The domestic dog fight between Qantas and Virgin Australia has kept airfares relatively low and the continued fight should ensure no major increases, even though a recent analysis by Macquarie Equities shows that fares between Sydney and Melbourne – one of the world’s busiest airline corridors - are about 10 per cent higher than the same time last year. Aviation commentator Tony Webber predicts a fare rise of 5 to 10 per cent in the next two years. The good news is that any removal of the Qantas Sale Act will not stop the fare battle. If anything, it will give Qantas an opportunity to step up the fight.
Qantas already suffers from a perception that it is “the international airline that doesn’t fly anywhere” with its network of routes already depleted and with more pain to come. The daily Perth to Singapore route will be scrapped later this year while, domestically, Qantas no longer operates flights from the mainland to Tasmania with its subsidiaries Jetstar and Qantaslink taking over. This week, Qantas ended its codeshare arrangement with South African Airways and there is widespread conjecture as to how enthusiastically the carrier’s much-vaunted partnership with Emirates has been received by customers.
FREQUENT FLYER SCHEME
Unsurprisingly, this is one of the most contentious areas for customers of the troubled airline. A 49 per cent sale of the scheme could deliver $1.3-$1.6 billion in cash to Qantas, but so far the airline has held back from putting it on the market. Some experts have cautioned that there could be a devaluation of points in the long term. As Qantas cuts flights and routes, frequent-flyer seats may become harder to get. But for the moment, there seems to be no imminent change to the scheme or the points.
Tyler Brule, the London-based international style arbiter and founder of Monocle and wallpaper* magazines, once that wrote that Qantas has “an excellent product on the ground and a so-so product in the air”. Indeed, Qantas has long suffered from a perception of inconsistent cabin service with one crew said to differ in standards from another. It will be difficult for the airline to manifestly improve cabin service amid low morale due to mass redundancies and cutbacks with cabin service possibly declining as a result. The airline, with star chef Neil Perry as its food ambassador, may seek to cut costs in the meals it serves but it risks alienating high-yielding business customers and in economy drawing comparisons to its budget offshoot, Jetstar. There’s a theory that ditching in-flight magazines saves on fuel costs but passengers can expect to find the thick Qantas magazine on board as long as it continues to attract advertising.
Despite its plan to slash its workforce Qantas says it is proceeding with plans for new lounges – where it is unquestionably a market leader - in Los Angeles, Brisbane (domestic) and Hong Kong. Qantas has already invested heavily in self-service check-in kiosks for tickets and baggage at major airports, eliminating or reducing the need for labour-intensive check-in counters. Expect to see fewer Qantas staff assisting passengers at self-service kiosks and more contract staff.
Flights from Sydney and Brisbane to Singapore will be downgraded from Boeing 747 jumbo jets to Airbus A330 aircraft by September. These jumbos were recently refitted with the same premium economy seats, lie-flat beds in business class and widescreen in-flight video displays as Qantas’ flagship Airbus A380. In their place will be smaller Airbus A330s without premium economy seating or fully-flat beds in business. Qantas has promised new cabins for the A330s, but it could be a while coming. All up, six Boeing 747 jumbos will be cut by 2016 and all 15 of its domestic fuel-guzzling Boeing 767 fleet by 2015.