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Aviation Is A strategic Priority For Tourism Australia

World Travel – Airlines

Open Eyes Opinion {source: Tourism Australia}

Australia

Aviation is a strategic priority for Tourism Australia in achieving the industry’s Tourism 2020 strategy targets. Australia’s international aviation capacity needs to grow by 40–50 per cent to reach the Tourism 2020 goal of growing overnight expenditure from China from its current A$5.3bn to over A$13bn by 2020.

 

International aviation capacity growth to Australia

The last 20 years

Over the last 20 years, international aviation capacity to Australia has grown from 7.7 million inbound seats in 1993 to 21.0 million in 2013 or an average annual growth rate of 5.1 per cent. Growth has been driven from New Zealand, Middle East, Southeast Asia (Singapore, Malaysia, and Indonesia), China (including Hong Kong) and the USA.

 

Chart: International capacity growth to Australia

 

Recent growth

International capacity growth to Australia slowed during August 2014, up four per cent compared to eight per cent growth during the 12 months to 31 August 2014. Growth continues to be driven from Malaysia and Indonesia. During April 2014, capacity from China declined for the sixth consecutive month. Despite capacity growth slowing, average load factors on all flights into Australia also declined one percentage point to 74 per cent in August 2014 suggesting slower growth will continue in the coming months.

 

Chart: Growth in aviation seat capacity into and around Australia by key markets

How are we tracking on Australia’s Tourism 2020 aviation targets?

Australia is tracking ahead of expectations to achieve its Tourism 2020 aviation capacity targets, with around 80 per cent of the additional seats required already occurring in the first five years (from 2009 to 2014) of the 10-year plan. Japan, Korea and India are the only markets tracking behind the Tourism 2020 targets and will be Tourism Australia’s aviation development priorities during 2014-15.

Recent news

  • Virgin Australia purchased the remaining 40 per cent stake in Tigerair Australia for A$1.00 in October 2014. Tigerair Australia will retain its brand and could potentially launch short haul international services from Australia. Virgin Australia will be looking to turn around the airline’s profitability, with the airline largely being unprofitable since it launched services in 2007.
  • ASEAN open skies is progressing with Indonesia and the Philippines reportedly the last two of the ASEAN countries to sign-up to establish a Single Aviation Market for the region, which is scheduled to be fully implemented by the end of 2015. This agreement is expected to improve access within these countries initially but then Australia is likely to benefit as more consumers become more familiar with travelling and start looking to travel further abroad to places like Australia.
  • A number of airlines have recently introduced the B787 aircraft into the Australian market during 2014, improving the operating economics of these routes. Airlines include: Air New Zealand, United Airlines, Qantas, Jetstar, and Qatar Airways. Scoot is also looking to deploy the aircraft on all its Australian services (Perth, Sydney and Gold Coast) by April 2015. Japan Airlines is also considering deploying the B787 aircraft on its Sydney services.
  • Aviation alliances continue to evolve. Recent examples include: expanded Emirates and Jetstar/Qantas agreements; expanded Virgin Australia and Delta Air Lines partnership in the USA; and a new Air New Zealand and Singapore Airline’s agreement. Airlines are also expanding partnerships with hotel reward programs (e.g. AirAsia BIG and HHonors) and events (e.g. Emirates and Australian Open tennis).
  • Tigerair Taiwan became Taiwan’s first Low Cost Carrier (LCC), launching services in September 2014. This now means all North Asian markets have a low cost carrier (LCC). However, LCC penetration in North Asia remains much lower than Southeast Asia (around 10 per cent compared to 60 per cent) and liberalisation can be seen as a limiting factor. Regardless the outlook for LCCs in North Asia is positive as they expand services and partnerships.

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