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Qantas will cut more flights over the next six months as extraordinary levels of staff sick leave and sky-high fuel prices hurt the airline’s efforts to meet strong demand for travel but it promises to end reliability failures in September.

Chief executive Alan Joyce said 320 pilots called in sick or were in isolation every day, with the dual COVID-19 and flu waves causing a big “double peak” in illness which was driving the airline’s highly publicised operational flaws.

“We’ve had a spike in COVID, which I don’t think anyone was predicting. Sick leave, in some cases, has more than doubled,” Mr Joyce said on Thursday, as he unveiled the airline’s third huge loss of the pandemic.

It comes as other companies, such as Woolworths, say high levels of staff absenteeism are hurting their operations. Woolworths chief executive Brad Banducci said it was struggling to meet its usual levels of customer service, but he expected this would even out in spring.

Qantas reported a $1.9 billion underlying loss in the 2022 financial year – the total reported losses over the last three years of the COVID-19 pandemic are now over $7 billion – with the recovery from the virus ongoing before a return to profitability in 2023 despite reliability issues at the airline and questions about the strength of the brand.

But analysts warned the carrier was unlikely to reach pre-pandemic levels of profitability until the 2024 period, as Qantas provisioned $5 billion for fuel costs that have spiked 60 per cent higher over the last three years.

The result was bolstered by a $400 million on-market share buyback as Qantas shares shot 7.5 per cent higher on Thursday to $4.88 despite the loss.

Mr Joyce said the high levels of sick leave were the biggest problem for the airline operationally and, combined with the sky-high fuel prices, meant a cut to domestic flying of 10 per cent for the rest of the year as it tries to reduce the reliability issues that have circled Qantas for the last six months.

‘Taking flying down’

Qantas will operate at 95 per cent of pre-pandemic capacity in the first half of financial year 2023, before raising this to 105 per cent in the second half.

This is the third cut to capacity the carrier has issued this year. Qantas had earlier targeted 115 per cent of pre-virus capacity in the first quarter of the 2023 financial year, but dropped that to 110 per cent in May. In June, it said domestic capacity would be 102 per cent of pre-virus levels in the first half.

“What we’ve done now to protect from that [the high levels of sick leave] is taking flying down, so we have a lot more reserves, a lot more coverage to account for it going forward,” Mr Joyce said. The airline left the door open for it to increase capacity again should its “operational resilience improve”.

Mr Joyce said a hot labour market had led to high attrition rates in parts of the business too – 25 per cent of cabin crew at a charter subsidiary Network Aviation in Western Australia had left, with Qantas working to fill the gaps.

He said this attrition was not the source for Qantas’ reliability issues, and that it had recruited 1500 new staff to bolster its workforce since April.

The reliability issues, which resulted in Qantas cancelling 6.2 per cent of all flights in July and land just 53 per cent of services at their destinations on time, would also be behind the airline in September, according to Mr Joyce.

“The past year has been challenging for everyone. We had to ramp down almost all flying once delta hit and stay that way for several months before ramping back up through multiple omicron waves,” he said.

“We’re not happy with the operational performance, but we have a plan to fix it and recover it very rapidly, and we will be doing that, as we outline here, for September and October.”

Result lands within expectations

The $1.9 billion underlying loss represented a 5 per cent fall on the prior corresponding period as border closures, lockdowns and other pandemic restrictions kept aviation grounded.

It was in-line with analyst expectations.

On a statutory level, the after-tax loss was $860 million, boosted by the sale of surplus land the proceeds of which Qantas used to pay down its debt balance. Revenue increased by more than 50 per cent to $9.1 billion, but this was still almost half the revenue Qantas recorded in the 2019 financial year.

Qantas said it would invest increase staff benefits as it looks to retain and hire new staff. It said: “the staff travel scheme will be made more generous, with better access for family members and an expansion of the already significant fare discounts on stand-by travel.”

It said fuel costs in the 2023 financial year would reach $5 billion, driven by a nearly 60 per cent rise in the cost of fuel compared to pre-pandemic levels as the war in Ukraine drives oil prices higher.

Domestic flying was profitable at the underlying earnings before interest and tax level in the June quarter, while Qantas Freight accelerated in financial year 2022.

International flying struggled due to the constraints in-place for much of the period. Even still, the company plans to introduce a new Auckland-New York route to service from next June and lift capacity to 65 per cent of pre-virus levels in the next six months due to a stronger than expected rebound.

The company has five of its jumbo Airbus A380 jets in service, three in maintenance and two out of service.

Jarden analyst Jakob Cakarnis said it would be critical for Qantas to manage the high fuel bill well. He said the $5 billion of fuel costs made it unlikely that Qantas would reach 2019 levels of profitability ($1.3 billion underlying before-profit profit) with that a recovery pushed into the 2024 financial year.

The $400 million buyback was “ahead of market expectations” as balance sheet repair progresses quicker than first thought, Mr Cakarnis added.

Macquarie analysts said the outlook was good for Qantas with the “ongoing recovery and sustained demand in travel” coming amid “confidence in a rational operational environment”.

“There is an expectation for an ongoing travel recovery across both domestic and international. However, there may be ongoing right sizing of capacity to manage [per-seat revenue], considering higher fuel costs and operational challenges which we hope start to show signs of improvement,” they said.

Macquarie rated the stock “outperform”, with a target price of $6.60.

Steve Johnson, the chief investment officer at Qantas investor Forager Funds Management, said the result fell largely within his expectations with “strong pricing and lack of capacity is offsetting the short-term impacts of higher fuel costs and operational disruptions from staff shortages and illness”.

But he said the company’s guidance for the 2023 period was “cryptic” and hit out at the company’s decision to give $400 million of capital to shareholders via the buyback.

“In the current environment of significant public perception issues for Qantas, we would have preferred they wait another 6 to 12 months,” he said.

“It unnecessarily opens them up to criticism of shareholders benefiting while customers are suffering. They should be focussed on fixing the problems first.”

Qantas is opening a multimillion-dollar purpose-built pilot training centre in Sydney’s south, as it gears up to run a range of new routes and aircraft to meet the renewed appetite for global travel.

The national carrier, along with the broader aviation industry, has been weighed down by staff shortages and flight disruptions, and Qantas chief executive Alan Joyce said the new training facility would ensure the company’s high training standards remain in place.

“Qantas has trained its pilots and crew in Sydney for more than half a century, and we look forward to bringing this critical function back to New South Wales with this custom-built facility,” Joyce said in a prepared statement.

“Sydney will be the launch city for our non-stop flights to London and New York, and will now be the home of pilot training for the A350s, which will operate these flights from 2025.”

The training facility, at St Peters, will offer simulators for the new fleet of aircraft including for the long-haul flights announced in the carrier’s recent Project Sunrise. The centre will also have mock-up cabins, emergency procedure equipment and classrooms.

Upon completion, the facility will alleviate the need for Sydney-based pilots to travel interstate for training. Qantas relocated its simulators from Sydney to Melbourne and Brisbane in 2021.

Senior Qantas and Jetstar training captains will train pilots from the two airlines, while global training provider CAE will maintain the simulators and manage the day-to-day operations of the centre as part of a long-term partnership.

CAE, which will enter into a 20-year lease for the site, may also provide training for other airlines in the region at the facility.

Industrial property giant LOGOS bought the 7946 square metre site to develop the specialised facility, which is said to have an end value of about $100 million. It is next to the 13.8 hectares of land that LOGOS acquired from Qantas in October 2021 for $802 million.

Qantas has trained its pilots and crew in Sydney for more than half a century, and we look forward to bringing this critical function back to New South Wales with this custom-built facility

Qants CEO Alan Joyce

LOGOS head of Australia & New Zealand Darren Searle said the property is located within a “premium industrial precinct on the doorstep of Sydney airport”.

“This development provides the ideal location for Qantas’ new training centre, and the long-term commitment provided by CAE reflects the unprecedented level of demand for industrial land stocks that we’re currently seeing,” Searle said.

“This is particularly so in South Sydney given its proximity to Australia’s two main international gateways, the Port of Botany and Sydney Airport.”

The development is subject to planning approvals. The transaction was introduced by Michael Crombie of Colliers.

The NSW Minister for Planning and Minister for Homes, Anthony Roberts, said the NSW government was a proud supporter of Australia’s aviation industry and the proposal had been declared as “state significant, in recognition of its potential widespread economic benefits and importance to the aviation industry”.

Searle said the centre would be focused on being sustainable with green star certifications, including indoor air quality, energy generation and efficiency, and water use. Construction is scheduled to begin in December 2022, with the facility expected to be operational by early 2024.

The government’s air navigation agency insists it is adequately staffed to cope with a resurgence in travel despite being forced to implement landing restrictions on an increasing number of flights at Sydney Airport due to shortages of air traffic controllers.

Landing restrictions, which are usually put in place due to inclement weather or equipment outages, were implemented on 21 out of 31 days at Sydney’s Kingsford Smith Airport in July, and have continued into August, according to multiple aviation bodies. While some of the delays have been caused by weather, illness and absenteeism among air traffic controllers has also contributed, the sources said.

Airservices Australia, which employs the country’s air traffic controllers, rejected suggestions the increase in disruptions was due to insufficient air traffic controller numbers and said in July there were a total of 23 hours of service disruption out of 744 total service hours, amounting to about 3.1 per cent of services hours at Sydney Airport, not 21 days.

“We have sufficient staff numbers to fill our shifts in Sydney and across the network. We need about 800 air traffic controllers to fully staff the system, and we have more than 900 on staff...Most of the disruptions were confined to a single hour,” a spokesperson said. But the spokesperson conceded absenteeism caused by illness had contributed to the delays.

Figures from the Bureau of Infrastructure and Transport Research Economics revealed July was the worst month for cancelled flights across the nation since January. Airlines cancelled 6.4 per cent of flights in July, up from 5.8 per cent in June. The Sydney-to-Melbourne route experienced the most cancellations, with 13.9 per cent of flights cancelled according to the BITRE data.

In perfect conditions, Sydney Airport can accommodate up to 50 landings an hour on the parallel runways and 25 on the cross runway. A ground delay program controls the air traffic volume to an airport when the projected demand exceeds the site’s capability to safely accommodate aircraft.

The Airservices spokesperson said the organisation’s internal data revealed just 62 hours out of 5728 operational hours in 2022, or 1.1 per cent, have been interrupted at Kingsford-Smith.

But the president of the air traffic controller union Civil Air, Tom McRobert, said Airservices Australia’s focus on staff numbers misrepresented the issue.

“The staffing challenge is actually about keeping people from burning out. We do a very specialised, technical job that requires us to be physically and mentally healthy,” he said.

“You do not want a tired air traffic controller grounding a plane after working 10 days in a row because everyone else is sick or in training.”

He saidmore attention should be paid to long-term training and retention measures.

Airservices Australia introduced a retirement incentive scheme for employees between 56 and 65 in December 2021, leading to the departure of more than 140 air traffic controllers and support staff between October 2021 and June 2022.

Data analysis compiled by Civil Air and published in the Guardian, showed air traffic controllers employed at Sydney Airport recorded more than 500 hours of overtime for July. The union has warned the situation threatens to undermine the ability to safely provide air traffic services.

The union’s claims were rejected by the Airservices Australia spokesperson who said frontline overtime is a normal factor of a 24/7 operational business and actually on par with pre-COVID levels.

According to data from the Australian Bureau of Statistics released last week, staffing numbers in the air and space transport industries have fallen by 31 per cent compared to pre-COVID levels.

“Juggling hiring, training and staff illness and morale is an industry-wide issue. Attracting people into this labour market is really hard and staff are struggling with morale when working in such intense conditions,” Civil Air’s McRobert said.

Qantas will expand its freight division with six Airbus A321 aircraft to capitalise on Australia’s demand for online shopping.

The six A321 freighters will arrive between 2024 and 2026 to replace the existing fleet of five Boeing 737 freighters that are nearing retirement.

Each freighter will be able to carry 23 tonnes of cargo, nine more than the expiring 737s, and are 30 per cent more fuel efficient per tone of freight carried.

Sourced on the open market, the aircraft will be converted from carrying passengers to cargo, subject to commercial negotiation, by removing seats and installing a cargo-handling system.

In 2020, Qantas Freight became the first airline to fly an Airbus A321 passenger-to-freighter conversion aircraft for Australia Post.

The airline now has three A321 passenger-to-freight aircraft and is converting two wide-body A330s to freighters, one of which will be used on the domestic network.

Qantas Freight also operates a Boeing 767 and wet leases two Boeing 747s from Atlas Air to connect Australia with international freight hubs.

Wet leasing is when the leasing company provides the aircraft and crew and is largely responsible for the entire flying experience.

Qantas Group chief executive Alan Joyce said Qantas Freight has been a “standout” performer for the group during the pandemic.

“This is one of the largest-ever investments in our domestic freight fleet that will enable Qantas Freight to capture more of that demand and will provide the opportunity to help freight further grow revenue and earnings.

“The first three [aircraft] have been a fantastic addition to our fleet and operating a single type of narrow-body aircraft in the future will enable us to generate further operational efficiencies and significantly reduce emissions per tonne of freight flown.”

The terms of the order are confidential. Qantas is planning to buy the aircraft on the second-hand market and convert them to freighters. Airbus last listed the A321 passenger model in 2018 at $US118.3 million ($166.1 million). However, list prices are typically discounted by about 50 per cent and this price does not consider the passenger-to-freight conversion.

Fuel price hikes put the airline industry under strain—but may prompt airlines to limit overcapacity, leading to better returns and industry stability.

Just as airlines began their recovery from the COVID-19 pandemic, the sector was hit by another challenge—a rapid spike in fuel prices. Since the start of 2022, the price of jet fuel increased by approximately 90 percent and costs roughly 120 percent more, on average, than it did in 2021, at the time of writing. This price increase presents a significant challenge for airlines as fuel is often the largest operating cost, accounting for around 25 percent of total costs depending on the year.

Counterintuitively, high fuel prices might not necessarily be a bad thing for the industry. Even though it causes short-term pain, it also increases marginal costs of flying—which can foster greater capacity discipline. This, in turn, drives healthier industry economics and can help profitability.

This article examines what airlines have done in the past when fuel prices were high and offers strategies that airlines could consider to mitigate the effects of fuel price hikes. We believe this is especially important at a time when a potential recession looms and pressure is increasing for airlines to drive improved sustainability.

Sky-rocketing jet fuel

The price of crude oil and jet fuel steadily increased over the course of 2021 and reached new highs in early 2022. As of June 27, 2022, a barrel of West Texas Intermediate (WTI) crude oil is hovering around $111, up by about 135 percent since the beginning of 2021. Refined product prices have risen even more, with jet fuel now around $4 a gallon in the United States, up approximately 90 percent since the beginning of 2022, and increasing by around 215 percent since January 2021.

Additionally, a “perfect storm” is driving increased price volatility in some local markets, such as New York. Refining capacity has come down significantly post-COVID-19 as refineries, seeing less demand, have shifted capacity away from producing jet fuel towards other fuels. Furthermore, Russia’s invasion of Ukraine contributed to lower crude oil and refined product exports, especially to Europe. These factors have pushed up prices globally for crude oil as well as for middle distillates such as diesel and jet fuel. On top of these global price increases, local logistics constraints in meeting the sudden increase in aviation demand, in places such as the Northeast United States, have caused additional local price spikes specific to jet fuel where the price per gallon has topped $8.

These steeply rising energy costs represent the next hurdle for an industry still recovering from the COVID-19 pandemic. One major US airline recently stated in its annual report that for every cent a gallon of jet fuel increases in price, the airline’s total fuel bill would increase by $40 million. Therefore, the recent 195-cent increase in jet fuel equates to an approximate $8 billion increase in annual fuel costs for this airline.

Qantas has been forced to change its flying schedule out of London to avoid cancelling flights following Heathrow Airport’s extraordinary directive to airlines to reduce passenger numbers.

With staff numbers yet to return to pre-pandemic levels, Heathrow has imposed a 100,000-passenger a day cap on airlines, about 20 per cent below current levels of 122,187.

In addition, Heathrow also ordered airlines not to sell any more seats for travel in and out of London’s biggest airport until September 11.

A Qantas spokeswoman said the airline was “disappointed” with the decision made by Heathrow, but were doing all they could to minimise the impact.

“We have two flights a day to London and we want to preserve them at all costs given people’s travel plans are at stake,” said the spokeswoman.

“We’ve managed to negotiate a workaround that isn’t perfect but will get our customers to their destination. We continue to work with Heathrow on improving this situation.”

As a result, Tuesday’s QF2 service to Sydney would depart 9-hours earlier than scheduled, taking off at midday from terminal 4, instead of terminal 3.

The earlier departure time meant an 11-hour stopover in Singapore, during which time customers would be provided with accommodation.

Estimated arrival time into Sydney would be the same – at 5.10am on Thursday.

It was unclear whether more flights would be retimed with discussions between Qantas and Heathrow continuing on Monday.

Even with the changes, Qantas customers were likely to be better off than those with some other airlines, which have been forced to make significant alterations to schedules at considerable cost.

British Airways asked its passengers to consider postponing their travel, and offered to reschedule bookings within the next 12-months free of charge.

In the case of Emirates, the airline was simply refusing to comply with Heathrow’s demands, saying the 36-hours notice given by the airport was “entirely unreasonable and unacceptable”.

“Re-booking the sheer numbers of potentially impacted passengers is impossible with all flights running full for the next weeks, including at other London airports and on other airlines,” said a statement issued by Emirates.

“All the signals of a strong travel rebound were there, and for months Emirates has been publicly vocal about the matter.

“London Heathrow chose not to act, not to plan, not to invest. Now faced with an ‘airmageddon’ situation due to their incompetence and non-action they are pushing the entire burden of the cost and scramble to sort the mess to airlines and travellers.”

Analysis of the directive by aviation analytics firm OAG estimated the daily cost to airlines of reducing passenger numbers and cutting flights to be in the vicinity of $800m.

“In addition to the direct revenue loss to airlines, there are also the costs of attempting to rebook affected passengers,” said an OAG spokeswoman.

“Allowing for all of the costs of that activity — when airlines are probably looking at around $74 a head to rebook — is another unexpected cost for airlines.”

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.

‘Significant improvement’

“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.

After a catastrophic few years for the travel industry, Australian luggage brand July is back on track and launching a new bricks-and-mortar presence in Sydney and the US.

The business, which saw sales fall more than 90 per cent during the worst of the pandemic when the travel industry was forced to shut down, is now enjoying a year-on-year revenue spike of 1500 per cent, and 50 per cent month-on-month.

July co-founder Athan Didaskalou said the business will be launching a store in Sydney’s The Galeries shopping centre in September, then focus on launching stores in New York and Los Angeles soon. 

“The secret sauce for us has got to be our physical retail,” Didaskalou told Inside Retail. 

“In the early days [of July] it was a bit of a flex for us – we knew there was a customer that would need luggage [to travel] the next day, and there’s no e-commerce solution for that. 

“But we’re starting to realise that, when we do our revenue per square metre [analysis], our stores are phenomenally profitable. We want to expand our physical retail presence as much as we can.”

July launched into the US in [2021] when travel in opened up again, and, while its budget pieces didn’t perform well in that market, it’s more premium ‘trunk’ style products are in constant demand and the business “literally can’t make them fast enough”.

And, following its successful expansion into the US, July is likely to try to gain a foothold in the UK with an eye to expanding into Europe.

Under one roof

Back home in Australia, the business’ physical spaces have continued growing, despite the slow return to international travel.

Throughout the pandemic, July decked out its warehouse and headquarters in Melbourne with a new coat of paint, and created a retail space at the front-of-house.

And, though Didaskalou admitted it can be hard to focus on work when customers are shopping just metres away, the feedback gained by having a direct line to its audience has already led to some product improvements. 

“For example, for our ‘carrier lite’ bags, a lot of people have come in and said its too small. And we’ve [been] sitting there, working and listening in, so we made it expandable,” he said. “That insight came from being able to just sit next to the retail store and listening to people.”

Working together under the one roof has also helped the July team to bond, with warehouse, retail and head office workers being able to meet and speak on a daily basis.

Australians “anxious” about delivery times

Throughout the pandemic, Australians’ confidence in shopping online grew by leaps and bounds, and when travel was back on the cards, July saw many more customers shopping its ranges online.

However, after the difficulties delivery providers have faced in the last few years, Didaskalou is seeing far more consumer confidence in buying online where click-and-collect is an option.

“In Australia, there’s still a bit of anxiety around when [online purchases] will arrive,” Didaskalou said. 

“Australia Post and other players have a big job on their hands, [but] people just don’t expect their purchases to arrive anytime soon, so the option for click-and-collect has made things so much easier.”

However, with only two stores in Melbourne and one to come in Sydney, most Australians are unable to use the click-and-collect option at July. 

The way the business deals with this currently is by having several warehouses across the country, and working with small, private courier networks that commit to fast deliveries. That way, if a customer in Perth, for example, purchases a product, it doesn’t have to ship from the other side of the country.

As international travelling resumes after a two-year hiatus due to the Covid-19 pandemic, travel retailer Flight Centre is unveiling a new slimmed-down business model. 

In what the company describes as “Flight Centre Brand 4.0” the business will focus on embracing its three core assets: its people, its product, and its global retail footprint. The company believes it has developed an industry-first “blended ecosystem of technology and traditional booking systems” with the new model.

An omni-retail approach, blending the different ways Flight Centre clients book travel – in-store, on mobile or desktop, over the phone or via Flight Centre’s app – will be anchored on a soon-to-be-launched global website with what the company describes as “world-class booking functionality”.

The site will carry a standardised global brand, with regional and in-store functionality for bookable travel products, pricing, and promotions.

“We’ve used the past two years to right-size the business and reinvent Flight Centre after taking stock of our future ambitions,” said founder and CEO Graham ‘Skroo’ Turner. “Without leaving our core assets behind, we’re moving from a world of complexity to one of simplicity for our customers and consultants.”

Having repositioned the business to survive the pandemic, Turner believes that with the world beginning to exit that era, now is the time to focus on creating “a savvier and more streamlined business model”. 

“As such, we are improving the value and expertise of our consultants who will operate in a face-to-face environment, supported by the most sophisticated of online platforms.”

The new FCB business model features a dynamic and globalised pricing strategy, a consistent customer experience regardless of the location, an intuitive booking system dubbed Helio with an automated best-deal search engine and a single view display of end-to-end journey booking data visible to both client and consultant. 

“Our new online platform will feature a single booking portal that customers and consultants can access seamlessly, whether the booking is made in-store or online. Via our new omni-retail model, the business will increase its online sales to 40 per cent of total transactional value by 2025,” said Flight Centre Travel Group’s New Zealand MD David Coombes. 

The booking platforms are also designed to meet what Coombes describes as evolving customer demand for an ability to make decisions around their travel options that take into account their impact on climate change, but allowing carbon offsetting and transparency on CO2 emissions. 

 “Our suppliers are also taking positive steps to reduce their impact, with many of our preferred partners having implemented comprehensive environmental and broader Corporate Social Responsibility strategies,” he said. 

Coombes says travel has bounced back quicker than the company expected, leaving it trading at more than 60 per cent of the pre-Covid level – but with only one-quarter of the staff.

Flight Centre opened its first shop in Australia in 1982 and has since expanded into 27 countries with brands including its original red and white Flight Centre stores, along with Travel Associates, independents and, under its corporate arm, Corporate Traveller and FCM.

Turner says the company has grown a long way from its small beginnings.

“More than 40 years ago, I flew to London as a uni grad and had a hair-brained idea that buying a run-down double-decker bus would be a cheap, but effective way to drive around Europe. A few friends liked the idea too and pretty soon, we worked out people would actually be willing to pay to come along with us on some of our fun.

“That was the start of Top Deck Travel and became the catalyst for the birth of Flight Centre.”

Qantas will trim domestic flying from 107 per cent of pre-COVID-19 levels to 103 per cent in July – when it will start lifting airfare prices – as it rebalances the local operation for higher fuel costs and lower demand.

It is the first Australian airline to announce capacity cuts with jet fuel costs straddling sky-high fuel costs stemming from the war in Ukraine. A barrel cost $US146.53 ($206.72) last week, down on last month but still double the price this time last year, the International Air Transport Association said.

Qantas will continue to monitor market conditions, but said it did not think these capacity adjustments would materially affect passengers because of “the large number of flights on most routes”.

“Those impacted will be contacted directly and offered different options. In practical terms, these changes will generally lead to a higher seat factor on flights across the group,” the airline said.

Virgin Australia chief Jayne Hrdlicka said earlier this week that the airline was operating north of 100 per cent pre-pandemic capacity. Virgin is factoring in higher fuel costs in its schedule planning.

Rex, which this week told the Daily Advertiser in Wagga Wagga it was “reviewing its entire regional network” as it battles Qantas for rural travellers, has also been contacted.

Qantas said the domestic market was otherwise performing well, following a bumper Easter period during which services buckled under the weight of what one executive termed “revenge travel”, despite the higher fuel costs.

“Fuel prices have kept rising over the past month and require the group to rebalance capacity and fares in response.”

The carrier had indicated changes were coming in a quarterly update earlier this month, when it also warned passengers to expect “fare increases during July and August”.

Qantas has not changed its international capacity for the rest of the financial year as demand is strong, and said it would operate 70 per cent of the overseas flights it did pre-virus in the September quarter.

The airline will bring its third Airbus A380 double-decker out of hibernation and return it to service on Melbourne-Los Angeles flights from June 6. It will also restart Jetstar services to Japan from late July as the country starts to relax its border rules. Qantas Sydney-Tokyo flights will restart in September.

It said demand for trans-Tasman flights was also high after the New Zealand border restrictions were relaxed, and that it would increase its frequency on some trans-Tasman routes soon.

Still, Qantas has delayed restarting Sydney-San Francisco trips for two more months until October 30 because of concerns about the availability of its Boeing 787 jets pencilled in to fly that route.