QANTAS Airways may cut routes and seek more tie-ups with competitors as Australia’s largest carrier works to reverse losses at its international business, according to analysts.
The airline could cease flying to South Africa and South America to focus on routes to London and Los Angeles, said Neil Hansford, chairman of Strategic Aviation Solutions. It might also shift Hawaiian services to the Jetstar budget unit, Mr Hansford said.
His comments come as Jetstar prepares to make a “significant announcement” today relating to Melbourne, China and the company’s pan-Asian network.
Qantas chief Alan Joyce has promised a “ruthless” review of operations after forecasting two years of annual losses at the international unit following a loss in market share.
The airline is losing travellers as Singapore Airlines and Emirates lure business customers with newer planes and free rides to airports.
“Qantas International has stood still for decades and everyone caught up and overtook them,” said Chris Weston, an institutional dealer at IG Markets in Melbourne.
The flag carrier’s share of travellers to and from Australia has fallen to 19 per cent in April from 35 per cent in 2001, according to official data.
Qantas’s plans to revamp its international business include “making cuts where we need to make them,” Mr Joyce told the ABC last weekend.
Mr Joyce has said he will inject some of the savings squeezed from the international network into the luxury-end of the division.
The strategy’s two other elements involve addressing partnerships with other carriers and targeting expansion in Asia.
Forging alliances with carriers such as Malaysian Airlines would help Qantas add destinations without having to fly all its own jets and provide the infrastructure, according to the Centre for Asia-Pacific Aviation.
Qantas forecast on June 22 a $200 million loss at the international arm for the year ended June 30, and a bigger loss this year.
Mr Joyce also faces challenges from rising fuel costs, a strong dollar and has to deal with a looming strike threat from long-haul pilots.
The Australian & International Pilots Association, which represents long-haul pilots, this week voted to take its first industrial action at the carrier since 1966, while the engineers’ union plans disruptions across the network in support of higher wages.