BITRE June 2019 domestic aviation statistics: weak demand

[Melburnian1]

While there were 21 weekdays in June 2018 compared to 20 in June 2019, the BITRE June domestic airline statistics show weak demand. (AFFer dajop very kindly reminded me a couple of months ago that it's important to note that the number of weekdays can be a contributing factor.)

Population in Oz is growing by about 1.7 per cent per annum, but in June 2019 compared with June 2019, the number of air passengers only rose by 0.1 per cent.

Melbourne - Sydney passenger numbers fell a large 3,3 per cent, Brisbane - Sydney was down 1 per cent and Brisbane - Melbourne declined 2.4 per cent.

So even accounting for one fewer weekday, demand has not risen in line with population growth.

It's probably fair to say demand is 'soft.'

Six of the top 10 routes showed passenger decreases when comparing the two Junes.

The two main routes ex OOL showed some rise, as did those ex HBA but CNS routes to SYD and MEL dropped sharply.

In the year to June 2019, there was only a 0.3 per cent rise in passengers carried around Australia.

Load factors in June 2019 fell compared with June 2018, although as usual that doesn't reveal anything about yields:

https://www.bitre.gov.au/publications/ongoing/files/Domestic_aviation_Jun_2019.pdf

Not a great story if one was an airport owner. Much of their revenue is from non-aeronautical items such as retail and car park revenue, but these will drop if passenger numbers are fewer, and in time there may be downwards pressure on the outrageous rents demanded.

JohnK might well link rising domestic air fares to this lower demand on key routes.

I don't regard it as "cheap" when QF advertises return SYD - MEL fares at A$398. And many pay far more than that, especially businessmen and women who need to book at short notice.

 

[odysseus]

I had a similar thought, that it's supply constraints at the old prices.

I'm looking at a Sunday SYD-MEL flight 4 months out. Over a couple of months, the base price for most of the day aside from 7 a.m./8p.m. is $225! Similarly I've noticed the special fares for SYD-ADL are 20% higher than earlier this year.

Of course demand will fall when price rises are so great. Demand isn't inelastic. And given the price rises a few per cent down is easily understandable, given the economy hasn't been booming for many years.

 

[Saab34]

Tiger has pulled back out of Cairns compared to last year so that’s probably a large hit as they do essentially grow the market numbers quite rapidly when they expand, and when they pull back the next season obviously that growth disappears.

There would be some election washout declines there also.

Avalon isn’t on the list do they included this in the main cities? I don’t think that’s right and they should be set out seperate unless JQ has an issue reporting numbers.

 

[Melburnian1]

Tiger has pulled back out of Cairns compared to last year so that’s probably a large hit as they do essentially grow the market numbers quite rapidly when they expand, and when they pull back the next season obviously that growth disappears.

There would be some election washout declines there also.

Avalon isn’t on the list do they included this in the main cities? I don’t think that’s right and they should be set out seperate unless JQ has an issue reporting numbers.

Sabb34, For the AVV domestic routes, JQ is now the only operator (a few years ago TT as it is now was running to SYD from AVV.)

This explains why it doesn't feature:

Individual routes shown are restricted to those with an average exceeding 8 000 passengers per month over the previous six months where two or more airlines operate in competition. For the month of June 2019, there were 65 such routes.

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I don't know why the BITRE chose '8000 passengers' (i.e. c.4000 each way) per month. Perhaps a line had to be ruled somewhere.

 

[Saab34]

I see. So when they cancelled the Avalon to Hobart service this would only just boost the Melbourne-Hobart flight figures.

Same with the Avalon to Sydney which they recently increased. Really all it does is pull away from the Tullamarine numbers.

 

[Melburnian1]

I see. So when they cancelled the Avalon to Hobart service this would only just boost the Melbourne-Hobart flight figures.

Same with the Avalon to Sydney which they recently increased. Really all it does is pull away from the Tullamarine numbers.

Given that AVV to SYD (and presumably HBA) tends to be cheaper than ex or to MEL, maybe it partly stimulates the market. But I take your point.

 

[docjames]

Note that OOL will show a spike for (southern winter) school holidays, and the Tiger out of CNS will be affecting CNS pax.

Note also holiday started a few days later this year compared to ‘17 and ‘18 so that can also affect numbers (although in theory should push July the other way.....).

There’s too many variables to derive anything meaningful from a single month.

What were the ASKs rather than RPKs? May give a better indication although that may be confounded where airlines are chasing yield rather than volume growth.

 

[Melburnian1]

Note that OOL will show a spike for (southern winter) school holidays, and the Tiger out of CNS will be affecting CNS pax.

Note also holiday started a few days later this year compared to ‘17 and ‘18 so that can also affect numbers (although in theory should push July the other way.....).

There’s too many variables to derive anything meaningful from a single month.

What were the ASKs rather than RPKs? May give a better indication although that may be confounded where airlines are chasing yield rather than volume growth.

I am always cautious about a single month, but as I suggested last month, May (not June) is a good month to draw comparisons as it lacks school or public holidays, variability around Easter/Christmas and so on.

docjames, this comment from BITRE explains the RPK/ASK comparison:

"...RPT revenue passenger kilometres (RPKs) performed were 5.50 billion for the month, virtually the same as in June 2018. Capacity, measured by available seat kilometres (ASKs), increased by 0.4 per cent compared with June 2018 to a total of 7.03 billion. The industry wide load factor (RPKs/ASKs) decreased from 78.6 per cent in June 2018 to 78.3 per cent in June 2019. Load factors on individual routes decreased on 37 of the 65 RPT for which complete data is available in both years..."

As I noted in a previous post above, demand for the year to June 2019 increased only marginally compared with ye 30 June 2018, so 'soft.' As always, it varies route by route.

Media commentators have been noting for a while that the 'capacity wars' have ended, so your last point about the two airline groups 'chasing yield' seems accurate.

 

[TomJones]

The airlines chasing yields in place of raw pax numbers at the moment is exactly what I've been hearing too. Interested to see how VA and QF's earnings go.