The Qantas Group has announced further cuts to its international flying, reducing capacity by almost a quarter for the next six months. The Australian airline is grounding eight of its Airbus A380 aircraft - until mid-September, putting another two into heavy maintenance, which leaves just two still flying.
The latest cuts follow the spread of the Coronavirus into Europe and North America over the past fortnight, as well as its continued spread through Asia, which has resulted in a sudden and significant drop in forward travel demand.
These additional changes will bring the total international capacity reduction for Qantas and Jetstar from 5 per cent to 23 per cent versus the same time last year and extend these cuts until mid-September 2020.
The biggest reductions remain focussed on Asia (now down 31 per cent compared with the same period last year). Capacity reductions to the United States (down 19 per cent), the UK (down 17 per cent) and Trans-Tasman (down 10 per cent) will also be made in line with forward booking trends.
Service changes
Rather than exit routes altogether, Qantas will use smaller aircraft and reduce the frequency of flights to maintain overall connectivity.
In response to strong customer demand for the direct Perth-London service, the existing Sydney-Singapore-London return service (QF1 and QF2) will be temporarily re-routed to become a Sydney-Perth-London service from 20 April.
The start of Qantas’ new 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 was suspended last week.
Domestically, Qantas and Jetstar capacity reductions will be increased from 3 per cent to 5 per cent[1] through to mid-September 2020, in line with broader economic conditions.
In total, this is the equivalent of grounding 38 Qantas and Jetstar aircraft[2] across the international and domestic network. The Group’s total capacity reduction changes from 4 per cent (announced on 20 February) to 17 per cent for the last quarter of FY20.
Given the reduced flying across the Qantas Group fleet, maintenance work will be brought forward where possible to make best use of this time.
Cost-cutting work
In addition to cutting capacity, a number of cost reduction measures will be triggered across the Qantas Group, including:
Annual management bonuses set to zero for FY20.
For the remainder of FY20:
Qantas Chairman will take no fees.
Group CEO will take no salary.
Qantas Board will take a 30 per cent reduction in fees.
Group Executive Management will take a 30 per cent pay cut.
Freeze of all non-essential recruitment and consultancy work.
Asking all Qantas and Jetstar employees to take paid or unpaid leave in light of reduced flying activity.
CEO Alan Joyce says....
Announcing the changes, 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.”
Qantas and Jetstar will contact customers affected by these changes in the coming week. Customers who booked via a travel agent (including online travel agents) will be contacted by their agent rather than the airline. 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 latest information will be published on Qantas and Jetstar websites. Customers are encouraged to check this before calling the airline. To provide customers with greater flexibility and confidence when they book, Qantas and Jetstar will waive change fees for new international bookings made from today until the end of March, if customers change their travel plans[4]. 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.
SUMMARY OF QANTAS GROUP NETWORK CHANGES
| Route | Change | Effective dates
(until mid-Sept 2020)
|
| Asia | ||
| Sydney-Tokyo (Haneda) | B747 replaced by smaller A330 | 30 March |
| Melbourne-Singapore |
– 7 return flights per week cancelled (QF 37/38)
– B787 replaced by larger A330 on 7 return flights per week (QF 35/36)
| – 20 April
– 4 May
|
| North America | ||
| Brisbane-Chicago | Route launch postponed | Was to start 15 April |
| Brisbane-San Francisco | Route suspended (3 return flights per week) | 18 April |
| Sydney-San Francisco | B787 replaced by larger B747 | 18 April |
| Melbourne-San Francisco | Route suspended (4 return flights per week) | 18 April |
| Sydney-Dallas/Fort Worth | A380 replaced by smaller B787 | 20 April |
| Melbourne-Los Angeles | A380 replaced by smaller B787 | 1 June |
| Sydney-Vancouver | Seasonal service suspended (3 return flights per week) | June and July only |
| United Kingdom | ||
| Sydney-London (Heathrow) | – Flights to operate via Perth (instead of Singapore)
then non-stop to London.
– Perth-London to become double daily as a result.
– A380 replaced by smaller B787
| 20 April |
| South America | ||
| Sydney-Santiago | Delaying planned B787 introduction and continuing with B747 | 1 August |
Note: The suspension of the A380 and First Class from Singapore routes will see the Qantas First Lounge in Singapore close temporarily, with customers instead invited to use the adjacent Qantas Business Lounge.
Note: Qantas B787 has approx. 250 less seats than an A380.
Qantas – Extension of previously announced cancellations
(Until mid-Sept 2020 unless stated)
| Route | Change |
| Sydney-Shanghai | Route continues to be suspended until at least mid-July (7 flights per week)
(sole route to mainland China)
|
| Sydney-Hong Kong | Reduced from 14 to 7 return flights per week |
| Melbourne-Hong Kong | Reduced from 7 to 4 return flights per week (1 additional cancellation per week from previously announced cuts) |
| Brisbane-Hong Kong | Reduced from 7 to 3 return flights per week (1 additional cancellation per week from previously announced cuts) |
Note: Further capacity reductions will also be made on flights to Japan and New Zealand, with other Asian routes under evaluation.
Jetstar Airways – Summary of New Changes
| Routes | Change | Effective date
(until end June but may be extended)
|
| Asia | ||
| Melbourne-Bangkok | Route suspended | 1 May |
| Sydney/Melbourne-Ho Chi Minh | Flights reduced by over 50 per cent | 1 May |
| Japan routes | Flights reduced by almost 40 per cent | 20 May |
| Brisbane-Bali | Minor flight reductions | 1 May |
Note: Further capacity reductions will also be made on flights to New Zealand, with other Asian routes are under evaluation.
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