EuroWire September 2020

Transatlantic cable

planned to order up to 12 Airbus SE A350-1000 planes to allow non-stop Sydney to London and Sydney to New York flights by 2023. At time of speaking, Qantas had 220 planes grounded and, other than government repatriation charters and cargo flights, had stopped all international flights. There were plans to triple domestic capacity to 15 per cent of normal levels by the end of June and if, or when, border restrictions eased there would be the potential return to 40 per cent of normal domestic service during July. Australia, which had seen relatively few COVID-19 cases, was banning its citizens from almost all outbound travel for the time being, and Mr Joyce agreed the outlook for international travel was still unclear. Industry sources believe Airbus is planning to hold its jet production at 40 per cent below pre-pandemic figures for the next two years, adding new pressure to cut thousands of jobs. Airbus previously announced output cuts of up to a third before the coronavirus crisis hit the air travel sector, but analysts have called that figure “optimistic”. After adjusting for different levels of labour intensity, Airbus has calculated that its “single-aisle equivalent” production rate, likely to be the driver for decisions on staffing, will be down 40 per cent for the next two years. The future labour force will depend on the number and types of aircraft in production. It takes five times as many workers to build the long range, wide-body A350 as to make one narrow-body A320, while the A380 – the world’s largest passenger airliner, but scheduled to go out of production – needs eight times more people per plane. Production is expected to be dominated by the single-aisle A320. On paper the estimated labour force of 35,000 people involved in production at Airbus, including associated engineers and support staff, would need to fall by the equivalent of approximately 14,000 full-time posts to meet the 40 per cent reduction, sources believed. One industry source said the output trajectory more likely demanded the equivalent of 15-20,000 job cuts, depending on the pace of recovery within the economy in general, and air travel in particular, as well as the extent to which Airbus wants to preserve skills. Emirates to make fleet decisions In early June, while still in place as Emirates airline’s president, Sir Timothy Clark confirmed that the company will be making decisions about its fleet over the coming months. Emirates flew to 157 destinations in 83 countries before the coronavirus pandemic, but has since flown only a few, limited, services. Sir Timothy believes it could take Emirates four years to resume flights across its entire network. “We need a little more time to see how this is all going to pan out,” he told the industry publication Aviation Week . A decision will be made when there is greater clarity on whether demand for travel will rebound in 2022 which, he believes, will depend on a COVID-19 vaccine being developed soon, and made widely available. Airbus jobs under threat while production is held back

broadband subscriber numbers grew through the first quarter of 2020. Craig Moffett, an analyst with the independent research consultancy MoffettNathanson, said in an industry update that US cable is “punching above its weight” where it faces FTTH competition. The MoffettNathanson report included data from Comlinkdata that examined how extensively some individual cable operators are exposed to fibre-based service providers, as well as competing providers that deliver service on legacy and more advanced DSL platforms. The Comlinkdata study cited in Mr Moffett’s latest report suggests that Comcast faces competition from ILEC FTTP in 33 per cent of its footprint, compared to Charter (28 per cent) and Cable One (5 per cent). Charter has a 61.8 per cent share in those FTTH competition markets, with Comcast at about 55.8 per cent. “This does not appear to be a case of the FTTH services still being too new to have reached equilibrium. Cable’s share has consistently been higher than one would expect, even in FiOS [fibre optic services] markets where FiOS has been offered for more than a decade,” the Moffett report stated. “Generally speaking, the pricing differences between telco FTTH and cable are not large enough to be explanatory. Whether cable’s high- er-than-expected share is a function of marketing superiority, or perhaps of pairing with a better video service (if so, that is something that will lose its efficacy over time) is unclear. In any case, it has been this way for a long time.” The Comlinkdata findings were based on a panel of 200 million US smartphones, identifying the underlying broadband providers that devices are connecting to over home Wi-Fi. The data suggests that US cable operators are accelerating their broadband market share gains from telecommunications providers. Mr Moffett described broadband provision as “a two-horse race between cable and telco FTTP, where it exists. In every other competitive cohort, the telcos’ technology platform is being rendered irrelevant, which is a roundabout way of saying…we believe that cable’s accelerating market share gains will prove durable.” Mr Moffett confirmed that US broadband growth accelerated through the first quarter of 2020, as consumers adjusted their educational and working situations at home before the pandemic fully took hold, but cable continued to dominate. Concluding Mr Moffett’s analysis, US cable broadband subscriber growth improved to 5.4 per cent in the first quarter, year-on-year, showing the fastest growth rate for multiple-system operators since 2017. At 2.2 per cent, US telecommunications companies witnessed their fastest ever aggregate rate of broadband decline.

Aviation

Qantas is planning a service between Sydney and London

Qantas Airways’ chief executive has confirmed that once the airline is back to “financial strength” the company will reactivate its plans to source aeroplanes capable of making the world’s longest non-stop commercial flights (Sydney to London). CEO Alan Joyce said during an industry webcast that the business case for the service is “very strong”. He added, “The aircraft are not going anywhere. When we are comfortable in doing it, and have the financial strength to do it, we will be doing it.” Before the pandemic hit, Qantas had

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September 2020