Grounded by high fares

Costly flights weigh on domestic tourism

OUTSPOKEN Sydney Airport chief executive Geoff Culbert has warned high airfares and limited capacity are holding back domestic tourism.

The warning came as the airport released its February passenger numbers, showing domestic traffic was still a good distance below pre-Covid levels at 82.9 per cent.

Mr Culbert said the domestic passenger recovery at Sydney Airport had been “stagnant” since last April.

“Reduced capacity and high airfares are impacting people’s travelling habits,” he said.

Melbourne and Brisbane airports were also seeing “flat” domestic travel numbers, with December and January figures below those in the preceding months.

February saw a further decline, but it was traditionally the month with the lowest figures due to the fact there are only 28 days in the month.

Brisbane Airport head of public affairs Stephen Beckett said the limited growth in domestic travellers since April last year could be attributed to several factors.

“It’s not just the result of reduced capacity due to fleet and crew challenges, we’re also seeing the impact of interest rate and cost-of-living pressures,” Mr Beckett said. “International travellers also buy tickets on domestic flights. Until Australia’s inbound market totally recovers, we won’t see a full domestic recovery.”

The warnings came after the Australian Competition & Consumer Commission revealed falling passenger traffic numbers in the typically busy summer period, despite rising airline capacity.

In January, Qantas was back to 102 per cent of 2019 capacity, Virgin Australia was at 96 per cent, and Jetstar at 84 per cent.

“While the pattern of monthly domestic passengers is similar to 2019, there are still fewer people flying than there were prior to the pandemic,” said the ACCC airline monitoring report. “The recovery in passenger numbers continues to remain at or below 90 per cent since it reached a high of 97 per cent in June 2022.

“In contrast to passengers, domestic seat capacity has increased in recent months to reach 5.9 million in January.”

The imbalance meant flights were becoming less full, with the 75 per cent load factor in January the lowest since May last year.

“Only two routes reported a load factor of 90 per cent or higher in January, in contrast with 17 in October 2022, and seven in January 2019,” the ACCC report said. “The two routes were both interstate routes linking popular tourist destinations the Sunshine Coast and Ballina-Byron Bay to separate capital cities.”

Domestic airfare data for March showed there were few falls in prices despite the boost to airline seats. Bureau of Infrastructure, Transport and Regional Economics statistics had business class fares 15 per cent higher than a year ago, and best discount seats were up 5 per cent.

Restricted economy continued to track at a similar rate to what was available towards the end of last year, and almost 13 per cent higher than March last year.

On a more positive note, Chinese visitors were starting to return in volume to Australia, after the reopening of mainland China in January.

Sydney Airport now ranked China as its fifth biggest source of international travellers, up from seventh a month ago.