Qantas to cut jobs as chief blames rising costs for staff restructure
Qantas International chief executive Cam Wallace has blamed rising costs for expected job losses, despite a new report showing the airline industry’s record profits and high airfares.
Qantas International chief executive Cam Wallace says the biggest challenge facing the airline is rising costs, which has prompted the current staff restructure expected to result in significant job losses.
Speaking in Auckland on Monday, Mr Wallace said demand for international travel remained strong but it was a constant uphill battle competing with 55 other airlines.
He said they were “forever looking at what competitors are giving to their customers” and what they could do to remain competitive without increasing airfares.
“Customers aren’t prepared to pay a lot more for air tickets so we’ve always got to stare into our cost base, use automation, use digitalisation and say ‘how can we continue to be efficient?’ because you need a really effective cost base,” Mr Wallace said.
Rising costs had contributed to the recent Qantas staff restructure expected to lead to a significant number of redundancies in the corporate office of the airline.
Mr Wallace said it was an ongoing process to reduce duplication across the business and improve efficiency.
“As a business we compete with a lot of carriers who are government-owned who don’t have such a profit imperative as we have as a publicly-listed company so we’ve got to compete smartly and strategically and part of that is always looking at costs, and that’s what that is about,” he said.
“Getting rid of duplication, making sure we’ve got the right spans and layers and making sure we’re leveraging technology to be more efficient, and we do that with the customers but we’ve got to look at ourselves as well and say how we keep our costs as low as possible.”
The latest Australian Competition and Consumer Commission report on the domestic airline industry painted a different picture, highlighting the strong profits of Qantas and Virgin Australia amid a lack of competition.
ACCC Commissioner Anna Brakey said demand had outpaced seat capacity in recent months, resulting in record load factors and higher airfares.
In October, Jetstar flights operated with an average of 92.2 per cent of seats filled, Virgin Australia recorded an average load factor of 88.8 per cent, and Qantas 77.5 per cent.
At the same time, airfares climbed to their highest level since December 2022, and were up 4.5 per cent on 2019 levels.
Ms Brakey said the data highlighted the need for greater competition in the domestic airline industry.
“What we do see is that there is constrained capacity in the market, so capacity hasn’t rebounded to the same extent as passenger numbers have, and as a result we have seen prices go up,” she said.
“We are seeing some increase in capacity, with new aircraft or redeployed aircraft from Jetstar Asia coming back, so we are seeing some improvement but the load factors are high, and airfares are higher.”
Ms Brakey said having a viable aviation industry was critical but domestic travel also needed to be affordable and good value for customers.
To that extent, the ACCC was focused on ensuring any barriers to entry for new domestic airlines were as “low as they can possibly be”, she said.
“If there’s not competition from new entrants, there’s at least the threat of new entry there keeping some competitive pressure on the Qantas Group and Virgin,” said Ms Brakey.
In terms of market share, Qantas dominated the domestic landscape with a 37 per cent slice, ahead of Virgin Australia on 33.6 per cent and Jetstar on 27.8 per cent.
Regional airline Rex carried a mere 1.6 per cent of travellers in October.
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Originally published as Qantas to cut jobs as chief blames rising costs for staff restructure
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