QANTAS wants to have 60% of its domestic flight bookings transacted online within 12 months.
The airline group aims to save A$80 million in distribution costs over the next year “in tandem with a program to accelerate the Group’s (total) domestic online bookings from 44% to 60%.”
CEO Geoff Dixon said Qantas has already driven its distribution costs down by 25% over the past three years, largely by cutting travel agents commissions and going direct to consumers.
Its most recent commission cuts on July 1, when it slashed domestic commission from 5% to 1%, bore immediate fruit with A$50 million saved in the six months to the end of 2005.
Meanwhile, online bookings across all Qantas Group airlines, which includes Low Cost Carrier Jetstar, have increased 500% over the past four years.
But it was not all good news from the Internet with disintermediation hitting the profit of Australia’s largest wholesaler, Qantas Holidays.
“In both the domestic and outbound markets the effect of unbundling due to the increased use of online bookings has seen air land revenues fall 20 per cent.”
Dixon said Jetstar, which already does more than 90% of its bookings online and increased its pre-tax half year profit 45.6% to A$27.7 million, will play an ever-growing role.
“The Jetstar strategy involves expanding the domestic network, launching international operations and bringing the (loss-making) Jetstar Asia operation closer to the Jetstar Group,” Dixon said.
“New Jetstar joint ventures are also planned for other parts of the world.
“This will mean considerable growth for both brands, especially Jetstar internationally in the next three years, Qantas in new international markets, and the movement of Australian Airlines into the Qantas Airlines structure.”
Total Qantas Group international market share fell by 1.2% to 31.3%, reflecting the assault on Australian skies by “predominantly government owned” carriers from the Middle East.
Its domestic market share was 66.1%, according to the latest statistics.
Overall Qantas reported a 3.4% decline in pre-tax profit to A$483.5 million for the half year, thanks largely to fuel and restructuring costs.