Qantas Group Boosts Investment in Customer Experience Amidst Rising Travel Demand and Fuel Prices
SYDNEY – The Qantas Group has released a market update highlighting a significant increase in its investment towards enhancing customer experience, the continued surge in travel demand, and the implications of rising fuel prices.
Elevated Customer-Centric Investments
Qantas is set to invest an additional $80 million in customer improvements for FY24, supplementing the already budgeted $150 million. This surge in investment, sourced from profits, aims to alleviate customer 'pain points'. Initiatives include bolstering contact centre resources and training, expanding the number of seats redeemable with Frequent Flyer points, enhancing support during operational hiccups, revising policies for fairness, and upgrading inflight catering quality.
Furthermore, Qantas is fast-tracking ongoing projects, such as the re-platforming of the Qantas app, with more details to be unveiled soon.Advertising
Robust Travel Demand
The first quarter of FY24 mirrors the strong trading conditions seen in the last quarter of FY23. Qantas and its subsidiary, Jetstar, are gearing up to transport over 4 million passengers during the September/October school holidays and football finals, spanning nearly 35,000 domestic and international services. This marks a notable increase from last year's 3.7 million passengers across roughly 28,000 services.
Recent surveys indicate that travel remains a top expenditure for Qantas Frequent Flyers, overshadowing entertainment and home-related expenses. The Group expressed gratitude for the unwavering support from its loyal customer base.
Fuel Price Surge and Its Implications
Since May 2023, fuel prices have witnessed a 30% hike, with a sharp 10% increase since August. This surge, attributed to higher oil prices, increased refiner margins, and a depreciating Australian dollar, could potentially inflate the Group's 1H24 fuel bill by an estimated $200 million, reaching $2.8 billion post-hedging. An additional $50 million impact is anticipated due to non-fuel related foreign exchange fluctuations.
While the Group intends to absorb these escalating costs, it will keep a close watch on fuel prices, potentially adjusting its settings to strike a balance between cost recovery and maintaining affordable travel fares.
Network and Capacity Expansion
By year-end, Qantas and Jetstar aim to amplify international capacity by 12%, translating to nearly 50 extra flights weekly. This expansion includes the resumption of Qantas' Sydney-Shanghai route, the inauguration of new routes like Brisbane-Wellington and Brisbane-Honiara, and Jetstar's new Brisbane-Tokyo service.
Despite the challenges, the Qantas Group maintains a robust financial position, marked by manageable debt levels and consistent revenue inflow. The on-market share buyback, announced in August 2023, is 10% complete. The upcoming Qantas AGM will seek shareholder approval for potential future share buybacks.