Bowing to pressure from foreign competition, Qantas is expected to cut more than 10 major international routes in August. The Australian flag carrier has been unable to compete with Asian competitors, who often have a cost base that is 40% lower than Qantas.
Since 1995, Qantas’ share of international traffic into and out of Australia has dropped from 40.3% to 19.5% in 2010.
Routes to Honolulu, New York, Santiago, Mumbai, Buenos Aires, Manila and Hong Kong are expected to be cut.
However, Qantas is expected to announce the creation of a new joint venture full-service airline called Qantas Asia at the same time as the cuts. The new airline will be based in China or Singapore, which will allow it to cut labour costs and compete more evenly with Asian carriers.