Following a spate of cheap seat offerings across the domestic sector, Qantas Group CEO Alan Joyce says affordable airfares will continue across the domestic market – and even when international routes make a return.
Mr Joyce’s optimism comes as the airline announced on Thursday a staggering $1 billion loss in its half-yearly results in the six months to December 31.
The COVID-19 pandemic has decimated the global aviation industry, with the Australian airline currently relying on domestic travel and freight given international travel will likely not resume until the end of October.
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Mr Joyce said the budget arm Jetstar generated positive cashflow in the past six months, and that the continued interest in domestic travel alongside the vaccine rollout will only continue providing premiers roll back sudden border closures.
“Our whole philosophy is that we want to get aircraft into the air and we want to cover cash costs,” Mr Joyce said.
“At this stage, we don’t need to make profits we need to cover cash. That means we don’t have to cover the costs of the aircraft ownership … so it does mean we can continue to offer very attractive airfares … to stimulate the market and get people to travel.”
Just this week, Jetstar announced a new route between Sydney and Hervey Bay, which came at an initial sale cost of just $59 one way.
The budget carrier announced earlier this month a ‘fare frenzy’ which had some popular routes – such as the popular Sydney to Melbourne leg – drop to just $29 one way.
The sale was off the back of rival airline Rex launching fares between the capital cities for $49.
Mr Joyce said that the budget carrier’s low fare sales, such as the $19 sale in June last year which saw 10,000 tickets sell out in four hours, would likely be around to stay.
“We have also seen Qantas come out with some extremely low airfares … we are sitting with a lot of empty seats, so even though we are back at 60 per cent of the pre-COVID schedule, we have got to fill them,” he explained.
“I’d rather lose a dollar in the air than a dollar on the ground … so the airfares are going to be very attractive and with a lot of competition around and when international starts, there will be a lot of carriers around in the same boat.
“So this is going to be a great time for consumers … we need to get people back in the air and travelling again.”
Qantas has pushed back its return to overseas flights by a further four months, with its international network unlikely to be fully restored until 2024 at the earliest.
The company said Qantas and Jetstar international flights would make a comeback from October 31, instead of July, as it previously forecast.
Most of Qantas’ international routes would resume on that date, including flights to London, Singapore and Los Angeles.
Three routes – New York, Santiago and Osaka – will return at a later date, with Qantas passengers able to fly to those cities with codeshare partners in the meantime.
However flights to New Zealand are likely to increase from July as Australia maintains its travel bubble arrangement with its trans-Tasman neighbour.
In addition, Jetstar would resume flights to all 13 of its international destinations from October 31.