Qantas to freeze wages until return to profit. Courtesy: Sky
What does the Qantas cuts mean for travellers? Source: Supplied
QANTAS is slashing staff and services across the board, trying to find a massive $2 billion in savings. How will these cuts affect consumers and travellers?
PRICES
Travellers aren't likely to see any significant hikes in airfares following yesterday's announcements. Chief executive Alan Joyce repeatedly stressed the fierce competition it was facing from foreign airlines, especially in capacity, so it doesn't make sense for Qantas to give those rivals another competitive advantage by raising it own prices.
ABBOTT REFUSES TO BACK QANTAS
Australian Business School professor of travel and tourism economics Larry Dwyer said there's unlikely to be major changes to flight prices in the near future.
"At the moment, they want some stability, [Qantas] has an interest in maintaining stability and small revolutions at work - not some dramatic changes overnight. There's some concern and the last thing the travelling public wants is uncertainty."
Qantas chief executive Alan Joyce said the airline will defer new aircraft deliveries. Source: Supplied
He added the real risk for Qantas is that negative coverage is more likely to turn customers away and decrease loyalty.
"Qantas has always had a loyal following among Australians. Increasingly these stories are emerging of not so good experiences coupled with continued talk of job cutting, I don't think that loyalty base exists anymore. That's the real risk for Qantas, that it will lose a portion of its customer base permanently to other airlines."
Professor Dwyer argued prices might come into play if people are wavering in their loyalty to Qantas. He said it's possible for Virgin to increase prices because it's part of supply and demand.
A Qantas spokesman told news.com.au yesterday: "Today's decision has no impact on flight prices. Qantas customers won't notice any difference."
PLANES
There's unlikely to be any mass-scale renewal of its aircraft, either through new planes or a makeover of its existing aircraft which may be looking a bit tired.
To reduce cost, Qantas has delayed delivery of new planes including eight flagship A380s. It will also sell off or early-retire Boeing 767s and the six oldest 747s.
In all, 50 aircraft will have its delivery deferred or sold.
Qantas chief executive Alan Joyce said the company will slash 5000 jobs. Source: Getty Images
ROUTES
Qantas announced it will exit the Perth to Singapore route by the end of September this year. It will also replace 747s with A330s on the Sydney to Singapore and Brisbane to Singapore routes in the same period.
Flights between Melbourne and London will be retimed in November to reduce time spent on the tarmac at Heathrow Airport.
The company said it will also suspend any growth plans for Jetstar Asia and "exit under-performing routes" although has not made any specific announcements relating to regional Australia.
Professor Dwyer said reduction in routes could impact customer loyalty.
"[If] there are less planes flying that will impact on the ability for transport and so on. [It would make Qantas] a less popular alternative than a company that is trying to promote regional development," he said.
FREQUENT FLYERS
While the sell-off of its lucrative Frequent Flyers division was rumoured before today's announcement, there has been no decision made. The Frequent Flyers' program was the most profitable operation of all of Qantas' units, reporting a $146 million profit.
MARKETING
Qantas spends tens of millions of dollars every year on marketing itself and Australia to the world. Its most recent effort included flying out the cast of Modern Family to Australia for a special episode of the comedy series.
Modern Family cast arrive in Queensland on a special Qantas flight. Source: Supplied
A spokesman said: "We won't stop promoting Australia to the world. That's important for us and the tourism industry. Nor do we have any changes to announce to our Ambassador program or our support for tourism initiatives, which we see as important investments in promoting Australia."
The spokesman said Qantas saw a 22 per cent boost in bookings following its partnership with Ellen.
While Qantas wouldn't reveal how much it spent on the Modern Family activity, the spokesman said: "We wouldn't make these investments if we didn't get a good return."
Qantas half-year results revealed it spent $314 million on "selling and marketing" in the six months to December 2013.
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