Business & Investment

Australian airlines prepare for price competition as Reuters bring new challengers to market

© Reuters. File photo: Qantas planes can be seen at Kingsford Smith International Airport after the coronavirus outbreak in Sydney, Australia, on March 18, 2020.Reuters / Lauren Elliott


Jamie Fried

Sydney (Reuters)-Australia’s domestic aviation industry is price-competitive as new entrants to the jet market challenge incumbent Qantas and Virgin Australia, dominated by state border closures during a pandemic. We are preparing for it.

Regional Express Holdings Ltd (Rex) is expanding its main routes, with low-cost startup Bonza next year.

For the first time, the two companies have brought new competition to the market since Virgin acquired the independent low-cost carrier Tigerair Australia in 2013. Low fares like Rex’s one-way A $ 69 ($ 49) on the new Sydney-Brisbane route cut prices for other companies.

“There has never been three large jet players in this market for a long time,” said Peter Harbison, Honorary Chairman of the CAPA Aviation Center, at a conference hosted by the company. “Who is the winner of all these? Australian travelers.”

The domestic market, which has dropped to 17% of pre-COVID passengers in October when Sydney and Melbourne were blocked, is on its way home as the state sticks to plans to open borders despite the threat of Omicron variants. It is in.

According to Qantas data, airlines have a 7% market share of the currently closed Tigerair in the domestic market, which has historically generated an annual profit pool of A $ 1 billion ($ 711.8 million). Are competing for each other.

Qantas expects to return to pre-pandemic domestic production capacity by January and exceed it by April. We are aiming for a market share of 70% from the previous 62%. Qantas CEO Alan Joyce said the airline is “competitive to protect our lawn” with the best products and fares.

Australian competition regulators said Tuesday that they are closely monitoring capacity and pricing, but analysts said the unusual trading environment made activities anti-competitive or part of a recovery plan. He said it could be more difficult to prove it.

Qantas wants to generate cash, return idle planes and staff to the air, rather than making immediate profits, and says it has natural benefits such as a powerful loyalty program.

During the pandemic, we launched nearly 50 new domestic routes. According to CEO Jayne Hrdlicka, Virgin is also adding routes like Perth-Launceston to maintain about one-third of Tigerair’s market share. Rex Vice Chairman John Sharp (OTC :) said his airline will add planes and expand into larger cities, while Bonza CEO Tim Jordan said Jetstar was by Qantas. Given that he owns, he said he believes in a profitable niche as an independent low-cost carrier.

“It’s about new growth, new opportunities, new markets,” Jordan said of Bonza’s plans. “It’s not about stealing shares from someone.” ($ 1 = 1.4049 AUD)

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Australian airlines prepare for price competition as Reuters bring new challengers to market Australian airlines prepare for price competition as Reuters bring new challengers to market

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