Qantas chief executive Alan Joyce has said air fares will continue to come down as more planes are put on domestic routes, but industry-wide supply chain issues are still preventing the airline from returning its international capacity back to 100 per cent.
Announcing a $100 million investment in Qantas’ lounge network on Tuesday, Joyce said, Qantas’s domestic seat capacity will be back to 100 per cent by June. However, international capacity is not going to recover until 2024 as carriers all over the world scramble for parts and staff.
Airlines offering fewer domestic and international flights, amid ongoing worker shortages and high jet-fuel prices have led to more expensive airfares, with the extra revenue helping Qantas’ quick return to profit.
Qantas CEO Alan Joyce has announced improvements and upgrades of the first and business class lounges around the world and domestically. Credit: Nick Moir
In November, Qantas forecast its profit for the first half of its financial year will land between $1.35 billion and $1.45 billion, up $150 million from its previous guidance.
Joyce said on Tuesday that the better numbers had helped push through the single biggest upgrade to the lounge network over his 14-year-tenure. Qantas will create four new facilities, including a first-class lounge at London’s Heathrow Airport, and undertake a revamp of existing lounges including the international business lounges at Hong Kong, Sydney and Melbourne.
He also defended the high fare environment, which has dominated air travel over the past six months
“We don’t define the prices, the market does. Typically, every year for the last two decades airfares in real terms have gone down, and as competition is re-established airfares will come down again, and we have to compete against those airlines,” he said.
“This year Jetstar has 10 million seats available for under $100, Qantas has 2 million seats available for under $200...the consumer has never had more choice. Qantas is in the most competitive international market. We have 56 international competitors. We don’t define the prices, the market does.”
The opening date of the new lounge in London will be timed with the first direct London to Sydney flight in 2025, a long-term project known as “Project Sunrise”. Qantas hopes the new lounge will provide direct access to boarding gates and full airfield views, subject to UK regulatory approval and agreement with Heathrow Airport.
The airline will also reopen its Hong Kong international lounge in April, and its yum cha trolley, that was shut down during the onset of the COVID-19 pandemic.
Sydney’s international business lounge will undergo a complete rebuild from early next year to boost capacity to more than 600 seats, while Melbourne’s international business lounge is set to open in mid-2024.
It’s also planning to relocate the Hobart Qantas Club to increase capacity from 96 to about 150 seats. This will be timed with the redevelopment of the terminal at Hobart Airport.
Qantas will also construct a new regional lounge at Broome to open in 2024 to double capacity from 49 to 100 seats. Joyce said the network upgrade will be completed by 2025, with three of the lounges due to open this year.
With Qantas set to announce its half-year results on Thursday, the airline has also announced tens of thousands of new international reward seats will be released for frequent flyers this Friday. The rewards seats will be available across all cabins on the airlines international network and is an extension of the airline’s October commitment to provide 50 per cent more reward seats on international routes until the end of this year.
Joyce refused to provide an update on the number of travel credits still to be used by Australians who had their flights cancelled during the COVID-19 pandemic ahead of the group’s financial results.
Qantas has also unveiled a new $10 million regional grants program to support non-for profit community groups across the country through a combination of flights, cash and marketing support.
The December half was dominated by high fares – which reached records not seen since 2007 at the end of last year – high-fuel prices, and the return of some international competitors.
The airline has previously committed to creating a new international lounge at Auckland, a new business lounge at Adelaide domestic airport, an upgrade to the chairman’s and Qantas Club lounges at Adelaide domestic, a new regional lounge at Rockhampton Airport and a redevelopment of Port Hedland’s regional lounge.
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