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Flight Centre boss Graham Turner says travellers should expect to pay less for travel in the future as international airfares continue to fall. But he doubled down on his criticism of the Albanese government for blocking Qatar Airways from adding flights to Australia.

One of the biggest travel booking companies in the world, Flight Centre recorded $301.6 million in underlying earnings in the year to June 30, an almost half-a-billion-dollar turnaround from its 2022 loss of $183.1 million.

About 70 per cent of this result was generated in the six months to December following increased corporate travel, bolstered domestic flight offers and the rampant return of international airlines to Australia when the borders reopened after the pandemic.

Flight Centre recorded a full-year statutory profit of $70.5 million, swinging from a $377.8 million loss the year before. Its total transactions doubled to $22 billion.

The travel agent said macroeconomic conditions had not been “significantly impacting” demand in the first six weeks of this financial year, with its earnings already markedly higher than during the same, COVID-19-affected, period last year.

Flight Centre will issue a dividend for the first time since the pandemic. Shareholders will receive a fully franked payout of 18¢ per share. The company plans to adopt a new capital management strategy this year to pay out more than 50 per cent of its net profit as dividends or buybacks.

Presenting the results, Turner – who founded the travel booking behemoth in the 1980s – reiterated his criticism of the government’s decision to reject an application from Qatar Airways to double its flights to Australia.

“This is a significant blow. No other part of the tourism and aviation sector can rationalise it. I don’t blame Qantas for its lobbying, but I am concerned it was successful,” Turner said.

“This is supposed to be a competitive market, a free market. Our travel agency business competes with many major international businesses in Australia, as it should. Most other markets we compete in are relatively competitive.”

Turner said he was “reasonably confident” more international airlines would continue to apply to fly to Australia. He pointed to European carriers including Air France, which does not currently fly to Australia and has indicated it would like to. Turkish Airlines, one of the biggest airlines in the world, has also flagged its intention to fly here, but the Turkish government is yet to formally lodge an application.

Turner said he was concerned about the competition consequences of the government’s decision, and reiterated his prediction that it would keep airfares high.

Flight Centre’s results were buoyed by the resumption of corporate travel overseas. The group expects corporate travel in Australia to exceed 2019 levels by the end of 2024 as fares normalise.

“We spent a lot of time negotiating with businesses during COVID-19 to make sure they would continue to partner with us. We won a lot of work that way. This result is down to that success in the US and UK, but we expect Australian corporate travel to normalise as fares come down, and it becomes easier to book a seat,” Turner said.

RBC equity research analyst Wei-Wei Chen said Flight Centre’s leisure travel division outperformed its expectations, while its corporate segment underperformed. UBS’ equity research team said in a note the result was “a little underwhelming”.

Flight Centre shares closed 3 per cent lower at $21.42 on Wednesday.

A key business group has weighed into the debate over the government’s decision to block Qatar Airways from operating more flights into Australia, saying the move would cost the tourism industry an estimated $788m a year.

In a letter to Transport Minister Catherine King, Australian Chamber of Commerce and Industry tourism chair John Hart said more international flights would help operators rebuild after years of crippling Covid-19 restrictions.

He said the growth of Australian tourism was a function of inbound and outbound air capacity, and any limitations on capacity stunted growth not only through seat numbers but fare competitiveness.

“ACCI acknowledges the government’s role in approving applications, however, members are concerned that the decision will have long-term impacts on the tourism sector in a number of ways,” wrote Mr Hart in the letter seen by The Australian.

“For example, if this decision sets a precedent for consideration of future applications from other airlines, being that requests for additional flights will not be granted, the loss to the tourism industry will be grave.”

An additional four flights a day by Qatar Airways could potentially inject $788m into the visitor economy, he said.

“We would be grateful for the chance to meet with you to explain our concerns and detail the impacts of the decision on the tourism industry,” Mr Hart wrote.

Virgin Australia also stepped up its opposition to the decision and CEO Jayne Hrdlicka added her voice to the outcry.

The airline partnered with Qatar Airways last year in a deal designed to benefit both carriers and give Velocity frequent flyers he opportunity to use points on long-haul flights.

Ms Hrdlicka’s statement came after Virgin’s head of corporate affairs and sustainability told a Senate committee hearing on Monday that the ruling against Qatar was “deeply regrettable”.

“International airfares today are nearly 50 per cent higher than pre-Covid,” Ms Hrdlicka said.

“Additional Qatar flights would have an immediate and tangible effect in reducing airfares between Australia and Europe, the Middle East and Africa.

“Qatar is in the unique position in the context of a constrained global supply of widebody aircraft, to be able to quickly make available four additional services a day to Australia.”

Ms Hrdlicka said she looked forward to “working with the federal government and other key stakeholders to find a way to understand and resolve the underlying issues”.

Qatar currently operated a mix of Boeing 777s and A380s on Australian routes, and could increase capacity by 27 per cent upgauging to all A380s, Qantas suggested.

The flying kangaroo has defended the government’s decision over Qatar Airways, suggesting the reaction was overstating the importance of an extra 28 flights a week.

Qantas International chief executive Cam Wallace said a number of other airlines, including Singapore and Cathay, were increasing capacity to Australia by more than what Qatar wanted to.

Qantas opposed Qatar’s application for more flights, which appeared to have helped sway the government’s decision.

Earlier this month, Ms King told parliament “it was not in the national interest” to grant Qatar Airways more traffic rights but would not elaborate further.

Qatar Airways is yet to comment on the decision.

High airfares and a brutal cost-cutting program have helped Qantas deliver its biggest full-year result on record, a $1.74bn net profit, but CEO-designate Vanessa Hudson says it can do better.

Delivering her last result as chief financial officer before stepping into the top job, Ms Hudson said the $2.6bn turnaround on last year’s $860m loss was “not as good as it gets”.

Even with fares moderating and capacity increasing, Ms Hudson was confident that the $1bn in costs taken out of the business under its pandemic recovery plan would ensure a more profitable operation in the years ahead.

“All of the work we’ve done during Covid-19 in terms of restructuring our cost base, we are going to see that as fares come down and capacity comes back, our cost position is going to improve materially going forward,” said Ms Hudson, who will take over from Alan Joyce in November.

“Therefore we are expecting the future earnings potential of our business is going to continue to grow.”

The underlying profit of $2.47bn represented a $4.3bn improvement on the 2022 result, setting another new benchmark for the 103-year-old carrier.

In the 12 months to June 30, Qantas passengers poured almost $17bn into the airline, paying around 57 per cent more for international airfares than pre-Covid, and 34 per cent more for domestic.

The high prices saw Qantas International make $906m and jump from being the least profitable part of the business in 2019, to the second biggest earner after Qantas Domestic, which pulled in $1.3bn.

Qantas Loyalty was third with earnings before interest and tax of $451m, aided by the take-up of about 250,000 points-earning credit cards.

And low fares carrier Jetstar turned the prior year’s loss of $796m into $404m in earnings, with the help of 37 per cent growth in ancillary revenue collected from passengers for things like baggage, food and seat selection.

Mr Joyce lauded the “remarkable turnaround” of the airline group, which last made a full-year profit in 2019. He said the result was three years in the making, and it had been hard.

“From being 11 weeks shy of insolvency to a challenging return to flying across the industry to finally getting back to the leading domestic operational performance, it is an absolute credit to the resilience and hard work of our people, the patience and understanding of our customers and the support of our shareholders,” he said.

Domestic capacity was now back to pre-Covid levels, and international flights would get there by mid-2024, putting downward pressure on fares, Mr Joyce added.

He also delivered the final plank in the airline’s much-needed fleet renewal: an order for 24 new widebody aircraft to replace ageing A330s and eventually the A380 fleet.

The 12 Boeing 787-9s and 12 A350s would start to arrive in 2027, providing greater flexibility and efficiency for Qantas with their long range and lower fuel burn.

Another 12 A350-1000s were on order for ultra-long-range Project Sunrise flights, due to start in late 2026 or 2027.

“This is my last full year results as Qantas CEO,” Mr Joyce said.

“It’s been extremely challenging but I’m pleased to say the future of the national carrier is on solid ground.”

There was little movement in the Qantas share price in response to the announcement, which was within the profit guidance range flagged in May.

At the close of trade on the ASX, Qantas shares were up 5c, or 0.8 per cent at $6.22.

Analysts found much to like about the results, noting the balance sheet remained strong, net debt was down to $2.89bn and Qantas had a healthy $10bn of liquidity including $4.4bn in cash.

Moody’s Investors Service vice president Ian Chitterer said the airline’s credit profit had “never looked stronger”.

“We thus consider that Qantas will remain well positioned, even if the currently strong outlook for travel demand deteriorates,” said Mr Chitterer.

UBS analyst Andre Fromyhr said the market was more concerned about the outlook into 2024.

“On that front, if the company can build confidence in the resilience of demand and stability of the cost base, then the market may start to put a higher probability on Qantas hitting its 2024 financial year targets and sustaining its current earnings run rate for longer,” Mr Fromyhr said.

Union reaction was less effusive, although pilots were happy to see the fleet rejuvenation plans mapped out. Australian and International Pilots Association president Tony Lucas said the new 787s and A350s would provide “new opportunities for promotion”.

ACTU national president Michele O’Neil said Qantas was “hell bent on driving down terms and conditions for its workers to maximise profits”.

“Our flagship carrier, with these kinds of profits, should be respecting their workforce,” said Ms O’Neil.

“Qantas workers deserve secure jobs and fair pay and conditions for the hard and important work they do to keep us all safe. Instead on some Qantas domestic flights, you see the cabin crew on five different rates of pay on the same plane, all for doing the same job.”

As temperatures dropped throughout July, a slew of consumer and spending data left Australian retailers with little doubt that winter had finally come.

Data from banking giant ANZ this week suggested overall spending was down by 10.3 per cent in the first weeks of July compared with last year, while over at NAB consumer surveys showed Australian households were scrimping on meals out and little luxuries to ensure they could afford to cover their insurance policies and children’s activities.

Retail sales data released on Friday showed turnover dropped by 0.8 per cent across the country in June, with the sharp fall coming off the back of weaker than usual spending at end of financial year sales.

At the same time, brands are struggling to balance their own budgets – a survey of more than 200 local retailers by e-commerce software platform Shopify this month shows 58 per cent of businesses say they’ve had to pass on most of higher input costs to their customers.

But over on the ASX, consumer stocks managed to shrug off the gloom. The S&P/ASX200 consumer discretionary index had posted monthly gains of more than 3.5 per cent as of Friday, and consumer stocks accelerated after better-than-expected inflation data on Wednesday.

Kmart, Target and Bunnings owner Wesfarmers was ahead by close to 1 per cent for the month on Friday. Online retailer Kogan.com was up by about 30 per cent for the month, surging this week after a trading update confirmed that while overall sales were slowing, profitability was improving.

Rivers and Katies’ operator Mosaic Brands shot up by 19 per cent last Friday after revealing it would swing back to profit for 2023, as chief executive Scott Evans flagged that the retailer’s cohort of older shoppers was actually continuing to spend in the face of cost of living pressures.

“Do we think that the next six months is going to be all wonderful? No. Do we think it’s Armageddon? Not quite,” he said.

Analysts and economists have been forecasting the spending slowdown for more than a year now, with many stock watchers already baking this pessimism into their models.

And while there is no doubt that conditions are softening overall, recent spending data suggests there could be some winners despite the slowdown.

Australian consumers have increasingly been making trade-offs in their spending to make their dollars stretch further, and to be able to afford the parts of their budgets that they can’t bear to axe.

The phenomenon of “trading down”, or moving from one product to a lower-cost alternative, could open growth opportunities for a range of retailers, including discount retailers such as Aldi and Kmart.

UBS analysts said this month that Aldi was most likely to win market share in the current trading environment. The investment bank said last month that it also preferred brands that “are lower priced and able to win from a trade-down”, such as Wesfarmers’ discount department store Kmart.

“The consumer is reducing spending in aggregate and when they do spend they are: (1) trading down by price point in apparel and general merchandise,” the UBS team said.

Kogan.com founder Ruslan Kogan said this week that there were growth opportunities as consumers revisited their budgets, with the online retail platform seeing an improved performance in its phone plans business and its loyalty subscription program, Kogan First, even as overall sales slow.

“In this environment, where people are looking to save more money, that [program] has been very popular,” he said.

There’s also some evidence that older consumers are helping drive sales in areas such as fashion, even though clothing and apparel sales have weakened since the country emerged from lockdowns.

CommBank iQ cost of living data for the first months of this calendar year showed that consumers aged over 55 have increased their spending beyond inflation compared with 2022, and shoppers aged over 35 increased their clothing spending by 3.1 per cent in the first quarter of the year, as younger shoppers pulled back.

Things are also rosier at the luxury end of the retail market, where brands such as Chanel have had rapid growth as the world emerged from pandemic lockdowns.

Shares in ASX-listed designer brands platform Cettire have surged by more than 140 per cent year-to-date as the business reports that revenue momentum is growing rather than slowing.

Meanwhile, this month’s trading update from travel operator Flight Centre suggests that while households are working harder to balance budgets, discretionary dollars are still being spent when it comes to holidays.

Shares in the travel agent have advanced by more than 20 per cent this month and the business expects 2023 earnings will be better than previously forecast, coming in at between $295 million and $305 million.

Flight Centre managing director Graham “Skroo” Turner said in the trading update that the year-on-year growth in outbound travel suggested consumers are putting holidays first.

“Looking ahead, our expectations are that leisure travellers will continue to prioritise holidays
and experiences over other areas of discretionary spending,” he said.

There is no public benefit in the Albanese government rejecting a bid by Qatar Airways to bring more tourists to Australia. It’s another story for our national carrier.

Government records show that international aviation seats in Australia had recovered to just 64 per cent of pre-COVID levels by last December, and short-term visitor arrivals had recovered to just 60 per cent.

Over the past three decades, there has been a 61 per cent correlation between growth in airline seats and growth in inbound tourists. This means that if the international tourism sector is to completely recover from the effects of COVID-19, we need to convince international airlines to bring more seats into the country.

It is therefore confounding that the Albanese government would reject a bid by Qatar Airways to bring an additional three flights a day into the country.

An average Qatar Airways flight last year brought 330 seats into the country. Rejecting three services a day from the carrier is equivalent to turning away 722,700 seats a year, representing about 3 per cent of the Australian market.

When the government decides to accept or reject additional capacity bids from foreign airlines, it usually does so by considering the public benefit. What would it consider?

The first and most significant public benefit is inbound tourism spending. Qatar Airways flies between Australia and Qatar (90 per cent of its seats) and between Australia and New Zealand (10 per cent).

Most of the inbound tourists on its Doha-to-Australia flights are likely to be European. Assuming half the seats on these flights are sold to Europeans, three additional daily flights from Qatar could have brought 150,000 visitors into Australia.

Each of these visitors spends on average $3284, which means the additional visitors from Europe could have spent $500 million here, generating thousands of jobs.

Cheaper airfares

If 10 per cent of the additional seats that Qatar Airlines would have brought into Australia were also on routes between Australia and New Zealand, this would represent an additional 72,270 seats on the Tasman route. Some of these seats would carry New Zealand residents wishing to visit Australia, spending on average $1611 each, again generating benefits for the economy.

Australian residents would benefit from additional Qatar Airways seats not only because of the tourism spending, but also because Australians flying overseas would pay cheaper airfares.

If Qatar added more seats to the Doha-Australia and NZ-Australia routes, this would reduce the average airfares paid by residents flying overseas on these routes.

This would benefit 1.7 million Australians who are likely to fly to Europe and 1.3 million Australians who are likely to fly to New Zealand each year once we have fully recovered from COVID-19. With current international airfares at astronomically high levels, any additional capacity would have helped solve this problem.

What potential factors might have a negative effect on the public? To answer this question, we need to identify the Australian residents or companies that may be worse off if Qatar Airways was granted more seats.

Broadly, the Australian economy could be worse off if the additional Qatar Airways seats on Australian routes take more Australians overseas than visitors entering the country.

Official aviation data does not offer any insight into the residency of passengers, so it is difficult to quantify this effect. But it is certainly a possibility.

Airlines that fly passengers between Australia and the Middle East, Europe and New Zealand would be worse off because the extra Qatar Airways capacity would dampen their yields and margins. This effect would be significant for Qantas, since its services to London Heathrow and to New Zealand represent a significant proportion of its international capacity and earnings.

Qantas mainline international experienced combined losses of $879 million during COVID-19, more than half of which was recovered over the six months to last December with earnings of $464 million – the greatest six-month profit result for the carrier’s international arm in its history.

Qantas will not want the hard work that went into earning this record profit to be wound back by Qatar Airways adding more capacity.

Qantas is still looking to claw back more of the international losses incurred during the pandemic. It will do so by using the formula that worked so successfully over the latter half of last year, which is to drip-feed capacity back into the market and allow continued pent-up demand to drive up yields (Qantas international yields grew 64.4 per cent compared to pre-COVID levels over the six months to last December).

The most adversely affected carriers will be the other Middle East carriers, notably Emirates and Etihad. This is because Qatar competes head-to-head with these carriers. Doha Airport is just 380 kilometres from Dubai Airport and 320 kilometres from Abu Dhabi Airport, meaning that travel between Europe and Australia can easily move between transit stops at any of the three Middle East airports.

Given the Qantas code share relationship with Emirates, the negative impact that additional Qatar capacity may have on the strength of the code share numbers will not have gone unnoticed by Qantas management.

Tony Webber is chief executive of Airline Intelligence and Research.

Flight Centre boss Graham “Skroo” Turner has accused the federal government of deliberately keeping airfares up by rejecting Qatar Airways’ application to double its flights to the country.

Turner, who founded the $4.7 billion travel agency business, said the decision was “ridiculous” after unveiling a bullish profit upgrade ahead of the group’s full-year results in August.

“The cost of airfares is a huge problem for travellers. I think it’s the most ridiculous decision I’ve ever seen. We have Australian airlines like Qantas, which do not have the capacity for additional services, and yet we’re rejecting Qatar’s extra capacity,” he said.

Qatar Airways applied to add 21 flights to its services from Doha into Sydney, Melbourne and Brisbane last year. Transport Minister Catherine King confirmed the additional bilateral air rights were not being considered on Monday, as reported by The Australian Financial Review. She did not outline why.

Although supported by most of the tourism and aviation sector, as well as the National and Liberal parties, the application was opposed by Qantas. It was also opposed by five Australian women who were subjected to invasive searches at Hamad International Airport by Qatari federal police ahead of their flight with the airline in 2020.

The women were part of a larger group who were forced to undergo internal examinations after a newborn baby was abandoned in a bin at the airport. The women are now seeking damages from Qatar Airways and the Qatar Civil Aviation Authority – which are both owned by the Qatari government – over the incident.

“If the event with the women is the reason the airline has been prevented from additional flights, it is totally illogical,” Turner said. “Qatar as an airline has nothing to do with the behaviour of federal police. If the conduct of a country’s police force is the reason they were rejected we wouldn’t let half the world’s carriers fly to Australia.”

Qatar has a close partnership with Virgin Australia and was one of the few carriers that continued to fly to Australia throughout the COVID-19 pandemic. Qatar also assisted the government’s mission to evacuate Australians during the fall of Kabul in 2021. Sources close to the application process confirmed the carrier expected to be granted the additional flights as a recognition of its goodwill and close trading ties to the country.

Outgoing Sydney Airport chief Geoff Culbert said on Thursday Australia’s airlines should relinquish slots on high-demand domestic routes if they do not intend to fly them – a topic Turner is also passionate about.

“There’s no doubt the major airlines are deliberately cancelling flights to keep fares up and prevent other carriers. I don’t blame them for taking advantage of the system, but it can’t be denied they’re doing it and the government needs to close the loophole to prove they’re not in the pocket of Qantas and Virgin,” Turner said.

Culbert also hit out at the number of flights cancelled by Qantas, Virgin Australia and Rex on major routes, including Sydney to Melbourne, and said the creeping cancellation rates and high airfares had suppressed demand.

“If incumbent airlines have decided to fly less between key domestic markets, then they should relinquish slots to domestic and international carriers who want to operate out of Sydney Airport and provide more choice for customers.”

Passenger numbers on the Sydney to Melbourne routes are still 81 per cent of pre-COVID levels, while Sydney to Canberra sits at 64 per cent.

Flight Centre upgraded its full-year profit guidance for a second time in just six months on Thursday, after its total transaction value increased by more than 115 per cent on 2022 to $22 billion.

The business now expects its earnings before interest, tax, depreciation and amortisation to be between $295 million and $305 million, a 7 per cent increase on its prior projection at the mid-point.

Turner credited the upgrade to stronger-than-anticipated corporate demand, which will eclipse leisure turnover this year, with $11 billion to leisure’s $10 billion now expected. The business’s full-year results will be unveiled on August 30.

Citi analyst Samuel Seow said the strong corporate performance was an encouraging sign, although he commented the upgrade lacked detail.

“Looking forward, we see this as optimistic, as we see a mix as the key driving factor in achieving a 2 per cent profit before tax margin,” Seow said.

Flight Centre’s share price increased by 4 per cent to $21.68 on Thursday.

A singing flight attendant … a thank-you note. This airline goes above and beyond on a business-class trip to LA.

Delta Airlines is increasing the frequency of its flights between Sydney and Los Angeles. We find out if it’s up to the task.

Delta One flight details

Flight number DL40
Route Sydney to Los Angeles. Departing 9.35am, landing 6.05am (on same date as departure due to time difference).
Aircraft Airbus A350-900
Seat number 6D, Business
Flight time Arrives on schedule; duration 13 hours and 40 minutes. 

THE SEAT

The business class cabin of 32 seats features nine forward-facing rows configured 1-2-1, with a retractable privacy screen between the centre pairs. A sliding door turns my window seat into a “suite”; when closed, crew will not disturb (or serve) you. It’s a wonderfully cosy booth with customisable lighting, reading lamp and ample storage. A large surface area next to the seat holds my laptop, book, toiletries and drink while I eat at the slide-out table. Noise-cancelling headphones hang on a hook and there are dedicated spaces to store my shoes, water bottle and personal bag, plus a large overhead bin for my carry-on suitcase. Most importantly, the seat is a 180-degree flat bed, with a high-quality duvet and pillow. As a side sleeper, I find it a little too firm but the blanket is large enough to wrap around and create a soft layer underneath me. When not sleeping, it’s comfortable, especially with the adjustable footrest. An amenities pack contains toothbrush, toothpaste, eyeshades, earplugs, socks and Grown Alchemist lip balm and hand cream. Slippers are provided.

LUGGAGE ALLOWANCE

Business class passengers get 64kg (two bags x 32kg) of checked luggage plus two carry-on items (no weight restrictions).

TECHNOLOGY

Each suite has an 18-inch, HD, touchscreen monitor with retractable remote. An international power outlet and a USB port keep everything charged. Delta offers free wi-fi on all domestic flights, with a full rollout to international flights expected by the end of 2024. I don’t buy the package on this sector but on my connecting flight from LAX, I’m impressed by the speed of the service.

FOOD AND DRINK

Duval-Leroy Brut Reserve Champagne, mimosas, orange juice and a bowl of warm nuts are offered upon boarding. A couple of hours later, dinner is served. A week before departure, Delta One passengers can choose from two limited selection main courses, which change every three months. I enjoy my barramundi with olives, beans, kale and cherry tomatoes, but will try the duck confit on my way home.

For those who do not pre-order, there’s a choice of three meals: chicken parmesan with mashed sweet potatoes and fried eggplant; red wine braised beef with garlic-chive mashed potato, tomatoes and broccolini; or paneer makhanwala with cumin rice, kale and chickpea masala. The set entree is a creamy tomato soup, Sonoma Bakery sourdough roll served with Pepe Saya butter and olive oil, and a green salad.

Dessert options are a passionfruit cheesecake, ice cream sundae, or fruit and cheese plate. No wine lists are handed out, but there are two whites and two reds on the trolley. Other drinks include standard spirits and beers such as Miller Lite. The coffee is Starbucks and the tea is Thrive Farmers. A mid-flight snack of tandoori prawns is a tasty intermission. Passengers can help themselves to Tim Tams, Kit Kats, chips, biscuits and fruit in the galley. Quiche Lorraine and coconut sago porridge are served for breakfast.

INFLIGHT ENTERTAINMENT

Choose from 300 movies, television series, documentaries, educational shows and games. Delta’s partnerships with Paramount+, Peloton and Spotify extend the range of entertainment with podcasts, curated playlists of various music genres, and meditation and seated stretch classes.

SERVICE

This is the best in-flight service I’ve experienced in a long time. The crew is efficient, friendly and good-humoured. One flight attendant sings as she serves breakfast, while another makes helpful recommendations and leaves a “thank you” note.

ON THE GROUND

At Sydney Airport, Delta One passengers can access the SkyTeam lounge, which was recently redesigned to save water and energy and reduce emissions. Even better is the huge Delta Sky Club at LAX, reopened last year at terminal 3. Refresh in the luxurious shower rooms, get some fresh air at the outdoor deck, or grab a freshly made taco.

LOYALTY PROGRAM

Part of the SkyTeam alliance, Delta has the SkyMiles loyalty program with more than 20 partners, including KLM, Air France, Hawaiian Airlines, Garuda, Korean Air, LATAM, China Eastern and Virgin Atlantic (sadly, no Australian airlines).

IN THE KNOW

Delta is increasing the frequency of its SYD-LAX service to 10 flights a week from October 31; twice daily from December 17. It is also investing in its business class lounges across the US. The first dedicated to Delta One customers will open at JFK and LAX in 2023 and 2024, respectively. Other new or upgraded Delta Sky Clubs were recently unveiled in Chicago, Boston, Nashville and Atlanta.

THE VERDICT

Delta aims to achieve net-zero emissions by 2050, but not at the expense of comfort. The crew are exceptional and the superior suite aids a solid six-hour sleep. Free in-flight wi-fi will make the airline even more appealing next year.

Virgin Australia chief executive Jayne Hrdlicka says there is “no pressure” when it comes to timing the airline’s plan to go public, dismissing the arrival of aviation’s super profits era as the upshot of typically cyclical airline earnings.

She unveiled new investments in the airline’s fleet at the weekend to step up the competition with Qantas on domestic routes, where Virgin unseated Qantas’ dominance over Sydney-Melbourne traffic in May, as it competes harder for business travellers.

Ms Hrdlicka said Virgin needed to stay focused on delivering sustainable profits and “rationally rebuilding the industry for the long term”.

“We’re in a very high inflationary environment and we’ve been through a really difficult period,” she told The Australian Financial Review, with a nod to parent Bain acquiring the airline from administrators less than three years ago.

Ms Hrdlicka said Virgin had one year of profitability, and while she “wouldn’t call them super profits”, the airline was “doing a really good job rebuilding the business and rebuilding it for the long term”.

“The dynamic at play in aviation is [and] has always been the same, which is you have ups and downs, and the downs are pretty punishing,” she said. “And the ups are always moderated and fleeting, so I don’t really buy into the notion [of super profits].”

In May, Virgin’s shareholders, substantially represented by the US private equity firm, pocketed a $730 million capital return that extended to Virgin’s 7000 employees, nearly all of whom received some form of bonus. Virgin made $2.5 billion in revenue in the six months to December 31 on a profit margin of 5 per cent, it has previously revealed.

Qantas earned a record annual pre-tax profit of up to $2.48 billion in 2022-23.

‘Timing needs to be right’

This month’s reopening of the ASX float window, with the debut of family-owned chemicals business Redox, was a positive signal, Ms Hrdlicka agreed, but she insisted Virgin would not rush its IPO process.

“It’s great to see the market’s open, but the timing needs to be right for us and we’ll work our way through what that looks like,” Ms Hrdlicka said.

“We’re very, very focused operationally and on delivering new aircraft into the fleet and delivering our schedule. Of course, the IPO is happening in the background, the planning, and as we’ve always said there’s no pressure on timing when we’re ready.”

The Virgin boss was tight-lipped about whether the airline was seeking a cornerstone investor after rumours that its strategic partner, Qatar Airways, could take a stake.

“There’s a mix of different avenues you can take as you work your way through to a public listing, and we’ll consider all options as we look through them,” she said.

The airline has also appointed former Macquarie chairman Peter Warne and ex-Goldman Sachs banker Pippa Downes to its board in preparation for listed life.

737 refurbishments

On site to welcome the first of 33 new Boeing 737-MAX aircraft to Virgin’s Brisbane hangar on Saturday, Ms Hrdlicka said the airline would spend $110 million to add 50 per cent more cabin baggage space, in-seat charging and device holders in its existing fleet of 737s.

“This investment is to ensure that all aircraft are up at the same standard as we bring new aircraft into the fleet.”

The refurbishment of the existing 737s will be completed over the next two years, as rival Qantas plans to start taking delivery of a newer, more fuel-efficient A220 fleet from Airbus. Virgin will fly its new MAX fleet on international and domestic routes, and the first aircraft is designated to fly between Cairns and Tokyo.

“You would expect all operators in a capital-intensive industry to play very rationally because we’ve got to reset our balance sheets, we’ve got to reset for the future and ensure that we’ve created sustainability in our businesses,” Ms Hrdlicka said.

The CEO said the government’s new Jet Zero Council demonstrated its commitment to ensuring the development of the sustainable aviation fuel industry in Australia: “Without it, we can’t deliver on our ambitions with respect to getting to net zero,” she said.

Separately, Virgin and Boeing signed a memorandum of understanding to explore sustainable aviation fuels, carbon offsetting, First Nations inclusion and people development, as well as ways to collaborate around the US-Australia critical minerals and clean energy transformation compact.

Regional Express has flagged its intent to apply to service Australia’s research missions in Antarctica, weeks after downgrading its profit forecast for this financial year.

Rex confirmed on Tuesday it had submitted a response to a request for information issued by the Australian Antarctic Division, ahead of a formal request for tender expected in November. Rex also confirmed that its long-awaited order of two Boeing 737-800NG planes from Singapore Airlines were now scheduled to arrive by the end of August – one month after initially expected.

The Australian Antarctic Program is a scientific partnership between the government and multiple research bodies to better understand the effects of climate change. The Antarctic program will require one large intercontinental passenger jet, four intercontinental turboprop aircraft and four twin-engine helicopters.

The airline’s Antarctic project manager Craig Martin said Rex was equipped for the contract due to its experience flying for the Department of Defence and select state air ambulance operations.

“We believe there is no better Australian candidate than the Rex Group with its expertise in
operating a fleet of 150 aircraft in every state ranging from Boeing 737-800NG, Embraer E190 airliners, De Havilland Dash 8-400 turboprops, over 55 Saab 340 turboprops, one of the largest fleet of Beechcraft King Air aircraft in Australia, and the recently introduced Pilatus PC24 jets,” Martin said.

Rex said it would lean on a consortium of industry partners to operate some aspects of the Antarctic program which require “more specialised expertise”.

Rex confirmed on Tuesday its long-awaited order of two Boeing 737-800NGs leased from Singapore Airlines will now arrive in July and August. The airline signed a letter of intent with Singapore Airlines in February, with the planes originally scheduled to arrive in June and July, and has not provided an update on the delivery until now.

The delivery of the Boeing 737s will aid some of Rex’s fleet woes but one third of its 57 Saab 340s remain in storage due to insufficient staff. This has led to a reduction in regional flying across the country.

Regional Express on June 20 disclosed it would end the financial year in the red and downgraded its forecast to a $45 million loss following a bullish February outlook. One day after the downgrade, Rex was awarded best regional airline in Australia and the Pacific at the 2023 Skytrax World Airline Awards.

With about 5 per cent of market share, the airline has a significantly smaller operation than competitors Qantas Airways and Virgin Australia.

Qantas, Virgin and Regional Express all declared a return to profitability in 2022, with Qantas issuing two profit upgrades for the December half of 2022, and Virgin Australia’s owner, Bain Capital, considering returning the airline to the ASX less than three years after it came out of voluntary administration.

The downgrade triggered questions from the Australian Securities Exchange, after concerns the carrier had waited too long to alert shareholders to the forecast reversal.

Rex told the ASX it became aware of the loss one week ahead of its disclosure but waited for the information to be “reviewed” by its chairman Lim Kim Hai.

The airline blamed the fall in performance on the lack of momentum in corporate travel due to exponential growth in airfares.

When unveiling the airline’s half-yearly $16.5 million loss in February, Rex said it would return to profit by the end of the year due to strong domestic performance. The company reported an after-tax loss of $46.1 million for the 2022 financial year.

Rex’s share price has shed 16 per cent since the announcement to $1.05.

Qantas wants to hire 300 pilots and engineers from overseas over the next five years to bolster its domestic fleet, sparking union claims the national carrier is trying to suppress wages amid a war over looming industrial relations reforms.

The airline, which was targeted by unions this week over its labour-hire practices, says a local skills shortage means it needs to look abroad for staff – including 10 officers and training captains for its new A220 fleet – to cope with increasing demand for travel post-COVID.

The Australian and International Pilots Association says the 10 A220 staff could be recruited from existing ranks, while the airline argues that no Australians are qualified to fly the new jet.

“It’s important to keep this in perspective. We’re creating thousands of new Australian jobs over the
next five years, which is in contrast to the roughly 60 a year we’re looking to recruit overseas under
this agreement,” a Qantas spokesperson said.

The federal government is considering the airline’s special application as the Australian Council of Trade Unions slams Qantas’s industrial practices to support looming labour-hire reforms that have become an ideological battleground between business groups and workers.

Various sectors from health and aged care to construction are looking abroad to plug labour and skills gaps as the government overhauls the migration system in a global competition for talent.

Despite the airline’s commitment to create 8500 local skilled jobs, including 1600 for pilots, over the next decade, it has sought the labour agreement with the government to fill the short-term void in pilots and engineers.

Qantas wants 75 pilots and simulator instructors from overseas for its Eastern Australia Airlines and Sunstate Airlines regional subsidiaries and is asking the government to raise the maximum age for applicants from 45 to 55. As well as the A220 pilots, it also needs engineers for QantasLink and Jetstar.

“Most of these roles take years of training to become qualified, which is why we’re building a long-
term talent pipeline through a new Engineering Academy, in addition to our Pilot Academy,” the spokesperson said.

But AIPA president Captain Tony Lucas described it as a cynical attempt by the airline to suppress wages.

“There is no shortage of Australian pilots, with more than 300 highly qualified pilots on the waiting list for jobs at the Spirit of Australia,” Lucas said.

“All Qantas would have to do to attract them to the new A220s is lift salaries to a competitive level, rather than offering pay as low as half the major US airlines.”

He added the airline had not needed to recruit foreign pilots when previously introducing new aircraft to Australia, and accused Qantas of dangling Australian passports in front of foreign pilots to circumvent offering better conditions to local pilots.

The airline said it had been advertising locally for the roles since January last year.

Immigration Minister Andrew Giles, who is considering the application, said he was not able to pre-empt the outcome of any negotiations.

The ACTU has targeted Qantas among other major Australian companies as the government prepares to introduce laws aiming to give labour-hire workers the same pay and conditions as directly employed workers doing the same job.

ACTU head Sally McManus accused Qantas of “gaming the system” by using various labour-hire companies, including some it owns, to contract staff who work alongside its directly employed workers but often earn less.

But Workplace Relations Minister Tony Burke, who plans to introduce the Same Job, Same Pay reforms later this year, refused to criticise the airline.

“I’m not going to say, “how dare they” – they are acting legally. But it’s a loophole that the government doesn’t believe should be there,” Burke said.

The Business Council of Australia has urged the government to exclude internal labour-hire companies from its reforms.

Qantas said in a statement that other companies, including airlines, had arrangements with similar outcomes but did not seem to generate the same criticism.

“That includes the public sector, which has many employees on grandfathered conditions working next to people on more modern arrangements,” it said.

“There appears to be a concerted effort to paint Qantas as doing something nefarious despite the high wages we pay, the training we invest in and the highly competitive sector in which we operate.”

Under questioning by Senate employment committee chair Tony Sheldon at a parliamentary hearing on Tuesday, Department of Employment and Workplace Relations deputy secretary Martin Hehir said the proposed reforms aimed to address some of Qantas’ hiring practices.