Qantas Airways cuts fuel surcharge for domestic flights by $ 5

Qantas Airways, the national airline of Australia, has decided to reduce its fuel surcharge for domestic flights by $5 following a decline in the prices of oil globally.

The new surcharge for Qantas Airways (of $21, down from $26) and for QantasLink jet services would apply to all tickets issued from November 28, 2008.

Surcharges on the turboprop services of QantasLink, a regional brand of Qantas Airways and an affiliate-member of the Oneworld airline alliance, will drop from $24 to $21.

Qantas Airways, based in Sydney, Australia, has its main hub at Kingsford Smith International Airport. Qantas is the largest airline in Australia.

John Borghetti, executive manager of Qantas Airways, said in a statement: “The drop in domestic fuel surcharges followed cuts to international surcharges and domestic fares. In early October 2008, we reduced international surcharges by as much as $40 per return trip, and lowered domestic fares by approximately 2%-3%. Oil prices have come down further since then, however they remain volatile.”

Based on current world oil prices, the fuel bill of Qantas Airways for the 2008-09 financial year would be $750 million, higher than in 2007-08, Borghetti added.

Qantas Airways forecast the other day that the company’s pre-tax profit would be around $500 million in the fiscal 2009, and that it would be cutting capacity further in view of slower demand.

In a press release, Qantas Airways said the capacity reductions “would be equivalent to grounding 10 aircraft and would create greater flexibility for the airline when market conditions improve.”

In an interview, Alan Joyce, 42, who takes over as chief executive officer of Qantas Airways on November 28, 2008, said: “Qantas may further cut passenger capacity or defer orders of new planes if the global recession continues to reduce demand for air travel. Planes may be grounded and more international routes can be cut. The company’s domestic sales are helping to insulate earnings from the drop in international revenue.”

Qantas Airways is scheduled to receive the first of 115 Boeing 787 Dreamliner aircraft in 2009. However, Alan Joyce said the deliveries might be delayed by 6 months because of strikes at Boeing Company, based in Chicago, the United States.

Alan Joyce said in the interview: “While we wouldn’t want to do it, the Boeing 787 is so far delayed that our contract allows us to walk away from it. We still want to take the Boeing 787 and we plan to take them, but we do have options with them.”

Qantas Airways got rid of 10% of international seats this week as it forecast that profits would fall by 64% as a result of the global recession eating away at demand for business-class travel.