Much of Qantas' annual results announcement today was full of the kind of nit-picking over who gets charged what that excites the sharemarket but has nothing to do with the actual services a company sells. However, while confirming that onboard Wi-Fi is still on the backburner and discussing the challenges of making Qantas' international business profitable, CEO Alan Joyce did offer some interesting insights into how costs mount up on international routes.
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During the Q&A session following the announcement, Joyce noted that a typical flight on the Sydney-London 'kangaroo route' might attract close to $1 million in revenue. However, fuel costs for the same flight would currently be more than $500,000, Joyce said, making profitability a challenge once staff, catering, airport slots and other expenses factor in.
Qantas has stiff competition on that route, with more than 30 airlines offering Sydney-London connections in some form. Making money on the route is thus challenging even without fuel problems, especially for airlines which can't charge a premium for first or business class seats.
Another noteworthy figure: there are now 8.6 million members of the Qantas Frequent Flyer scheme, with 2000 new additions each day. That reinforces a point we make constantly: if you do want to book a flight using points, try and do so as early as possible. You've got a lot of competition.