Qantas Boosts Customer Experience

Sydney, Sept 25: In a market update released today, the Qantas Group has outlined several key developments affecting its operations, including a significant investment in customer enhancements, robust travel demand, and the challenges posed by rising fuel prices.

Customer Improvements

The Qantas Group has unveiled plans to inject an additional $80 million into customer improvements during the fiscal year 2024. This substantial allocation supplements the previously budgeted $150 million and will be financed from profits. The primary objective of this supplementary investment is to address various customer pain points.
Key improvements include bolstering contact center resources and training, expanding the number of seats available for redemption through the Frequent Flyer program, enhancing support for passengers during operational disruptions, and revisiting longstanding policies to ensure fairness. Furthermore, passengers can anticipate improvements in the quality of inflight catering. The Qantas Group is also working on expediting ongoing initiatives, such as the re-platforming of the Qantas app, with more details forthcoming in the coming weeks.

Travel Demand Remains Robust

Despite the challenges posed by the ongoing global situation, the Qantas Group reports that travel demand remains strong. The trading conditions observed in the first quarter of the fiscal year 2024 closely resemble those of the previous quarter, marking a continuation of positive trends.
Over the upcoming September/October school holidays and football finals period, Qantas and Jetstar anticipate carrying more than 4 million passengers on nearly 35,000 domestic and international flights. This is a notable increase compared to approximately 3.7 million passengers and 28,000 flights during the same four-week period last year. Recent survey data reinforces that travel remains a top spending priority for Qantas Frequent Flyers in the next six months, surpassing entertainment, renovations, and homewares.

Fuel, FX, and Fares

One significant challenge facing the Qantas Group is the surge in fuel prices. Since May 2023, fuel prices have risen by approximately 30 per cent, with a further 10 per cent increase recorded in August. This spike is attributed to a combination of factors, including elevated oil prices, increased refiner margins, and a weaker Australian dollar.
As a result, the Qantas Group is expecting its 1H24 fuel bill to increase by approximately $200 million, reaching $2.8 billion after hedging. Additionally, non-fuel related foreign exchange changes are predicted to have a $50 million impact. While the group is committed to absorbing these higher costs, it will monitor fuel prices closely in the coming weeks. If the current price levels persist, adjustments may be considered to strike a balance between covering increased costs and ensuring affordable travel in a context where fares are already elevated.

Capacity and Network Update

To meet rising demand, Qantas and Jetstar are implementing measures to boost international capacity by 12 percentage points by the end of the calendar year. This translates to nearly 50 additional flights per week. Highlights of this expansion include Qantas resuming its Sydney-Shanghai services, introducing two new routes (Brisbane-Wellington and Brisbane-Honiara), and the launch of a new Jetstar service from Brisbane to Tokyo. Importantly, the estimates for both international and domestic capacity for 1H24 remain largely consistent with late August 2023 projections.

Strong Financial Position

The Qantas Group reaffirms its robust financial position, which encompasses healthy debt levels and consistently strong revenue streams. Furthermore, the on-market share buyback of up to $500 million, announced on August 24, 2023, is already 10 per cent complete. The upcoming Qantas Annual General Meeting will seek shareholder approval to expand the headroom for potential future share buybacks, aligning with the Financial Framework.
The Qantas Group continues to navigate a dynamic and challenging environment, prioritizing customer satisfaction, financial resilience, and responsible management in its strategy for the future.
The announcement is in response to an apology from Qantas CEO Vanessa Hudson last week, where she committed to revitalizing the airline’s image following a turbulent period. For the apology video, please refer to the attached below.