one-stop) to SYD / MEL ?
KL has enough capable aircraft.
There is a lot of interest of travel between the EU and AU.

Last edited by airsurfer; Jan 26, 2016 at 11:23 am
airsurfer is offline  
Old Jan 26, 2016, 12:39 pm
  #2  
FlyerTalk Evangelist
 
Join Date: Mar 2008
Location: Netherlands
Programs: KL Platinum; A3 Gold
Posts: 28,446
The only European airline that flies to Australia is British Airways. However, they now only have a single daily flight to Sydney. When their partnership with Qantas came to an end a couple of years ago (at the time that QF decided to enter a major partnership with Emirates) many people felt that BA would end up ditching Sydney as well (they had previously flown to other Australian destinations). However, it appears that they are able to make a profit on the route.

Virgin Atlantic dropped Sydney from their roster about 2 years ago. They were losing money on the route. (Look also at Air New Zealand, who dropped their HKG-LHR route recently. They do, however, still serve LHR via LAX).

It is doubtful that ANY other European airline could make a service to Australia work unless they were willing to sustain losses on the route. Turkish Airlines announced plans of starting service to Australia, initially via an Asian stopover, but eventually non-stop from Istanbul. It remains to be seen whether this will happen, and whether it is a sustainable route (I suspect that it may be, at least once they can offer a non-stop flight from Istanbul, given TK-s breadth of coverage in Europe).

The reason?

Not even Qantas could serve Europe profitably...hence their relationship with Emirates. True, Qantas offers a daily flight from Sydney and Melbourne to London, but all other European destinations gradually were dropped (with the last, Frankfurt, being dropped at the time of the Emirates deal).

Virgin Australia never served Europe, instead relying on partners (today primarily Etihad) and even then, they only serve Abu Dhabi a few times a week, with Etihad doing almost all of the flying for them on Australia-Europe itineraries.

End-of-line carriers struggle on this route - to serve such a long route, they need a "base" in some intermediate city, which increases their costs. Also, due to the fact that their hub is at the very end of the line, they cannot offer the same breadth of destinations, or at least not without extra sectors, that other airlines whose "hub" is located between Europe and Australia can.

The Asian carriers began to eat into the European carriers' markets, with the Gulf carriers joining the frenzy in the past 15 years. All of these carriers have their hubs located between Australia and Europe, and can therefore route passengers to other destinations from their hub, and are therefore not entirely dependent on Australia-Europe passengers (as a European airline would be). Also, their costs are much lower.

KLM finds it hard to compete on both short-haul and long-haul as it is. They would have to open a crew base somewhere like Singapore, Kuala Lumpur, Hong Kong, etc. They could only offer a one-stop service to passengers originating in the Amsterdam and Sydney (assuming SYD is the Australian destination served) areas - for all other customers in Europe and Australia, the Asian and Gulf carriers would be far more attractive, offering a one-stop service on far more city pairs (e.g. Nice-Adelaide on Emirates; Rome to Canberra on SIA, etc, that KLM would need 4 flights and a new partnership with an Australian airline to serve).

And moreover, there simply is no way they could start flying to Australia again and make money on the route.

Last edited by irishguy28; Jan 26, 2016 at 9:19 pm
irishguy28 is online now  
Old Jan 26, 2016, 1:47 pm
  #3  
Original Poster
 
Join Date: Dec 2009
Posts: 540
Indeed. I have never realized that.

DXB/AUH/DOH are nearly in the 'center' of the world. Australia and Europe are at the ends of the route. That's why KLM (and other carriers) feel threatened by these 3 Middle East airlines.
80% of the world's population is within 8 flying hours from one of these three airports.
And SIN/KUL/HKG are in a midway between as well.

But, yet, EK (and QR) have flights to LAX/SFO which are profitable, despite Europe is somewhat in the center of the route Middle East - USA.
So, do EK/EY/QR work more efficiently ?
airsurfer is offline  
Old Jan 26, 2016, 8:01 pm
  #4  
FlyerTalk Evangelist
 
Join Date: Mar 2008
Location: Netherlands
Programs: KL Platinum; A3 Gold
Posts: 28,446
From the Gulf, SFO/LAX are only a few hundred miles further away than destinations such as SYD.

If you accept that the Gulf carriers can make a profit on flights to Australia, why would it be any different on flights to the US West Coast?

There are far fewer Gulf carrier flights to the US West Coast than there are to Australia. And you should see the prices they charge in the US market - particularly in premium cabins.
irishguy28 is online now  
Old Jan 27, 2016, 2:08 am
  #5  
 
Join Date: Feb 2003
Location: Netherlands
Programs: FB Gold
Posts: 399
Originally Posted by airsurfer
Before 1990 KL and LH had more times weekly flights to SYD and MEL.
Probably they ceased because of the codeshare formula.

But currently, EK, EY and QR (SQ, MH, KE, CZ and CX in a lesser extent) are the greatest threats to KL and other major European airlines.
And all these airlines have flights to AU destinations with only a few hours transfer at their respective hubs.
So why does KL tot attack them by offering direct flights (i.e. one-stop) to SYD / MEL ?
KL has enough capable aircraft.
There is a lot of interest of travel between the EU and AU.
You also had AZ/OA/UT/JU/OS(initially Lauda)

Asian airlines can offer one-stop service linking scores of city-pairs on the 'Kangaroo Route', some of those city-pairs may only attract a few passengers per day, but with enough combined they can operate full flights. European carriers can not, they have to fill the flights linking a single city-pair, or attract passengers that are prepared to accept two stop journeys.

The airline that started this seriously was SQ after splitting from MH.

There has long been talk of non-stop Europe-Australia service, LON-SYD would be the prize, but to date there is no aircraft capable of operating such a service profitably in both directions.
AJCNL is offline  
Old Jan 27, 2016, 2:26 am
  #6  
FlyerTalk Evangelist
 
Join Date: Oct 2000
Posts: 14,352
Originally Posted by airsurfer
Before 1990 KL and LH had more times weekly flights to SYD and MEL.
Probably they ceased because of the codeshare formula.
Back then, national governments, their (often state-owned) airlines and IATA formed a global cartel.

If a government decided, for whatever reason, that an air service to Australia was desirable, then the national airline would provide one. Profitability came second, but as fares were set by IATA and therefore no competition on price, these could be kept high.

Given that KL enjoyed full government support for the first 70 years or so of its existence, all the whining about "unfair" competition from the ME carriers comes across as a hypocritical, to put it mildly.

Johan
johan rebel is offline  
Old Jan 27, 2016, 3:53 am
  #7  
 
Join Date: Feb 2012
Location: amsterdam/nl
Programs: FB PLATINUM IHG ACCOR
Posts: 327
Reason is a bit more simple ; an aircraft (in KL case a b 744) took to long to fly up/down; read could make more profitable trips in same time. Therefore codeshare agreements where made with other airlines eg MH and lately Garuda(even via DPS nowadays)

Back in the days KLM was operating 3 x a week (via Sin/KUL) some flights where even operated for AZ with KLM equipment(inbound KL outbound AZ)
In short operational costs are to high and yield low.the same aircraft can fly 2 -3 times meanwhile to more profitable destinations like to the USA.
Obviously the Down Under market has been taken over by ME3 and the ones really suffering are mostly found in South East Asia
splflyer is offline  
Old Jan 27, 2016, 6:20 am
  #8  
 
Join Date: Jan 2007
Location: GLA
Programs: AF/KL FB Plat 4L, VA Vel Silver, BA EC, LH M&M
Posts: 1,825
Originally Posted by johan rebel

Given that KL enjoyed full government support for the first 70 years or so of its existence, all the whining about "unfair" competition from the ME carriers comes across as a hypocritical, to put it mildly.

Johan
This is a non-sequitur. There is no reason why government support in the past should make it hypocritical to complain about unfair competition in the present.
cityflyer369 is offline  
Old Jan 27, 2016, 7:44 am
  #9  
FlyerTalk Evangelist
 
Join Date: Oct 2000
Posts: 14,352
Sure, a reformed career criminal whose car gets stolen is free to complain to the police. I'm sure quite a few people would nevertheless chuckle and think he had it coming.

Without strong government support for most of their existence, the legacy carriers would never have achieved the dominant position they held until recently, so what happened in the past is highly relevant today. Now that their position is being threatened by competitors that provide a by and large superior product, much to the benefit of the traveling public, it would behoove these legacy carriers to stop complaining, get their act together and provide a better product at attractive prices.

Besides, what are the whiners asking for? Government support and intervention in the shape of more regulation to restrict competition.

Whether the ME carriers actually receive government support to the extent that it gives them a decisive competitive advantage is another matter. I've yet to see conclusive proof.

Johan
johan rebel is offline  
Old Jan 27, 2016, 7:51 am
  #10  
Suspended
 
Join Date: Aug 2005
Location: BOS
Posts: 15,027
Originally Posted by airsurfer
Indeed. I have never realized that.

DXB/AUH/DOH are nearly in the 'center' of the world.
Not really.
The great circle AMS-SYD is actually passing over HKG and most of western China. It seems then that CX and CZ are the perfect airlines to handle Europe-Australia traffic.
Dieuwer is offline  
Old Jan 27, 2016, 7:53 am
  #11  
 
Join Date: Feb 2003
Location: Netherlands
Programs: FB Gold
Posts: 399
Originally Posted by cityflyer369
This is a non-sequitur. There is no reason why government support in the past should make it hypocritical to complain about unfair competition in the present.
Indeed. What happened decades ago is irrelevant to the situation today. Everything was regulated in the past, there was effectively no competition, airlines were run for a purpose, as a public utility with great political interference. They were often required to fly the routes their governments told them to fly for purely political reasons, certainly not commercial. Airlines such as BEA were required to buy British aircraft rather than more efficient alternatives, Australia had its extreme domestic duopoly with the two 'competitors' required to match each other on schedules and aircraft type.

Times have changed, what counts is the operating environments airlines find themselves in today, and there is a very valid discussion to be had concerning the way airlines compete with others from very different business cultures.
AJCNL is offline  
Old Jan 27, 2016, 8:26 am
  #12  
 
Join Date: Jul 2014
Location: Netherlands
Programs: Flying Blue Platinum for Life, AccorLiveLimitless Platinum, Qatar Airways Gold
Posts: 356
Originally Posted by AJCNL
You also had AZ/OA/UT/JU/OS(initially Lauda)

There has long been talk of non-stop Europe-Australia service, LON-SYD would be the prize, but to date there is no aircraft capable of operating such a service profitably in both directions.
Qantas is studying the options to fly nonstop PER-LON with a 787-9. KL has a good footprint in the UK (and Europe) so why wouldn’t KL be able to do the same? OK, KL does not have the Australian domestic market but a partnership would give them that.

My personal opinion is that the ME3 offer a great product but I don’t like the transfer in the middle of the trip. That’s why I almost always went for the layover in SIN/KUL, it gives you 10 hours of continuous sleep.
Brendan88 is offline  
Old Jan 27, 2016, 8:49 am
  #13  
FlyerTalk Evangelist
 
Join Date: Oct 2000
Posts: 14,352
On the contrary, what happened decades ago is highly relevant, because it explains the position of the legacy carriers in operating environment airlines find themselves in today.

Look no further than SK. What happened decades ago still has a strong impact on the operating environment it finds itself in today, and largely explains why the airline has been struggling to keep its head above water.

Johan
johan rebel is offline  
Old Jan 27, 2016, 8:57 am
  #14  
FlyerTalk Evangelist
 
Join Date: Mar 2008
Location: Netherlands
Programs: KL Platinum; A3 Gold
Posts: 28,446
London is somewhat unique as regards the Australian market: it is a big enough O&D market that it could probably very well sustain a direct non-stop flight to PER with little need for transfer traffic on the European side. (Qantas always complained about the significant backtracking required from London for their pax to non-UK destinations in Europe - London is not a logical connection point for most European traffic to Aus)

AMS, however, would not be able to sustain such a route without significant transfer traffic at both ends (meaning they would require an Australian partner, which would most likely be Virgin Australia thanks to the Etihad link). Therefore, the KLM option would require 3 flights - two relatively short flights [except for AMS/PER bound pax] and one very long flight - which again makes a less attractive option for pax in the UK regions that are served by a Gulf carrier offering a simple 2-flight option on more comfortable long-haul aircraft all the way.

True, KL flies from more UK origins than have Gulf carrier service, but the daily demand from these smaller UK cities would be insufficient to sustain a daily Australian KLM service. Being unable to offer a daily connection would then make the KLM option even less attractive, given the numerous daily connections on offer from any number of nearby UK cities on Gulf and Asian carriers - and I doubt KLM would be able to price their flight competitively. The UK is a relatively compact country, so the "hardship" of forsaking the closest local small airport for a nearby larger airport with better connections is minimal. KLM's large UK coverage would therefore not amount to much of an advantage as regards filling this supposed Australian flight if they could not offer it as cheaply as the Gulf carriers can.

Last edited by irishguy28; Jan 27, 2016 at 9:02 am
irishguy28 is online now  
Old Jan 27, 2016, 9:55 am
  #15  
 
Join Date: Jan 2007
Location: GLA
Programs: AF/KL FB Plat 4L, VA Vel Silver, BA EC, LH M&M
Posts: 1,825
Originally Posted by Brendan88
Qantas is studying the options to fly nonstop PER-LON with a 787-9. KL has a good footprint in the UK (and Europe) so why wouldn’t KL be able to do the same? OK, KL does not have the Australian domestic market but a partnership would give them that.
There is not much to gain for KLAF.

Currently KLAF do have enough traffic Europe to Oz (via codeshares) to fill about one daily plane. So let's assume that KLAF set up one daily AMS-PER (actually AMS-DRW may work better) , chanelled all KLAF traffic via this one flight and established coorperation with Virgin Australia (Qantas would not be possible due to their contracts with Emirates) to distribute all passengers to their final destinations in Australia. Would be cool for those who like KLAF and like ultra-long flights for a sleep.
However,
1. Passengers would typically have to fly 3 segments to arrive at their destinations. This is not really an advantage compared with all the current 3-segment options available, and a disadvantage compared with the increasing number of 2-segment options available (via ME, via China, via SE Asia). So this flight would definitely not offer an advantage regarding travel time.
2. As there would be only one daily Europe-Oz flight, passengers would have less flexibility than currently with the various codeshare and interline options that KLAF offer.
3. This AMS-PER/DRW flight would be pretty expensive to run. Fuel costs do not increase linearly with the distance of a flight (otherwise it would not matter if you have 2 short and 1 very long flight or 1 short and 2 longer flights). Instead, fuel costs go up exponentially with the distance of the flight (due to the fact that you need fuel to carry your fuel). So a 3-segments Europe-Oz itinerary on AFKL would be more expensive than an itinerary with a stop in ME or SE Asia or China.

So it really does not make sense for KLAF to have their own non-stop flight to Oz.

Now why do Qantas look into this option? National pride, prestige and significant OD traffic from London.

All that said, I still think that KLAF could significantly improve their Europe-Oz product via suitable codeshares. (It used to be good when all these properly timed QF codeshares via SIN and HKG were in place, but QF's Emirates tie-up made this impossible to maintain, for contractual reasons and for timetable reasons). Unfortunately, the KLAF management in Australia (yes, they do have some dozen staff members there) live in their own bubble and do not see the bigger picture of the market and actually think little from the perspective of passenger experience. But this is a different story. I find it a bit disappointing and during the past years I mainly took SQ to fly to Europe.

Edit: I am aware there some overlap with what irishguy28 had already written; I just wanted to reply a bit more comprehensively.

Last edited by cityflyer369; Jan 27, 2016 at 10:09 am
cityflyer369 is offline  

Thread Tools
Search this Thread

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.