Australia’s national carrier, Qantas announced on Thursday (Feb. 20) that flights to Asia are being slashed as the novel coronavirus outbreak slows demand – cutting into international airline and travel industries.
In a statement, Qantas said that the decision to reduce its overall capacity to Asia by 16 per cent until at least the end of May is expected to cut between 100 million and 150 million Australian dollars (US$67 million-US$100 million) from the carrier’s earnings this year.
“Qantas International will cut 16 per cent of Asia capacity until at least the end of May, impacting flights from Australia to mainland China, Hong Kong and Singapore,” the company declared.
“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.”– Qantas Chief Executive Alan Joyce
The breakdown of the disruptions are as follows:
Additionally, Qantas’ secondary carrier, Jetstar will cut back services to Asia by 14 per cent.
The Flying Kangaroo noted, however, that there is no change to other key parts of its international network, such as the US and UK, that remains unaffected.
As the global tourism industry continues to be battered by the COVID-19 crisis, Qantas and Jetstar will also reduce their domestic capacity by 2.3 per cent for the second half of the Australian financial year, which ends on June 30.
For his part, Qantas Chief Executive Alan Joyce said the airlines were acting now to limit exposure to softening markets.
“Coronavirus resulted in the suspension of flights to mainland China and we’re now seeing some secondary impacts and weaker demand on Hong Kong, Singapore and to a lesser extent Japan,” he argued.
The Qantas boss further contended that the decision, though unavoidable, leaves the company with a surplus of some 700 full-time workers from its overall staff of 30,000. The company would consequently need to adjust, by asking workers to volunteer to take leave owed to them while the reductions take place.
“What’s important is that we have flexibility in how we respond to coronavirus and how we maintain our strategic position more broadly,” Joyce said. “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.”
“We know demand into Asia will rebound. And we’ll be ready to ramp back up when it does,” Joyce posited.
“These past few months have been extraordinarily difficult for the tourism industry and we’ve tried to minimise the impact of our capacity reductions as much as possible,” he said.
About half of Qantas’ domestic cancellations, according to Joyce, are between Sydney, Melbourne and Brisbane, but, he said the airline was avoiding any route exits.