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Qantas cuts domestic capacity as fuel prices soar

written by Adam Thorn | June 26, 2022

Victor Pody shot these two 737-800s, including 16-year-old VH-VYD

Qantas is set to make a further cut to its domestic capacity to help mitigate the effects of higher fuel prices and the industry’s talent shortage.

However, the decrease will still mean the airline will operate at 106 per cent of pre-COVID levels for the second quarter of FY23 and 110 per cent for the third quarter.

The announcement came alongside news many employees would be eligible for a $5,000 bonus following a two-year wage freeze.

“For July and August, an additional 5 percentage points of capacity will be removed on top of the 10 per cent announced in May,” said Qantas in a statement to the ASX.

“This total 15 per cent cut will also be applied to September. A cut of 10 percentage points will be applied to schedules from October through to the end of March 2023.

“These reductions, combined with robust international and domestic travel demand, are expected to help the Group substantially recover the elevated cost of fuel indicated by forward oil prices.

“They will also assist with the near-term resourcing pressures currently being felt across aviation and the broader economy.”

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The airline added the effect on passengers would be minimal, with capacity removed from higher-frequency routes.

“Those affected will be contacted directly with alternatives as close as possible to their original timing, usually within 1–2 hours,” said Qantas. “Many of these adjustments have already been made with the remainder to flow through in coming days.”

Up to 19,000 staff will also be offered a one-off payment of $5,000 once new enterprise agreements are finalised.

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Australian Aviation reported earlier in June how domestic airfares appear to be rapidly rising as airlines contend with increasing jet fuel costs and inflation.

New BITRE data from the Department of Transport shows the monthly index price for June is tracking to be 2.6 points higher than May, following a long period where Australia has seen some of the lowest fares in its history.

However, the rise to 72.8 still means standard economy prices are significantly cheaper than pre-pandemic prices, when the index stood at 100. Nevertheless, it still marks the most significant rise in months.

It comes as figures compiled by IATA show global jet fuel prices have increased 6 per cent in the last month and nearly 130 per cent over the past year. Across Asia and Oceania, prices have increased 20 per cent in the last year — a far higher rise than any other region of the world.

Qantas also confirmed there would be no reduction in international capacity. It comes alongside it launching a new route between Perth and Rome on Wednesday night, and also announcing a new route between Perth and Johannesburg.

Comments (3)

  • PeterL

    says:

    The photo shows a 787 and a 737, not two 737s. Come on guys get it right, not hard to do if you really know aviation.

  • Eve

    says:

    The claim that capacity is being scaled back due to high fuel prices is absurd. Historically, when fuel prices have been high Qantas has charged passengers a surcharge.
    With unprecedented pent-up demand for travel, you don’t cut your way to growth.
    The real reason is the business is a train wreck. It simply can’t operate with the staffing levels and poor systems and procedures they have, particularly in maintenance.
    The business has been severely shaken up. They need to get their house in order.

  • Vannus

    says:

    Do you work in QANTAS Engineering, Eve, as you’ve referenced it in your comment?

    I don’t agree with what you’ve said in any way, but your entitled to your opinion, as am I.

    For decades’, QANTAS have fuel hedged, if you know what that means, thus saving much money when fuel prices are currently high, by utilising said fuel, the storage of which is held at various ports throughout the world, to which QANTAS flies.

    The Company doesn’t hit customers’ with a surcharge every time there’s an increase to purchase aviation fuel.

    A company which can pay off one BILLION $ of a debt in four months’, is definitely NOT a ‘train wreck’.
    Have you bothered to read the latest business plan release on the QANTAS website? If you do, you’ll learn much information.

    The reasons’ for lessening flights being flown is thought out by those whose exact job is to do this. They know the reasons’ behind this, as they take into consideration much more relevant information that you have with your knee jerk wording.
    BTW, QANTAS CEO Mr Alan Joyce holds three Degrees’, one of which is in Mathematics. ‘Nuff said.

    The Company is growing exponentially, since Covid, & looks forward to profit in 1H23.

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