The Qantas Group has announced temporary reductions to flights across Asia in response to a drop in demand due to Coronavirus. The net profit impact of Coronavirus is estimated at between A$100 million to $150 million for FY20 – a figure softened by lower fuel prices.
Reductions of around 5% will be made to Qantas and Jetstar’s flying between Australia and New Zealand. There is no change to other key parts of the Qantas International network, such as the US and UK, which remain unaffected.
Reductions of around 2% of total Group domestic Australian flying in the second half are being made to reflect market demand. Qantas International will cut 16% of Asia capacity until at least the end of May, impacting flights from Australia to mainland China, Hong Kong and Singapore.
- Sydney-Shanghai (the airline’s sole route to mainland China) – will remain suspended
- Sydney-Hong Kong – reduced from 14 return flights per week to 7
- Brisbane-Hong Kong – reduced from 7 return flights per week to 4
- Melbourne-Hong Kong – reduced from 7 return flights per week to 5
- Melbourne-Singapore – flights to be operated by Boeing 787s instead of larger Airbus 380s
Qantas will reduce flights across the Tasman by 6% with cancellations on Sydney-Auckland, Melbourne-Auckland and Brisbane-Christchurch. Jetstar will reduce its Tasman flying by 5%.
Qantas group CEO Alan Joyce said the airlines were taking action now to limit exposure to softening markets: “Coronavirus resulted in the suspension of our flights to mainland China and we’re now seeing some secondary impacts with weaker demand on Hong Kong, Singapore and to a lesser extent Japan. Other key routes, like the US and UK, haven’t been impacted.
“We’ve also seen some domestic demand weakness emerging, so we’re adjusting Qantas and Jetstar’s capacity in the second half.
“What’s important is that we have flexibility in how we respond to Coronavirus and how we maintain our strategic position more broadly. We can extend how long the cuts are in place, we can deepen them or we can add seats back in if the demand is there. This is an evolving situation that we’re monitoring closely.
“We know demand into Asia will rebound. And we’ll be ready to ramp back up when it does.”