Jetstar quits Darwin base as Qantas shares test record lows

Qantas budget offshoot Jetstar will further reduce flights to the Northern Territory and close its aircraft base in Darwin, blaming intense competition from foreign airlines.
By · 10 Dec 2013
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10 Dec 2013
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Qantas budget offshoot Jetstar will further reduce flights to the Northern Territory and close its aircraft base in Darwin, blaming intense competition from foreign airlines.

The reduction in flights from Darwin to destinations including Bali, Brisbane and Singapore comes as Qantas shares closed below $1 for the first time in 17 months following its downgrade to junk status by one of the big two rating agencies on Friday. The stock is now trading just shy of a record low.

The paring back of services to regional Australia is likely to have political ramifications given it comes at a time when Qantas is seeking financial assistance from the federal government.

Jetstar’s 93 staff, including pilots and flight attendants, who are based in Darwin will be transferred to other cities around Australia, while three A320 aircraft will be shifted to Adelaide.

Qantas announced last week plans to axe at least 1000 jobs across the airline group, including Jetstar, over the next year but has yet to outline to staff and unions which roles will go.

As part of the latest reductions, Jetstar will ditch its four weekly flights from Darwin to Manila and Tokyo, and reduce the number of services to Denpasar in Bali, and to Brisbane and Singapore.

It also will shift the operation of flights between Darwin and Singapore to Jetstar Asia, which is based in the Asian city-state and typically has lower wage rates than the Australian airline.

However, Jetstar will increase services between Darwin and Cairns from three a week to seven.

The airline blamed an increase in competition, particularly on international routes, from airlines such as Malaysia’s AirAsia X and Singapore’s SilkAir for its decision to close its Darwin base.

It also said it had made clear that flying from Darwin was ‘‘among the most marginal’’ on its network.

Jetstar also appears to be responding to domestic rival Tigerair Australia, which is now backed by Virgin Australia, by scheduling flights between Darwin and Brisbane to depart at a similar time of the day. Tigerair last week announced plans to open a third aircraft base in Brisbane in March, and begin services from the Queensland capital to Adelaide, Cairns and Darwin.

Jetstar and Qantas began cutting flights to the Northern Territory earlier this year, saying the high Australian dollar was deterring foreign tourists. The cuts in September included a halving of Qantas flights between Uluru and Cairns, while Jetstar reduced services between Sydney and Darwin.

Jetstar also signalled last week that it was set to ditch flying to Avalon Airport, near Geelong, from Sydney and Brisbane due to poor returns from those services.

Adelaide will benefit from the latest changes with the budget airline choosing to base pilots and crew there, as well as three A320s from Darwin and another from Melbourne.

About 120 extra positions for pilots, flight attendants and ground staff will be created in Adelaide from next March, which will result in it adding an extra daily flight to both Sydney and Melbourne.

Qantas shares closed down more than 3 per cent at 99.5¢ – just above a record intra-day low of 96¢ – on Monday, in its fifth consecutive day of falls. UBS analysts also reduced Qantas to ‘‘neutral’’ from a ‘‘buy’’ in the wake of the airline’s profit warning and subsequent ratings downgrade last week.

Darwin Airport chief executive Ian Kew said the reduction in Jetstar services would be more than offset by the increase in services recently by airlines such as Malaysian Airlines, AirAsia X and SilkAir

‘‘The net effect is that Darwinians will still have plenty of choice of other airlines,’’ he said.
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