Qantas has decided to reduce domestic capacity increases over the next three months in response to softened demand and the upcoming elections.
In an online update, the carrier said it had revised seat capacity for Jetstar and Qantas’ domestic networks because of a recent drop in consumer confidence for travel around Australia.
The carrier’s original guidance for a two percent capacity growth was downgraded to be between 0.5 percent and one percent over April, May and June.
Qantas continued, saying that by dropping capacity it would “mitigate the negative impact on domestic RASK” and leave the Qantas Group domestic capacity growth in the final quarter in the negative compared to the prior period last year.
“Some softness in demand, related to the upcoming federal election and recent drop in consumer confidence in Australia, began to emerge over the peak Easter and school holiday period in March and continued to be seen in forward bookings.”
Qantas
In the international business, Qantas has also decided to ease capacity on its Australia to mainland US services by removing three Sydney – Los Angeles flights. Instead, the capacity will be re-directed to Singapore and Hong Kong where demand continues to grow.
These changes to Qantas’ international network will result in total market seat capacity growth between Australia and US of six percent compared to nine percent the prior year.
Following the network updates yesterday, Qantas’ shares took a slight tumble by 14 percent. Shares sat at around $3.49 by midday and slightly recovered to $3.58 at 12.30pm. At around 11.00 this morning, the carrier’s shares rose again to $3.59.
