Qantas Chief Executive Alan Joyce Foresees Higher Airfares

  @ibtimesau on June 05 2014 9:12 AM

Due to the slower domestic capacity growth of both Qantas and Virgin Australia, Qantas Chief Executive Alan Joyce said it would translate into higher fares, fewer discounts and higher load factors.

He reckoned that underlying growth in the market is between 4 per cent and 5 per cent annually, which in the previous years was 8 per cent.

He explained, quoted by The Sydney Morning Herald, "What that has meant is roughly for every percentage over the demand that meant a 1 percentage yield fall ... And that is why our yields have been down by about 4 per cent."

While Joyce warned of higher air fares, he said Qantas would still offer discounted fares, but there would be fewer such offers if the air carrier is comfortably filling its seats.

He pointed out that domestic fares have actually gone down by 21.6 per cent in the last 10 years and are considered extremely low.

Joyce said at the yearly gathering of the International Air Transport Association in Doha, Qatar, that Qantas aims to acquire a 65 per cent domestic market share so it could make the best offer to corporate clients. It currently accounts for 63 per cent, although its share of the corporate market is higher at 80 per cent.

As part of the Flying Roo's $2-billion cost-cutting initiative spread over 3 years, Qantas exited from the unpopular Perth-Singapore route due to competition from budget carrier Scoot and rescheduled its Melbourne-Dubai-London trips to free its A380 jet for use in the Sydney-Dallas route.

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