In a market update, Qantas group reports that its group domestic capacity has increased beyond previous estimates to reach 90% of pre-COVID levels in Q4 FY21; with Jetstar to exceed 100 per cent due to strong leisure demand. The airline states that all Qantas and Jetstar domestic crew are now back at work.
Qantas states that its recovery strategy “puts short term focus on cash positive flying over profit margins” in order to keep fares low to help drive demand.
Qantas is continuing to target resumption of rest of international network from late October. The airline reports that growing domestic demand and the opening of a two-way travel bubble with New Zealand are helping keep the Qantas Group’s recovery on track and allowing more parts of the business to be brought out of hibernation.
To help meet increased demand for low fares leisure travel and fill structural gaps in the Australian market, Jetstar will deploy six Airbus A320 aircraft on loan from Jetstar Japan on leisure routes.
Jetstar also expects to deploy up to five of its Boeing 787-8 aircraft, usually flown on international routes, in the domestic market from mid-year until international flying returns.
The Group has also engaged Alliance Airlines to operate three Embraer E190 aircraft from May to provide capacity on existing Qantas routes in northern and central Australia. Under an agreement announced earlier this year, Qantas can access up to 14 E190 aircraft from Alliance Airlines, giving it the flexibility to respond to changes in demand.
During the fourth quarter, 90 per cent of the Group’s aircraft will be active, compared with just 25 per cent at the height of the national lockdown in mid-2020. Qantas and Jetstar will have more aircraft operating on domestic and resources markets than pre-COVID, including all Boeing 737s and Airbus A320/A321s. Some aircraft which operate international flights including the entire A380 fleet (which are in long-term storage) and some Airbus A330s and Jetstar 787-8s, have not resumed flying.
All Qantas’ 787-9s have been reactivated and are operating repatriation flights on behalf of the Australian Government and some freight-only services.
Qantas and Jetstar say that they have seen strong demand since the two-way trans-Tasman bubble was announced with tens of thousands of bookings made in the first few days.
Qantas is preparaing for the reopening of international borders and the resumption of international flights in late October (beyond flights between Australia and New Zealand), which include reactivating aircraft and training employees.
“The Group maintains flexibility to bring forward, push back or stagger the resumption of our international flights to align with any updates to the Australian Government’s COVID-19 vaccine rollout timeline or approach to international travel.”
“We’re now seeing really positive signs of sustained recovery,” said CEO Alan Joyce. “This is the longest run of relative stability we’ve had with domestic borders for over a year and it’s reflected in the strong travel demand we saw over Easter and the forward bookings that are flowing in each week from all parts of the market.”
Joyce adds, however: “We are still facing a massive financial loss this year, which will be the second one in a row. We’ve lost more than $11 billion in revenue since the pandemic started and that number will keep growing until international travel recovers.
“We’ve used debt and shareholder equity to get through to this point, and our people have had the benefit of direct government support, which continues for those still stood down due to international border closures.
“As the recent lockdown in Brisbane showed, airlines and many other sectors remain vulnerable to snap travel restrictions until Australia’s vaccination rollout is complete.
“The vaccination program is absolutely key to restarting international flights in and out of Australia. While there have clearly been some speedbumps with the vaccine rollout, we are still planning for international flights to resume in late October. We remain in regular dialogue with the Government.”