Pressure on Qantas mounts as competition in business class increases


International operations of Qantas which is going in loss is reeling under increasing pressure ofreducing the fares which has moved even to the business class cabins in long routes.

Now the Chinese airlines have come to the fore strengthening their capacity to Australia which is offering their passengers a return fare of $5000 as against earlier $7000 between Europe and east coast cities.


Discounts were a common for economy tickets but now the discounting has reached to business class also, according to Andrew Flannery who is chief financial officer of flight center. He also added that the cost of return fare of business class from Melbourne toEurope is being sold for less than $3500 this holds good even for the high season.


Chinese airlines have been aggressive in selling their seats at a discounted price in order to build a strong market share for itself on routes to Australia according to the country’s biggest travel agency.China Southern has promised to triple its existing flights to Australia which will be more than 110 within a span of four years. According to the flight center during global financial crisis in 2008, the economy fares to destinations such as Paris, Bangkok and Rome were maintained well below the level.
This can be seen as a boom to the travelers but heavy discounting of business class fares has put a threat on Qantas and also proved a dampener to the premium international. Qantas has lost roughly more than $200 million in the last financial year. There are other airlines such as Air NewZealand that are struggling to come out of losses from their long distances operations because of fierce competition and ever rising fuel prices.
As per Qantas spokesman there is a spurge in the capacity on the routes to Australiain recent times as these have been taken over by the Chinese airlines and Middle Eastern. He said that when more and more airlines come in the competition, the fare drop drastically making it more and more difficult to sustain yields.
Qantas on Friday said that it was not going for the two new A380 super jumbos for another four years which it had decided to take. This was in order to attain $400 million cut in spending in the next financial year.

Matt Crowe, analyst of CBA Equities mentioned that Qantas had the intentions of buying A380 but now due to financial constraints it was not a good idea to acquire the airbus that may be to sacrifice competitiveness of your product offering to save cash