Wow: Qantas Cutting Capacity, Grounding Most A380s

Filed Under: Qantas

Qantas is following the global trend, and has announced that they’ll be cutting capacity significantly in light of reduced demand.

Qantas cutting capacity by 23%

The Qantas Group has announced plans to cut international flying, as they’ll be reducing capacity by almost a quarter over the next six months.

As Qantas describes it, this comes as coronavirus has spread into Europe and North America, and has continued to spread in Asia, causing a sudden and significant drop in travel demand.

With these changes, total Qantas and Jetstar capacity will be reduced by 23% compared to the same time last year, with cuts lasting through mid-September 2020.

To break it down by region:

  • Asia capacity is being reduced by 31%
  • United States capacity is being reduced by 19%
  • United Kingdom capacity is being reduced by 17%
  • Trans-Tasman capacity is being reduced by 10%

Qantas is cutting overall capacity by 23%

Qantas grounding all but two A380s

Qantas is trying to avoid cutting routes altogether as much as possible, and instead is trying to use smaller planes and reduce frequencies in order to maintain service.

As part of this, Qantas will be grounding all but two of their 12 A380s:

  • Eight Qantas A380s will be parked
  • Two Qantas A380s will undergo heavy maintenance and cabin upgrades

Qantas isn’t the first airline to ground A380s during this tough time. Lufthansa will be grounding their entire fleet of A380s for a period of at least two months.

Qantas is grounding 10 of their A380s

Flights that Qantas is canceling & reducing

With 10 of 12 A380s being grounded, we can expect significant changes to Qantas’ route network. Some of the most noteworthy adjustments include the following:

  • Qantas is delaying their new Brisbane to Chicago flight from mid-April to mid-September
  • As of April 18, 2020, Qantas is suspending their 3x weekly Brisbane to Chicago route
  • As of April 18, 2020, Qantas is suspending their 4x weekly Melbourne to San Francisco route
  • As of April 20, 2020, Qantas’ Sydney to Dallas flight will be operated by a 787-9 rather than an A380
  • As of April 20, 2020, Qantas will be replacing their A380 flight from Sydney to Singapore to London with a 787-9 flight from Sydney to Perth to London (meaning there will be two daily Perth to London flights)
  • As of June 1, 2020, Qantas’ Melbourne to Los Angeles flight will be operated by a 787-9 rather than A380

Many Qantas A380 routes are being replaced by 787s

Qantas management taking pay cuts, hiring paused

In light of the situation, the company has announced cost reduction measures.

For the remainder of FY2020

  • The Qantas Chairman will take no fees
  • The Qantas Group CEO will take no salary
  • The Qantas Board will take a 30% reduction in fees
  • The Qantas Group Executive Management will take a 30% pay cut

On top of that:

  • Qantas is freezing all non-essential recruitment and consultancy work
  • Qantas and Jetstar are asking all employees to take paid or unpaid leave

Employees will be asked to take leave, given reduced flying

Bottom line

These are some drastic cuts on Qantas’ part, though they seem like appropriate measures.

It appears that Sydney to Los Angeles will be the only route to keep the A380 for now, as the Sydney to Dallas flight is downgraded to a 787, the Melbourne to Los Angeles flight is downgraded to a 787, and the London flight goes twice daily through Perth with 787s.

What do you make of Qantas’ approach to cutting capacity?

Comments
  1. Surprised to see Brisbane Narita and Sydney Osaka not on the list. There is a hell of a lot of capacity between Australia and Japan and these would seem like the weakest routes.

    (Also hoping for a change fee waver in Brisbane Narita for a flight next month)

  2. In the list “As of April 18, 2020, Qantas is suspending their 3x weekly Brisbane to Chicago route” should be Brisbane to San Francisco.

    The cuts make sense and I appreciate them doing as much as possible to keep their route network in tact through downgauging and reduced frequencies. I have a trip to Australia planned in 10 days – hoping that the Australian government doesn’t end up restricting travel to Americans due to the spread of the virus here.

  3. I’m not surprised by this at all and I would imagine they will focus on accelerating the rest of the a380 refits in Dresden (I believe 4/14 have been completed). Alan Joyce does not shy away from making tough decisions, and again I think we see some difficult, but I believe are sensible adjustments. I agree with Ed, it is surprising the schedules to Japan remain largely in-tact. I read that yesterday’s service to Haneda from Sydney had only 84 pax on a 747. The forward bookings must have been dismal.

  4. @Jay

    Don’t come. I don’t want to be unfriendly but everyone is a potential walking disease vector right now. Even if you don’t have it you could pick it up on the plane or from someone here. It’s best for everyone if we all restrict our movements.

  5. This is pretty clever. By re-routing the Sydney-London flight through Perth, they overcome any passenger concerns about transiting Asia. And they still get to retain the only A380 route with significant demand for paid first class: Sydney – LA, due to the film industry.

  6. And SIN-MEL #35/36 is being downgraded from A380 to A330 and the new first class lounge in Singapore is being temporarily closed. (Sadly I have a first class reservation on this flight.) The other daily MEL-SIN R/T is canceled.

  7. With due respect to @Ed. Just take sensible precautions and continue to live life. Buy more shares while your at it.

  8. Definitely agree with buying more shares but don’t agree with putting the elderly and vulnerable at risk with frivolous travel, and I love to travel.

  9. “As of April 18, 2020, Qantas is suspending their 3x weekly Brisbane to Chicago route”

    Lucky, I think this bullet point should read “Brisbane to San Francisco”. You covered the delay of the Chicago launch in the bullet point before that.

  10. Domestic flights were already cut back (SYD MEL) – obviously not an A380. Can’t say I blame them. They are a business and need to survive (and we need them to survive). At least QAN on the ASX has bounced back a but today.

  11. Glad to see CEO is willing to take no salary pay during this difficult time.

    My understanding is the flu season in Australia is just about to start and I really hope coronavirus won’t spread there during the late fall-early spring (May-October 2020.)

  12. @Jay
    It would be hard to imagine that Australia would impose restrictions on Americans: things would have to take a dramatic turn for the worse for that to eventuate.
    However, it is noteworthy that a number of Australians have contracted the virus during travel to the US ( and diagnosed upon return). That would suggest a level of community-based transmission ( whether it be hotels, restaurants, tourist activities, conferences) not yet really evident in the reporting.
    There is just as much chance that a city like Sydney would have to go into some form of lockdown as there is in Los Angeles or New York.

  13. Like LH, QF is grounding the A380 fleet due to lack of demand…except for LA, and that’s because of leisure traffic, not the entertainment industry.

    As a result they need to re-deploy the 787-9s for network coverage. Brisbane is mainly being hit, Melbourne to a lesser extent (then again, Melbourne also recently hit by suspension of Vancouver-Vancouver by AC)

    Side note, the 747 being brought back to life from SFO.

    Long live the Queen!

  14. Like LH, QF is grounding the A380 fleet due to lack of demand…except for LA, and that’s because of leisure traffic, not the entertainment industry.

    As a result they need to re-deploy the 787-9s for network coverage. Brisbane is mainly being hit, Melbourne to a lesser extent (then again, Melbourne also recently hit by suspension of Vancouver-Melbourne by AC)

    Side note, the 747 being brought back to life from SFO.

    Long live the Queen!

  15. Qantas has confirmed that Alan Joyce will take NO salary for the remainder of the financial year (which ends June 30). The management team will not get bonuses. They have also cancelled plans for their off-market share buy back.

  16. Ouch! This will make QF reward travel nearly impossible to the USA. With most 747s gone and replaced with 789s rewards are hard to come by.

  17. @Ed
    According to Qantas they don’t have a plan to reduce or cut flights to Narita from Brisbane even though less than 20 people on board today’s flight.

  18. My SIN-MEL flight was cancelled and i was rebooked on the lone remaining flight, which used to be an a380 but is now a 787.

  19. I wonder what the impact will be on Virgin Australia. I don’t see it looking too good for them. Bankruptcy perhaps?

  20. I do wonder if the Aussie government will step in if it comes to that. It will not be good for Australia to be left with only one domestic airline.

  21. Why is the plush executive team only taking a 30% cut while some Frontline staff have to take unpaid leave? This executives live in a far more comfortable financial situation than most of these employees….

  22. I was about to add on a child fare from BNE to SFO. Yesterday it was $600, today it is $900. Qantas will always be profitable. Joyce knows how to dance with the numbers (as he should). But ouch anyway!

  23. Travel internationally is very affected.
    Govts tend to do certain things now.
    1-ban anyone coming from certain countries.
    2-Self quarantine by law folk from certain countries of departure.
    3-as above but only for folk with symptoms.
    4-scan for temp and screen everyone arriving.
    business travel very impacted in Asia and also personal travel with companies effectively banning travel to certain countries.
    indeed Here in Asia many countries they are actively pushing staycations as hotels and attractions experience huge loss of business.

  24. @davistev I just book an economy MEL to SYD for May for a weekend. $145 each way so not too bad. BUS was still sitting at $715 each way / 18000 points. Absurd given the current climate. I am only gold but when I went to choose my seats on the flight out (4pm on a Friday!!) I could literally pick ANY seat I wanted in economy. On the way back only 2 other people had selected seats. I’ve never seen that before.

  25. If they’re wanting staff to take annual leave – without pay! – the management of Qantas can hardly be seen to be hugely recompensed themselves.
    This will be about long term survival. And when things get really dire the Oz government will step in and subsidise the losses – like they always have – it’s Qantas after all!
    Then when it eventually comes good – as it will – especially as there’ll be less competition to begin with! – and the company starts making some profits again – the CEO, etc will start taking their mega-bonuses again.
    Though I’m fairly certain all those who took leave without pay will not be reimbursed.
    In the meantime, Joyce and Co. will be spinning us a sob story about ‘poor Qantas’ and how all Aussies should get behind it and his efforts. True blue! Dinky di! Fair dinkum! Aussie, Aussie, Aussie – Oi! Oi! Oi!
    It’s so predictable.

  26. I flew Sydney to Los Angeles few days back, then not to imagine LAX to SeaTac. Which is constantly full, had about 40 passengers. Flights were at best empty. Only passenger in first too lax from Sydney. I’m happy to be home, but this is scary. Politics aside. Unless this nipped in butt, major recession around globe. Just not USA. God bless those trying to find a job at this moment. This is a huge issue, but I really media isn’t using it for fear, ratings or money. And yes, I live in Kirkland. Ghost town.

  27. @Ron – nice rant. They’ve asked staff to take paid and unpaid leave. Not forced it on staff (yet).
    Last time QF went cap in hand to the government, they were turned away.

  28. Don’t live life in fear, but u can be very precautious. And make certain decisions. I personally won’t go anywhere for few weeks as precaution.

  29. @Ed – from Qantas:
    “Further capacity reductions will also be made on flights to Japan and New Zealand, with other Asian routes under evaluation.”

    I sense it’ll be a matter of time before Tokyo flights are reduced.

  30. @Jay – I sit on the other side of the fence to @Ed.

    If it is safe for you to travel, and you’re fine with your travel being disrupted, I think you should still go.

  31. I imagine they’re maintaining capacity to Japan to keep the pressure on Virgin Australia’s upcoming BNE-HND launch.

  32. @Ed The elderly and vulnerable at risk need to do their part by removing themselves from situations where they can receive it. What happened in Northern Italy when they cancelled school? Grandparents took care of their grandchildren while the parents were at work. They took them to the park with all the other germy little kids touching the playground and interacted with people going to and from the park. THAT is significantly more harmful to the elderly than Jay taking a flight.

    Individuals deciding to travel internationally isn’t going to stop those people from contracting it. COVID has spread to Austrailia already – it’s there. There isn’t really a justifiable reason for able-bodied people to not travel if they choose. There’s no real logic in it other than fear makes people suggest irrational solutions.

    Instead, elderly and at-risk individuals should stay home as much as possible and avoid situations where they come in close contact with other people. Those that travel should avoid visiting elderly and at risk individuals. That’s an effective and realistic start to protecting those individuals – not “no one should travel at all”.

    @Jay Enjoy the trip.

  33. I am a long-term critic of the AJ management of QF. I dislike his soap-boxing and adverserial style of management. There is no need for this. He attempts to milk maximum kudos for himself out of every decision he has ever made.
    Project Sunrise has been stretched into a 7-year project, from start to implementaton in 2023, if it goes ahead.
    He buys a handful of new aircraft and milks it for a few years. Just get on and do it, don’t puff your chest out and say “look at me”.
    I was asked to make submissions to both the 2014 and 2016 Senate Inquiries by Senators, which I did. QF have been quietly implementing things that I criticised them for in both of those Inquiries, eg, change SYD-DFW to A380’s instead of B747’s so as to eliminate the BNE stop, reintroduce QF flights to DPS, add more QF flights to Japan instead of Jetstar, add QF flights from regional Vic to SYD, to name but a few. I criticised the decision to give Jetstar the B788’s instead of QF, who they were ordered for. Now, 3 of them are listed for sale. Who is making these decisions? They need repurposing for QF services. I am certainly not a Joycyte, as you can see.
    In 2012, I attempted to set up an international airline here in Australia but my investors headed for the hills once QF started hemorrhaging money.
    In 2016, I gave Malcolm Turnbull a plan to set up a Federally owned airline which would add about 150 aircraft over a 5 year period, and 2,000 direct and 2,000 indirect jobs pa over that period simply by opeating flights that begged to be operated, that were not operated by QF or VA, e.g., daily PER-AKL, daily ADL-SIN, and by taking back Australian jobs given away by AJ to EK,EY and QR. It ticked all of his boxes – grow the economy, grow jobs, grow tourism, grow northern Australia, grow regional Australia.
    I have a very different future plan for QF, from the current vision of AJ that I have been trying to get to the QF Board of Directors, but every attempt has been thwarted by QF corporate gate-keepers through the proper channels.
    I have a very different approach to Project Sunrise, which has some inherent problems and risks, but my alternative eliminates these. QF needs a strong plan B for European services as the Gulf region is a powder keg. As many people don’t want to fly via DXB to Europe as those who don’t want to fly via Asia. Putting all QF Customers onto EK flights to Europe except for LHR, exposes QF to huge commercial risk. My plan eliminates that risk. Spending $3.2 billion on buying up to only 12 aircraft to fly only 5 return services per day to LHR and JFK or EWR, for a maximum of just 425,000 pax pa, is not the best choice for the money. That is, after all, 3 year’s of QF profit to be spent for a return of about $125 million pa. Will QF shareholders have to endure another 7 years without dividends? And it still does nothing to eliminate the commercial risk of putting all non-LHR European customers on EK.
    Will QF management continue their flawed strategy of taking $2.3 billion of shareholders’ cash out of the bank to repurchase shares? Flawed strategy? You tell me. Today, the QF share price and market cap are less than in 1999. If you were a shareholder would you want your CEO to get $25 million pa for dishing you up something like this?
    And, QF continues to fly around an ageing fleet that gets one year older with every 12 months that passes. Seems obvious to me, but not to others apparently, who want great ROIC’s instead of a modern fuel-efficient and competitive fleet, in order to get their STIP and LTIP bonuses. Maybe I am getting a little bit cynical as I get older? Yes, even I am getting one year older with every 12 months that passes too.
    And QF continues to be unable to fly dozens of routes because it doesn’t have the aircraft to do so, current COVID-19 situation excepted of course. COVID-19 will come and go like SARS and the GFC and every other problem that has happened over the years. It needs to be dealt with swiftly and appropriately of course, and I would make some additional changes at QF to deal with it as well. With the reduced cost of fuel, the reduction in flying, and QF cheap seats disappearing because of less flights, QF will come out of it OK.
    QF is at a pivotal point in its future. Aircraft choices now will have an impact on the future of QF for 10 to 15 years. QF suffered badly in the past through choosing the wrong aircraft for the airline’s needs. AJ still had the opportunity when he became CEO to ditch B747’s and replace them with B77W’s, but he didn’t. Air NZ did it. SIA did it. Cathay did it for pax aircraft. All US major airline’s did it.
    But, if I can get my plan for QF in front the QF Board at some stage, then they will see a whole new different landscape of amazing opportunities in front of them. The one-man’s-vision that they have in front of them now just doesn’t cut it for the future of QF though. What do you think are the chances of that, do you think?

  34. Have a trip scheduled to SYD/BNE/AKL, all for business, leaving this weekend from LAX. Can’t decide what to do to be honest. Trying to push aside sensationalized, fear-mongering media sites and get clear and rational information. It is an important business trip. It just truly feels unclear where the situation is headed both in the US and Australia.

  35. I am certain Qantas is keeping a close eye on Australia to Japan flights. If the 2020 Olympics in Japan were curtailed or cancelled (not impossible!) then drastic and immediate cuts would follow.
    On the salary/fees cuts for Qantas execs., that plays into the PR optics Qantas is at pains to promote. Smart move nonetheless.
    I mean, surely Alan Joyce has squirrelled away a few millions from last year’s payoff to tide himself over the next 6-12 months? $24m would seem to go a long way in most households.
    Likewise the Board members would not be too inconvenienced by a 30% cut. Not really a job; just a handful of meetings each year followed by drinks and a slap-up lunch. And most of them have up to a dozen other Board appointments elsewhere to pick up the slack.

  36. Looks like Korean Air is also grounding all their A380s. I’m scheduled to fly from LAX to ICN in two weeks and they’ve already swapped it out to the 777. They went from two daily A380 flights to just one 777 flight. A big capacity reduction. Also the same for their New York A380 flights.

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