Qantas says there are signs the Australian travel boom has peaked and is cutting back and re-routing services to better manage a drop in demand that became obvious late last month.
It says forward bookings have been hurt by a slump in consumer confidence.
“Some softness in demand, related to the upcoming federal election and recent drop in consumer confidence in Australia, began to emerge over the peak Easter and school holiday period in late March and continued to be seen in forward bookings in April and May.”
As a result, Australia’s largest carrier has slashed its domestic services this quarter and says capacity growth for April, May and June “will now be negative compared to the prior corresponding period.
“As a result of these changes previous guidance for Group domestic capacity growth of around 2% in the second half of the financial year has been revised to growth of between 0.5% and 1%.
Services between Australia and the United States have also been reduced with Qantas removing three Sydney-Los Angeles services and re-directing that capacity to Singapore and Hong Kong, where demand remains strong.
Qantas shares fell 10% on the news while retailer Flight Centre dropped 5%.