Qantas cuts capacity, adjusts fares as fuel prices take off

Daniel Newell and Geoffrey ThomasThe West Australian
Qantas says the extra costs mean it will need to “rebalance capacity and fares in response”.
Camera IconQantas says the extra costs mean it will need to “rebalance capacity and fares in response”. Credit: Credit Qantas/TheWest

Qantas says it will be forced to trim capacity and has flagged fare hikes amid surging demand for post-COVID bookings as the airline fights to keep a lid on rising fuel prices.

In an industry update issued on Thursday, the national carrier said domestic travel continued to perform well with strong demand across all categories.

But it signalled further cuts to its flying levels over the next few months because jet fuel prices had continued to rise over the past month.

The extra costs meant it would need to “rebalance capacity and fares in response”.

“The cuts to domestic flying levels for July and August are being deepened with capacity moving from 107 per cent of pre-COVID levels to 103 per cent,” Qantas said.

“These additional reductions will progressively flow into industry booking and reservation systems in the coming days. The group will continue to monitor market conditions and adjust capacity as needed.”

Qantas said the changes should not materially impact customers because of the large number of flights on most routes and could lead to a higher seat factor on flights across the group.

Airlines have multiple fares levels on each flight — from sale fares to last-minute business class — and the greater number of passengers on each flight the higher the last minute fares.

Qantas also noted that bookings for its international services remained strong as customers escaped Australia’s winter for sunnier climes and more countries relaxed COVID restrictions.

It has already restarted its lucrative Perth to London non-stop service but it expects group-wide international capacity to remain unchanged at just under 50 per cent of pre-COVID levels by the end of July. It believes that figure could rise to about 70 per cent by the end of September.

It said a third A380 would be brought back from storage, which will return to service from June 6 on the Melbourne-Los Angeles route.

The recent relaxation of New Zealand border restrictions meant Qantas and discount carrier subsidiary Jetstar could now also ramp up flights on trans-Tasman routes.

Qantas will start a seasonal Perth-Rome service from June 22.

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