Qantas May Up Fuel Surcharge, Again...
By Steve Creedy, The Australian | Aug. 11, 2006
Qantas is looking at raising international fuel surcharges again as the price of fuel continues to rise and overseas carriers move to boost the levy.
Qantas chief financial officer Peter Gregg confirmed yesterday that the airline was "definitely in the process of reviewing our international fuel surcharge".
Qantas last increased the surcharge in April when it boosted the levy on international flights by $23, to $98 a sector.
Mr Gregg said any increase would be limited to international flights at this stage and a decision on the international surcharge was "a few days away".
Mr Gregg also did not rule out floating Jetstar at some future date, noting extraordinary times "require extraordinary solutions".
"There's nothing about to eventuate, it's just a possibility," he said.
"It's too early to be going into a lot of detail about it ... because it's not something we've said we're going to do."
Earlier, he warned in a speech to the American Chamber of Commerce that businesses that cost money would have to restructure and make a profit or face the axe.
Mr Gregg said that sustained high fuel prices would force the airline to make cuts beyond the $1.5 billion targeted over the next two years under its Sustainable Future Program. He said that the airline had made substantial headway in simplifying and improving the efficiency of its operational processes.
It had been able to do this because of the segmentation process started three years ago to create separate business units.
"We are now taking that process to the next level, transitioning businesses that were cost centres to profit centres," Mr Gregg said.
"We have a wide spread of businesses, including full in-house engineering, catering and airport ground handling capabilities."
These businesses are valuable, but like the rest of the aviation industry are facing intense competition from overseas providers that have substantial scale and cost advantages.
"Many of our competitors around the world are outsourcing these activities in their search for cost efficiencies."
"We are reviewing all of our businesses. If they cannot generate the required returns, we will need to extensively restructure or exit them."
Mr Gregg also said that the airline expected to make some 'big decisions' on freight interests in the coming months.
He said Australian-based air passenger transport would continue to be the airline's primary business but it was looking to grow in other areas.
"We have two joint ventures with Australia Post in the domestic time-definite freight market - Australian Air Express for air freight and StarTrack Express in the road sector," he said.
"These businesses have very strong market positions, and we are evaluating opportunities to build on these assets."
We are also assessing options in the general freight market that have potential synergies with our existing interests.
"I cannot discuss specifics, but I expect that we will be making some big decisions in this area over coming months."