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Qantas is cutting planned domestic capacity growth in H2 of the year due to slower than expected demand. The airline said it was cutting domestic capacity growth to between 0.5 and 1% for the second half, from 2% previously, due to "changed demand conditions". "Some softness in demand, related to the upcoming federal election and recent drop in consumer confidence in Australia, began to emerge over the peak Easter and school holiday period in late March," the airline said, referring to a likely July 2 general election date. It added that the weaker conditions were continuing. Qantas also said it has cut capacity between Australia and the US by removing three Sydney-Los Angeles flights and re-directing capacity to Singapore and Hong Kong in response to demand in those markets. Those changes would result in total seat capacity growth between Australia and the US of 6%, compared to 9% growth earlier. <br/>

There is a new but secretive price war raging among Australia's domestic airlines. Stage two in this battle has kicked in as airlines are now cutting back on capacity growth. Monday Qantas was the first to fess up to clipping its own capacity growth wings. It had planned to add 2% more seats in the January-June period, in its combined Qantas and Jetstar domestic brands. This growth target has been reduced up to 75%. Virgin doesn't give capacity numbers but industry sources say it has also been paring back growth in the number of seats on offer. Qantas domestic flights booked for April had fallen about 8% and flights for May had dropped about 15% compared with the same period last year. The announcement from Qantas ignited fears the Australian airline duopoly might revisit the bad old days of a few years back when irrational fare pricing and oversupply of seats cost both the players hundreds of millions in profits. <br/>