No end in sight for Qantas' international yield reductions


Qantas reported continued yield weakness in Aug-2009, with combined domestic yield 13.3% lower year-on-year and total international yield continuing its slump, falling 24.4%.

Qantas Group total domestic (Qantas, QantasLink and Jetstar Domestic) and total international (Qantas and Jetstar International) yield (excluding foreign exchange): Jul-2008 to Aug-2009^

Largest year-on-year contraction in past 12 months for domestic yields

Latest Group yield figures indicate there is no bottoming yet for the carrier’s international yields, which experienced its second largest contraction in the past 12 months in Aug-2009. And, while domestic yield falls appear to be slowing, they experienced the largest year-on-year contraction in the past year last month.

Qantas, at the beginning of Sep-2009, stated its yields had stabilised, with absolute numbers "tracking sideways".

Load factor improvements a positive

In more positive news, Qantas Group load factors increased 2.8 ppts year-on-year to reach 80.5% in Aug-2009 (although this was lower than Jul-2009’s load factor of 82.9%, which was the highest level for the carrier in 19 months). The Group decreased capacity (ASKs) in Aug-2009 by 4.8%.

Group RPKs fell 1.4% last month, while Group passenger numbers rose 6.0% year-on-year to 3.4 million, showing a major shift in its operating profile to shorter haul flying (reflecting the weakness in international long-haul markets).

Qantas sees no recovery in sight

Qantas Chairman, Leigh Clifford, in the carrier’s 2008/09 Annual Report released last week, stated the global economic outlook remains “uncertain”, with the carrier yet to see any substantial recovery in underlying business conditions. Mr Clifford added many factors are in play that could affect the timing of the recovery and uncertainty is "also being created through significant capacity increases, domestically and internationally, by Qantas Group competitors, some of whom enjoy very favourable taxation and other arrangements”. 

However, Mr Clifford stated the carrier is well placed to weather the downturn and to take advantage of opportunities when a recovery eventuates. An improvement in the airline's yields should signal an economic recovery is under way.

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