It’s business as usual for Qantas in SA

THERE are no indications that
Qantas’s South African route will
be affected come February 27,
when the airline announces its halfyear
nancial results and provides
further details of its cost-cutting
measures and structural review.
Qantas announced on December 5
that it expected to report a pre-tax
half-year loss of between A$250m
(R2,38bn) and A$300mn (R2,85bn)
for the six months ending December
31, following deteriorating trading
conditions. At the time, Qantas
ceo, Alan Joyce, announced that
the airline would accelerate its
cost reduction strategy across all
areas of business with the aim of
achieving A$2bn (R19bn) in cost
savings over a three-year period.
Qantas regional manager for Africa,
Michi Messner, said she did not
foresee any changes on the airline’s
South Africa route – either in terms
of frequencies or seat capacity. “It is
an important route for Qantas from
a VFR, corporate and leisure point
of view.”
She added that Qantas foresaw
moderate growth on the route to
the end of the 2013/2014 nancial
year although key challenges
that remained were the sluggish
economy, the high rate of exchange
and the perception among the South
African market that Australia was an
expensive destination. Sales and
load factors in the six months to
December 31 were pretty much on
a par with those of July-December
2012 and, in some instances,
slightly higher.
A quick survey among South
African travel agents has revealed
that Qantas’s nancial woes and
challenges have had no impact on
their businesses.
Sean Hough, ceo of Pentravel,
says: “Our relationship is stronger
than ever. We’re getting all the same
support from the airline that we
always have and we’re selling the
Qantas product furiously.”
Claude Vankeirsbilck, Tourvest
Travel Services chief sales and
marketing ofcer, agrees: “There
have been no issues at this stage,
although generally when things like
this happen there can be an impact
down the line. If Qantas decides
through these cost-cutting measures
to withdraw the South African route
or change its operational structure in
South Africa in a way that it wouldn’t
be able to service the trade, then we
would feel the impact.”
As part of Qantas’s cost-cutting
measures, the partial sale of key
assets is being put on the table.
The Australian press and analysts
speculate that this asset sale
could include a partial or full
sale of the Qantas Frequent Flyer
programme, which has nearly
10 million members and is a good
income generator for the airline. It
is believed that the sale of Qantas
Frequent Flyer could generate
between A$1,5bn (R14,29bn) and
A$2,5bn (R23,8bn) for Qantas and
would be the easiest way for the
airline to stem its nancial woes.
However, some argue that it would
be a bad move for Qantas to sell
off the programme because of the
prots it generates.