According to the ACCC’s latest Airline Competition in Australia report, the number of passengers flying domestically in April 2022 was the highest since the pandemic began. However, jet fuel prices have surged to record levels and airfares are expected to rise soon.
The month of April was particularly busy for Queensland holiday destinations. It is estimated that the number of passengers traveling Canberra-Gold Coast exceeded pre-COVID levels by 193 percent, and that the number of passengers traveling Melbourne, Adelaide, and Sydney exceeded the pre-pandemic average.
Due to COVID-related workforce shortages and staff absences, on-time departures decreased to 62 percent, the lowest level on record.
As a result of record high fuel prices, airlines have been forced to revise their capacity forecasts despite the strong domestic travel economy.
In May, jet fuel prices hit an all-time high. A subsequent revision to Qantas’ capacity forecast for July and August was 107 to 103 percent of pre-pandemic levels.
However, Virgin, Qantas and Jetstar reported that they expect to be flying at or above pre-pandemic levels in the coming months. Qantas has also said that demand for business travel is recovering faster than expected, with small business demand above pre-pandemic levels and larger corporate traffic at 85 per cent in May.
It is expected that Bonza, an ultra-low-cost carrier, will launch operations in the second half of 2022 and operate 27 routes, the majority of which are currently unserved. As part of its monitoring of how existing airlines react to this new competition, the ACCC is asking airlines for information about how they will respond to Bonza in terms of their strategic plans.
Following higher prices over Easter, discount airfares briefly reached an 11-year low. There is, however, a likelihood that airfares will rise in the near future.
Despite the industry’s near-recovery, some routes have lacked passenger traffic, and airlines continue to overhaul their networks. In late May, Rex stopped operating Sydney-Canberra, an intercity route. The Australian Government’s Regional Airline Network Support program will end in late June, so the airline will also be leaving some regional routes.