Qantas CEO Alan Joyce says the airline's axing of year-round international flights from Perth was driven by harsh economics which made the route a revenue sink-hole at the same time the airline is trying to cut costs and claw its way back into profit.
"Unfortunately we can't insulate WA from the need for hard decisions" Joyce said in a speech to the Chamber of Commerce and Industry of Western Australia yesterday, two weeks ahead of the closure of Qantas' sole remaining international flight from Perth.
Joyce cited increased competition owing to "a giant wave of airline capacity that has reshaped Australian aviation", partnered with "ongoing record fuel prices", as key challenges confronting Qantas.
"I recognise that Perth has been affected by the withdrawal of some Qantas International routes – routes that were unprofitable," Joyce said, explaining that "we have had to rationalise our international network in some areas."
Describing Qantas' efforts to slash $2 billion in costs over the coming three years as "one of the biggest reform programs in corporate history," Joyce warned "there is a lot more hard work ahead before we can be satisfied with our cost base."
Qantas will shutter the Perth-Singapore flight QF77/78 from May 12th, leaving travellers to Singapore in the hands of low-cost offshoot Jetstar Asia, although the airline will temporarily resurrect the service from July 3-21 to cater for additional demand over the peak holiday season.
Qantas will also run a twice-weekly Perth-Auckland flight from December 5th 2014 to April 26th 2015, although from October 15th this will go up against Air New Zealand's new Boeing 787-9 – a plane which may not be flying in Qantas colours until close to the end of this decade.
But while Joyce praised Perth for "the pace of development and the sense of energy and optimism that comes with it" and predicted that "WA will continue to play a lead role in the Australian economy", Qantas will for the most part leave its alliance partner Emirates to ferry rusted-on Red Roo travellers to the rest of the world.
The Middle Eastern airline has big plans for Perth, with a daily Airbus A380 tipped to take over one of the three daily flights between Perth and Dubai.
Virgin Australia partner Etihad Airways will also commence daily flights between Perth and its Abu Dhabi hub from July 15.
Singapore Airlines and Cathay Pacific are expected to increase the promotion of their daily flights from Perth to Singapore and Hong Kong and the onwards connections to Europe, while Thai Airways will debut its first Boeing 787 service between Perth and Bangkok on July 1st this year.
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