Qantas reduces capacity to US, shakes up points program

Qantas has announced a major change to its loyalty program, allowing members to spend their way to status credits that allow access to priority boarding and airport lounges, and flagged a hiring spree as chief executive Vanessa Hudson refreshes the airline’s offering.

Qantas has also unveiled direct flights between Australia and the gambling capital of the United States, destination Las Vegas, while offering an olive branch to the unions that it clashed with repeatedly under the aggressive industrial strategy of Hudson’s predecessor Alan Joyce.

Uncertainty over demand for flights to other US locations, meanwhile, has prompted the airline to cut its capacity on flights to the US by flying A380s to Singapore, instead of Los Angeles.

Points shake-up

Qantas is changing how frequent flyer status points works by removing what’s known as “attain and retain” thresholds. Unlike regular Qantas frequent flyer points, which have long been available from the airline’s branded credit cards through on-the-ground spending, status credits were reserved for flying – and brought perks like more generous baggage allowance.

The change removes the incentive for high status members to book on other airlines once a Silver, Gold or Platinum status is achieved. Instead, members can now earn up to 140 additional status credits each year, through ten retail partners.

“We are giving value back, ensuring hard-earning status credits in one year give members a head start in the next,” Hudson said.

Adele Eliseo, of The Champagne Mile, said members who regularly exceed their tier are “likely to benefit most from the new rollover and lifetime milestones”. Members who barely edge into qualifying for a Silver or Gold tier “will need to work harder to qualify, either by flying more or engaging with the new ground earning options”.

The closely watched division of the airline posted pre-tax earning of $286 million a rise of 12 per cent.

Spreading wings

Hudson said the airline’s earnings have been helped by the delivery of new, more efficient planes, strong consumer appetite for Qantas loyalty points, and robust earnings from Jetstar.

“We’re already seeing the benefits from the next-generation aircraft that are flying, which, along with strong demand, our dual brand strategy and expanding loyalty business, helped us deliver another strong result,” Hudson said.

“Around 60 per cent of Jetstar’s increase in profitability in the half was driven by its new aircraft, through a combination of growth, new network opportunities and the redeployment of existing aircraft onto other routes.

The airline posted $1.46 billion in pre-tax half-year profits on Thursday, helped by strong demand, rising efficiencies from new Airbus aircraft, and Jetstar’s continued growth. The result is up $71 million on the previous half. The board also announced a share buyback of up to $150 million.

Qantas shares climbed as much as 4.1 per cent before swinging 4.8 per cent into the red. While the result came in slightly above analysts’ expectations, Josh Gilbert from eToro said it showed the improvements were mostly thanks to the new aircraft, while travel demand especially on flights to America was starting to look a “little worrying”.

Whether softer demand for US travel is driven by changes in exchange rates, or concerns about border troubles for Australians, Qantas has moved a larger A380 from flying to Los Angeles to fly instead to Singapore.

Hudson said: “We are continuing to be really optimistic about all of our markets, including the US, but we are using our capacity dynamically.”

She gave the example of the Sydney-Las Vegas flight, noting: “We’ve had incredible success with seasonal services and we know that Las Vegas is going to be incredibly popular with our customers.”

Jobs, jobs, jobs

The airline remains on track to create 8500 jobs in Australia by 2030, Hudson said. Qantas will re-establish a cabin crew base in Singapore, supporting its growing international network, Hudson said.

Qantas plans to hire an additional 3500 cabin crew and more than 1000 pilots. It will launch a new Jetstar Perth cabin crew base later this year, creating 90 roles. Qantas’ ambitious plans will require a level of collaboration from the Transport Workers’ Union to ensure the smooth expansion of the airline’s crew bases abroad.

The carrier will open a Qantas crew base in a Singapore subsidiary, paid at local wages, for 120 staff. That headcount is expected to rise to 650 by 2031. Jetstar will open a smaller crew base of 90 jobs in Perth. In June, Qantas closed Singapore-based Jetstar Asia, eliminating 500 jobs.

A new leaf with the unions?

The growth plans come as Hudson pursues warmer relations with a key union in an effort to “reconsolidate” the enterprise agreements that had been splintered under the former leadership.

TWU national secretary Michael Kaine said it was too early to say this was “a totally new Qantas”.“We must continue to see open dialogue with workers right across the industry and we acknowledge the first steps here to make that happen.”

Five years ago, the TWU and Qantas clashed after the airline illegally sacked nearly 1800 ground crew as COVID shutdowns hit. Those firings were found to be illegal and Qantas was fined $90 million, on top of $120 million it had to pay out in compensation.

The TWU, which represents more Jetstar crew than Qantas crew, said Qantas’ plan to open a new crew base will remain an issue.

Hudson denied there was a contradiction in seeking to include union input on staffing while planning for more low-cost crews in the Qantas groups. She said she believed in having “constructive and collaborative relationships with the unions” while acknowledging that they won’t always agree.

“I fundamentally believe that unions and company representatives have very aligned objectives,” Hudson told this masthead.

One union was unconvinced. The flight attendant’s union has raised an alarm on Qantas’ plans: “You cannot continue to offshore Australian aviation jobs and still claim to embody the Spirit of Australia,” said FAAA leader Teri O’Toole.

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