May BITRE domestic aviation passenger numbers report

[Melburnian1]

May is a good month to look at how domestic aviation passenger numbers are doing as it is typically one of the lower months (along with February and November) for both air and interstate surface travel and it does not have Easter or school holidays that can move around.

In May 2016, while domestic air passengers carried rose three per cent compared with May 2015, which is above population growth nationally, the pattern seems to be that the top three routes (Melbourne-Sydney-Brisbane) are doing well as are some (mainland Chinese?) tourist routes (AYQ - SYD is one) but a number of other routes are performing extremely poorly (Melbourne, Sydney or Brisbane to Perth, Sydney to Townsville with its nickel refinery problems, various Queensland provincial city or town routes such as Brisbane to Gladstone and Moranbah where mining and resources have sadly taken a hit, Brisbane to Mackay and the Whitsundays' Proserpine and a similar story in WA such as Perth - Karratha):

http://bitre.gov.au/publications/ongoing/files/Domestic_aviation_ May_2016a.pdf

While the latest high speed rail Melbourne - Sydney proposal has many questions about it - why are the proponents advocating a maglev instead of conventional rail, for one - if we had such a rail link a lot more Melbourne - Sydney and intermediate stations travel would be induced than what the BITRE report shows is the monthly rise in Melbourne - Sydney air travel.

It is also debatable whether the rise in air passenger numbers in the 'golden triangle' (and consequent positive effect on the percentage of seats filled, since capacity is not being increased) has led to higher yields for the four main domestic airlines in their two competing groups. If I recall AFF member JohnK suggested that his average Y fare had risen about $20 (one way) in recent months but I do not know what base JohnK was calculating this on.

 

[kermatu]

First time I've flicked through this report. Some interesting stats. Thanks for posting.

 

[JohnK]

It is also debatable whether the rise in air passenger numbers in the 'golden triangle' (and consequent positive effect on the percentage of seats filled, since capacity is not being increased) has led to higher yields for the four main domestic airlines in their two competing groups. If I recall AFF member JohnK suggested that his average Y fare had risen about $20 (one way) in recent months but I do not know what base JohnK was calculating this on.

The steady rise of airfares is personal experience over the past 8 years.

This years airfares are by far the highest at $155 one way SYD-BNE. Too high for me to commute each week and this year will see the lowest number of weeks commuting per year in the past 8 years. The forecast for next year is even less weeks commuting. For example in 2010 I was paying ~$130 return on Qantas. The expensive airfares was a point of discussion with a long time Platinum One whose business cannot justify the high cost of airfares so now using JQ if saving is significant.

Qantas used to discount every single week in the year at various times throughout the year. Now they don't discount Christmas, Easter and every flavour of school holidays until very late. Say a normal discount airfare is $89 for SYD-BNE then you may be able to get those for $109 if you are early booking otherwise it goes up to $115 in the next round of specials and higher.

Also I don't see how passenger numbers are up on key routes. Some peak flights are full but not always. Business class looks to have taken the biggest hit which is where I suppose they make their money.

Will be interesting to see what happens with the trend in airfares in the coming months

 

[Melburnian1]

Also I don't see how passenger numbers are up on key routes. Some peak flights are full but not always. Business class looks to have taken the biggest hit which is where I suppose they make their money.

I read in today's 'Weekend Australian' that one or two analysts are starting to downgrade QF's future profits (but one still rates the stock a 'buy'.) While this was more in response to what these forecasters believe will be the eventual upwards trend of oil prices, there may have been a comment snuck in there about yields for business class having declined.

It is impressive that JohnK is able to tell us what he paid for airfares some years ago.

 

[RAM]

I read in today's 'Weekend Australian' that one or two analysts are starting to downgrade QF's future profits (but one still rates the stock a 'buy'.) While this was more in response to what these forecasters believe will be the eventual upwards trend of oil prices, there may have been a comment snuck in there about yields for business class having declined.

It is impressive that JohnK is able to tell us what he paid for airfares some years ago.

Q's 'creative' accounting has never really been looked into by any of the analysts despite my encouragement. It seems that, perhaps just like the pollies and the Chairman's Lounge, that analysts (and their related corporate finance through the Chinese Walls of course) do not want to endanger their 'higher' status and perks that they seem to achieve. Very lucrative business organising the leveraged leases on jets for Q.

Some long term looking at Q's 'CA' reveals that a 'tax' arbitrage was put in place immediately before they floated and during the period where they renewed the bulk of their fleet. Then, allegedly, despite receiving discounts of up to 47% on list prices - planes were revalued from price paid to list price as their market value. Some large Life Companies were queuing up more than Q's passengers were!

Some alleged interesting double-entries seemed to dramatically improve their P&L for a VERY lengthy period.

Once the magic pudding was no more and aircraft were to be retired with no chance of on-sale we had the massive international (& slightly other) fleet write-offs. Add in a few brand new aircraft being flown heavily by JQ and then transferred to Q just when more costly maintenance was about due and you get a fine result.

Over-writing off the remaining fleet then permits, in the following years, significantly less depn charges. Geniuses in charge at Q!

Enjoy a dig into the accounts and try matching the last 5-7 years figures against their fleet details.

Seems Lewis Carroll has found a successor!

 

[Melburnian1]

Q's 'creative' accounting has never really been looked into by any of the analysts despite my encouragement. It seems that, perhaps just like the pollies and the Chairman's Lounge, that analysts (and their related corporate finance through the Chinese Walls of course) do not want to endanger their 'higher' status and perks that they seem to achieve. Very lucrative business organising the leveraged leases on jets for Q.

RAM, would the Australian Taxation Office be interested in your observations? I am not a taxation auditor or accountant so I have an open mind.

QF (and to a lesser extent VA) are experts at 'schmoozing' various groups, including parliamentarians. It is interesting that you imply that analysts' reports are coloured by their QF-granted 'privileges.'

As a general observation not limited to aviation, a perception of groups who monitor this sort of thing (Transparency International is one) is that corruption (relative to other nations) has been rising somewhat in Australia. We (as at 2015) are allegedly equal 13th in the world, significantly beaten by our Kiwi neighbours and somewhat below Canada:

https://issuu.com/transparencyinter...uptionperceptionsindex_rep?e=2496456/33011041

The rise and rise of secretive lobbying must play a part.

 

[RAM]

RAM, would the Australian Taxation Office be interested in your observations? I am not a taxation auditor or accountant so I have an open mind.

QF (and to a lesser extent VA) are experts at 'schmoozing' various groups, including parliamentarians. It is interesting that you imply that analysts' reports are coloured by their QF-granted 'privileges.'

As a general observation not limited to aviation, a perception of groups who monitor this sort of thing (Transparency International is one) is that corruption (relative to other nations) has been rising somewhat in Australia. We (as at 2015) are allegedly equal 13th in the world, significantly beaten by our Kiwi neighbours and somewhat below Canada:

https://issuu.com/transparencyinter...uptionperceptionsindex_rep?e=2496456/33011041

The rise and rise of secretive lobbying must play a part.

Well you'd have thought so wouldn't you?

Add in the $4.4m of NSW Electoral funding withheld by the NSW Electoral Commission due to the NSW State Liberal Party not revealing names of donors who routed donations via Federal Party allegedly at behest of State Party due to 'illegal donation laws' and you wonder whether we should have a higher ranking.

As some of the CA happened while still a Fed Govt entity and the float was given a complete indemnity by the Fed Govt - muddies the waters somewhat does it not?

Would prove very embarrassing for many people, perhaps result in loss of 50+ board positions for example...

Much like the CSELR and that it is actually costing over $2 billion to cut net public transport capacity into Sydney - if any of the claims made for it in the first 4 years of the scheme are true.

If not then the NSW public have been mislead for 4 years (including Parliament) - odd how other major State Political parties have not done anything about it.

But then again, historically around 5 of top ten donors to the major parties have been the same.

The rise and rise of secretive lobbying must play a part.

Couldn't say it better myself.