Jetstar Airways cuts capacity, considers sale of three Boeing 787

MDRX [CC BY-SA 3.0]

As the Australian Federation of Air Pilots (AFAP), Jetstar Airways pilot members together with Transport Workers Union (TWU) voted to take industrial action in order to force its hand to the low-cost carrier to increase wages and benefits. The Melbourne-based airline indicated that it will cut capacity in January 2020 to avoid any potential disruption to its customers and will decide on the future of three wide-bodies in its fleet, the 787 Dreamliners.

“Both unions are pursuing wage claims that are unsustainable, inconsistent with the three percent increases offered across the Qantas Group and ultimately incompatible for a low fares airline,” noted Jetstar Airways’ press release. The industrial action is set to cost the airline, a subsidiary of Qantas Airways, around $13-17 million (AUD20-25 million), as a result of the disruption in December 2019 and a 10% domestic capacity cut in January 2020, indicated the low-cost carrier (LCC).

On December 14 and 15, 2019, Jetstar pilots conducted “a limited number” of four-hour stoppages. Further protected industrial action (PIA) includes agreements to not work on days off, not respond to crewing department calls when off duty, not agreeing to flying duties beyond the existing limits and not performing duties outside the published roster.

“Jetstar pilots and the AFAP ensure that industrial action will not be taken over Christmas to New Year to protect this holiday period for the traveling public,” said the union’s Executive Director Simon Lutton. Jetstar Airways specified that AFAP will not take action between December 20, 2019, and January 3, 2020.

Chief Executive Officer of the airline, Gareth Evans, emphasized that the strikes do not change the fact that the wage demands are “unsustainable”, as the pilots are requesting a wage increase of 15%, while TWU, which is responsible for ground handling services, demands an increase of 12%, Evans added. 94% of TWU members voted in favor of the industrial action, as the company refused to satisfy the union’s claims, including “guaranteed hours, better pay, and minimum 12-hour breaks between shifts,” reads a statement issued in November 2019.

“Jetstar could fix its pay dispute with baggage and ramp workers by paying them just 90 cents extra an hour,” according to TWU’s latest update regarding the planned industrial action.

Jetstar fleet and network changes?

Seemingly, the airline’s problems do not end with the PIA. In order to avoid further financial issues, the company is reviewing its fleet and network, including the potential sale of three Boeing 787 Dreamliners that are operating “loss-making and marginal international routes.” In total, the low-cost carrier owns 11 787s. The gained capital will be invested in “other parts of the Qantas Group or returned to shareholders,” with the decision to come in Q1 2020, according to Jetstar.

One source close to the matter indicates that the LCC considers cutting flights to Honolulu, Hawaii (U.S.), reports Reuters. Jetstar Airways operates two flights from and to Hawaii – JQ1 from Melbourne and JQ3 from Sydney, Australia. Just last week, on December 9, 2019, the airline announced new flights from Gold Coast (OOL) to Seoul Incheon International Airport (ICN) in South Korea.

At the same time, in September 2019, the company announced preliminary plans to completely cut regional flights in New Zealand due to the fact that the regional network was loss-making. The low-cost carrier confirmed its decision on October 16, 2019.

 

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