Weak dollar not enough to tempt tourists

Qantas has warned that foreign tourists fearful of the global economic slowdown have yet to be tempted to take advantage of the weak Australian dollar and visit the country.

The airline’s departing boss, Geoff Dixon, said weak consumer confidence and big fluctuations in currencies were deterring potential travellers from flying into or out of Australia.

“We have certainly seen a deterioration in booking intakes, particularly international markets, for travel over coming months,” Mr Dixon told a business gathering in Melbourne yesterday.

“Exchange rate fluctuations also appear to be reducing demand and overseas holidays have become relatively more expensive for Australians but, at this early stage, we have not seen an offsetting lift in inbound demand.”

Macquarie Equities said the greatest threat to Qantas this year was falling demand for seats, prompting the broker to reduce its annual profit forecasts for the airline to just $573 million. In August, Qantas posted a record full-year profit of $969 million.

Rivals such as Cathay Pacific have been boosting flights into Australia to reduce the impact of falling demand, especially for corporate travel, on other routes.

Macquarie said a 34 per cent fall in the Australian dollar against the greenback since July had also offset most of the benefits to Qantas of a recent fall in jet fuel prices. Mr Dixon, who steps down at the end of next month, also predicted more airlines would collapse.

So far, more than 26 carriers have collapsed due to the meltdown in financial markets and slowdown in the global economy.

“Oil prices have now dropped back but, of course, many of the surviving airlines face sharply lower profits that will not provide an adequate return on capital invested. No airline can be immune to the upheaval taking place,” Mr Dixon said.

Qantas’s total revenue seat factor – a measure of seats occupied by paying passengers – fell 2 per cent to 77.7 per cent in August, compared with the same month last year. The airline also carried 43,000 fewer passengers on international routes in August.

The airline announced in July it will axe 1500 jobs by Christmas and shelve plans to hire a further 1200 staff. It will also ground 22 mostly older aircraft. Last month Qantas delayed a partial float of its frequent flyer program until the first half of next year.