Australians look set to have good value overseas flights in coming months but may pay more for regional travel when Covid lockdown restrictions are eased.
The federal government is yet to repeal the March 2020 ban on travelling overseas for a holiday but the flying kangaroo airline is confident 80 per cent of the working age and adult population will be fully vaccinated before Christmas.
The Covid pandemic has seen Qantas cement its market share, to the point it had 74 per cent of the domestic market by March 2021 as its key rival Virgin Australia struggled to survive.
Australians look set to have good value overseas flights but may pay more for regional travel when Covid restrictions are eased
Qantas, however, isn’t nearly as dominant in the international space with Singapore Airlines, Air New Zealand and British Airways set to provide plenty of competition.
IBISWorld aviation analyst Tom Youl said Qantas was likely to offer good deals in late 2021 and early next year to get Australians flying overseas again, after nearly two years of being kept at home.
‘That’s a potential strategy. There is a pretty good case that discounts are the way to go to invigorate travel again,’ he told Daily Mail Australia.
‘We’re talking about that international market, getting people back in the air and building up that scale, with scale being vital to airline profitability.’
During the last financial year, Qantas made a full-year after tax loss of $1.728billion with international holidays banned and state borders closed, on and off.
From the end of 2020, after Melbourne emerged from its big lockdown, Qantas offered discount domestic airfares to lure travellers, before prices went up again.
Qantas is now taking bookings from international flights before they resume in mid-December with Sydney to Singapore among the first to be available (pictured is the Rain Vortex indoor waterfall at Changi Airport)
Qantas plan for international travel
MID-DECEMBER: Singapore, the United States, Japan, United Kingdom and Canada using Boeing 787s
New Zealand if travel bubble reopened with Australia
Airbus A330s, and 737s and A320s for services to Fiji
FEBRUARY 2022: Hong Kong
APRIL 2022: Bali, Jakarta, Manila, Bangkok, Phuket, Ho Chi Minh City and Johannesburg
APRIL 2022: Budget subsidiary Jetstar to resume international flights
JULY 2022: Sydney to Los Angeles on A380s
NOVEMBER 2022: Sydney to London via Singapore with Darwin instead of Perth as a possible transit point
Mr Youl said that strategy was likely for overseas flights.
‘When domestic flights picked back up again, there were cheap flights that became available but from there we saw prices pretty steadily increase, airfare levels a little bit higher than what we saw prior to the Covid pandemic,’ he said.
‘We’re likely to see a similar playbook implemented by Qantas.’
Before the pandemic, Australians were offered good value airfares as Virgin Australia made losses year after year to take away market share from Qantas.
Virgin is now under the control of American private equity group Bain Capital which means it is more focused on cutting costs than challenging the dominance of Qantas.
Regional carrier Rex has since moved to the more lucrative Sydney, Melbourne and Brisbane routes, as Qantas competed more actively in the less profitable regional routes in a bid to become the dominant player outside the capital cities.
With competition reduced on regional routes, prices were expected to increase as Covid restrictions within Australia were gradually eased.
‘There’s going to be reasonably strong demand for domestic travel even when international borders open up,’ Mr Youl said.
‘In terms of the aviation space, there’s going to be strong demand there so there’s a pretty strong case for domestic airfares, particularly to regional areas, being elevated over the next year or two.’
Some overseas flights are cheaper than flying to parts of regional Australia.
An economy one-way Qantas flight from Sydney to Singapore on December 18 on Thursday was available for $741.
Some overseas flights are cheaper than flying to parts of regional Australia. An economy one-way flight from Sydney to Singapore on December 18 on Thursday was available for $741
By comparison, a return Sydney to Broken Hill flight on Rex in September and October costs $778, which is certainly a lot more expensive per kilometre than Singapore
By comparison, a return Rex flight from Sydney to Broken Hill, in the far west of New South Wales, in September and October costs $778, which is certainly a lot more expensive per kilometre than Singapore.
Qantas announced on Thursday that from mid-December, it would fly from Australia to first-world destinations with high vaccination rates including the United States, Canada, the UK, Singapore, Japan and New Zealand, along with Fiji.
The resumption of international flights is also based on National Cabinet scrapping caps on returning Australian travellers who are fully vaccinated.
Qantas chief executive Alan Joyce admitted on Thursday a requirement for fully vaccinated Australians to quarantine for 14 days upon their return from overseas was a threat to profitable international travel.
Qantas chief executive Alan Joyce admitted on Thursday a requirement for fully vaccinated Australians to quarantine for 14 days upon their return from overseas was a threat to profitable international travel
‘One of the biggest unknowns in all of this is the quarantine requirements for fully vaccinated travellers entering Australia and there are a number of trials that are starting around the country,’ he said.
‘If it is still 14 days in a hotel, demand levels will be very low and this schedule won’t be feasible.’
Qantas announced flights to cities in Asia and South Africa with low vaccination rates and high Covid-19 case numbers would not restart until at least April 2022.
Those destinations include Bali, Jakarta, Manila, Bangkok, Phuket, Ho Chi Minh City and Johannesburg.
What are the four phases of opening up?
A. Vaccinate, prepare and pilot (from July 14)
Arrival caps cut in half to 3,035 a week; early, stringent and short lockdowns if outbreaks occur; trials of seven-day home quarantine for vaccinated arrivals in South Australia; medicare vaccination certificates available on apps like apple wallet
B. Post vaccination phase (when 70 per cent are jabbed, expected late this year)
Lockdowns less likely but possible’; vaccinated people face reduced restrictions; caps for unvaccinated arrivals increased; a larger cap for vaccinated arrivals with ‘reduced quarantine requirements’; capped entry for students and economic visa holders
C. Consolidation phase (when 80 per cent are jabbed, time not announced)
Lifting all restrictions for outbound travel for vaccinated travellers; no caps for vaccinated arrivals; increased caps for students and visa holders; more travel bubbles being set up with countries such as Singapore; booster shots rolled out
D. Final phase (percentage or time not announced)
Uncapped arrivals for vaccinated people without any quarantine and uncapped arrivals for unvaccinated people with testing before departure and on arrival
Why Australians will get good deals on overseas flights as Qantas restarts international travel