Qantas cuts capacity, hints at fare rise in response to fuel prices

Rising fuel prices and lower demand have pushed Qantas to cut domestic capacity and increase prices from July.

The airline said it would cut capacity from 107 per cent of pre-COVID levels to 103 per cent, despite strong demand across all domestic categories.

In an industry update on Thursday, Qantas cited rising fuel prices over the past month for the cuts and said it would need to rebalance both capacity and fares.

Customers will not be financially impacted, according to Qantas, due to a large number of flights on most routes, and those impacted will be contacted directly by the airline and offered different options.

Qantas is the first Aussies airline to announce capacity cuts due to rising fuel prices as a result of the situation in Ukraine.

Virgin Australia boss Jayne Hrdlicka revealed Virgin was operating at a higher capacity than its pre-pandemic levels and it is factoring in the higher fuel costs in its scheduled planning, according to the Financial Review. 

Rex told the Daily Advertiser in Wagga Wagga it was in the process of reviewing its entire regional network.

Qantas said its international capacity will not be impacted and will remain at just under 50 per cent of pre-COVID levels by the end of the fourth quarter of FY22 and rise to around 70 per cent by the end of the first quarter of FY23.

The airline resumed its Perth to London service on 23 May, with one return flight per day operating through the Western Australian gateway after operating through Darwin since November last year.

Qantas will reroute its Sydney-Darwin-London service to operate Sydney-Singapore-London from 19 June, and switch from a 787 back to an Airbus A380 service.

Trans-Tasman travel is on the rise for the Kangaroo carrier, with flights resuming from Australia to Queenstown and Wellington, plus additional routes to Christchurch and twice as many flights to Auckland from Melbourne and Sydney.

Jetstar too has restarted New Zealand flights, bringing back all services between Australia and Auckland, with remaining Christchurch, Queenstown and Wellington markets in the next few weeks.

A third A380 will also be brought out of storage, returning to service from 6 June to operate Qantas’ Melbourne-Los Angeles route.

With Japan travel set to restart in the coming months, Jetstar will resume flights from Cairns-Tokyo (Narita) from 20 July and Cairns-Osaka from 26 July, and Qantas will resume Sydney-Tokyo (Haneda) services from 12 September, and from Melbourne and Brisbane to Tokyo (Haneda) from the end of October, using A330s.

Bali is also in seeing strong demand, prompting Jetstar to restart direct services from all seven Australian cities it flew from pre-COVID and will be close to pre-COVID levels of capacity on the majority of routes by the end of June 2022.

Qantas also announced it would increase frequency between Sydney and Manila from five flights per week to six from 20 June increasing to daily from mid-September and will resume flights from Sydney to Santiago from 30 October, with four flights per week using its 787s.

However, the airline has pushed back the restart of flights between Sydney and San Francisco from 30 July to 30 October, accommodating customers on flights via Los Angeles.

Qantas previously announced it will start a seasonal Perth-Rome service from 22 June,  flights from Sydney to Bengaluru (Bangalore) from 14 September and flights from Melbourne to Dallas Fort Worth from 2 December.

The national carrier joins the likes of Delta and British Airways who also recently announced capacity cuts, citing rising fuel prices and staffing issues flight demand in the US and UK continues to soar.

Image source: iStock/Christopher Malek