Qantas drops routes as fuel crisis mounts
The soaring cost of fuel has prompted Qantas to ground some of its domestic flights from July and rethink its international schedule.
In the wake of Silverjet suspending shares and relying on a £12.6m bail out to continue flying thanks to oil prices rocketing, the Australian flag carrier’s chief executive officer Geoff Dixon has said it will come out of some of its lowest performing routes including the Sydney-Gold Coast route. The equivalent of six jets will be grounded.
Dixon added that job cuts and executive pay freezes will also follow as the airline’s fuel bill is set to increase by more than $2 billion in 2008/9 – that’s about 35% of the carrier’s total expenditure.
In a statement, Dixon said: “The fact is that fuel prices are something we have no control over, so we have to look harder at areas where we do have control. Despite our fuel hedging strategy, fuel surcharges, two separate across-the-board fare increases and a recruitment freeze, we are not bridging the widening gap between the actual increase in the cost of fuel and the amount we offset.”
The carrier plans to retire one B737 aircraft, ground two B767 aircraft and one Jetstar A320 aircraft, cancel the delivery of one Jetstar A321 aircraft, accelerate the retirement of its four B747-300 aircraft, currently operating trans-continental services to Perth, by December and adjust the flying patterns of other aircraft, including reducing the use of the B747-400 fleet.
Dixon said: “This will enable us to make significant changes to domestic and international flying for both Qantas and Jetstar. In some cases, this will involve pulling off routes entirely. In other cases, we will scale back frequencies and capacity.”
He added: “Wherever possible, we have tried to minimise the overall impact of the changes. For example, Jetstar will continue to offer more than 140 return services to the Gold Coast each week, including up to 10 services a day on the Sydney-Gold Coast route.
Dixon said Qantas was putting the finishing touches to its international network restructure, including capacity adjustments and market exits, and would announce these within the next week, adding that “the magnitude of the changes would require a reduction in staff numbers”.
Qantas pays only around US$72 a barrel for its oil at the moment thanks to a fuel hedging policy [where prices are locked at the start of the financial year] but this agreement ends on July 1 when it will have to pay the going rate of US$130 a barrel.
By Dinah Hatch
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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