Qantas boss Alan Joyce says airfares will fall, after $2.5b profit

Qantas boss Alan Joyce has revealed when airfares are expected to fall after the airline posted a $2.5 billion profit.

Qantas says its domestic airfares are only 4 per cent higher than before the Covid pandemic, and international fares 10 per cent higher – with expectations they will continue to fall into next year.

As Qantas Group CEO Alan Joyce announced the company had delivered an underlying profit before tax of $2.47 billion for the financial year on Thursday, he dismissed claims about lack of competition driving high airfares.

He said the group’s domestic capacity was above pre-Covid levels, while international capacity was at about 80 per cent and expected to be back at 100 per cent by the middle of next year.

“The data shows economy fares peaked in December of last year and they’ve fallen since then by about 12 per cent, and they should keep on dropping as more international capacity comes online,” he said, speaking to the media about his final results as CEO before retirement in November.

Mr Joyce said mid next year was the fastest the airline could get some large widebody aircraft back in service.

“We have the aircraft, we have the pilots, it’s just taken us a while to get the maintenance done because every airline in the world is getting maintenance done on aircraft that was in storage for three years,” he explained.

Qantas Group chief executive officer Alan Joyce discusses the Qantas Group’s full year results on Thursday. Picture: NCA NewsWire / Christian Gilles

The outgoing CEO was asked why Qantas had opposed Qatar Airways application to increase its flights to Australia, if his airline couldn’t return to full international capacity until mid-2024.

It comes as the Australian government denied an application by Qatar Airways to add 21 weekly flights to the 28 it already operates last month.

Virgin Australia CEO Jayne Hrdlicka, whose airline has a partnership with the Doha-based carrier, urged the government to rethink its decision, saying “additional Qatar flights would have an immediate and tangible effect in reducing airfares between Australia and Europe, the Middle East and Africa”.

But Mr Joyce maintained his argument on Thursday that it could “distort the market”.

“There shouldn’t be rights granted when there’s huge amount of capacity being put back in the market and doubling those rights could actually distort the market,” he said, referring back to Qantas’ stance in a submission made opposing Qatar’s request in October last year.

“That’s been proven to be correct because capacity has essentially doubled in that time.”

Mr Joyce defended Qantas’ opposition of Qatar Airways increasing its flights to Australia. Picture: AFP / Eric Piermont

Mr Joyce pointed to “massive growth” from other airlines like US-based carriers Delta Air Lines and United Airlines, and Singapore Airlines.

“We have 52 carriers that we compete against internationally, and they’re all coming back rapidly and we are seeing airfares come down as a consequence of that,” he said.

He added: “There seems to be a focus on Qatar and people are missing all this extra capacity that’s a lot bigger than what they were asking for that’s been added across the network.

“And that’s what we said would happen in October last year. That is exactly what’s happening and it’s putting downward pressure on airfares.”

Mr Joyce also rejected accusations that Qantas was hoarding flight slots at Sydney Airport to stop other airlines from getting them.

He said for every slot they had aircraft, crew and “every intention to operate” but weather events, air traffic control, or technical difficulties were “completely legitimate reasons” to cancel flights.

“It’s nothing to do with any implication we’re trying to stop competition,” he said.

He said while there is a requirement they must operate the slot 80 per cent of the time, Qantas operates its slots at Sydney Airport at 92 per cent.

Qantas Group chief financial officer will take over as CEO Vanessa Hudson in November. Picture: NCA NewsWire / Christian Gilles

The Qantas Group posted a statutory profit after tax of $1.74 billion for FY23 – the first full-year statutory profit since 2019.

The company said underpinning the profit was completion of its $1 billion recovery program (launched in the first year of those losses), a 132 per cent increase in flying compared with FY22 and strong travel demand driving significantly higher revenue.

Mr Joyce described the company’s financial position as the “strongest it’s ever been”.

He will face more tough questions next Monday after the Australian Senate summonsed him to appear before an inquiry into the cost-of-living crisis.

It is understood he will be grilled on high airfares, his personal bonuses, the airline’s Covid travel credit scheme and outsourcing of ground handling staff.