Qantas CEO Plays Down Rival's Low Trans Pacific Fares
3rd May 2016
Although Qantas has significantly lowered is fares on many trans-Pacific routes, most notably on Sydney to New York, where the economy fare has been dropped from $2310 to $1621 on Monday, the Australian flag carrier is still several hundred dollars up from some of its rivals.
In an interview to the Fairfax Media Qantas Chief Executive Officer Alan Joyce has attempted to play down the concerns about the low trans-Pacific routes Qantas rivals are now offering:
"We have always gad periods of time where there are selective low airfares and promotional fares. Recently on Melbourne-Sydney we have had airfares as low as $69. It happens generally when people want to promote weak times and weak demand. But Qantas always maintains a yield premium over competitors domestically and internationally."
Qantas CEO also explained how some airlines are passing on some of the cost savings to consumers they could be making all because of the drop in fuel prices:
"In these environments, people are going to grow and take advantage of these really good margins. We are taking advantage of it. We see really good margins for our international business. It is still going."
According to Mr Joyce Qantas might be selling tickets with an average fare price or yield lower than what it had in 2015, but this was outweighed financially be the benefits provided by its transformation program.
Along with its partner, American Airlines, Qantas has added capacity to the market in December last year and has resumed flights between Sydney and San Francisco, while the American Airlines has started the Los Angeles-Sydney route. The two companies have signed a revenue-sharing partnership in June, 2015, but are still waiting for approval for a deeper partnership from US regulators.
Unfortunately for both Qantas and American Airlines, the US regulators still haven't given their approval, despite the initial hopes. This is in part due to the complaints from JetBlue and Hawaiian Airlines. Australian and New Zealand authorities have already given the green light to the partnership.
However, according to a spokeswoman from Qantas, the US Department of Transportation might soon change its mind of the Qantas-American Airlines deeper partnership:
"It has always been the intention that Qantas and American Airlines will share all value created by the partnership and revenue-sharing will kick in once all the regulatory approvals are gained."