Published on : Monday, December 9, 2013
The embattled Australian airlines, Qantas may be forced to cut flights to New Zealand and the Northern Territory as part of its $2 billion cost saving drive.
Fly-in-fly-out routes to mining communities could also be on the chopping block as part of a wide-ranging review announced Saturday by the airline, according to Qantas’s former chief economist, Tony Webber.
“The first tier is the mining routes, followed by any routes positively affected or indirectly affected by mining actions, such as those in Queensland and Western Australia.
“The least likely are sun (holiday) routes like Coolangatta, Maroochydore and Cairns,” he said.
Dr Webber, now an associate professor at the University of Sydney Business School and managing director of Webber Quantitative Consulting said it was premature to say whether this would mean cutting the routes altogether or reducing services to save money.
However, he said the airline faces some tough choices as it tries to get back in the black after announcing on Thursday it would slash more than 1000 jobs as it stares down the barrel of a $300 million half-year loss.
“One of the routes that is always really bad recently is Darwin and other Northern Territory routes,” he said.
Mr Webber said services to the New Zealand cities of Christchurch and Wellington were also at risk.
The news got worse for the national carrier today as it had its investment grade credit rating downgraded to ‘junk’ status by ratings agency Standard & Poor’s, meaning the airline could face a steep rise in its annual interest bill, higher leasing fees and the loss of investors.
However, Dr Webber said the airline’s poor results were unlikely to result in a rise in ticket prices for the traveling public.
He said while ticket prices were too low, Qantas was determined to retain 65 per cent of domestic market share, and that required it to go toe-to-toe with competitor Virgin Australia on price.
Tags: Tourism News