Airline cuts 'due to global crisis'

(AAP) - Cuts to aviation capacity and the possibility of 400 job losses at Virgin Blue may just be the beginning of the tourism industry's battles during the global financial crisis, experts say.

Virgin Blue announced on Tuesday it would remove eight per cent of capacity - or up
to five aircraft - from its domestic fleet in May just hours after Qantas said it
would significantly alter its flight schedule.
Virgin's plans will affect up to 400 staff, who the airline said could be offered
job-sharing options or moved to international start-up V Australia before sackings
were considered.
Qantas' changes will cut capacity to China, alter India's schedule and replace
services in New Zealand with its low-cost offshoot Jetstar.
Tourism groups said on Wednesday the airlines were doing the right thing to ensure
the future competitiveness of Australia's aviation sector.
Tourism & Transport Forum executive director Olivia Wirth said the cuts were the
"sad reality" of the global financial crisis and came as 63 per cent of their
membership forecast staffing changes would need to be made to their businesses.
"The outlook is bleak and businesses are taking steps now to ensure they can deal
with the drop in demand," Ms Wirth told AAP.
"Airlines are no different."
Where the cuts would end was anyone's guess, Australian Tourism Export Council
managing director Matt Hingerty said.
"Anybody who says they know when this is going to end or what the full impact on the
industry is going to be is lying," he said.
Airlines weren't charities and the figures that had prompted the decisions were
there for all to see, he said.
Tourism Australia managing director Geoff Buckley said the industry was seeing a
small part of a broader, global response.
"I don't think it's over yet," he told AAP.
"I think there will be all sorts of adjustments as the market adjusts."
But seat capacity into Australia was still forecast to grow in 2009-10, he said.
Meanwhile, Treasurer Wayne Swan said the government's nation-building and jobs
package would help the airline industry.
"One job lost anywhere is a big loss for the individual, and when many are lost,
it's a big loss for the country," he told reporters in response to Virgin Blue's
announcement.
Mr Swan said there had been a marked contraction in the international economy in the
past few weeks, especially in Japan, Europe and the US.
"All of that means that we must here do all within our power to boost our local
economy and cushion it against these international events."
Transport Workers Union national secretary Tony Sheldon said Virgin staff were
worried but the union was confident the airline could ride out the tough times.