Flag-Carrier Struggles and Airfreight Suffers

Qantas has announced further cuts to its international flights following the spread of the Coronavirus, which has resulted in a sudden and significant drop in demand for air services.

Australia’s flag-carrier airline, Qantas, announced yesterday (10/03/20) further cuts to its international flying, reducing capacity by almost a quarter for the next six months. These additional changes will bring the total international capacity reduction for Qantas and Jetstar from 5% to 23% versus the same time last year and extend these cuts until mid-September 2020. The biggest reductions remain focussed on Asia, which for Qantas is now down 31% compared with the same period last year.

Shares in Qantas are at a two-year low of A$4.45 today (11/03/20). Events of the past few days have been driven by the global spread of the COVID-19 virus.

Qantas will use smaller aircraft and reduce the frequency of flights to maintain overall connectivity. Ten of the airline’s largest aircraft, the Airbus A380, are presently grounded, leaving only two of its A380s flying. The existing Sydney-Singapore-London return service (QF1 and QF2) will be temporarily re-routed to become a Sydney-Perth-London service from 20 April. The start of Qantas’ new Brisbane-Chicago route will be delayed from 15 April to mid-September.

The International Air Transport Association (IATA) has said that global airlines stand to lose US$113 billion in sales if the coronavirus continues to spread. Airlines normally expect to make about 5% to 10% of their revenue from carrying cargo. Airfreight comprises about 20% of global trade by volume and more than 35% by value, according to IATA. With limited flights in/out of China at present, approximately 85% of the belly capacity has left that market. 

Compared to this time last year, flights overall within Asia have dropped by nearly 60% and transpacific capacity has fallen by half. Expect air freight rates to spike as a result of the reduced capacity.

As licensed Customs Brokers and International Freight Forwarders, Colless Young offers you correct, professional advice on all your import and export cargo needs. We are based in Brisbane and handle shipments at all major airports around Australia.