CAPA, 4th Dimension and Flight Centre Travel Group release Australian Aviation and Airfare Analysis

Press Release

CAPA - Centre for Aviation, 4th Dimension and Flight Centre Travel Group are pleased to announce the launch of the third edition of the Australian Aviation and Airfare Analysis. The report is the most in-depth study of Australian aviation and air travel trends currently available in the market.

This year's edition includes several firsts:

  • The Australian Aviation and Airfare Analysis report is the most comprehensive study of Australian aviation and air travel trends available in the market.
  • The report includes analysis of international routes, benchmarking of inflight product, and a full-year study of the top 10 domestic routes.
  • Fares rose substantially in 2015, with Qantas Airways increasing fares by around 7% and Virgin Australia by 12%.
  • Adelaide-Sydney and Canberra-Sydney routes experienced the highest fare increases, particularly in business class.
  • Total year-on-year capacity growth at the start of 2016 was just under 2%, and market share changes between Qantas, Jetstar, Virgin, and Tigerair were minimal.
  • Further competition in the low-cost carrier space appears unlikely, with Tigerair below growth rate forecasts and Virgin Australia unlikely to expand its current fleet.

Speaking on the release of the latest edition of the report, 4th Dimension general manager Virginia Fitzpatrick said, "The travel industry as a whole has not been overly good at tracking fares, benchmarking and using the data for the benefit of the business or retail buyer. However, 4D and CAPA are confident the level of fare benchmarking and depth of analysis on the Australian aviation sector as published within the Australian Airfare and Aviation Analysis is here to stay. Looking ahead 4D and CAPA will expand the collation of airfare and aviation data to incorporate more regions as well as new entrants in the Low Cost Carrier market."

CAPA - Centre for Aviation executive chairman Peter Harbison said, "CAPA is delighted to again join with 4D and Flight Centre Travel Group to produce this milestone report. It is an invaluable tool for airlines, airports and those affected by air travel."

"The analysis monitors industry performance by regular comparisons of fares, against the context of broader developments. The report fills a key gap in the market intelligence available on airline pricing and capacity trends."

"With sound airline profitability and continuing low fares, the overall Australian aviation market is in a healthy equilibrium, and we look forward to assessing the market as it continues to develop", he said.

Key conclusions of the Australian Aviation and Airfare Analysis:

  • Fares rose substantially during 2015, with Qantas Airways increasing fares of around 7% compared to Virgin at 12% (albeit from lower published fare rates);
  • Adelaide-Sydney and Canberra-Sydney attracted the highest increases (particularly in business class during 2015;
  • At the start of 2016 total year-on-year capacity growth was just under 2% and market share changes between Qantas, Jetstar, Virgin and Tigerair did not move by more than +/- 1%, reflecting the subdued competitive position between the two groups - and the forecast is for flat capacity through the year;
  • Further competition in the LCC space appears unlikely with Tigerair at below trend for the growth rate Virgin Australia forecast to the ACCC when acquiring the airline, and is unlikely to expand the current fleet.

As a result of the significant competitive tension in the marketplace over the previous five years, the passenger experience has continued to improve. For Australian travellers the Qantas/Virgin Australia domestic duopoly continues to deliver the best and most affordable domestic travel experience worldwide.

Domestically, Australia is showing the first signs of a developing challenging operating environment - Qantas noted a softness in demand, related to the upcoming federal election and recent drop in consumer confidence. Economic activity continues to shift away from the resources sector placing particular pressure on Virgin's premium A330 product. Seat capacity is expected to remain flat, with forecasts now at or below 1% growth. This makes a disciplined approach to capacity management integral to sustainability over the next 12 months if either airline group is to continue to maintain a profitable position.

Report Background

The Australian Aviation and Airfare Analysis report is backed by a partnership between the Flight Centre Travel Group (FCTG) and CAPA - Centre for Aviation, with CAPA providing the aviation sector intelligence while by 4D Business Travel Consulting - a division of The Flight Centre Travel Group - provide airfare benchmarking analytics.

This is the third edition of the report, which compares airfare purchasing trends in 2014 (tracked and reported quarterly) against current year-to-date quarterly data for 2015 between Qantas Airways and Virgin Australia. The outcome of the analysis is by no means a complete representation of ticket prices for the entire Australian travel market, however FCTG's current market share represents 35% of Australia's retail travel sector and approximately 25% of the corporate travel sector providing a solid snapshot into fare trending.

Organisations with major commercial airline contracts have been removed from this research.

Media Contacts

4th Dimension Business Travel Consulting
Virginia Fitzpatrick, General Manager
+61 422 896 633

CAPA - Centre for Aviation
Blake Moore, Industry Analyst
+61 2 9241 3200

About CAPA - Centre for Aviation

Established in 1990, CAPA - Centre for Aviation is the leading provider of independent aviation market intelligence, analysis and data services, covering worldwide developments.

We offer an extensive range of information services developed by analysts covering the entire spectrum of commercial aviation at www.centreforaviation.com

CAPA also runs aviation and corporate travel summits globally, with full details at www.capaevents.com

Understanding aviation markets is our great strength and passion. Providing our CAPA Members, clients and partners with an unparalleled level of expertise and insight is our business. We offer an extensive range of information services developed by analysts covering the entire spectrum of commercial aviation.

About 4th Dimension Business Travel Consulting

The team at 4th Dimension (4D) provides procurement solutions to help companies generate more value from their spend on corporate travel. As the consulting arm of Flight Centre Travel Group's corporate division, 4th Dimension primarily works with clients in the mid-to-large market. 4D's advisors help businesses to develop tailored strategies to effectively benchmark and analyse travel programs, reduce costs, improve processes and secure direct savings when sourcing airline, hotel and car hire services.

Providing strategic sourcing guidance, strategic procurement including category management plans, comparative benchmarking analysis and detailed category spend analysis, the 4th Dimension approach challenges traditional travel management practices with more sophisticated procurement techniques. At the core of the 4th Dimension offering is comparative benchmarking based on broad data analysis.

Powered by 4D Analytics, 4th Dimension benchmarking is helping organisations to use 'big data' for deeper insights into behaviour analytics and spend analysis.

About Flight Centre Travel Group

After starting with one shop in the early 1980s, Flight Centre Travel Group (FCTG) has enjoyed remarkable growth to become a $13.5 billion business consisting of more than 30 brands. One of the world's largest travel agency groups, it has company-owned operations in 11 countries and a corporate travel management network that spans more than 85 countries. It employs more than 15,000 people globally and has a total of 2500 stores.

In 1995, FCTG was listed on the Australian Securities Exchange (ASX: FLT) and has been nominated for major industry awards in Australia and around the world. In addition to the flagship Flight Centre brand,

FCTG's other travel brands include:

  • Escape Travel
  • Student Flights
  • Travel Associates
  • Cruiseabout
  • Liberty Travel
  • Infinity Holidays
  • GOGO Vacations
  • FCm Travel Solutions
  • Corporate Traveller
  • Stage and Screen
  • cievents
  • Campus Travel