Qantas Blames Excess Domestic Capacity for Air Carrier’s Financial Woes

Qantas Domestic Chief Executive Lyell Strambi blamed on Sunday the excess capacity in the country's domestic routes as the reason behind the air carrier's financial woes. He said the situation benefits passengers, but not the airlines.

John Borghetti, chief executive officer of the rival air carrier Virgin Australia, agreed that there were some adjustments in domestic capacity in the last few months and acknowledged that competition is very aggressive and will always be aggressive.

Mr Stambi made the comment at a media briefing at the Sydney airport to announce the shift of Airbus SAS A330s beginning May 2013 for all services between Perth and Sydney and Melbourne. The A330s will replace Qantas's Boeing 767s on east-west routes which will be transferred to the busier east-coast network, Mr Stambi said.

Virgin announced last week the addition of seats on routes between Australia's east and west coast as a result of the company's decision to switch to wide-body aircraft such as the A330 on these routes.

To worsen Qantas's worsening financial challenges, Virgin plans to purchase a controlling stake in Tiger Airways' Australian unit and take over Skywest Airlines which would give Virgin a larger slice of the domestic market to 35 per cent from its current 30 per cent.

Mr Strambi said Qantas decided to use the A330s for all its weekday services between Perth and Sydney and Melbourne to better serve business travelers who prefer more comfortable wide-body jets.

With the delivery of another A330 from the Airbus factory in Toulouse, France, Qantas would have nine such aircraft flying domestic trips, while the 21 others are B767s.

Meanwhile, Tiger confirmed on Sunday that Coffs Harbour would be its fifth new destination for 2012 and place on sale tickets beginning Monday, Nov 26. The discounted plane fare would be $59.95 one way between Sydney and Coffs Harbour.

By Feb 15, 2012, Tiger would have four weekly return flights between the two cities which would add 1,400 seats. By late March 2013, Tiger would add a fifth weekly service that would further hike the number of weekly seats between the two cities to 1,800.