QF reducing capacity growth

[JessicaTam]

Qantas cuts back flights in face of falling demand and confidence

Qantas shares have plunged after the airline and its low-cost spin-off, Jetstar, said it was cutting back planned flights on domestic routes in response to reduced demand from Australians worried about the economy and the upcoming election.

 

[Isochronous]

Capacity discipline is a good thing.

Now, more A330s for Asia please!

 

[JessicaTam]

Capacity discipline is a good thing.

Now, more A330s for Asia please!

Yep, and Trans Tasman as well would be nice.

 

[JohnK]

The demand is not there because the airfares are too high. No discounting during school holidays, Easter and Christmas the past couple of years where as Virgin is still offering low(ish) airfares.

Oh and if fuel surcharges people may actually more of their points for flying rather than toasters and gift cards.

 

[Quickstatus]

Im no airplane economist but i think they use certain metrics such a revenue per seat km?
100 seats on a 1000km flight costing $100 each would be lesser revenue raising than 50 seats travelling the same but at $250 each (simplistic Yes).

I think they learnt that from the last stoush with their competitor(s) that increasing capacity does not return better revenue.
Maybe the airline is sensing a relative weakness in their competitor and believe there is scope to reduce capacity without losing too many customers.

Is is the reported slump in forward bookings also evident across the industry or isolated to a certain airline, sector or route?



There is a relationship between prices and demand = Price elasticity of demand
Simply a x% change in prices causes a y% change demand
x and y do my necessarily equate 1:1 and the relationship may not be a straight line either

 

[wandering_fred]

Capacity discipline is a good thing.
Now, more A330s for Asia please!

Especially from PER :shock:

Happy wandering

Fred

 

[medhead]

Yep, and Trans Tasman as well would be nice.

I saw an A330 in AKL on the 17 April. I was wondering how it got there.

 

[Punky]

I saw an A330 in AKL on the 17 April. I was wondering how it got there.

Flew there. From Perth, most likely.

 

[cambriamarsh]

I saw an A330 in AKL on the 17 April. I was wondering how it got there.

Heading to PER?

 

[medhead]

Heading to PER?

IDK
Seems reasonable:

Flew there. From Perth, most likely.

 

[Quickstatus]

heading to per?

qf111 a330-200

 

[lovetravellingoz]

Australians cutting back flights due to worrying about the election. Bulltish!

 

[Conrad_S]

Australians cutting back flights due to worrying about the election. Bulltish!

It might be code for corporates and govt departments cutting back till they see what the outcome is

 

[MEL_Traveller]

The demand is not there because the airfares are too high. No discounting during school holidays, Easter and Christmas the past couple of years where as Virgin is still offering low(ish) airfares.

Oh and if fuel surcharges people may actually more of their points for flying rather than toasters and gift cards.

Airfares being too high might be one factor (prices MEL-SYD have not dropped in the same way that international ones have) - but how about all the other reasons... like cramming in extra rows to 737s? And reduced points earning (and when you do earn them, blocked awards or sky high fuel surcharges).

Whereas once I might consider a last minute weekend away by plane, the 'getting there' is just not enjoyable anymore.

 

[Himeno]

Australians cutting back flights due to worrying about the election. Bulltish!

Canberra basically shuts down when elections are called. Government departments go into holding mode with staff having no idea what will happen after the election with a new government. The staff tend to cut back on everything.

 

[kermatu]

Canberra basically shuts down when elections are called. Government departments go into holding mode with staff having no idea what will happen after the election with a new government. The staff tend to cut back on everything.

Somewhat true, though to say 'no idea' is overstated -- there will be a Govt and not much actually changes. In my opinion it's covered by the fact that in the months prior to an election there's far more travel than normal. And unless you have use of a VIP, the campaign generates a lot of airline business for politicians, staffers and media. The biggest factor for Canberra is the sitting schedule. Elections are a blip.

 

[medhead]

Somewhat true, though to say 'no idea' is overstated -- there will be a Govt and not much actually changes. In my opinion it's covered by the fact that in the months prior to an election there's far more travel than normal. And unless you have use of a VIP, the campaign generates a lot of airline business for politicians, staffers and media. The biggest factor for Canberra is the sitting schedule. Elections are a blip.

There can be major policy changes when the new government. There can be cut backs. The public service doesn't know who is going to win. While Politicians staffers and media need to travel for election very few of those are based in Canberra. The public service on the other hand all live in Canberra, they also out number the politician masters. Limited travel by the public service during an election is a significant factor, even in these cost cutting days.

 

[kermatu]

There can be major policy changes when the new government. There can be cut backs. The public service doesn't know who is going to win. While Politicians staffers and media need to travel for election very few of those are based in Canberra. The public service on the other hand all live in Canberra, they also out number the politician masters. Limited travel by the public service during an election is a significant factor, even in these cost cutting days.

Staffers vastly outweigh the politicians, and almost all I know from both major parties and the Greens are Canberra based. In any event, the election is a blip in terms of government travel. The biggest uncertainty isn't travel anymore, it's overall size. Further saves will mean staff cuts but they'll be at the junior end so won't impact much on travel. And the downscaling of flights to and from Canberra, including J seats, has been quite marked for a few years so I'd be surprised if VA and QF had assumed anything other than flat or even declining demand for a while now. As for the broader national picture, I just don't see the election holding much sway. More about the state of the economy and confidence - or lack thereof - in how it will be managed.

 

[medhead]

Staffers vastly outweigh the politicians, and almost all I know from both major parties and the Greens are Canberra based. In any event, the election is a blip in terms of government travel. The biggest uncertainty isn't travel anymore, it's overall size. Further saves will mean staff cuts but they'll be at the junior end so won't impact much on travel. And the downscaling of flights to and from Canberra, including J seats, has been quite marked for a few years so I'd be surprised if VA and QF had assumed anything other than flat or even declining demand for a while now. As for the broader national picture, I just don't see the election holding much sway. More about the state of the economy and confidence - or lack thereof - in how it will be managed.

I'm talking about the public service who vastly outnumber political staffers as I wrote in my previous post..

 

[kermatu]

I'm talking about the public service who vastly outnumber political staffers as I wrote in my previous post..

Understood. And not disputed. Though your statement that all the public service is Canberra based is wrong. Only around 40 per cent are.

But my view / knowledge is that PS travel has declined substantially and plateaued in the past couple of years after Labor's massive cuts from 2013. If an airline was downgrading its growth rates only now (for public service or even broader business travel given telepresence etc) that's a failure of the airlines (especially once matched and added to by the Coalition). Obviously important for demand ex-Canberra, but I have my doubts it is actually more than a minor factor in overall demand.

I was responding more to comments that the election period itself is a driver behind forecasts. My evidence is travel is far higher pre and post election by the PS, as well as by the political and media side during, to more than make up for it. Caretaker is quiet for the policy side of the PS, but it's business as usual for the majority, and the same if not more policy issues need to be settled in any given year, so it all balances.

Just my opinion.