The Qantas Group is cutting international flying by a massive 90 percent and domestic flying by 60 percent until at least the end of May, warning it could be months before travel rebounds.
The cuts will be phased in from the end of March and represent the grounding of 150 aircraft including almost all the group’s widebody aircraft.
The unprecedented International cut is a big increase from a 23 percent reduction in international group capacity announced last week and largely reflects the impact on demand of severe quarantine requirements on overseas travel.
Governments to increase restrictions in the past week include the US, Australia, New Zealand and Canada, which has now barred entry to most foreigners.
Australia and New Zealand both now require most travelers to self-isolate for 14-days after arrival.
READ: Airlines plead for help as cancelations keep coming.
More surprising than the massive international reduction is the huge 60 percent domestic cut, which is up from just 5 percent last week.
The airline said this reflected a rapid decline in forward travel demand due to the government containment measures, corporate travel bans “and a general pullback from everyday activities across the community”
“It’s now fair to call this the single biggest shock that global aviation has ever experienced,” Qantas chief executive Alan Joyce said in a memo to staff Tuesday.
The Australian government has banned gatherings of more than 500 people leading to the cancelation of many sporting and cultural events.
Particularly damaging to Qantas’ premium market have been travel bans imposed by some big corporations and government departments.
The airline said it was still working through the route-by-route details of the changes and these would be announced in the coming days.
Already announced cuts from the end of May through to mid-September will stay in place and Joyce said they would probably be deepened, based on demand.
“All these numbers are confronting and the reality behind them is just as stark,” he said.
“As I said yesterday, this will impact all 30,000 of us. There will be significant hardship as we make our way through this, and out the other side – which could take a while.“
Despite the deep cuts, the national carrier said it would maintain its critical role in transporting people and goods on key international and domestic routes.
“Even in a period of extremely low travel demand, the Qantas Group still has an important job to do,” Joyce said.
“We will maintain critical transport links internationally, domestically and to the regions – for people as well as freight. In fact, we will be flying some passenger aircraft on freight-only missions to replace lost capacity.”
Qantas said it was confronted with “a significant labor surplus” across its operations and the impact of this would be felt across its entire workforce of 30,000 people.
It did not say whether it would be laying off staff it is understood it is trying to avoid the option where possible.
It was working to manage the impact as much as possible, including through the use of paid and unpaid leave, in addition to measures already announced related to executive and board member pay.
Joyce said the goal was to protect as many jobs as possible and ensure the group was strong enough to ride out the crisis.
“We can’t shy away from the fact we have a very tough journey ahead of us,” he said. “But we will get through.”
The group earlier this week issued an expanded booking waiver for customers wanting to suspend their travel plans.
Customers with existing bookings on any domestic or international flight until May 31 can cancel their flight and retain the value of the booking as a travel credit voucher. This needs to be processed by March 31.
Those who make a new domestic or international booking can cancel their flight and retain the value of the booking as a Qantas travel credit or Jetstar travel voucher. This applies to bookings made from March 10 to March 31 for travel before May 31.
Meanwhile, Qantas partner LATAM also announced it was reducing operations by 70 percent, equivalent to a 90 percent cut in international flying and 40 percent domestically.
“We made this difficult decision following border closures that have made operating to a large part of our network impossible. If these unprecedented travel restrictions are extended over the next few days, we cannot rule out further reductions to our operation,” said LATAM chief executive Roberto Alvo.
Passengers on affected national and international flights will be able to reschedule their flights until December 31 at no additional cost.
However, the airline warned its customer service channels were swamped and asked that passengers not to call more than 72 hours prior to their flight.
“We are working to ensure the group’s long-term sustainability and protect the jobs of LATAM’s 43,000 employees,” Alvos said.
“However, the scale and unpredictability of this crisis makes it difficult to anticipate results. This is why we are going to require the support of governments to overcome one of the greatest crises in history for the tourism and civil aviation sectors.”
