The Aviation IndustryAviationisrecognisedasoneoftheworld’smostcomplexandchallengingindustries,inwhichitcanbehardtomakeasustainedprofit.Anumberoffactorscontributetothis:

– High Costs —Highfixedcosts(e.g.aircraftandairportinfrastructure)andunstablevariablecosts(e.g.fuel)

– Labour Intensive —labourcostsaccountforaveryhighproportionofoverallcosts(around25percent)

– Low Margins —airfareshavecontinuedtofallinrealtermssincetheSecondWorldWar,andthemarginonthesaleofaticketislowincomparisonwithotherindustries

– Perishable Product —whenaflightleaveswithemptyseatsthereisnofurtheropportunitytosellthoseseats

– Low Barriers to Entry —itisrelativelyeasyforanewairlinetosetupinAustralia

– Over-Capacity —competitionfromlower-costandgovernment-supportedairlines

Inparticular,thereisaverystronglinkbetweenpremiumyields(travelonFirst,Business,PremiumEconomyorfull-fareEconomytickets)andASX(AustralianSecuritiesExchange)top200companyshareprices.ThisisbecausethisindextrackstheexpectedfutureearningsofcorporateAustralia—ifhigh,thencorporatebudgets,partofwhichincludesspendonairtravel,willbemoregenerous.

The Impact of Exchange RatesForeignexchangerateshaveanimpactonairlinerevenue.

A stronger Australian dollar leads to:– More outbound travel —Australianschoose

toholidayoverseasratherthanathomebecausetheirdollarswillbuymoreabroad

– Less inbound travel —Australiabecomesrelativelyexpensiveforoverseasvisitors

– Less foreign earnings —thevalueofmoneyearntfromticketssalesoverseasisworthlessonceconvertedintoAustraliancurrency

Funding our BusinessIntheinternationalarena,QantascompeteswithsomecarriersthatpaynocorporatetaxandwithmanyGovernmentownedcarriers,someofwhichbenefitfroma‘SovereignRiskRating’allowingthemtocarrydebtlevelsfarhigherthanprivately-ownedairlines.Manycarriersarealsosupportedindirectlybygovernments,forexample,airlinesintheUScanrelyonChapter11bankruptcyprotection.

TheQantasSaleAct,designedbytheGovernmenttoprotectQantas’positionasanAustraliancompany,limitstotalforeignownershipofQantasto49percent.Aside-effectofthislimitistoconstrainQantas’accesstoglobalcapital,makingitharderandmorecostlytoraisefundsforexpansion.

AllofthismeansthattogrowandprosperQantashastoworkmuchharderandbeleanerandmoreefficient.ItisacredittoQantas’financialstewardshipthatitistheonlyairlineintheworldtohavecontinuallyheldaninvestment-gradecreditratingwhichenablesthecompanytoborrowmoneyatapreferentialrate.

Aviation Knowledge

– Regulatory Constraints —accesstoroutesandtimeslotsisconstrainedbygovernmentsandairportauthorities

– External Shocks —economicdownturns,securitythreats,healthpandemics,extremeweatherandnaturaldisasterscanallaffectindustryreturns

Airline EconomicsThe Link between the Global Economy and Airline TravelThestrengthoftheeconomygreatlyaffectsdemandforairlinetravel.Insimpleterms,inastrongeconomywithlowunemployment,morepeoplewillhavemoredisposableincomeandarethereforeabletoaffordtospendmoreontravel.

2006Jetstarlauncheslong

haulinternationalservicestoAsiaandHawaii,andfurther

extendsthebrandin2008withJetstarPacific(Vietnam)

CHA

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FAST FACT

AFTER FUEL, foreignexchangemovementsare

Qantas’secondlargestfinancialrisk(Qantasisexposedto80different

foreigncurrencies)

AlliancesAirlinesenterintocooperativearrangementswitheachotherinordertoexpandtheirnetworkreach,improvethecustomerexperienceanddeliveroperationalefficiencies.Customersbenefitfromabroaderrangeofflightdestinationsandfrequencies,plusenhancedservicessuchasreciprocalfrequentflyerprograms.Airlinesbenefitfromcostsavingsthroughmoreefficientuseofairportfacilitiesandotherresources,andtheopportunityforrevenuegrowth.

Thethreelargestpassengerairlinealliancesareoneworld,StarAllianceandSkyTeam.Theoneworldalliancewaslaunchedin1999byfoundingmembersQantas,BritishAirways,CathayPacificandAmericanAirlines.Inadditiontooneworldpartners,Qantashascodesharerelationshipswithmorethan25otherleadingairlines,andinterline/baggagethrough-checkagreementsinplacewithover200airlinesglobally.

AJointServiceAgreement(JSA)withBritishAirwayshasbeeninoperationsince1995,andgivesQantasandBAregulatoryapprovaltocoordinatenetworks,schedulesandpricingontheir‘KangarooRoute’servicesbetweenAustralia,AsiaandEurope.Thepartnershipincludescodesharingonbothcarriers’flights,reciprocalfrequentflyercustomerbenefits,sharedloungesandjointairportoperations/salesoffices.TheJSAscopealsoincludesbothcarriers’freightoperations.

Aviation Industry and Governing BodiesICAO —InternationalCivilAviationOrganisationIATA —InternationalAirTransportAssociationIASC —InternationalAirServicesCommissionASA —AirservicesAustraliaCASA —CivilAviationSafetyAuthority(Australia)ATSB —AustralianTransportSafetyBureauOTS —OfficeofTransportSecurity(Australia)DIT —DepartmentofInfrastructureandTransport(Australia)

Air Services Agreements AirServicesAgreements(ASAs)arenegotiatedbetweengovernments,typicallybilaterally,andsetouttheentitlementsofeachcountry’srespectiveairlines,regardingwhichcitiesmaybeserved,frequency,routing,aircrafttypeandlimitationsonpassengerandcargotrafficthatmaybecarriedbetweenparticularpoints.

Inrecentyears,manyofAustralia’sASAshavebeenprogressivelyliberalised,asmanycountriesmovetowardsmore‘openskies’.However,Australia’sASAswithsomecountries,includingFrance,remainveryrestrictivewhichlimitstheQantasGroup’sabilitytoexpandintootherwiseattractivemarkets.

Onceairservicesrightsaregranted,Qantas’GovernmentandInternationalRelationsdepartmentgenerallyappliestotheInternationalAirServicesCommission(IASC)foranallocationofcapacitytoenablepassengerand/orfreightservicestobeoperatedbyQantas,JetstarorQantasFreight.

The three largest passenger airline alliances are oneworld, Star Alliance and SkyTeam

2008ThefirstQantas

AirbusA380commercialflightfromMelbourne

toLosAngeleson20October

AVIATION KNOWLEDGE40 41

FAST FACT

THE AIRLINE INDUSTRY is a low-margin business — Australian banks

produce similar revenues to Qantas, but enjoy profit margins 10 times greater than Qantas

‘Freedoms of the Air’EverwonderedwhyQantasdoesnotpickupdomesticpassengersonitsLosAngeles–NewYorksector?Tolandanaircraftinaforeigncountry,oreventoflywithinitsairspace,isaprivilegegrantedbythegovernmentofthatcountry.Historically,internationalagreementsrecognisedeightlevelsofprivilege,knownas‘FreedomsoftheAir’,whicharestillreferredtotodayintheairlineindustry:

First FreedomTherightofanairlinetooverflyanothercountrywithoutlanding,forexample:

Australia Singapore

Indonesia(Overfly)

Second FreedomTherighttomakealandinginanothercountryfortechnicalreasonsonly,e.g.torefuel—withoutpickinguporsettingdownpassengersorfreight.

(Airlines do not usually exercise this right due to cost reasons)

Third Freedom Therighttocarrypassengers,mailandfreightcargofromtheairline’shomecountrytoanothercountry,forexample:

Australia Singapore(Pick-up) (Set-down)

Fourth FreedomTherighttocarrypassengers,mailandfreightcargofromanothercountrytotheairline’shomecountry,forexample:

Singapore Australia(Pick-up) (Set-down)

Fifth FreedomTherightofanairlinetocarrypassengers,mailandfreightcargofromoneforeigncountrytoanotherforeigncountrywhileenroutetoorfromtheairline’shomecountry,forexample:

UnitedAustralia Kingdom(Pick-up) (Set-down)

Singapore(Pick-upandSet-down)

Sixth FreedomTherightofanairlinetopick-uppassengers,mailandfreightcargoinaforeigncountryandtransportthemtoanotherforeigncountryhavingstoppedoffenrouteattheairline’shomecountry.ThisisacombinationofFourthandThirdFreedoms.

Seventh FreedomTherightofanairlinetocarrypassengers,mailandfreightcargobetweentwoforeigncountriesonarouteoutsideofitshomecountry,forexample:

Singapore Bahrain

(Qantas does not currently exercise this right)

Eighth Freedom (Cabotage) Therightofanairlinetocarrypassengers,mailandfreightcargobetweencitieswithinaforeigncountry,forexample:

NewYorkAustralia (Set-down)

LosAngeles(Pick-up)

(Qantas does not currently have this right)

2009JetstarcommencesdomesticNewZealandservices

AVIATION KNOWLEDGE42 43

THE COMPOSITION OF MARKET SHARE has changed over time, with mid-point hub carriers, such as Singapore Airlines and Emirates, expanding share at the expense of end-of-line carriers such as Qantas

FAST FACT

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Plane Spotting Time ZonesTheearth’ssurfaceisdividedinto24timezones.Timedifferencesbetweenthezonesaremeasuredeastorwestofthe0degreemeridian(orlineoflongitude)whichpassesthroughGreenwich,England.Thetimeonthismeridianisreferredto

asGMT(GreenwichMeanTime)orUTC(UniversalCoordinatedTime)orjust‘Zulu’,andistheinternationallyagreedstandardtime.Manycountriessettheirclocksaheadonehourduringsummer(DaylightSavings).

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ADELAIDE

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AUCKLAND

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TORONTOVANCOUVER

BEIJING

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MUMBAI

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ROME

DUBAI

FRANKFURT

TOKYOOSAKA

MANILA

JOHANNESBURG

TAIPEI

BANGKOK

LONDON

CHICAGO

DALLAS FORTH WORTH

LOS ANGELESSAN FRANCISCO

NEW YORKWASHINGTON

BUENOS AIRES

NADI

PORTMORESBY

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TAIPEI

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LONDON

CHICAGO

DALLAS FORTH WORTH

LOS ANGELESSAN FRANCISCO

NEW YORKWASHINGTON

BUENOS AIRES

NADI

PORTMORESBY

Airport Codes

AustraliaAdelaide ADLAliceSprings ASPAvalon-Melbourne AVVAyersRock-Uluru AYQBrisbane BNEBroome BMECairns CNSCanberra CBRDarwin DRWGoldCoast-Coolangatta OOLGoveNhulunbuy GOVHobart HBALaunceston LSTMelbourne–Tullamarine MELPerth PERSydney SYDTownsville TSV

Asia-PacificAuckland AKLBangkok BKKChristchurch CHCDenpasar DPSHoChiMinhCity SGNHongKong HKGJakarta CGKManila MNLMumbai BOMNadi,Fiji NANNoumea,NewCaledonia NOUOsaka–Kansai KIXPhuket HKTPortMoresby,PNG POMQueenstown ZQNShanghai-Pudong PVGSingapore SINTokyo–Narita NRTWellington WLG

Europe, Americas and AfricaBuenosAires,Argentina EZEDallas,FortWorth DFWFrankfurt FRAHonolulu HNLJohannesburg JNBLondonHeathrow LHRLosAngeles LAXNewYorkJFK JFK

Aeroflot SUAerolineasArgentinas ARAirCanada ACAirChina CAAirFrance AFAirIndia AIAirNewZealand NZAirPacific FJAlitalia AZAmericanAirlines AABritishAirways BACathayPacific CXChinaAirlines CIChinaEastern MUContinentalAirlines CODeltaAirlines DLDragonair KAEmirates EKEtihadAirways EYFinnair AYGarudaIndonesia GAHawaiianAirlines HAIberia IBJapanAirlines JLJetstar JQJetstarAsia 3KJetstarPacific BLKLM KL

KoreanAir KELAN(LatinAmerican) LALufthansa LHMalaysian MHMalev MAMexicana MXNorthwestAirlines NWPakistanInt.Airlines PKPhilippineAirlines PRQantasAirways QFRoyalJordanian RJS7Airlines(Russia) S7SingaporeAirlines SQSouthAfricanAirways SASouthwestAirlines WNThaiAirways TGTigerAirways(Aus) TTTigerAirways(Sing) TRUnitedAirlines UAUSAirways USVarig RGVietnamAirlines VNVAustralia VAVirginAtlantic VSVirginBlue DJ

Phonetic AlphabetA—AlphaB—BravoC—CharlieD—DeltaE—Echo

F—FoxtrotG—GolfH—HotelI—IndiaJ—JulietK—KiloL—LimaM—Mike

N—NovemberO—OscarP—Papa

Q—QuebecR—RomeoS—SierraT—Tango

U—UniformV—Victor

W—WhiskyX—X-ray

Y—YankeeZ—Zulu

Airline CodesAirlinedesignatorsaretwo-charactercodesassignedbyIATA.Thecodeformsthefirsttwolettersoftheflightnumber.Thecodesforsomeoftheworld’sairlinesarelistedbelow.

2010Qantas

celebratesits90th

birthday

PLANE SPOTTING 4746

IN 1945, it cost 2.5 times the average annual salary to fly Sydney-

London return, today it costs less than two weeks’ wages

FAST FACT

FAST FACT

Airline Acronyms and TermsAASK —AvailableSeatKilometres—availableseatsmultipliedbykilometresflownATB —AirTurnBack—whenanaircraftmakesanunscheduledreturntothedepartureportBBlocks —WhenanaircraftcomestoacompletestopandthechocksareplacedunderthewheelsBlack Box —FlightRecordersareactuallyorangeCCodeshare —AnarrangementwherebytheMarketingCarrieristheairlineonwhichthepassengeristicketedandtheOperatingCarrieristheairlinewhose‘metal’performstheserviceCRS —ComputerReservationsSystemDDirect Flight —Aflightwhichmayincludestopsenroute,butnochangeofaircraft(aNon-Stopflightisadirectflightwithnostops)DG—DangerousGoodsEETA/ETD —EstimatedTimeofArrival/Departure

FFOC —FreeofChargeGGDS —GlobalDistributionSystemGreat Circle Route —TheshortestdistancebetweentwopointsontheglobeGSA —GeneralSalesAgent—aperson/organisationrepresentinganairlineinanothercountry/regionwheretheairlinedoesnothaveitsownsalesofficeHHold —Sectionoftheaircraftforbaggage,mailandfreightHub —Anairport/citywhichisacentralpointforpassengertransfersIInterline —TravelonanotherairlineInventory —ThenumberofseatsavailableforsaleandseatssoldJJump Seat —TheseatsbehindtheflightcrewinthecockpitLLoad Factor —Theproportionofseats/freightspacesoldandusedversusthetotalseats/freightspaceavailable

SSeat Factor —Thepercentageofseatsoccupiedbypassengerse.g.80%:measuresanairline’soverallutilisation(RPKsdividedbyASKs)Seat Pitch —ThedistancefromthebackofoneseattothebackofanotherSlip —OvernightcrewlayoverSlot —Aconfirmeddate/timeatanarrival/departuregate(anairporthasalimitednumberandairlinesmustapplyforthem)TTariff —ThefaresandratesapplicabletothetransportationofpersonsandpropertyandtherulesgoverningthemThrough Check-in —ApassengerchecksinandreceivesaboardingpassforanonwardconnectingflightfromanotherairportUULD —UnitLoadDevice—pallets/containersusedforupliftingfreightandbaggageUM —UnaccompaniedMinor(childtravellingalone)WWet Lease —Whenaircraftisleasedoutwithcrew(adryleaseiswithoutcrew)Wide Bodied Aircraft —Aircraftwithmorethanoneaisle(e.g.AirbusA380)YYield —Theamountofrevenueearnedperpassengerperkilometre(netrevenuedividedbyRPKs)ZZero Fuel Weight —Theweightofanaircraftwithpassengersandcargo,butwithoutfuel

MMCT —MinimumConnectingTime—aMisconnectioniswhenanarriving/departingflightdoesnotmeettheminimumtimerequiredtotransfertoanotherflightNNarrow Bodied Aircraft —aircraftwithasingleaisle(e.g.Boeing737)Net Fare —Publishedfarelesssalediscount(andrebate)No Show —Apassengerwhoholdsareservation,butdoesnottravelontheflightOOCS —OnCompanyService:internalmailOffline Station —Acitytowhichanairlinedoesnotfly,butmaintainsitsownrepresentationPPayload —Passengers/Freight(Load—anyotheritemscarried)PAX —PassengersPNR —PassengerNameRecord:thedetailsheldinthereservationssystemQQantas Paper —TheticketstockissuedbyQantasforwhichQantasreceivespayment:travelmaybeonQantasoranothercarrierRRamp —TarmacareawheretheaircraftisparkedRegistration —UniqueidentificationcodeofanaircraftallocatedbynationalaviationauthorityRPK —RevenuePassengerKilometres:thenumberofpayingpassengerscarried,multipliedbythenumberofkilometresflown

2012ThefirstoftheQantasGroupBoeing787Dreamlinernextgenerationaircraftduetobedelivered

PLANE SPOTTING 4948

Ifcallingfromoverseas,usetheinternationaldialingcode+61.

Ambulance (Australia only) 000APC Reception Mascot (02)96919411(internal29411)Brisbane Administration (07)33079153(internal79153)Building A Reception Mascot (02)96914445(internal24445)Building C Reception Mascot (02)96912884(internal22884)Building E Reception Mascot (02)96910238(internal20238)Corporate Communication (for all Media Enquiries) (02)96914773(outofhours0418210005)Customer Care (02)96913399(internal23399)Employee Assistance Program (counselling) 1300360364(overseas+61282952292)Fire (02)96918888(internal28888)ID Services (02)96911199(internal21199)IT Helpdesk (Global Service Centre) (02)96916666(internal26666)Jetstar Telephone Sales 131538Joey Club Brisbane (07)31141270Joey Club Melbourne (03)93365050Joey Club Sydney (02)96932599Melbourne Administration (03)83364190(internal64190)PeopleConnect 1300303411(internal86111)Qantas Centre of Service Excellence (02)95784900(internal84900)Qantas Staff Credit Union 1300747747Qantas Superannuation 1300654384(overseas+61293743930)Qantas Switchboard (02)96913636(internaldial9)Security (02)96911818(internal21818)Staff Travel (02)83034444(internal34444)orqantas.com/stafftravelTelephone Sales 131313Uniforms (02)96911450(internal21450)Whistleblower Hotline 1800855212(overseas+61282661453)

Useful Telephone NumbersRegistered AddressQantasAirwaysLimitedBuildingA,203CowardStreetMascotNSW2020Australia

Contact NumbersPhone (02)96913636Fax (02)96913339Website qantas.comIntranet http://qfintranet.qantas.com.auABN 16009661901

Contact Details

OTHER USEFUL INFORMATION 5150

Publication DetailsProduction: PeoplePerformanceandCulture,QantasDesign: Surveillance.net.auImages: QantasMediaBinPrinting: TMAGroupPaper: Impact100%recycled(100%post-consumerwaste,ForestStewardshipCouncilcertified)

Information correct as of June 2011

QantasStationeryItemCode:91D00067

A Guide for Employees of the Qantas Group

The Little Book

A G

uide for E

mp

loyees of the Qa

ntas G

roup

thelittle book