Page last updated at 10:24 GMT, Thursday, 5 June 2008 11:24 UK

Qantas scales back Asia flights

A Qantas plane over Sydney
Qantas says it may reinstate flights when conditions improve

The rising cost of fuel has prompted Australian airline Qantas to scrap or reduce several of its services to Japan and south-east Asia.

A thrice-weekly Melbourne-Tokyo service is among the casualties, and there will be fewer Sydney-Tokyo flights planned.

Maintaining the existing schedule to Japan would cost the airline an extra 100m Australian dollars ($95m; 49m) at current fuel pieces, it said.

Last week Qantas said it was cutting domestic capacity by about 5%.

We will continue to work with individual markets and look for opportunities as conditions improve
Geoff Dixon
Qantas chief executive

Staff numbers would be reduced, it said, and some aircraft would also be taken out of service.

The news came as Qantas forecast a A$2bn rise in its fuel bill in the 2008-9 financial year - meaning that its fuel bill will make up about 35% of total expenditure.

'Capacity issues'

In the latest round of cutbacks, Qantas' budget carrier Jetstar will end its service from Cairns to Osaka and Nagoya.

The firm will also replace 14 flights a week from Cairns to Tokyo on Qantas with daily flights on Jetstar.

Other changes include withdrawing Jetstar's Sydney to Kuala Lumpur service and using its discount carrier to replace Qantas on routes from Perth to Denpasar and Jakarta.

"We will continue to work with individual markets and look for opportunities as conditions improve to address capacity issues and reinstate services where and when we can," said chief executive Geoff Dixon.

The price of oil hit a record high of more than $135 a barrel last month, although it has since pulled back to trade around the $120-a-barrel mark.

Many airlines are starting to take drastic steps to cut overheads and increase revenue.

This week US carrier United Airlines said that it was grounding 100 of its planes and cutting between 900 and 1,100 jobs, in addition to 500 already announced lay-offs.

Delta Airlines is offering redundancy to all 3,000 volunteers had come forward - despite initially only planning to lay off 2,000 workers.

And American Airlines is to become the first major US carrier to charge passengers to check in a first bag.

Several airlines, including Qantas, British Airways and Virgin Atlantic have increased their fuel surcharges.

The International Air Transport Association (IATA) has warned that the airline industry faces a "grim" outlook, saying passenger numbers will be dented by soaring fuel costs and an economic slowdown.

United Airlines cuts 100 planes
04 Jun 08 |  Business
Sky-high fuel hurts US airlines
23 Apr 08 |  Business
BA fuel surcharges rise further
29 May 08 |  Business
Fuel price grounds Qantas planes
28 May 08 |  Business

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