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Qantas
- IATA/ICAO Code:
- QF/QFA
- Airline Type:
- Full Service Carrier
- Hub(s):
- Brisbane Airport, Melbourne Airport, Sydney Kingsford Smith Airport
- Year Founded:
- 1920
- Alliance:
- oneworld
- CEO:
- Alan Joyce
- Country:
- Australia
Qantas has announced that it will be cutting its domestic capacity further than previously announced in an attempt to minimize the effects of higher fuel costs and labor shortages. The additional 5% cut to domestic capacity, confirmed to ASX in an interview, comes on top of a 10% reduction, which was announced in May. Despite the reduction in capacity, the airline will still be flying at above pre-pandemic levels by the second quarter of 2023.
Trimming capacity
This is the second reduction in domestic capacity announced by the airline since May. However, in a sign that future larger cuts are unlikely, this reduction was half the size of the one announced last month. The reduction is also unlikely to see any services axed, with Qantas instead reducing the number of flights on high-frequency routes.
Speaking to ASX, Qantas said:
“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.”
Qantas said those affected by any changes would be contacted within the next few days by the airline and offered alternatives that are as close as possible to their original flights.
The move comes as part of Qantas’s attempt to minimize the impacts of soaring fuel prices. The price of jet fuel has skyrocketed since the easing of COVID-19 restrictions, with Asia and Oceania seeing prices climb higher than the global average. The price of a barrel of fuel in Asia and Oceania hit $175.66 last week, up by more than 130% since this time last year. The price of fuel in the region has increased by 28% in the last month alone. International routes will not be affected by the changes.
Staffing shortages
Like many airlines, Qantas slashed its workforce during the pandemic and is now finding that attracting people to fill new roles is trickier than expected. Qantas’s staffing issues are so chronic that it has even asked its office employees to assist and work the ground services ahead of the July holiday period.
The shortage of staff is leading many firms to offer greater incentives to existing and prospective employees. Qantas recently announced that more than 19,000 workers will be entitled to a £3,456 one-off bonus this year after a two-year pay freeze. However, the one-off bonus comes as many Australians are feeling the squeeze from high inflation, driven in part by higher fuel prices. The bonus is tied to Qantas staff accepting certain terms, such as a below-inflation 2% pay increase. The move is expected to cost the airline around $60 million.
Alan Joyce, CEO of Qantas, said:
"We can’t afford to permanently increase salaries beyond the 2% threshold we’ve set, but we can afford to make this one-off payment on top of the Qantas share rights we’ve already given.”
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