Qantas chief Alan Joyce says travellers should expect more expensive tickets to help the airline cope with a fuel bill set to surge $1.7 billion higher next financial year, all while he works to rescue the Flying Kangaroo’s spoiled reputation with a public sick of cancellations and delays.
There will be more staff on deck to help passengers and two wide-body jets on standby to ease disruption over the three-week July school holiday peak.
Yet Qantas will also remove 5 per cent of services from its schedule in July and August to cope with stubbornly high fuel prices. The airline will try to sell more seats on fewer services, which points to more crowded flights.
“The reality is that we are taking capacity out because of oil prices,” Mr Joyce said.
“We get a smoother operation because we still have the pilots, the cabin crew, and we still have the airport staff to meet that schedule. It gives us more flex in the system.”
Announcing new direct flights from Perth to Johannesburg and Jakarta alongside Premier Mark McGowan on Friday, Mr Joyce said his airline’s yearly fuel bill exceeded $4 billion.
He said airfares will have to rise because Qantas “can’t digest” the elevated cost of fuel. (Jet fuel was $US177.08, or $256.14, per barrel last Friday, according to the International Air Transport Association.)
This, combined with the reduction in capacity, would mean Qantas flights would be more efficient, he said.
“We need to get airfares up because our oil bill ... It’s [a] record high,” Mr Joyce said.
He reiterated that the staff shortages that have led to delayed and cancelled flights – Qantas dumped one in every 13 of its flights in May – and lost baggage were being experienced by airlines around the world.
In a market update on Friday, Qantas said it would have 20 per cent more staff on standby to minimise the toll of sick leave and absenteeism during the school holiday peak and had hired 1000 more staff.
The update, which also disclosed a one-off $5000 bonus payment to workers covered by industrial agreements on the condition that they accept new pay deals, had reduced its net debt to $4 billion by the end of the month.
This means it has paid off $1.5 billion in the past half-year, and has reduced net debt below its target range of $4.2 million to $5.2 million.
Jetstar CEO steps down
Jetstar boss Gareth Evans announced he would leave the low-cost airline next year. No reason was given for Mr Evans’ resignation. He was once seen as a potential successor to Qantas’ Mr Joyce, who said Mr Evans was a “superb leader”.
“He’s given an incredible amount to the organisation in several key roles, from his time as CFO through major restructuring and most recently as Jetstar CEO as we navigated COVID-19. When he leaves next year it will be with our sincere thanks and best wishes,” Mr Joyce said.
Mr Joyce said 85 per cent of flights on Friday morning were on time and the number of lost bags was coming down to pre-pandemic levels.
“Rightly ... we were hammered about the performance of the call centre,” he said. “We were having people waiting on average two hours and some people waiting five or more hours.”
The wait was because call volumes grew threefold, from 5000 to 15,000, Mr Joyce said. But the airline had since tripled the number of call centre workers compared with before the pandemic, and on Thursday the average waiting time was nine minutes.
“That’s still no excuse. We had to fix it, and we did,” Mr Joyce said.
“And in the next few weeks we should be seeing a significant improvement with all of these things we’re doing to make the operation more robust.”
Mr Evans will step down from the top job at Jetstar in December, but will stay on into 2023 “to work on key projects” before leaving the airline.
In a note to staff, Mr Evans said he was “grateful and fortunate to have worked in a wide range of roles across the Qantas Group, and I am excited about using these skills and experiences in new and different ways”.
”I’m committed to ensuring there is a smooth and thorough transition, so my plan is to step down as Jetstar Group CEO in December, then remain with the Qantas Group to work on key projects before leaving in 2023.
“Over the next six months we’ll welcome the arrival of our neos (Airbus A320neo jets), continue to grow Jetstar Airways’ domestic network, return our international operations to its pre-COVID capacity, and support Jetstar Asia and Jetstar Japan’s full ramp-up,” Mr Evans said.