Qantas and Virgin Blue tackle fuel prices

Australia’s flag carrier, Qantas, and Virgin Blue-the country’s second largest airline–are both trying to do whatever they can to tackle spiraling fuel prices, and some of these measures may adversely affect passengers. Qantas has decided that the only way it can deal effectively with dramatically rising oil prices is if it lays-off around 1,500 employees and nixes previously announced plans to hire as many as 1,200 new workers. Additionally, the Australian national airline has decided to retire 22 of its planes, which serves as a signal that flight cutbacks are also imminent. In the very near future, however, the airline only confirmed that it had scrapped the eight percent growth projection that it had previously expected and now believes that annual growth will hover near zero percent. While Geoff Dixon, Qantas’ chief executive officer, pointed out that he had no intention of cancelling routes altogether, he did suggest that cutbacks to the frequency of flights on some routes was a distinct possibility.

Virgin Blue took several key steps as well, in order to ensure its profitability in a very difficult financial climate. The airline has decided to implement the unpopular measure of making passengers pay as much as $20 for each piece of luggage that they check-in, as long as it does not exceed 23kg. Additionally, airfare on some routes will rise by as much as 5 percent in the coming weeks.

Most industry experts believe that the strategy chosen by both Qantas and Virgin Blue is to fly fewer planes, but to ensure that a higher proportion of seats are occupied on existing flights, in order to compensate for meteoric fuel costs.

www.qantas.com.au