Business Environment Profiles - Australia
Published: 24 April 2024
Aircraft kilometres flown
472 millions of kilometres
-3.8 %
This report analyses trends in the number of aircraft kilometres flown by domestic and regional airlines within Australia. Domestic aviation travel is predominantly used for recreational holidays, business purposes, and mail and freight transport. The data for this report is gathered from the Bureau of Infrastructure, Transport and Regional Economics.
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IBISWorld forecasts the number of aircraft kilometres flown by Australian domestic and regional airlines to rise by 7.2% in 2023-24, to 472.4 million kilometres. The COVID-19 pandemic and related travel restrictions have been fully lifted, fuelling a a gradual, but consistent growth in domestic and international plane travel. The price of airfares has trended downward after a surge in the immediate aftermath the pandemic. As airfares become more affordable, more Australians are opting to fly again, which has juiced domestic demand, enabling the overall number of aircraft kilometres flown to trend back towards pre-pandemic levels. Labour shortages are also expected to moderate over the year, easing pressure on major airlines, allowing more passengers to travel through airports, more often.
The expansion of low-cost airlines over the past two decades has heavily influenced aircraft kilometres flown within Australia. These airlines, including Jetstar and Tigerair, have given consumers the chance to fly more frequently. Jetstar and Tigerair have represented the low-cost businesses of Australia's largest airlines, Qantas and Virgin Australia. Yet, the pandemic collapsed demand for domestic airfares, and Virgin Australia retired the Tigerair brand in March 2020 amid the company's financial struggles and entry into voluntary administration. As restrictions have eased and demand has gradually rebuilt, Virgin Australia has re-entered the domestic market. In 2022, regional airline Rex announced it was expanding into the market for intercity airline travel. This announcement means that nine domestic routes are serviced by three competing airlines. These developments fuelled higher demand for air travel in 2022-23, stimulating demand through greater choice and lower airfares. The entry of a new budget airline, Bonza, in 2022-23 further aided this process.
Prior to the pandemic, Qantas and Virgin focused on optimising seat capacity, meaning less profitable flights were cut from schedules. This practice, also known as route optimisation, resulted in the number of aircraft kilometres flown creeping downwards in 2017-18 and 2018-19. This result came despite solid demand growth for domestic tourism, with a weak Australian dollar discouraging international travel. Route optimisation constrained supply and heightened the price of airfares, which resulted in many Australians using cars as their mode of transport instead of flying in a plane. As travel restrictions eased in 2022, labour shortages and the inflated price of jet fuel have constrained Qantas and Virgin's capacity to service rising demand, which has led to an uptick in cancellations and delays. This trend slowed an otherwise strong recovery in 2021-22 and 2022-23. Overall, aircraft kilometres flown are on track to decrease at a compound annual rate of 3.8% over the five years through 2023-24.
IBISWorld expects the number of aircraft kilometres flown by Australian domestic and regional air...
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