Flying high: domestic air routes recover
Passenger numbers have bounced back after the pandemic, but less competition is not so Bonza.
News that retirees are spending up on international travel have been matched locally, with a report showing that post-pandemic domestic aviation is in good health.
Passenger levels and capacity has returned to pre-COVID levels and prices have stabilised, but aviation fuel costs are up, and competition has declined with the exit of Bonza.
The ACCC’s latest Domestic Airline Competition in Australia report reveals that the major airlines – Jetstar, Qantas, Rex, Virgin Australia, and Bonza – carried nearly five million domestic passengers in March.
The airlines flew around 6.2 million seats, which was just below the seat capacity recorded in March 2019.
The ACCC has found greater seat capacity has contributed to lower domestic airfares, expressing the hope that this trend “continue as the airline industry returns to a more stable market”.
The report found that airfares spiked on some routes in February, probably due to the high demand caused by major events, including Taylor Swift’s concerts in Melbourne and Sydney, as well as a World Wrestling Entertainment show in Perth.
The report warns that the collapse of Bonza means less choice for travellers wanting direct flights to regional destinations.
Bonza played a key role in connecting regional hubs across the domestic network as it tried to stimulate demand on new routes not offered by other airlines.
However, Bonza is being investigated for possible trading while insolvent. The company’s directors are likely to be referred to the corporate regulator for investigation.
Creditors, including 323 staff and 71,399 customers, could walk away with nothing.
The number of domestic routes in Australia increased to 178 in March 2024, a net increase of 22 routes since 2019, in part thanks to Bonza.
“Since Bonza began operations, travellers benefited from more affordable airfares and the convenience of direct connections to various regional and holiday destinations otherwise not offered by other airlines,” ACCC Commissioner Anna Brakey said.
Some good news: budget airline Jetstar will launch direct flights between the Sunshine Coast and Cairns in December after Bonza demonstrated there was strong demand for the route.
Airline service reliability has improved in recent months but is still worse than the long-term industry average.
In March 2024, the industry cancelled 2.8% of flights, which represented an improvement from 5% in December 2023. Similarly, on-time performance across the industry was 77.2% in March 2024, improving from 63.6% in December 2023.
International travel has surpassed pre-pandemic levels with revenue passenger kilometres increasing by 13.8% compared to March 2019.
As at March 2024, total arrivals and departures to and from Australia was only 0.6% lower than in March 2019, but 24.6% higher than in March 2023.
There have been signs of strong activity, with international passengers in Perth Airport exceeding pre-pandemic levels in January and February 2024, while Melbourne Airport hosted a record 923,065 international passengers in March 2024.
The consumer watchdog says where a business enters voluntary administration, consumers’ ordinary legal rights can be affected, including outstanding credits, gift cards, refunds, and other reimbursements.
The impact will depend on what happens in the administration process.
The appointed administrator of Bonza is Hall Chadwick: 03 8678 1600 and bonzacustomers@hallchadwick.com.au. More general information about what happens when a business goes into administration is available on the ACCC website.
