Qantas says it’s making solely a 5 per cent revenue margin on its QantasLink Q400 regional turboprop providers because of excessive prices.
In its submission to the Productiveness Fee’s inquiry into regional airfares, the Flying Kangaroo stated regional aviation is “commercially difficult”, with airport prices, distance, gas prices and upkeep all impacting its backside line.
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“Whereas Qantas’ Q400 turboprop fleet is essentially the most appropriate plane to service the lengthy and thinner distant or smaller regional routes, on common, these providers are greater than twice as costly to function than Qantas 737s and about thrice costlier than Jetstar and Qantas worldwide providers on a per passenger foundation,” the airline stated.
“With 800 Q400s in service worldwide and manufacturing presently suspended, the price of spare components continues to rise considerably. The rise in engineering prices can’t be attributed solely to pre- or post-pandemic elements.
“For instance, in 2023 a touchdown gear proximity sensor value $6,700 whereas as we speak, Qantas pays over $10,000 for a similar part. Furthermore, the year-on-year will increase throughout that point have been rising exponentially from 9 per cent in 2023, 15 per cent in 2024, and to 19 per cent in 2025.”
On a per-seat foundation, Qantas says the price of its regional operations is “considerably greater than mainline home and worldwide operations”.
“[This is] because of quite a lot of elements together with greater airport and safety prices, costlier gas, and better upkeep bills – with prices having to be unfold throughout a smaller variety of passengers in comparison with bigger plane and better density markets,” it stated.
Increased prices for regional aviation have been a characteristic of the trade for a very long time nevertheless, lately, among the largest regional value inputs (significantly engineering and airport prices) have been rising considerably above inflation, whereas income from airfares has not.
“The Group has seen a pointy improve in some prices together with airport prices and Authorities charges, which have elevated at double the speed of inflation over the previous 12 months.”
In line with Qantas’ submission, this has led to “tough selections” to “guarantee each the operational energy and industrial viability of the regional community”.
“For instance, earlier this yr Qantas introduced the suspension of providers on the Albury to Melbourne and Wagga Wagga to Melbourne routes,” the submission learn.
“Regardless of makes an attempt to stimulate demand via gross sales, tactical advertising and marketing, adjusting schedules and dealing with native councils to construct consciousness, each of those providers had inadequate income to cowl the rising value of operations.”
QantasLink presently operates a fleet of 43 Q400s, having retired its smaller Sprint 8 plane beginning in mid-2024.
