There was something missing from the Qantas investor presentation back in August – the Flying Kangaroo has become Australia’s most cancelled airline.
Qantas reported a lower profit thanks to higher fuel costs and foreign exchange movements.
Nonetheless, Qantas’ domestic business, the company’s biggest earner, had a strong year with its operating margin dipping only a little from 12.9 to 12.1 per cent. That compares with 6.7 per cent for Virgin Australia domestic.
Helping preserve the Qantas margin in the increasing tendency of the airline to cancel flights on its main Sydney-Melbourne trunk route and shuffle passengers to fill up the planes that do take off.
Genuine question @Qantas – what is going on with your Sydney-Melbourne route? In the past 3 weeks, I have had direct experience of 6 cancelled flights. Seems more than bad luck.
— Jonathan Harley 🚴 (@jharleyaus) August 30, 2019
That reached a new high last month – alas, too late to feature in the year-to-June-30 figures. In July, 3.9 per cent of all Qantas domestic flights were cancelled, tying with Tigerair to be Australia’s most cancelled airline. Over the past three months, Qantas has been worse than Tigerair.
The Qantas performance compares with 3.1 per cent for Jetstar and was more than double Virgin’s 1.4 per cent. In bare numbers, Qantas cancelled 380 of its 9647 scheduled flights, while Virgin cancelled 172 of its 11,931 scheduled take-offs.
The overall Qantas performance was distorted by a horror month for it on the Sydney-Melbourne route. Weather made that route difficult for all airlines, but the Qantas underperformance is extraordinary.
Qantas cancelled 13.2 per cent of its scheduled Melbourne departures for Sydney compared with 6.7 per cent of Jetstar flights and 6.1 per cent for Virgin.
For the Sydney-Melbourne leg, Qantas cancelled 12.8 per cent of flights, Jetstar 6.7 per cent and Virgin 5.4 per cent.
While July was particularly bad, increasing cancellations has been a trend for Qantas over the past two financial years.
That’s a trend not seen in Virgin’s statistics as it has become more reliable.
It looks like Qantas is doubling down on the benefit that it and Virgin have gained from the end of the capacity war they were fighting.
There was zero increase in domestic market capacity last financial year after a negligible 0.1 per cent rise in 2017-18 and a half-per-cent shrinkage the year before that. Last year Qantas domestic reduced its ASKs (available seat kilometres) by 1.5 per cent.
Cancelling flights saves Qantas money on the planes that don’t take off and ensures that those that do leave the ground are full, and therefore more profitable.
However, it looks like Qantas’ desire to run lean is impacting service availability.
For example, on Thursday evening, Qantas cancelled its 10am Sydney-Brisbane flight, saying it was for “mechanical reasons”.
In short order, there were no seats available on any Qantas Sydney-Brisbane flight between 8am and 4pm. And the cheapest one-way economy seat on that 4pm flight jumped to $938.
It’s nice to be one of the world’s most profitable airlines, but there’s a delicate balance between profit and becoming recognised as Australia’s least reliable airline.