Improvements scheduled for Qantas' FF IT program has been cancelled. Photo: Peter Braig
Qantas has shelved a project to replace a 26-year-old IT system that supports almost 10 million members of its frequent-flyer program because it would cost another $40 million to complete.
The decision highlights the pressure on Qantas to slash costs to retain a cash buffer and keep up the fight in the domestic market against a rejuvenated Virgin Australia.
Qantas has already forked out $20 million on the NewGen program begun in early 2010 to replace the existing frequent-flyer IT platform called Profile. The new system was originally due to be rolled out within 18 months.
Insiders have questioned the benefits of the work on the new program so far but Qantas said the old system had been enhanced by incorporating elements from NewGen. Contractors were kept on until October to ensure part of the new project was bolted on to the old Profile system.
Those full-time Qantas employees working on the new system have since been sent to other projects within the frequent-flyer business such as the Qantas Cash and Acquire programs.
Qantas insists that, despite its age, the ''existing system is running well with the enhancements we've made'', although it concedes that a ''new system is something we'll need to consider in the future''.
Staring at a first-half loss of up to $300 million, Qantas has outlined a plan to axe at least 1000 jobs within the next 12 months and strip out an extra $2 billion in costs over the next three years.
It also has a team of internal strategists working on a wide-ranging structural review, which will canvas the possibility of partial sales of assets such as the frequent flyer division and Jetstar. The airline has yet to decide whether it will bring in external advisers to work on the review.
Meanwhile, in an air travel IT incident, flights were delayed across Australia on Monday morning following technical problems affecting the air traffic control tower in Melbourne.
Melbourne Airport's website showed several flights by Qantas and Virgin Australia among those that experienced delays of around 30 to 45 minutes. That led to flights from Sydney to other destinations around Australia experiencing delays.
In an update at 12pm, Airservices said it had found a data fault in its digital tower technology system.
“We have identified the defect and the system has been reset,” Airservices said. “We will be closely monitoring the system throughout the afternoon to ensure it continues to operate normally.”
A spokeswoman for Airservices Australia said the control tower had lost power at one point, leading to all flights being temporarily suspended.
A Qantas captain addressing passengers on a delayed flight departing Melbourne Monday morning described the situation as "unprecedented".
"They tried to reboot the system a number of times without success," he said.
"They've gone back to a manual system for processing aircraft."
Flights returned to normal Monday afternoon.
- with Jamie Freed