Qantas Group provides customers more flexibility due to Coronavirus

Last updated on

The Qantas Group has announced further cuts to its international flying, reducing capacity by almost a quarter for the next six months.

  • Qantas and Jetstar customers given option to cancel flights and receive travel credit
  • Applies to customers with existing and new bookings on domestic and international flights
  • Offer available until 31 March 2020 for travel up to 31 May 2020.

Qantas and Jetstar have introduced greater flexibility for customers wishing to change their travel plans, following increased travel restrictions being implemented by various governments around the world due to the evolving Coronavirus situation.

These changes apply to all domestic and international flights for Qantas, QantasLink and Jetstar (including Jetstar domestic services in New Zealand and Jetstar Asia’s flights between Darwin and Singapore).

EXISTING BOOKINGS

Customers with existing bookings on any domestic or international flight until 31 May 2020, who no longer wish to travel, can cancel their flight and retain the value of the booking as a travel credit voucher. This needs to be processed by 31 March 2020.

Travel credit vouchers can be used for travel on any domestic or international flights. Qantas and Jetstar will waive the change fee once customers are ready to rebook.

  • For Qantas customers, travel credit can be redeemed for travel for up to 12 months from the original booking.
  • For Jetstar customers, travel vouchers can be redeemed in one booking only within 6 months of issue, for travel within 12 months of new booking date.

Qantas Frequent Flyers who have booked classic redemption flights on Qantas, Jetstar and all partner airlines, and no longer wish to travel, will have change fees waived.

NEW BOOKINGS

To provide customers with greater flexibility and confidence when they book, customers who make a new domestic or international booking and later decide they no longer wish to travel, can cancel their flight and retain the value of the booking as a Qantas travel credit or Jetstar travel voucher.

This applies to bookings made from 10 March 2020 until 31 March 2020 for travel before 31 May 2020. This policy supersedes the previous policy to waive change fees announced on 10 March.

The same conditions apply for the vouchers as existing bookings (outlined above).

ADVICE FOR CUSTOMERS

Customers should not call the contact centres. Due to high demand, we are experiencing long call wait times.

To access this offer:

  • Qantas customers should visit Manage Booking on Qantas.com, select ‘Cancel’ and then ‘Voucher’.
  • From 9am tomorrow Monday 16 March 2020, Jetstar customers should go to Manage My Booking on Jetstar.com.  Please do not call the Jetstar contact centre before that time should you need further assistance.

If flights were booked through a travel agency or third-party website (eg. Webjet, Booking.com), customers will need to contact them directly to make changes to their booking.

COMMENTARY

Comments from Qantas Group Chief Customer Officer Stephanie Tully:

“Following the introduction of increased travel restrictions from governments around the world, Qantas and Jetstar are introducing greater flexibility for customers booked on all domestic and international flights.

“We understand that some customers would prefer not to travel at the moment.

“We have removed the standard change fees, where it applies, and are giving customers the option to cancel their flight and receive a travel voucher that can be used anywhere on our network at a later date.

“Travel restrictions are being introduced by governments to contain the spread of the Coronavirus, not because of the risk of contracting the virus on a flight.

“Medical experts, including Australia’s Chief Medical Officer and the World Health Organisation, continue to advise that it continues to be safe to fly and the risk of contracting the Coronavirus on an aircraft remains low.”

The Qantas Group has announced further cuts to its international flying, reducing capacity by almost a quarter for the next six months.

The latest cuts follow the spread of the Coronavirus into Europe and North America over the past fortnight, as well as its continued spread through Asia, which has resulted in a sudden and significant drop in forward travel demand.

These additional changes will bring the total international capacity reduction for Qantas and Jetstar from 5 per cent to 23 per cent versus the same time last year and extend these cuts until mid-September 2020.

The biggest reductions remain focussed on Asia (now down 31 per cent compared with the same period last year). Capacity reductions to the United States (down 19 per cent), the UK (down 17 per cent) and Trans-Tasman (down 10 per cent) will also be made in line with forward booking trends.

CHANGES TO SERVICES

Rather than exit routes altogether, Qantas will use smaller aircraft and reduce the frequency of flights to maintain overall connectivity.

This approach results in eight of the airline’s largest aircraft, the Airbus A380, grounded until mid-September. A further two A380s are undergoing scheduled heavy maintenance and cabin upgrades, leaving two of its A380s flying.

In response to strong customer demand for the direct Perth-London service, the existing Sydney-Singapore-London return service (QF1 and QF2) will be temporarily re-routed to become a Sydney-Perth-London service from 20 April.

The start of Qantas’ new Brisbane-Chicago route will be delayed from 15 April to mid-September.

Jetstar will make significant cuts to its international network, including suspending flights to Bangkok and reducing flights from Australia to Vietnam and Japan by almost half. Jetstar’s daily Gold Coast to Seoul flight was suspended last week.

(See table below for more detail of international network changes.)

Domestically, Qantas and Jetstar capacity reductions will be increased from 3 per cent to 5 per cent[1] through to mid-September 2020, in line with broader economic conditions.

In total, this is the equivalent of grounding 38 Qantas and Jetstar aircraft[2] across the international and domestic network. The Group’s total capacity reduction changes from 4 per cent (announced on 20 February) to 17 per cent for the last quarter of FY20.

Given the reduced flying across the Qantas Group fleet, maintenance work will be brought forward where possible to make best use of this time.

IMPACT ON FINANCIAL PERFORMANCE

The Group is taking decisive action to mitigate the significant adverse impact of Coronavirus on demand, including longer range capacity cuts that improve the business’ ability to reduce costs. However, given the dynamic and uncertain nature of this situation, it is not possible to provide meaningful guidance at this time on the size of that impact on Group earnings for the remainder of FY20.

In line with its Financial Framework the Group is in a strong position, with low debt levels and a long debt maturity profile, $1.9 billion in cash plus a further $1 billion in undrawn facilities and $4.9 billion in unencumbered assets.

To help maintain this position in the face of current uncertainty, the Board has decided to cancel the off-market buyback announced in February, which will preserve $150 million in cash. The interim dividend of 13.5 cents per share will still be paid on 9 April.

COST REDUCTION MEASURES

In addition to cutting capacity, a number of cost reduction measures will be triggered across the Qantas Group, including:

  • Annual management bonuses set to zero for FY20.
  • For the remainder of FY20:
    • Qantas Chairman will take no fees.
    • Group CEO will take no salary.
    • Qantas Board will take a 30 per cent reduction in fees.
    • Group Executive Management will take a 30 per cent pay cut.
  • Freeze of all non-essential recruitment and consultancy work.
  • Asking all Qantas and Jetstar employees to take paid or unpaid leave in light of reduced flying activity.

A material drop in fuel price has provided a significant cost benefit in addition to the saving from lower consumption. The Group’s total fuel cost is now expected to be $3.74b[3] (excluding the benefit of capacity reductions compared with the same time last year) with limited participation to further falls in Brent crude prices.

CEO COMMENTARY

Announcing the changes, Qantas Group CEO Alan Joyce, said: “In the past fortnight we’ve seen a sharp drop in bookings on our international network as the global coronavirus spread continues.

“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September. This improves our ability to reduce costs as well as giving more certainty to the market, customers and our people.

“We retain the flexibility to cut further or to put capacity back in as this situation develops.

“The Qantas Group is a strong business in a challenging environment. We have a robust balance sheet, low debt levels and most of our profit comes from the domestic market. We’re in a good position to ride this out, but we need to take steps to maintain this strength.

“When revenue falls you need to cut costs, and reducing the amount of flying we do is the best way for us to do that.

“Less flying means less work for our people, but we know coronavirus will pass and we want to avoid job losses wherever possible. We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less.

“Annual management bonuses have been set to zero and the Group Executive team will take a significant pay cut for the rest of this financial year.

“It’s hard to predict how long this situation will last, which is why we’re moving now to make sure we remain well positioned. But we know it will pass, and we’ll be well positioned to take advantage of opportunities when it does.”

ADVICE FOR CUSTOMERS

Qantas and Jetstar will contact customers affected by these changes in the coming week. Customers who booked via a travel agent (including online travel agents) will be contacted by their agent rather than the airline.

Typically, customers flying internationally will be offered an alternative flight via another capital city or a partner airline, or an alternative day. Disruption to domestic passengers is expected to be minimal given the continued high frequency on most routes.

The latest information will be published on Qantas and Jetstar websites. Customers are encouraged to check this before calling the airline.

To provide customers with greater flexibility and confidence when they book, Qantas and Jetstar will waive change fees for new international bookings made from today until the end of March, if customers change their travel plans. This applies to travel commencing up to 30 June 2020 and is limited to one free change per customer. Customers will need to pay any fare difference.

The impact of COVID-19 on the travel industry is unprecedented and unpredictable. The nature of the content that is being shared on the ASATA coronavirus microsite is therefore constantly changing. Please check the date of the post to ascertain its recency.
Related News

Share: