Qantas and Jetstar cut flights as Omicron dampens travel expectations

Sydney, Australia - January 17, 2019: Qantas and Jetstar aircraft's tail at Sydney Kingsford Smith International airport tarmac.

Qantas and Jetstar have cut flights for the third quarter of FY22 in light of a sudden growth in COVID-19 cases.

The Qantas Group now expects domestic capacity for the third quarter to be at around 70 per cent of pre-COVID levels, down from the 102 per cent that had been planned.

The Group’s total international capacity for the same period will fall from 30 per cent to around 20 per cent of pre-COVID levels. This reduction is driven by increased travel restrictions in countries like Japan, Thailand and Indonesia and is mostly impacting Jetstar’s leisure routes.

Qantas Group CEO, Alan Joyce, said Omicron’s impact is present, however, it is manageable by the airline company.

“The sudden uptick in COVID cases is having an obvious impact on consumer behaviour across various sectors, including travel, but we know it’s temporary,” Joyce said.

“Thankfully, Australia has one of the world’s highest vaccination rates and the Omicron variant is milder than its predecessors. So, as challenging as this current phase is, we’re optimistic that it is likely to fast track a return to normal.”

Qantas said that customers will be contacted directly from late January if their booking is impacted by cancellations and offered alternative flights.

An assessment on the financial impact of these changes will be given at Qantas Group’s half-year results in late February, by which time the company will have a clearer picture on swing factors such as actual demand levels; potential loosening or tightening of travel restrictions in countries overseas; and consumer response to the reopening of Western Australia next month.

“People are already looking beyond what’s happening now with early bookings for the Easter holidays in April looking promising for both domestic and international,” Joyce said.

“We have the flexibility to add capacity back if demand improves earlier than expected, but 70 per cent still represents a lot of domestic flying and it’s a quantum improvement on the levels we faced only a few months ago.

“Our focus on cash positive flying remains, notwithstanding some of the costs that we’ll have to absorb from this sudden drop in demand,” Joyce said.

This announcement follows Virgin Australia’s recent decision to cut its flight capacity by 25 per cent and suspend ten routes, including its only international flight, Sydney-Fiji, in the face of Omicron numbers rising.

Virgin’s announcement was due to the reduced level of crew availability and hindered travel demand.

Virgin Australia CEO, Jayne Hrdlicka, commented on the updates, saying there is some uncertainty as to how the company will go forward.

“Although we don’t know when this wave will pass, we do know that as we make the shift to living with COVID-19 there will continue to be changes in all our lives,” Hrdlicka said.

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