Qantas trims back planned capacity increases as demand softens

Qantas trims back planned capacity increases as demand softens

Image credit: TK Kurikawa / Shutterstock

Qantas is cutting back planning capacity increases on the back of weaker demand.

The airline cited “some softness in demand related to the upcoming federal election and recent drop in consumer confidence in Australia”.

This began to emerge over the peak Easter and school holiday period late last month and continued to be seen in forward bookings in April and May.

Australians are due to head to the polls in early July for an election.

“Traffic over the peak Easter and school holiday period from late March fell below expectations, compounded by a disconnect in the timing of Easter and school holidays in most Australian states,” the airline said.

“In response to changed demand conditions, the Qantas Group has revised planned capacity additions in the final three months of financial year 2016.

“Qantas Group domestic capacity growth in the final quarter will now be negative compared to the prior corresponding period.”

Planned domestic capacity growth of around 2% in the second half of the financial year has been revised to growth of between 0.5% and 1%, “maintaining flexibility for further adjustments based on changes in market demand and competitive environment”.

On international routes, the carrier has dropped three Sydney-Los Angeles services and re-directed capacity to Singapore and Hong Kong.

Total group capacity is expected to increase by 5% to 6% in the second half of the financial year, driven by new Boeing 787 Dreamliners at subsidiary Jetstar International and increased utilisation of the existing fleet at the Qantas international division.

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