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Australia’s commercial airlines are operating at a fraction of their pre-pandemic capacity, but there is growing optimism within the industry as demand for interstate travel increases.
The Australian Competition and Consumer Commission (ACCC)’s second ‘Airline Competition in Australia’ report, released on Thursday, shows total passenger numbers for the month of September 2020 were 87 percent lower than September last year, and airline industry revenues were commensurately lower.
However, with signs that all states now have Covid-19 under some level of control, and with key domestic borders opening up, airlines are increasing capacity to meet pent-up travel demand.
“Covid-19 has created some of the most difficult market conditions in Australian aviation history, but we are beginning to see cautious optimism among airlines about increasing passenger numbers in the months ahead,” ACCC Chairperson, Rod Sims, said.
“The bulk of the flying in Australia this year has been within states, mainly in Queensland and Western Australia.
“But with borders now re-opened, interstate travel will start to look more like it did pre-Covid, particularly with the return of the all-important Sydney-Melbourne-Brisbane golden triangle routes.”
According to Sims, although the international border will remain closed for the foreseeable future, the demand for domestic holiday and family-reunification travel is expected to drive recovery.
He said the industry’s optimism was necessarily cautious and the path to recovery fragile, as was seen with new Covid-19 cases in South Australia during November.
Qantas and Rex gained market share in September at the expense of Virgin, but the report notes the three main carriers’ share of passengers may be volatile, given the depressed state of the industry.
“We expect airlines’ market shares will move around a bit in the short term as the industry continues operating at reduced capacity. At this stage, it is difficult to know exactly how competition will evolve as the industry emerges from this period,” Sims said.
The report outlines a number of significant developments in the airline industry in recent months, including the finalisation of the sale of Virgin to Bain Capital.
Virgin has announced plans to position itself as a mid-market carrier with a business product, although several aspects of its service offering are currently under review.