Are QF feeling the pinch?
Story from the ABC News Online web site.
Maybe a few dark clouds ahead
Airline capacity cuts an early warning of Australian economic malaise
By business reporter Andrew Robertson
Posted yesterday at 5:27pm
Qantas has witnessed a steep fall in bookings and Virgin has its own problems.
A domestic capacity cut by Qantas in response to falling bookings could be an early warning that Australia's economy is not as healthy as it appears.
"In the past load factors have been a great lead indicator for what GDP is doing, so this announcement from Qantas may highlight that the Australian economy is actually doing worse than we think," said Kieran Kelly, CEO of Sirius Fund Management.
'You're going to choose the lowest price product'
Motley Fool's Scott Phillips said, despite the aura around Qantas of late, airlines are just cyclical commodities like iron ore and coal.
"It doesn't really matter to you once you're on the plane, whether you're flying Qantas or Virgin or one of the Middle East carriers or the Asian carriers," he said.
"They all do the same job, with about the same safety record and you're going to choose the lowest price product."
Price and capacity have been the traditional battleground for the domestic duopoly.
This time around they are taking a more cautious approach.
"The revenue might suffer for the next few months, or the next year or so, but, overall, their profitability will not fall off the cliff," .