Qantas lifts ticket prices on key routes

Qantas has begun to raise fares in order to improve profits with prices rising by up to $10 per sector for about 14 key routes.

The price hikes are an attempt to regain market share after the company has suffered during the downturn, losing market share as demand for domestic and international air travel has weakened.

As reported in The Age, both Qantas and its regional arm QantasLink have contacted travel agents regarding the increases, with a spokesman calling the hike “just part of our periodic review of fares”.

Ticket prices have increased on popular routes such as the Melbourne-Sydney leg, while UBS has reportedly said the company has raised domestic fares by about 7% since September.

The price hikes come as figures released by the Government yesterday show the company’s market for international flights has fallen by 3.4% to 20% during September, compared with the same period a year before.

Competition has increased in the international sector, with a number of companies offering routes between Australia and the US including United, V Australia and Delta Air Lines.

Qantas, along with other major airlines, cut prices earlier this year in order to combat a drop in demand. Its bottom line was hit hard by the slump, with an 87.9% decline in annual net profit to $117 million for 2008-09, while pre-tax profit also fell 87% to $181 million.

But air travel is on the rise, with new figures showing international air traffic jumped 4.2% to 2.1 million passengers in September – the largest month-on-month increase in traffic since March 2005. Qantas has now been given enough confidence to increase prices.

Additionally, the company said in October it expects no further declines in its financial results, despite the volatile industry. Chairman Leigh Clifford said at the annual general meeting the company’s results will improve as trading conditions stabilise.

The price increases come after Qantas has introduced a number of measures in order to increase traffic, including reducing the number of first-class seats in its long-haul flights in order to accommodate more seats in economy sections.

Additionally, the company has also introduced new measures to reduce customer dissatisfaction, including faster boarding procedures.