Qantas sees domestic passenger traffic bouncing back to normal

Qantas Airways Ltd. said its passenger traffic in Australia has almost completely recovered, highlighting the potential for speedier travel rebounds than previously expected more than a year into the pandemic.

Capacity on domestic routes will top 90% of pre-Covid levels this quarter, the airline said in a statement Thursday, up from its previous forecast of reaching 80%. Low-cost unit Jetstar will have even more capacity than before the pandemic. Qantas said it has seen “extremely strong” demand for leisure trips and a return of business travel, which is back to about 65% of normal.

“We’re now seeing really positive signs of sustained recovery,” Chief Executive Officer Alan Joyce said. “This is the longest run of relative stability we’ve had with domestic borders for over a year and it’s reflected in the strong travel demand we saw over Easter and the forward bookings that are flowing in.”

The pace of the recovery shows there’s ready demand for travel in larger countries that have suppressed the coronavirus—Australia has only about 150 active cases—or are rapidly rolling out vaccinations.

With international travel still paralyzed, it’s a different story for carriers with no local market, such as Cathay Pacific Airways Ltd. in Hong Kong and Singapore Airlines Ltd., and smaller countries more reliant on overseas flights.

Virgin Australia, which collapsed last year under the pressure of debt and Covid-19 restrictions, is also benefiting. Now owned by Bain Capital, Virgin said Thursday it is leasing an additional 10 Boeing Co. 737 jets and fast-tracking plans to add routes. The airline is also looking for 150 more cabin crew.

Qantas said all of its domestic crew are back at work, as are Jetstar’s. To meet demand for leisure travel at home, Jetstar will deploy six Airbus SE A320 aircraft loaned from its Japanese partner, as well as up to five Boeing 787-8s that are usually used for international routes. This quarter, 90% of the group’s aircraft will be active.

Australia’s recovery has been helped by government subsidies for half-price airfares to prop up the tourism industry. With a short-term strategy focused on generating positive cash flow rather than returning to pre-Covid profit margins, more low fares will be offered to stimulate demand, Qantas said.

Qantas expects its domestic capacity to be at 107% of pre-Covid levels in July-September, the first quarter of its next financial year, and Jetstar’s to be at 120%. The airline is still preparing to open most of its international network in late October, even though Australia’s vaccination program has been delayed beyond that date.