Qantas scraps fuel surcharge but raises fares

Qantas is removing its fuel surcharges on international flights but says airfares will not become cheaper

Australian carrier Qantas will axe fuel surcharges on international ticket prices, but will raise base air fares to compensate for the cut.

The airline said on Tuesday that fares would not change, because the surcharge would be “absorbed” into base fares.

The move comes despite a call for the airline industry to cut fares on falling oil prices.

But Qantas said air fares were very competitive and lower than when the surcharge was introduced a decade ago.

“If you look at the trends in global aviation over the past decade, costs and competition have been increasing while fares and airline margins have been falling,” said Chief Executive Alan Joyce in a statement.

“The dynamics of this market have seen Qantas International post significant losses in the past two years,” he said, adding that yields were still significantly lower than before the global financial crisis.

The national carrier is recovering from the heavy losses and announced last month that it expects to post its best first-half result since 2010.

That compares to its record A$2.8bn ($2.2bn; £1.5bn) net loss in the 12 months to June last year.

Oil’s impact

Oil prices have fallen 60% since a peak in June and the International Air Transport Association (Iata) did predict in December that average returnfares for passengers would be over 5% lower this year from 2014.

But Qantas pointed out that with the lower fuel prices, Iata estimates that net profit airlines make per passenger this year will increase by just $1 to $7, compared to last year.

Meanwhile, Qantas is not the first airline to scrap the oil surcharge on air fares.

Qantas rival Virgin Australia got rid of its last remaining fuel surcharges last week, while Malaysian budget airline AirAsia said on Monday that it was also removing the cost in all its regional affiliates and long-haul operations.

In the Middle East, Emirates said it was considering removing the charge last week, while Qatar Airways said it will reduce the cost.

Sourced from BBC News


‘Man with vision’ Walsh named oneworld chairman

Willie Walsh, chief executive of British Airways/Iberia parent, International Airlines Group (IAG), is to take over as chairman of the oneworld alliance.

He succeeds American Airlines’ chairman, Tom Horton, who has held the position since December 2011.

oneworld said Walsh would act as ‘first among equals’ of the chief executives of its member airlines, starting his tenure as the alliance completes its biggest expansion to date: TAM Airlines and US Airways will both join on 31 March and SriLankan Airlines on 1 May.

oneworld currently comprises airberlin, American Airlines, British Airways, Cathay Pacific Airways, Finnair, Iberia, Japan Airlines, LAN Airlines, Malaysia Airlines, Qantas, Qatar Airways, Royal Jordanian and S7 Airlines, together with more than 30 of their affiliated carriers.

With the latest additions, the alliance will serve nearly 1,000 airports in 150 countries, carrying over 500m passengers a year on a combined fleet of 3,300 aircraft. It will operate more than 14,000 daily flights and generate over US$140bn annual revenues.

oneworld chief executive, Bruce Ashby, said: ‘We thank Tom Horton sincerely for his leadership of oneworld during a period of unprecedented growth for the alliance and at a time when his own American Airlines has been undergoing its merger with US Airways.

‘He has played a pivotal role in strengthening oneworld also through the significant deepening of cooperation between American and so many of our other member airlines in recent years.

‘We are fortunate to have, in Willie Walsh, a man with the vision, determination and overall skills and capabilities to lead us forward in the next phase of our journey to establish oneworld firmly as the first choice alliance for frequent international travellers the world over.’

Walsh became chief executive of IAG in January 2011, joining from BA, where he had been chief executive since October 2005.
Before that he was chief executive of Aer Lingus, then also part of oneworld. Walsh joined Aer Lingus in 1979 as a cadet pilot and worked his way through the ranks to become a captain in 1990.

He began his move to management in 1989, fulfilling various roles in the flight operations department, and in 1998 was appointed chief executive of Futura, Aer Lingus’s Spanish charter carrier.

He returned to Dublin in 2000 to become chief operating officer of Aer Lingus and was appointed chief executive in October 2001.

Sourced by e-tid

Qantas suffers second ratings agency downgrade

Qantas suffers second ratings agency downgradeBy Phil Davies |09 January 2014 at 08.31 GMT

A second ratings agency has downgraded the credit rating of Qantas to below investment grade.The downgrade by Moody’s follows a similar cut by Standard & Poor’s last month.

The Australian carrier issued a profit warning in December together with 1,000 job cuts amid strong competition in domestic and international markets.

Moody’s said a “sharp deterioration in the company’s core domestic business” was a key reason for the downgrade, the BBC reported.

Profits at Qantas’s domestic operations, the biggest contributor to its growth, fell 21% in the last financial year.

Moody’s cut the airline’s rating to Ba2 from Baa3, adding that the outlook on ratings was “negative”.

Senior vice president Ian Lewis said: “The downgrade to Ba2 reflects a worse than expected impact on Qantas’s credit profile of a marked sharp deterioration in the company’s core domestic business, which has been a key supporting factor of its previous investment grade rating.

“The cause of the deterioration in the operating profile is largely due to the aggressive competitive actions by Qantas’s key domestic competitor, Virgin Australia.

“These actions, which include capacity additions, have shifted the market dynamic against Qantas in a structural way.

“As such, we expect that Qantas’s business risk and financial leverage will remain at elevated levels and inconsistent with an investment grade rating.”

He added: “The material downturn in Qantas’s domestic business also comes at a time when the carrier is grappling with a turnaround in its loss making international mainline business.”

Qantas warned last month that it expects to make losses of up to A$300 million in the July-to-December period – the first half of its current financial year.

Australian prime minister Tony Abbott has backed calls for the airline to be “unshackled” from laws that limit foreign ownership to 49%.

Moody’s said that “a form of government support would, depending on form and structure, also potentially provide support for Qantas’s liquidity position and/or credit profile”.

Qantas is to provide an update on its AU$2 billion transformation programme, capital expenditure and structural review in February.

The airline’s chief financial officer Gareth Evans said the Moody’s downgrade was not unexpected and underlined the importance of taking “decisive action” to address an extremely difficult operating environment.

He admitted that earnings conditions have deteriorated rapidly in recent months and the airline faces “some of the most challenging circumstances” in its history, “including an uneven playing field in Australian aviation”.

“We continue to talk to the Australian government about options for resolving this situation,” said Evans.

“For Qantas passengers, we remain absolutely focused on providing the network and service that has earned record customer satisfaction over the past year.”

Sourced from Travel Weekly

Qantas issues profit warning and cuts 1,000 jobs

Qantas issues profit warning and cuts 1,000 jobsQantas is cutting 1,000 jobs after announcing a shock profits warning.

The Australian airline predicted a half-year loss of up to A$300 (£165 million) for July to December.

The airline said trading conditions had seen a “marked deterioration” amid tougher competition and slowing demand.

Chief executive Alan Joyce said the airline was facing “immense challenges”.

“Our November figures have shown us that there continues to be deterioration in the revenue performance of the business and our competitor [Virgin Australia] has just received $350m, meaning they can continue their uncommercial behaviour,” he told a media teleconference after the announcement.

“We are putting all options on the table in a review of our structure.”

The company’s share price fell 14.1% after the announcement. Qantas also said the outlook for its January to June period in 2014 remained “volatile”.

Sourced by Travel Weekly

Branson hits out at ‘badly managed’ Qantas

Branson hits out at 'badly managed' QantasBy Phil Davies

Qantas has come under fire from Sir Richard Branson who claims that if it was “better managed” then it would not be in a “financial mess”.The Virgin Australia boss hit out following Qantas’ backing of a plan suggested by Australian treasurer Joe Hockey that foreign ownership rules covering the country’s flag carrier should be relaxed.

Current laws restrict foreign stakes in Qantas to 49%, with overseas airlines allowed to own just 35%.

Qantas claims this puts it at a disadvantage to rivals such as Virgin Australia, which is not subject to the regulations.

But Sir Richard, writing on the website, claims that the Australian market is more than competitive already.

He wrote: “We began competing with Qantas in 2000 with just two planes and one route.

“Over the last 13 years we have grown the airline to more than 140 planes but flying in Australia has sometimes been akin to having a bleeding competition with a blood bank.

“Qantas was the giant in the market with a myriad of foreign alliances and advantages determined to bleed Virgin Blue, now Virgin Australia, dry.

“However thanks to the superior quality of Virgin Australia’s management and its staff, it has not only survived but has now managed to create a much more level playing field which is offering the customer more choice and better value.”

Qantas chief executive Alan Joyce wants “urgent, immediate action” from regulators to ensure his airline grows, despite already sealing a tie-up with Emirates and dominating the Australian market, the Daily Telegraph reported.

But Sir Richard said any such move from the authorities would be “grossly unfair”.

“Today Qantas’s alliances are still larger than Virgin’s, but our improved position is having a big impact on Qantas, who are now complaining about the intensified competition.

“It seems strange to me that a Liberal government would even consider tilting the playing field once again in Qantas’s favour.

“It would be grossly unfair, undermine the great work of Virgin Australia’s management team and staff and bewilder investors in Australia and worldwide.

“If Qantas was better managed and offered the public a decent service it would not be in the financial mess it is currently claiming it is in.

“Government should be there to encourage competition, not to prop up the weak when the going gets tough.”

Sourced from Travel Weekly

Which airline passengers pay the most for extras?

Ryanair takes a lot of flak for charging passengers extra for everything from checking in luggage to reserving a seat, but passengers flying on rival carrier actually pay more for ancillary services.

In fact, is one of the most successful airlines in the world at squeezing additional revenue out of passengers, according to a new report compiled by IdeaWorks Company.’s ancillary earnings of $45.83 per passenger last year placed it fourth in a league table of carriers, behind AirAsiaX, Spirit and Qantas.

It is believed to have earned more than 26% of its total revenue from a la carte sales, such as onboard meals and duty-free, while Ryanair makes just over 21% of its income from the sale of extra.

Even though the €1.064 billion earned by Ryanair made it the sixth biggest earner in the world for ancillary revenue, the Irish carrier didn’t even feature in the top 10 league table for income per passenger.

Neither did easyJet, whose total earning of €880.9million were estimated as it declined to provide official figures to the compilers of the report.

Overall, 53 carriers earned a total of $27.1 billion from the sale of ancillary services and products, up from $2.45 billion earned by just 23 airlines in 2007.

Sourced by Travelmole

Cathay lodges opposition to Hong Kong budget carrier

Cathay Pacific is opposing plans by Qantas to start a budget carrier in Hong Kong.

The Australian airline is seeking to create Jetstar Hong Kong as a joint venture with China Eastern Airlines.

But Cathay has lodged a formal objection to the application, claiming the proposal violates local laws and granting access would be detrimental to the city’s interests.

The airline argues that Jetstar Hong Kong does not meet the requirement that it must have its principal place of business in the city.

About half of Hong Kong’s traffic is controlled by Cathay and Asia’s biggest international carrier is seeking to defend that dominance while China’s economic growth slows, Bloomberg reported.

Cathay said: “The application would set a dangerous precedent by granting control of Hong Kong’s hard-negotiated sovereign air traffic rights to a carrier that is nothing more than a franchise operation controlled by a foreign airline.”

Sourced from Travel Weekly