Storm Clouds?

If you’ve have observed the airline industry for long enough you won’t have been surprised how quickly sentiment on the sector’s outlook has changed in recent months and weeks. The pilots’ dispute, deregulation, the Gulf War, 9/11, SARS, the Iraq War – external shocks are nothing new to an industry more used to turbulence than smooth skies.

Still, Qantas’s May 28 press release announcement of fleet and route cutbacks across the group landed in the inbox with a metaphorical thud, focusing attention and minds on just what an impact record fuel prices are starting to have. Not that long ago Qantas was basking in its record $1 billion profit for the 2007 financial year, now all of a sudden it is parking old aeroplanes, deferring the arrival of others and dropping services to ‘circle the wagons’ to defend itself against jet fuel prices of more than US$160 a barrel.