Qantas dominated 1990s/2000s tourism boom from Japan, but is disadvantaged in current Chinese influx

The shape of Australian tourism has undergone structural change over the past decade to the detriment of Qantas. In the 1990s and 2000s Qantas dominated a very large Australia-Japan market, made possible due to its cost base being significantly lower than those of Japanese airlines. Qantas accumulated over 11% of revenues from Japan alone.

But as Japanese capacity halved between 2005 and 2013, Chinese capacity tripled and overtook Japan in 2011 as Australia's largest North Asian market. Qantas' fortunes have changed: its higher cost base compared to Chinese peers (and limited network) means it has less than a 20% share of the Australia-China market. Qantas today still has more capacity to Japan than China. While there are growth opportunities for Qantas in China, they are limited. Qantas will be overshadowed by Chinese carriers, and Qantas will operate in the shadow of the glory days of the Japan boom.

The context is Australian but the implication is global - and profound: full-service carriers with a lower cost base and the advantage of what will be the world's largest domestic market can shift the balance of traffic.