Qantas has announced that it will invest a further $80 million in customer improvements across FY24 in addition to the $150 million previously budgeted, which will be funded from profits. The airline group is seeking to enhance its image with this investment targeting what it called “a number of customer pain points”.
Qantas is targeting improvements such as better contact centre resourcing and training, an increase in the number seats that can be redeemed with Frequent Flyer points, more generous recovery support when operational issues arise, a review of longstanding policies for fairness and improvements to the quality of inflight catering.
In an investor update, Qantas reports that overall travel demand remains strong, with trading conditions in the first quarter of FY24 similar to the last quarter of FY23 but notes that fuel prices have increased by around 30 per cent since May 2023, including a 10 per cent spike since August. This is driven by a combination of higher oil prices, higher refiner margins and a lower Australian dollar.
If sustained, the high fuel price is expected to see the Group’s 1H24 fuel bill increase by approximately $200 million to $2.8 billion after hedging. A further $50 million impact is expected due to non-fuel related foreign exchange changes, said Qantas.
“The Group will continue to absorb these higher costs, but will monitor fuel prices in the weeks ahead and, if current levels are sustained, will look to adjust its settings. Any changes would look to balance the recovery of higher costs with the importance of affordable travel in an environment where fares are already elevated.”
Qantas states that new aircraft deliveries and wet-leasing arrangements will help the airline and Jetstar boost international capacity by 12 percentage points by the end of the calendar year – an increase of almost 50 additional flights a week.
This includes Qantas resuming its Sydney-Shanghai services and starting two new routes, Brisbane-Wellington and Brisbane-Honiara, as well as a new Jetstar service from Brisbane to Tokyo.
Both international and domestic capacity for 1H24 is materially unchanged from estimates given in late August 2023.
In summary, Qantas stated that the Group remains in a “very strong financial position, including its debt levels and continued strong revenue intakes”.