Qantas will axe all 35 of its ground-handling staff in Hobart as it shifts the operations of services to the Tasmanian capital to its regional offshoot, QantasLink, sparking accusations that it is downgrading operations to the state.

The airline will stop operating its Boeing 737 aircraft on flights to Hobart from the mainland from the middle of April, and replace them with QantasLink’s smaller 125-seat Boeing 717s.

However, the frequency of services to the mainland will rise by an extra daily return flight between Hobart and Melbourne.

Qantas told the 35 ground staff in Hobart today that their roles would be made redundant, with its regional offshoot seeking contractors to perform the ground-handling work at the city's airport.

The airline said the changes were about ‘‘making sure we have the right aircraft on the right routes in support of leisure and business travel opportunities between Tasmania and the mainland’’.

QantasLink will recruit 30 flight attendants and 15 pilots who will be based in Hobart.

But Tasmanian MP Andrew Wilkie said the job cuts were an example of ‘‘another alarming downgrade of Tasmania’’ in the airline group’s network.

“No wonder Qantas is in trouble financially. It’s effectively abandoning destinations, axing staff and patching it up with subcontractors,’’ he said.

“When people fly Qantas they expect just that, not a succession of subcontractors.’’

Qantas outlined plans last month to axe at least 1000 positions from across the company, including Jetstar, over the next year. It has not revealed what part of the business will be hit hardest by the job cuts, other than to say that it will be a staged process.

Last month Qantas sought voluntary redundancies from domestic cabin crew, engineering support staff and managers but has yet to reveal the number of staff who applied.

With it facing a loss of up to $300 million in the first half, Qantas is trying to cut the cost of its premium domestic operations to within 5 per cent of Virgin’s by 2015, down from about 10 to 15 per cent at present.

As well as the job cuts, it plans to strip out an extra $2 billion in costs in the next three years.
It is also considering partial sales of the Frequent Flyer loyalty program and Jetstar, and outright sales of other businesses such as freight, as part of a company-wide strategic review.

Last week credit-ratings agency Moody’s joined Standard & Poor’s in downgrading Qantas to junk status, citing fierce competition from Virgin Australia.

Shares in Qantas slipped 2 per cent to $1.0975 in late afternoon trading.