Qantas Airways Cost Cutting Plan Sparks Cut Concerns

Qantas Boeing 737-800
Qantas will Buy 5 Boeing 737-800 Jets

Qantas Airways plans to slash the cost base of its ailing international business by nearly one-third over the next three years, in a move that has sparked ­speculation of further capacity cuts and job losses.

Qantas chief financial officer Gareth Evans this month revealed “$1 billion or thereabouts” of the company’s ­$2 billion cost savings target would come from its international division.

Analysis of Qantas accounts shows the overseas division had controllable costs of $3 billion last year, excluding fuel, depreciation and operating leases – suggesting one-third of these would need to be cut to meet the company’s financial targets.

Qantas expects inflation will erode some of the cost savings, meaning $1 billion of cuts to international would equate to actual cost cuts of about $730 million by the end of the third year.

An analyst said he struggled to ­comprehend how Qantas could cut $1 billion from its international division without further route withdrawals and job cuts, even though the airline has so far played down the prospect of more wholesale network changes.

“They will probably announce they will cut another 2000 or 3000 [jobs] on top of the 5000 already announced,” the analyst said.

Speaking at the CAPA Australia Pacific Aviation Summit, Mr Evans argued the cost savings could be made without sacrificing customer services.

“For us, it’s about controlling what we can control, and pulling out $1 billion worth of costs [and] continuing to improve the network and the product quality for our customers is absolutely what we can control,” Mr Evans said.

Qantas, including Jetstar, has a total controllable annual cost base of $11.6 billion, so the planned cuts will hit the international division disproportionately.

Of the $2 billion target for the business as a whole, Qantas has said it will cut $800 million from its cost base by June next year and the other $1.2 billion of savings are expected over the following two financial years.


DOT Fines Qantas $90,000 for Not Informing Passengers they Could Leave Delayed Aircraft

Qantas Boeing 747 at DFW
A Qantas Boeing 747 about to touch down at DFW

The U.S. Department of Transportation (DOT) today announced that Qantas Airways, an airline based in Australia, violated federal rules last March by not informing passengers on a delayed aircraft at Dallas/Fort Worth International Airport that they had the opportunity to leave the plane as it sat at the gate for an extended period of time with the door open. DOT fined Qantas $90,000 and ordered the airline to cease and desist from further violations.

DOT rules prohibit airlines from allowing their aircraft to remain on the tarmac for over 3 hours for domestic flights, and for over four hours for international flights without giving passengers an opportunity to deplane. Qantas violated a provision of the DOT’s airline consumer protection rule requiring that if passengers on a delayed flight have the opportunity to leave the aircraft, the carrier must inform them that they can deplane. Announcements that passengers can leave the plane must come 30 minutes after the scheduled departure time and every 30 minutes afterward.

“Airlines may not leave passengers stranded indefinitely aboard an aircraft, whether on the tarmac or at the gate, and passengers have a right to know if they are able to leave the plane,” said U.S. Transportation Secretary Anthony Foxx. “At DOT, we are committed to protecting consumers’ rights when they travel, and will continue to take enforcement action when our rules are violated.”

On March 21, 2013, Qantas flight 008 was scheduled to depart Dallas/Fort Worth at 10:00 p.m. en route to Brisbane, Australia. The plane initially pushed back from the gate at 10:41 p.m., but had to return to the gate three times after receiving mechanical alerts. After the first return to the gate, the plane sat for an hour and seven minutes with passengers on board, and the second time for two hours and two minutes. During both of these delays, the aircraft door was open and passengers could have left at any time, but Qantas personnel failed to inform passengers that they could deplane. The flight was canceled after a third mechanical alert and passengers disembarked at 3:05 a.m.