By Jessica Yun and John McDuling
Qantas chief executive Alan Joyce insists the airline’s move to cut the number of domestic flights it offers until March next year will not worsen chaos at airports, as the carrier brings on thousands of workers for the upcoming winter school holidays.
In an update to the stockmarket on Friday, Qantas announced it would cut ‘capacity’ on high -frequency routes between Sydney, Melbourne and Brisbane by at least 10 per cent until March next year. The move was made in response to surging oil prices, but comes after weeks of problems at airports, where Qantas passengers have been hit by cancelled flights, long queues and lost baggage.
Qantas will cut domestic capacity by a further 5 per cent until the end of September. Credit: James Brickwood
Asked at a press conference whether the capacity cuts would worsen the situation, Joyce said: “I think actually, it will help.”
“The reality is we’re taking capacity out because of oil prices. We buy over $4 billion in fuel every year. Our fuel bill has gone through the roof. So that has to come through in terms of the economics of the business.”
But passengers should not expect to avoid lining up altogether during the peak July school holiday period, Joyce indicated. “There were queues at airports before COVID. The queues are not new,” he said. “They were terrible at Easter, and they’re a lot better now.
“We think it will get smoother and smoother over the next weeks and months ahead. And absolutely [our] performance at the moment, it’s not where we need it to be, but it will improve over the next few weeks.”
Barrenjoey analyst Matt Ryan said the moves to cut domestic flights would help Qantas mitigate the impact of surging oil prices, which have added over $1 billion to its fuel bill, and could also help the airline improve its customer service.
“Bringing down capacity also provides some benefits to the workforce, which could result in an improvement to operational and customer service issues being encountered at the moment,” he said in a note to clients.
Qantas has been under fire from travellers for weeks over issues with delayed or cancelled flights and customer service, including long waits for calls at its contact centre. The company, which shed thousands of jobs at the start of the COVID-19 pandemic when flights were grounded, has been battling to re-staff its workforce.
Qantas has been offering more domestic flights than before the pandemic, amid a surge in interstate travel. However, international flying is still only at 50 per cent of pre-COVID-19 levels, and is expected to rise to 70 per cent by March next year.
The airline said it expects the impact on customers from schedule changes in coming weeks to be minimal, with travellers on cancelled flights to be contacted with alternative options, within two hours of the original booking.
The airline reiterated that there will be 15 per cent more ground handling staff during the July school holidays compared to the Easter break, as airlines make readjustments to side-step lengthy queues and chaotic airport scenes seen recently.
Qantas’ ground handling workforce has been entirely outsourced after slashing 2000 workers during the pandemic, in a move the Federal Court later found was unlawful.
$5000 staff sweetener, Jetstar CEO to depart
In efforts to retain staff, the national carrier on Friday also announced that up to 19,000 employees will be offered a one-off $5000 payment if they sign up to the company’s latest wage agreement in a move that will cost it $87 million.
Qantas is currently negotiating to increase wages by two per cent, following a two-year wage freeze for all staff during the pandemic. Joyce said the airline “can’t afford” to increase salaries beyond the two per cent threshold, but could afford the one-off payment.
Jetstar CEO Gareth Evans is departing in December.Credit: Michael Quelch
Qantas also announced the departure of Jetstar chief executive Gareth Evans at the end of the year. Evans, considered a potential successor to Joyce has been with the company for 23 years. “I tried to persuade him not to go,” Joyce said. “He’s been fantastic to the company. And I wish him the best.”
The departure of Evans comes after two decades at the company, during which Evans has also served as Qantas chief financial officer and CEO of Qantas International. He started as Jetstar CEO in 2017.
More than 1000 operational staff have been hired across Qantas and Jetstar since April and hundreds more added to call centres to reduce call wait times. The carrier said 20 per cent of staff will be on standby over the July school holiday period in case of sick leave, and new check-in and baggage kiosks will be rolled out, beginning in Sydney.
In recent comments about delayed or missing baggage over the long weekend, Joyce said it was an “airport service issue” caused by an IT outage at Sydney and Brisbane airports.
Qantas shares dipped 1.6 per cent to $4.45 at the end of Friday trading.
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