Qantas lay-offs show tourism industry grappling with influence of AI

Qantas has a long history of connecting Australians. Founded in outback Queensland more than a century ago, it began as a way to link isolated outback communities across a vast country. From those bush beginnings, it grew into Australia's national carrier.

But the business behind the familiar red tail is changing.

Qantas plans to cut 850 corporate jobs as it enters a deal with global technology and consulting giant Accenture, with the work to be delivered predominantly from India.

The roles are largely back-office positions in Sydney, and include finance, human resources and marketing.

Chief executive Vanessa Hudson said the changes will modernise the airline, simplify its operations and accelerate the use of artificial intelligence.

Hudson says the systems need an overhaul if the airline is to keep pace with a rapidly changing industry.

But the Australian Services Union has challenged the airline's explanation, accusing it of using AI as a justification for shifting Australian jobs offshore.

The announcement marks a significant shift for the company, but it also reflects the pressures facing an industry that has had little time to catch its breath.

The COVID-19 pandemic brought tourism to a standstill, and Qantas received $2.7 billion in taxpayer subsidies from the Morrison government.

Then, just as visitor numbers were starting to rebuild, a fresh wave of challenges arrived.

Rising fuel costs, driven higher by disruption to global oil supplies amid the war in Iran, are putting pressure on airlines. Higher wages, insurance premiums and airport charges are adding to the cost of doing business, while staff shortages continue to affect parts of the tourism sector.

Despite those pressures, Qantas is still making a lot of money, reporting almost $1.3b in full-year profits in August (although that is down from last year by 19.7 per cent).

But airlines are also facing pressure from the other side of the equation: passengers.

With household budgets under strain, Australians are becoming more selective about how they spend their money.

Research by the Tourism and Transport Forum found just 54 per cent of Australians planned to take a mid-year break in 2026, down from 74 per cent in 2024.

Tourism Research Australia figures show domestic overnight trips fell 2 per cent in the June quarter, compared with the same period last year, while the number of nights spent away also declined.

And the impact is already being felt in the air.

Qantas has cancelled its Adelaide–Mount Gambier route indefinitely and will suspend flights between Melbourne and Alice Springs from next week, meaning there are now no direct flights between the two cities. It has also temporarily suspended flights between Melbourne and Hamilton Island and Coffs Harbour, blaming high fuel costs and a lack of demand.

For tourism destinations, those decisions matter.

Qantas is a major part of the machinery that keeps Australian tourism moving. Its flights bring international visitors into the country and connect domestic travellers with destinations far beyond the capital cities.

Qantas told a Senate inquiry last year it operated 102 routes to 62 regional towns and centres, carrying more than nine million passengers to and from regional and remote Australia each year.

Bonza's collapse in 2024 wiped out dozens of routes, including 30 regional connections that had no other airline servicing them, according to the Australian Competition and Consumer Commission (ACCC).

Regional airline Rex also went into administration that year, after expanding into capital city routes.

For tourism businesses, those connections are vital. A visitor arriving in Cairns, Longreach or Mount Isa brings potential business for hotels, restaurants, tour operators and local attractions.

But when flights disappear, become less frequent or cost more, destinations can become harder to reach. Travellers may choose somewhere else, leaving local businesses with fewer bookings and less money flowing through their communities.

For businesses already operating on tight margins, the promise of greater efficiency is attractive. But the move to AI also raises questions about jobs, customer service and how much of the travel experience will eventually be handled by machines.

A 2026 survey by the International Air Transport Association (IATA) found almost half of passengers had used AI to help plan travel.

That included searching for flights to a particular destination, finding cheap fares and getting ideas about where to go.

Travel businesses are also using the technology. A survey by US publication Travel Market Report found three in four travel advisers are using AI to create content, research trips and communicate with their clients.

Qantas is a snapshot of an industry in transition. It has to compete, modernise and manage rising costs. But its decisions extend well beyond the airline itself, particularly in a country where tourism depends so heavily on flights.

The tourism industry has survived the pandemic and rebuilt much of its visitor market. Now it faces another test: keeping travel affordable, businesses afloat and destinations accessible as the cost of getting people around the country continues to rise.