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Qantas flies Whitsundays as economic headwinds blow

July 3, 2014 Aviation, Headline News 1 Comment Email Email

egtmedia59Jetstar International flew in May with 31.2% of its seats unoccupied, according to the airline’s latest guidance to the ASX in monthly traffic statistics. It reflects challenging economic times and the Qantas subsidiary is likely to be looking for ways to turn the situation around soon. Low-cost operations need to be as full as possible.

Qantas group passenger numbers for May 2014 were in line with the previous year. The airline continues to innovate and Qantas yesterday began direct services between Sydney and the Great Barrier Reef Airport, broadening travel options for Sydney and international customers heading to The Whitsundays.

Qantas will operate three flights a week on Wednesday, Saturday and Sunday during peak season (July and September through to January) and bi-weekly services on Wednesday and Sunday off peak.

It has been almost 10 years since Qantas served the route and provided customers with a premium flight alternative, the airline noted.

Overall, the Qantas Group still has some way to go. Capacity (Available Seat Kilometres) increased by 3% in May 2014 and Group demand (Revenue Passenger Kilometres) increased by 1.5%, resulting in a revenue seat factor of 73.4% which was 1.1% lower than the previous year.

Jetstar International’s disappointing May load factor reflects the economy rather than the airline’s management. Tigerair, 60% owned by Virgin Australia, also recorded a disturbingly empty month in May. In that month, Tigerair flew 29.7% of its seats unoccupied.

Jetstar Domestic seats, for the record, were 22.3% unoccupied in May.

Qantas noted that demand at Qantas Domestic in the month was affected by weak consumer confidence and business sentiment. The Federal Budget on 13 May 2014 wouldn’t have helped the latter half of the month, though Qantas doesn’t mention it.

On a well-publicised move on 21 May 2014, Qantas announced that in response to changing conditions in the domestic market, total domestic capacity growth (comprising Qantas Domestic, QantasLink and Jetstar Domestic) would be zero in each of the first three months of financial year 2015 compared to the corresponding period in 2014.

The period has just begun and the airline is understood to be carefully monitoring the response to its move.

Qantas Group passenger numbers for the financial year to 31 May 2014 increased by 1.1% from the previous year. Group capacity increased by 1.1% and demand decreased by 1.2 per cent, resulting in a revenue seat factor of 77.4 per cent which was 1.9% lower than the previous year.

For the financial year to date, Qantas Group yields were lower than the prior corresponding period. Total Domestic (comprising Qantas Domestic, QantasLink and Jetstar Domestic) yields were lower than the prior corresponding period as a result of market capacity growth and weak demand. Total International yields were lower than the previous corresponding period “due to persistently high levels of competitor capacity growth into Australia”.

Positive recent developments have seen Qantas Frequent Flyer reach the milestone of 10 million members. That was in early June. The program now has hundreds of program partners including 38 partner airlines, all major Australian banks, Woolworths and Optus.

On 18 June 2014, Qantas, together with joint owners and oneworld partners Cathay Pacific and British Airways, unveiled the new Los Angeles Business Lounge at Los Angeles International Airport. The lounge currently accommodates 400 customers, with all phases due to be completed in early 2015 including a new Qantas First Lounge.

On 12 June 2014, Qantas announced it would repay AUD 450 million of senior unsecured bank debt eight months ahead of schedule. That announcement, combined with other positive developments. has significantly extended the Group’s debt maturity profile. Qantas points out that it retains a strong liquidity position. with over AUD 3 billion in cash and undrawn bank lines.

Written by : Peter Needham

Currently there is "1 comment" on this Article:

  1. AgentGerko says:

    Good decision QF. Finally picked up on what agents have been saying for years, that places like the Gold Coast, Hamilton Island and Cairns need a few flights for premium passengers. Not everyone wants to be squashed in a minimum pitch low cost seat.

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