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Qantas to cut fares to win back passengers after chaos

Australia's Qantas Airways is set to cut fares in an effort to win back customers after grounding its entire fleet for 48 hours in a deliberate tactic to gain the upper hand in a labour dispute, a newspaper said on Tuesday.

November 1, 2011 11:25 by

Qantas caused international travel chaos last weekend, leaving almost 70,000 passengers stranded and angry, in a manoeuvre that succeeded in spurring local authorities to order a quick resolution to the long-running dispute.

But the tactic hurt the Qantas brand, with many disrupted passengers vowing never to travel again with the airline and leaving it with a huge job to restore confidence as it prepares for the busy Christmas-New Year holiday season.

“Qantas will cut prices across its international and domestic network, offer grounded passengers special promotional deals, and take out one of the biggest national advertising campaigns in its 90-year history in a bid to win back disenchanted travellers in the lead-up to the peak Christmas period,” the Australian Financial Review said.

Qantas also planned to bring in a temporary measure to double the rate of frequent flyer points earned, the newspaper said in its unsourced report.

On Monday, Qantas returned to the skies after Australia’s labour-market tribunal ordered an end to all industrial action and gave the airline and trade unions 21 days to settle their months-old dispute or submit to the tribunal’s arbitration.

A Qantas spokeswoman declined to immediately comment.

Qantas says it has lost about A$70 million ($75 million)since September from industrial action in its dispute with three trade unions over pay, working conditions and its plan to base more operations in Asia.

Credit ratings agencies Moody’s and Standard & Poor’s signalled possible credit downgrades for the airline on Monday, citing the grounding and the risk of brand damage. Both agencies currently rate Qantas at the lower end of investment grade.

Another rating agency, Fitch, said there was “potential for management’s showdown with labor to drive a material shift in passenger booking trends that could worsen the carrier’s revenue performance in coming months”.

But the share market, in contrast, have judged Qantas and Joyce the tactical winners from the weekend grounding.

Qantas shares extended their gains on Tuesday, jumping 2.7 percent to A$1.66 in a weaker overall market. The stock had surged as much as 7.4 percent on Monday.

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