Holiday travel drives domestic airline recovery

The message to travel around Australia seems to be working, with figures showing the growing number of domestic tourists has helped many airlines in their recovery from the COVID-19 pandemic.

Increased consumer confidence, lower airfares and greater competition between airlines has helped drive the recovery of Australia’s airline industry in recent months, according to the Australian Competition and Consumer Commission’s (ACCC) fourth Airline Competition in Australia report.

The report shows total passenger numbers in March 2021 were 55 per cent of pre-pandemic numbers, up from 41 per cent in December 2020.

Read more: Trans-Tasman travel bubble failed to inflate

The airlines have reported continued growth since March 2021 and had forecast a return to pre-pandemic levels of flying early in the second half of 2021.

However, recent outbreaks and subsequent border closures are likely to delay this time frame.

The Australian government’s Tourism Aviation Network Support (TANS) program that was announced in March subsidised 800,000 half-price tickets to 15 destinations and helped stimulate demand for holiday travel. 

Read more: Australia’s biggest tourism concerns

ACCC chair Rod Sims said that while TANS only applied to certain routes, Qantas, Jetstar, Virgin and Rex ran a number of overlapping promotions at the same time to encourage more people to fly.

“Prior to the recent Victorian outbreaks, the domestic airline industry had experienced relatively fewer and less significant disruptions for a number of months, and the combination of cheaper airfares and growing consumer confidence to travel interstate was critical to the recovery,” he said.

While airline expectations may have been downgraded since the Victorian lockdown from late May, the Qantas Group had previously forecast capacity would reach 95 per cent of pre-pandemic levels by June 2021, with both Qantas and Jetstar expected to exceed 100 per cent in 2021-22.

Virgin had forecast that its capacity would reach 85 per cent of pre-pandemic levels by mid-June 2021.

Read more: Government proposes international travel trial

Rex has expanded its capital city reach and will be operating six routes connecting Sydney, Melbourne, the Gold Coast, Adelaide and Canberra.

In response to Rex’s promotional entry airfares across the new routes, Qantas, Jetstar and Virgin have been running competitive sales that have put downward pressure on prices. Consumers flying Sydney-Canberra may benefit the most as Qantas had been the only operator on the route since Virgin withdrew its service in March 2020.

“The impact of increased competition can be seen on all of Rex’s new intercity routes, including Sydney-Melbourne where airfares fell to their lowest level in a decade following Rex’s entry,” Mr Sims said.

Growing competition on capital city routes means more passengers have more choice. Based on March 2021 figures, 18 per cent of Australian domestic passengers flew on routes where there was a choice of three airline groups, compared to the pre-pandemic figure of 1.5 per cent. This number is expected to have increased since March as Rex has now launched more services.

“Passengers flying Melbourne-Gold Coast, Melbourne-Adelaide and Sydney-Gold Coast now have a choice of four airlines, as Qantas, Jetstar, Virgin and Rex are all operating on the routes,” Mr Sims said.

How many domestic holidays have you taken this year? How many do you have planned for the remainder of the year? Why not share your thoughts in the comments section below?

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Written by Ben



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