Qantas yields soar on Tiger's grounding

Domestic yields at the Qantas Group have soared in the first part of the financial year with the company recording a 9.4% yield increase year-on-year in Jul-2011, its second highest monthly growth in a decade. The period corresponds with the grounding of Tiger Airways Australia, which removed approximately 12,400 seats from the market daily and saw airfares significantly increase.

Yields - calculated across all of the Group's domestic operations - continued to show strong growth even after Tiger resumed services in Aug-2011, albeit with only 10% of its pre-grounding seats. Qantas domestic yields grew 5.8% year-on-year in Aug-2011, the 15th highest monthly growth in the 117 months Qantas has reported figures.

Bruce Buchanan, CEO of Qantas' Jetstar unit, has acknowledged the upward pressure. Domestic yields across all Australian mainline carriers can be expected to grow highly over the next few months as Qantas removes capacity due to union strikes, but will come at the expense of decreased revenue at Qantas. For Virgin Australia, yields will grow with revenue.