Qantas to Strengthen Domestic Operations to Compete with Virgin

5th Jun 2012

Already the country's largest airline, Qantas Airways is now in an aggressive mood by expanding its hold in the domestic market. This is to possibly ward off Virgin Australia's foray into unserved routes or even routes not fully utilized.

Based on the official statement from the airline, it will add more seats this year to Brisbane, Melbourne and Sydney, three of the country's largest urban centers and Qantas Airway's busiest routes. To keep the carrier's capital spending in check, it even defers its delivery of a couple of Airbus SAS A380s.

Threatened by the aggressive expansion of Virgin Australia, Chief Executive Alan Joyce is ready to protect Qantas more than 65% share in the domestic market. Virgin is reportedly very serious in pursuing its goal to tap the lucrative corporate clients by taking care of their needs such as building lounges in major airports to pamper them. To further strengthen its foothold, it streamlined its capacity on its intercontinental routes to revive its operations losing hundreds of millions of dollars annually as they fight competitions large carriers from the Middle East countries.

The Executive Chairman of CAPA Center for Aviation in Sydney, Peter Harbison, acknowledged the importance of the domestic market to Qantas' survival. "The lifeline of Qantas Airways is its domestic market. They're not that strong on their international operations."

The carrier has deferred its delivery of the two Airbus A380s which was originally scheduled on 2013. Instead, the delivery might take place in the middle of 2017. The carrier has a dozen of super jumbo jets already on its fleet and another 6 more of this plane type will be delivered by the middle of 2019.


As part of its cost cutting measures, Qantas slashed A$300 million off its international operating expenses. The biggest cut was on its unprofitable routes by reducing flight frequencies or ceasing operations altogether, saving as much as A$120 million. Another measure was the shedding of jobs from its heavy maintenance and engineering units, saving up to A$100 million.

It's quite hard to compete along with big guys out there who have better financial resources. Non-stop long-haul flights to Europe from Australia via any of the Gulf-based airlines are easily available. Qantas Airways only connects London and Frankfurt, two of Europe's most cosmopolitan cities.

Jetstar, Qantas' budget airline brand is likewise on the expansion mood as it tries to defend its turf from the Tiger Airways invasion in Australia?s domestic market.