Qantas has announced that it will restructure international airfares, by folding its fuel surcharge into its base fares. However, this will not cause a drop in fares, as the base fares will. At the same time, they have announced a decrease in its fuel-related charges for Frequent Flyer redemption bookings of up to $130.
The change follows Virgin Australia’s announcement last week that it was going to remove the separate fuel surcharge for flights to the USA.
The changes by Qantas to the pricing calculation is unlikely to be readily noticed, as airlines are required to advertise a fully inclusive price. The airline it will continue to “price competitively, with fares moving in line with the broader market.”
“While global fuel prices have fallen in recent months, international air fares are extremely competitive and are significantly lower than when surcharges were first introduced 10 years ago,” according to the airline.
The airline said due to the size of the Qantas International network, the process to absorb fuel surcharges into base fares for up to 200 destinations will “take time”, and as overall fares are not changing, customers will not be disadvantaged.
Frequent Flyer Surcharge changes
From tomorrow, changes to the Qantas Frequent Flyer on Qantas and Jetstar Classic Award redemption bookings will take effect, with savings up to $110 in economy and up to $130 in premium economy on some routes for a return flight. Reductions will vary across its network, but are said to average around 14%.
“If you look at the trends in global aviation over the past decade, costs and competition have been increasing while fares and airline margins have been falling,” Qantas Group ceo, Alan Joyce said.
“The dynamics of this market have seen Qantas International post significant losses in the past two years. Even now, yields remain significantly below pre-GFC levels and like the rest of the industry our strategy is to keep strengthening them. “Factoring in lower fuel prices, IATA estimates that the net profit airlines make per passenger this year will rise by just $1 compared with last year, from $6 to $7.