Australia's Qantas Airways plans to cut fares and launch an advertising blitz to win back passengers, a newspaper said, after its showdown with unions caused international travel chaos and left almost 70,000 travellers stranded.
Qantas flights returned to normal on Tuesday for the first time since it grounded its global fleet last weekend, a deliberate tactic to gain the upper hand over trade unions in a long-running and costly labour dispute.
The tactic succeeded in spurring local authorities to order an end to all industrial action on Monday and should ensure a speedy resolution, but it also hurt the Qantas brand and left many passengers vowing to shun the airline in future.
Major rival Singapore Airlines Ltd (SIA), which competes with Qantas on a key Asian route to the UK, said its bookings had been strong since the Qantas grounding, especially for flights from Britain to Australia.
"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 temporarily double the rate of frequent flyer points earned, the newspaper said.
SHARES UP, RIVALS POUNCE
A Qantas spokeswoman described the newspaper report as speculation, but said the airline was apologising to passengers. "We are also looking at some other customer care and engagement opportunities."
Qantas shares rose 1.1% in a weaker overall market on Tuesday, extending strong gains made on Monday.
The stock has risen 5.5% since CEO Alan Joyce grounded the airline on Saturday, with investors judging it a tactical victory in a war with unions.
Joyce also won support from AirAsia Bhd CEO Tony Fernandes, who said the move to ground the fleet was about survival.
The grounding created a national crisis, prompting Australia's labour-market tribunal to step in. On Monday, the tribunal gave both sides three weeks to settle the row or submit to its final ruling on the matter, a tight timeframe that investors believe is more likely to favour Qantas.
Before the grounding, Qantas said it had lost about A$70 million ($75 million) since September owing to the industrial action in its dispute with three trade unions over pay, working conditions and its plan to base more operations in Asia.
Joyce had complained of "death by a thousand cuts" at union hands. Qantas's estimates of the daily cost of a grounding suggests it lost another A$40 million at the weekend.
Domestic rival Virgin Australia has been taking market share from Qantas during the months of union strife, taking aim at Qantas's more profitable business customers.
Credit ratings agencies Moody's and Standard & Poor's have both signalled possible credit downgrades for Qantas, citing the grounding and potential for lasting brand damage. Another rating agency, Fitch, said late on Monday there was "potential for management's showdown with labour to drive a material shift in passenger booking trends that could worsen the carrier's revenue performance in coming months".
