Stand by….more QF cuts on the way.
The Sydney Morning Herald says that Qantas has raised the prospect of further route cuts, even higher fares and the grounding of more aircraft if the price of jet fuel continues to climb.
The airline, which is embroiled in damaging industrial disputes with key parts of its workforce over wage claims, said yesterday that it could take out as much as 14 per cent of its flying capacity to try to alleviate the financial damage of surging fuel costs.
About a third of Qantas’s costs are taken up by fuel, the price of which has more than doubled in the past 12 months.
Like its international and domestic counterparts, Qantas has been trimming costs by reducing flights on unprofitable routes, cutting seat capacity, increasing fuel surcharges and taking an axe to destinations and jobs.
Further steps would be necessary if jet fuel continued to rise in price, the airline’s chief executive, Geoff Dixon, said yesterday. He gave no direct indication of the impact on ticket prices but said that if fuel went up by 20 per cent then “people can extrapolate”.
“To make a profit and invest in individual businesses, you have to charge at a rate to make the business viable,” Mr Dixon said, while announcing changes to Qantas’s frequent flyer program.
He pointed to measures taken by the airline in recent weeks – including reducing flights to Japan and South-East Asia, retiring older and less fuel-efficient aircraft and closing its Cairns pilot base – as the type of additional steps the company might have to take in future.
“If we have to cut, we will cut,” said Mr Dixon, who is entering his last year in the post at one of the most challenging times in financial and operational terms since he took the job in March 2001.
However, he said it was unlikely Qantas would add an additional fuel surcharge to tickets booked by customers using its revamped frequent flyer program.
The new program unveiled by Mr Dixon will allow the program’s 5 million members to book any seat on Qantas or Jetstar flights as well as let passengers use a combination of earned points with extra credit card payments.
The changes come as Qantas is considering selling part of its internally run and wholly owned frequent flyers’ company through a share sale on the sharemarket.
The move could raise more than $1 billion for the group.
A Report by The Mole from The Sydney Morning Herald
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