Qantas CEO rules out dropping all change fees, tips fare increases
Qantas won't follow the lead of US airlines in permanently removing change fees, says CEO Alan Joyce.
By David Flynn, September 2 2020
Qantas doesn't plan to follow US airlines in permanently dropping booking change fees, and could even slightly increase some fares to aid with post-COVID recovery, says CEO Alan Joyce.
United Airlines, American Airlines, Delta Air Lines and Alaska Airlines this week declared they would ditch fees charged for changing bookings on almost all domestic flights, except on their least-expensive 'economy basic' fares, in an attempt to woo passengers back in the wake of the coronavirus pandemic's decimation of travel demand.
Qantas and its low-cost offshoot Jetstar suspended change fees in May to provide passengers with "complete flexibility and certainty to make bookings and adjust them as they need," Joyce remarked at the time. On each airline's lowest fares, those fees would usually amount to between $55 and $99.
However, those change fees will inevitably return, Joyce forecast at today's CAPA Australia Pacific Aviation Summit.
"We did for the first time give complete flexibility on every airfare during this crisis, but is that going to continue indefinitely? It can’t."
Once passengers have more confidence that their travel plans won't be disrupted by border closures, change fees will return for the lower tier of heavily-discounted fares.
"I think when certainty comes back, I’m of the view that it’s a big part of how we manage (revenue and yield)," Joyce said.
"There is a product of fares for the corporate market that’s completely flexible (but) iIf every airfare is going to be completely flexible, then your revenue management system I think fundamentally breaks down over the long term."
Low-price fares would remain a vital part of the overall mix and would be especially useful for restoring the airline's cashflow, Joyce allowed, but tipped that prices would later increase to bring profitability back into the equation, especially if business travel is slow to rebound.
"What we're going to have to see, if there is a hit on some of the business traffic, is more of the slightly more expensive airfares being sold," although he suggested the uptick would be in the range of $10-$20, where "people might not even notice it."
Additional reporting by Chris Chamberlin
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
24 Aug 2011
Total posts 1209
He's right that you can't offer free flight changing for all and maintain your revenue model but I think he may be a bit optimistic if he think fare rises are a thing in the next year or so. The pandemic has massively strengthened video-conferencing as a competitor to airlines. Customers will be more price sensitive than ever.
09 May 2020
Total posts 571
Presumably most business fares will be flexible anyway so not a issue for them there. Ironically the increased use of zoom meant its the profitable J seats that are mostly impacted.
Hence any price increase are more likely to impact the economy seats which are space fillers on most flights (I suspected by weight, cargoes are more profitable) unless they paid Flexi fares.
The way to go is limit availability by limiting flights and discounted excursion fare until demand increase enough to open more flights but I’m sure you don’t need a business 101 lesson
31 Mar 2014
Total posts 378
Might be a good point of difference for Virgin. They are saying they will be a value carrier. There will be plenty of people who see the value in this. Seems to work for Southwest
05 Mar 2015
Total posts 413
Yes, I think Virgin could do worse than take a few lessons from Southwest!
17 Jun 2020
Total posts 238
Alan tipping fare increases in a public forum. Is this not price signalling which is illegal?
05 Mar 2015
Total posts 413
Can't blame AJ for wanting to get Qantas back into profitability, which will mean getting back to a sensible fare structure which sees the cheapest tickets with higher change fees and the more expensive tickets being the most flexible. Be interesting to see how a $10-20 increase in higher economy and business fares is treated by the market, certainly if Virgin is going down the cheaper 'value' route then it might not make much difference, you'll either fly with Virgin because it's a lot cheaper anyway or you'll fly with Qantas for reasons other than lowest price in which case an extra $10 won't change your mind.
09 May 2020
Total posts 571
Quite right, although I wonder how nimble VA will be in responding to demands, unless Bain gives Scurrah free rein at operational deployment when most outsiders (and some insiders) have no idea what capacity and actual assets are still on the table ready to go at short notice.
The damage from short notice border closure in the Eastern seaboard and on-going uncertainty about regular shifts (and income) for the crew of the major airlines meant some human assets may already start looking elsewhere for new secure employment.
17 Jan 2018
Total posts 84
Pure trivia. Big picture. Pathetic that Q are not offering any international flights to/from OZ yet many foreign carriers are. They should stop looking for reasons not to fly. AND BE LOBBYING GOVT TO LIFT DRACONIAN RESTRICTIONS. Airline industry is a global business and failure to recognise this and compete will end in disaster for those that think otherwise.
Singapore Airlines - KrisFlyer
08 May 2020
Total posts 21
Poor ol' QANTAS ! How is AJ ever going to maintain his $$23.86 mil. "remuneration package" If they don't keep charging sky high change fees?
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 250
Understand it's a fluid situation, but one minute Joyce is conveniently saying airfares will be as low as $30 whilst Virgin was looking for a buyer, and now a buyer is found, airfares now need to rise. Deceptive and conniving. Qantas has good marketing and for some reason theres a wad of pretentious base of travellers that think Qantas can do no wrong. They are a struggling airline with cash reserves being guzzled up which the government will not back they have made that clear in the past and now. Rich coming from AJ - they are not leading the airline industry - watch as their staff get ground crew/ cabin crew get replaced by cheap contracted out labour and see if the same service remains in future...
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 250
And to quote from the Australian in today's news about Virgins Sale and Qantas offering a lifeline to their future:
"Qantas’s Alan Joyce will not take his foot off its neck but has offered a lifeline of sorts by already declaring he will charge his own passengers top dollar for their flights when the industry returns."
You see a pattern on here from the same commentators who bagged out virgin and reassured Qantas could do no wrong. I can't help but think how you have been sucked in. Qantas is on its way to becoming a third rate airline presenting itselft as a premium carrier - being run on low cost budget with a contracted out workforce (just like Jetstar crew). Not even Virgin do this - they have 100% employed to VA company and not outsourced with less pay benefits and security. Yet Qantas has the spirit of Australia at heart.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 711
But Dan22, you're forgetting, only Qantas is a true Australian airline, why would anyone want to fly Virgin (cough cough). Truth is, AJ will say anything knowing most in the media wouldn't dare question him or hold him to his numerous contradictions (not The Oz, not the AFR, non of them would dare).
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