As passenger numbers continue to slide, Qantas is poised to ground six of its A380s. The mega jumbos fly to destinations such as London, Los Angeles and Singapore. But multiple sources over the weekend suggest the Qantas A380s are set for some downtime.
This comes as news breaks that Lufthansa is grounding its entire A380 fleet.
A barebones service set to be further reduced
Presently, Qantas runs the A380s on services between Sydney and Los Angeles, Sydney and London (via Singapore), Sydney and Dallas, and Melbourne and Los Angeles.
When demand was better, you could have seen the A380s on routes into Hong Kong and Tokyo. Now demand is such that the already barebones A380 services are set to be further reduced.
Qantas operates a fleet of 12 A380 aircraft (albeit one or two of them are usually out of service undergoing a cabin refurbishment). However, it looks like Qantas plans to ground six of the A380s and substitute smaller aircraft onto the routes.
And with capacity reductions elsewhere, the airline has Dreamliners and A330s to spare.
With travel to and through Asia hit particularly hard but the coronavirus outbreak, there is some speculation that Qantas may temporarily re-route its flagship A380 Sydney to London service through Dubai rather than Singapore.
Capacity cuts last week
The news comes hot on the heels of Qantas again reducing capacity into Asia late last week. The airline has canceled several services between Sydney and Sapporo, Sydney and Osaka, Sydney and Hong Kong, Melbourne and Narita, Melbourne and Auckland, and Brisbane and Narita.
A Qantas spokesperson said further cuts to services were likely.
“The Coronavirus situation and its impact on international travel demand is evolving and we’re monitoring closely. Further changes are expected.”
Qantas is well placed to weather the current travel downturn. The airline has previously pointed to its diversified business portfolio and strong balance sheet as buffers.
Never waste a crisis
There is also the view that Qantas should not, and will not, waste a crisis.
There is always opportunity in a crisis. Qantas is due to announce Project Sunrise any day now. There are two schools of thought on this. The first is that Qantas will use the downturn in travel demand as the perfect excuse to drop the idea.
The second school of thought is that now is the perfect time to launch Project Sunrise. With transits (and particularly Asian port transits) so unpopular right now, direct flights that bypass problem zones should appeal.
Many also believe that Qantas will use the current period of uncertainty to drive through IR reform and wage deals. With a surfeit of pilots on the market, Qantas has the upper hand to extract maximum efficiencies and minimum pay increases as it moves to re-set various enterprise bargaining agreements.
Qantas has upper hand as it negotiates a new pay deal with pilots
Of particular note is the ongoing stoush between Qantas and the Australian International Pilots Association (AIPA) over pay and conditions for Project Sunrise pilots.
There is criticism of AIPA by some of its pilot members over AIPA’s handling of the negotiations. They say the negotiations have dragged on too long, allowing Qantas to get the upper hand.
Pilots are set to vote on a pay deal in the next couple of weeks. The proposed deal isn’t popular with AIPA but the consensus is the deal will be accepted. Fears of lay-offs and a threat to out-source pilots are just two of the factors bringing pilots around to the proposed Qantas pay deal.
Despite Qantas’ ability to deal with the downturn in travel, it is a tough operating environment with no immediate relief on the horizon. The grounding of six A380s will most likely form part of the next round of capacity reductions at Qantas. But what after that?