Qantas is preparing to cut its international network further – with the airline planning to reduce capacity by nearly a quarter from its current point for the next six months.
Qantas blames the move on Covid-19 (the Coronavirus/Human Malware) and the spread of it in Europe and North America over the past two weeks, as well as its spread through Asia.
The net result is that bookings have taken a sudden and significant drop in bookings and demand. Qantas originally planned for a 5% cut. This now is increased by 23%, with the biggest reductions planned is in Asia, United States, United Kingdom and the Trans-Tasman routes.
The changes will run until Mid-September 2020 on both Qantas and Jetstar
So how is Qantas doing this?
Airbus A380 fleet reduction
Rather than park its entire Airbus A380, two will remain flying. Eight will be grounded whilst a further two will be sent for heavy maintenance and cabin upgrades. For those who are looking for the whale jet when travelling, it’s going to be a lot harder to find with Qantas.
Changes to services
In addition, the airline thinks that smaller aircraft seem to be the answer, along with reducing frequencies.
- QF1/2 will be re-routed – instead of operating Sydney-Singapore-London, it will operate as Sydney-Perth-London from 20th April
- Brisbane-Chicago route will be delayed from 15 April to mid-September.
- Jetstar will make significant cuts to its international network, including suspending flights to Bangkok and reducing flights from Australia to Vietnam and Japan by almost half.
- Jetstar’s daily Gold Coast to Seoul flight has already been suspended.
According to Qantas, the move is the equivalent of grounding 38 Qantas and Jetstar aircraft across the international and domestic network.
The full changes are displayed at https://www.qantasnewsroom.com.au/media-releases/qantas-group-update-on-coronavirus-response/, however here are some of the key change for international passengers:
As usual – check before you travel.
And don’t forget cost-cutting measures in HR.
The airline is making some symbolic changes at the top, with Management bonuses set to zero, Chairmen taking zero-fee, board taking a 30% cut.
However, there will be a freeze on all non-essential recruitment and consultancy work, as well as asking all Qantas and Jetstar employees to take paid or unpaid leave in light of reduced flying activity.
Qantas Group CEO Alan Joyce said:
“In the past fortnight we’ve seen a sharp drop in bookings on our international network as the global coronavirus spread continues.
“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September. This improves our ability to reduce costs as well as giving more certainty to the market, customers and our people.
“We retain the flexibility to cut further or to put capacity back in as this situation develops.
“The Qantas Group is a strong business in a challenging environment. We have a robust balance sheet, low debt levels and most of our profit comes from the domestic market. We’re in a good position to ride this out, but we need to take steps to maintain this strength.
“When revenue falls you need to cut costs, and reducing the amount of flying we do is the best way for us to do that.
“Less flying means less work for our people, but we know coronavirus will pass and we want to avoid job losses wherever possible. We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less.
“Annual management bonuses have been set to zero and the Group Executive team will take a significant pay cut for the rest of this financial year.
“It’s hard to predict how long this situation will last, which is why we’re moving now to make sure we remain well positioned. But we know it will pass, and we’ll be well positioned to take advantage of opportunities when it does.”
Meanwhile for passengers…
If you have bookings, keep an eye on the changes as the airlines (Qantas and Jetstar) will contact you. Those who booked via travel agents will be contacted by them. Typically, customers flying internationally will be offered an alternative flight via another capital city or a partner airline, or an alternative day.
Disruption to domestic passengers is expected to be minimal given the continued high frequency on most routes.
The airlines also join other airlines with them waiving change fees for new international bookings made from today until the end of March if customers change their travel plans. This applies to travel commencing up to 30 June 2020 and is limited to one free change per customer. Customers will need to pay any fare difference.
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