Capacity hikes take toll on Qantas Domestic

Capacity hikes take toll on Qantas Domestic
By admin


Qantas Domestic saw its earnings before interest and tax fall by 21% in the 2013 financial year as its rivalry with Virgin Australia saw the domestic market flooded with capacity.

The year saw capacity hikes of 8% – the equivalent of two year’s capacity growth squeezed into just one, according to Qantas chief executive Alan Joyce.

But this year will see a much more subdued approach, he insisted.

“In the last financial year we had an oversupply of capacity,” he admitted. “But we do believe that the market is moderating.”

While the airline remains focused on maintaining its 65% share of the domestic market, Joyce predicted capacity rises between 1.5% and 2% for the year.

However, he expressed hopes that capacity would grow at an even lower rate than those forecasts, giving the market time to “grow back into” the expanded number of seats.

But Joyce was adamant that the airline remains “ahead on every measure” despite the tough nature of the domestic market, claiming a strong performance within the corporate sector in particular is giving it the edge over Virgin.

“We are seeing a trend of corporate customers come back to us after trying the alternative,” he said.

“In FY13 we won back eight accounts, renewed 111 and secured 84 new accounts. We lost just seven.”

Significant cost reductions are also positioning it well against rival Virgin Australia, he added.

The airline will now focus on driving up service and product levels with a further 3000 staff to undertake advanced customer service training this year, on top of the 14,000 who have already completed it.

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