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Qantas warns on airfares as jet fuel costs spike before Christmas

Angry Qantas pilots have joined calls for the airline’s chairman Richard Goyder to resign after a series of “woeful” decisions that have smashed workforce morale and customer trust.

The Australian and International Pilots Association has written to the Qantas chief executive to explain its “unprecedented intervention”.

“Richard Goyder has overseen one of the most damaging periods in Qantas history which has included the illegal sacking of 1700 workers, allegations of illegally marketing cancelled flights and a terribly managed return to operations after COVID-19,” the association’s Tony Lucas said on Tuesday.

“The morale of Qantas pilots has never been lower. We have totally lost confidence in Goyder and his board.”

The pilots’ union also slammed Goyder’s recent pay rise while airline staff were expected to cop a wage freeze, Lucas said.

“[Qantas] needs leadership from a board that understands the value of its employees, respects its customers and can win back the trust of the nation.”

The move comes as Qantas put customers on notice about airfares, admitting on Monday that high fuel costs may push the airline to “adjust” its prices in coming weeks, just in time for Christmas.

The national carrier said in an update to investors on Monday it would “continue to absorb” higher fuel prices, which have risen by 30 per cent since May and 10 per cent in August alone.

But if “current levels are sustained”, the airline would look to “adjust its settings” (Read: Raise prices).

“Any changes would look to balance the recovery of higher costs with the importance of affordable travel in an environment where fares are already elevated,” Qantas told investors.

Qantas has experienced community anger in recent months over sky-high airfares, with flyers already paying upwards of 40 per cent more for overseas flights amid revelations that Qantas lobbied the Albanese government to reject a bid from Qatar Airways to increase its flight capacity.

The next chapter in that saga will be written this week when Goyder appears in Canberra for a grilling at a Senate inquiry into such bilateral air service agreements.

A parliamentary committee is examining the role Qantas’ lobbying played in the government’s decision to knock back the extra flights, as well as Australia’s bilateral air agreements more broadly.

It will hold hearings in Brisbane on Tuesday and in Canberra on Wednesday.

Goyder is tasked with drawing a line under a tortuous period for the national carrier that has raised scrutiny over its cosy relationships across Canberra and lacklustre airline competition.

Protestations won’t spare the flying public higher costs over the holiday rush, though, with global oil prices – the key factor underpinning higher jet fuel costs – slated to remain elevated in 2023.

Veteran aviation consultant Neil Hansford said a lower Australian dollar hasn’t helped because Australia imports almost all its refined petrol.

“We don’t refine jet fuel in Australia,” Hansford said.

“Problems with refineries in Singapore can’t be predicted.”

Qantas to take a hit

Qantas told investors that it expects a $200 million increase to its bill, to $2.8 billion, over the second half of the year.

Another $50 million impact is slated due to “non-fuel-related foreign exchange changes”, it said.

It remains to be seen how much of the financial hit will be worn by investors through lower profits or by the flying public in higher airfares.

But demand is expected to be strong enough to support robust capital returns, with Qantas now forecasting four million passengers over the September/October school holidays on 35,000 flights.

“This compares with around 3.7 million passengers on approximately 28,000 services over the same four-week period last year,” Qantas said.

“Latest survey data shows that travel remains a top priority among Qantas Frequent Flyers over the next six months, well ahead of entertainment, renovations and homewares.”

Hansford said that one issue facing consumers is that higher fuel prices no longer get added as a surcharge onto ticket prices, which means higher airfares often fail to come back down.

“As sure as god made little apples it never comes off. It becomes a way of getting a price and holding it,” he said.

Qantas also flagged an additional $80 million investment in customer service on Monday, which will be funded from profits and is designed to address a number of “pain points” among flyers.

It will come in addition to $150 million already budgeted for service improvements post-COVID.

Qantas said it will target better customer centre resourcing, an increase in Frequent Flyer seat rewards, “more generous” recovery support when “operation issues arise”, and in-flight catering.

-with AAP

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