Airfares to stay ‘significantly higher’ than 2019, says Qantas at record profit announcement

Qantas has warned airfares will remain ‘significantly higher’ as the airline announced a record $1.43bn half year profit.

First look at what Qantas calls the "best airline seats in the world" for business class passengers flying non-stop between Sydney and London.

Qantas has offered little hope of airfare relief after posting a record $1.43bn half year profit in a “huge turnaround” for the airline.

The announcement to the ASX noted that airfares would moderate as more airline seats became available but prices would remain “significantly above 2019 levels”.

On Tuesday chief executive Alan Joyce said airfares were about 20 per cent higher than pre-Covid-19 but financial analysts calculated the average increase was more like 45 per cent.

Since borders reopened in Australia, airfares in excess of $20,000 return have been charged for international business class, and between $500 and $700 for one-way economy on domestic routes.

Questioned about the fairness of high fares against the backdrop of a large profit, Mr Joyce said there was plenty of opportunity for people to nab a bargain through regular sales.

“We’ve got a million seat sale across our network today, fares as low as $39 on Jetstar between Sydney and the Gold Coast and some amazing international fares — Jetstar is selling roughly around $200 fares to Honolulu, Bali, New Zealand, so that’s what’s going to happen as we get more and more capacity in the year,” he said.

“Because we’ve gone on sale, our competitors have gone on sale today. Virgin has added 250,000 seats, Bonza have gone on sale as well so this is competition in real time and I think it’s great for the Australian consumer.”

He also reaffirmed his intention to step down as CEO at the end of the calendar year, after 15 years in the top job.

The Transport Workers Union on Thursday called for an “urgent meeting” with the Qantas board to discuss the succession plan, and the need to invest in the workforce after outsourcing more than 1600 jobs during the pandemic.

The legality of the outsourcing remains the focus of a High Court battle between Qantas and the TWU, with hearings expected in April or May.

Renders of what Qantas calls the "best airline seats in the world" for business and first class passengers flying between Sydney and London.

Although load factors on flights were not far above what they were pre-Covid-19, at 85.4 per cent compared to 84.5 per cent, Mr Joyce also said forward bookings were strong and demand for travel was not expected to abate for some time, ensuring fares remained high.

Furthermore Qantas research showed people were “prioritising air travel and experiences” at the expense of other discretionary purchases such as alcohol and homewares.

“For the next 12 months, research shows a net increase of 33 per cent of our frequent flyers wanting to spend more on air travel internationally, and over 30 per cent domestically,” said Mr Joyce.

“I will say Qantas does charge more than other airlines, in the domestic market for example because you get more value with Qantas in other areas, and it’s all about value.”

Proposed Project Sunrise flights between Australia’s east coast and major global cities like New York and London were expected to carry a hefty price tag, particularly for business and first class.

Mr Joyce unveiled the seats that would be installed in the pointy end of new A350-1000s ahead of the first non-stop flights from Sydney-London in late 2025.

Calling them the “best airline seats in the world”, Mr Joyce said they were designed with passenger comfort in mind.

“Qantas has been the leader in opening up new long-haul flights for most of our history, and we’re bringing everything we’ve learned, both technically and in terms of passenger comfort, to Project Sunrise flying,” said Mr Joyce.

“We think our A350 cabins have the most sophisticated and thoughtful design of any airline, combining cutting edge technology with sleep research to shape the look and feel for what is effectively a new era of travel.”