Qantas reacts to coronavirus travel downturn

• Majority of A380 superjumbo fleet grounded
• Brisbane-Chicago route launch delayed five months
• Melbourne-San Francisco route suspended
• Sydney-Singapore-London (QF1/2) rerouted via Perth, aircraft downgauge
• Singapore First Class Lounge temporarily closing
• Group CEO takes no salary for FY20

Qantas Group has revealed sweeping changes to its international flight operations in the wake of the spread of coronavirus into Europe and North America over the past two weeks. The capacity adjustments follows service reductions already implemented primarily on routes to Asia.

The decision follows the “sudden and significant drop in forward travel demand” for the Qantas Group and will be adopted for the next six months.

The biggest reductions remain focussed on Asia (now down 31% compared with the same period last year). Capacity reductions to the United States (down 19%), the UK (down 17%) and trans-Tasman (down 10%) will also be made in line with forward booking trends.

Majority of A380 fleet grounded / Brisbane-Chicago launch delayed / Singapore First Lounge closed

Changes will see Qantas trim the operation of its Airbus A380 from a fleet of 12 to just two until mid-September. Eight of the superjumbos have been grounded while two are undergoing scheduled heavy maintenance and cabin overhauls. Qantas will instead deploy smaller, more fuel-efficient aircraft including the Boeing 787-9 Dreamliner on those routes temporarily.

Qantas will boost its Perth-London route to twice daily, effective 20 April, at the expensive of the existing Sydney-Singapore-London return service (Q1 and QF2), which will temporarily reroute to become a Sydney-Perth-London operation. This move will see the Qantas First Lounge in Singapore, which opened just over 12 months ago, temporarily.

The new Brisbane-Chicago route, which was scheduled to commence inside 50 days (from 15 April), will be delayed until mid-September.

Jetstar is also making 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% to 5% through to mid-September 2020, in line with broader economic conditions.

In total, this is the equivalent of grounding 38 Qantas and Jetstar aircraft across the international and domestic network. The group’s total capacity reduction changes from 4% to 17% for the last quarter of FY20.

“We know it will pass”

Qantas Group CEO Alan Joyce said the company has witnessed 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,” he said.

“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.

“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.”

Joyce said that there will be no annual management bonuses paid out this year and that the Group Exec team will take “significant” pay cuts for the remainder of the financial year. He will take no salary this FY.

“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 Group CEO Alan Joyce concluded.

What’s next for affected customers

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.

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. 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

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.

Qantas – Extension of previously announced cancellations

(Until mid-Sept 2020 unless stated)

 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

Note: Further capacity reductions will also be made on flights to New Zealand, with other Asian routes are under evaluation.

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