Jetstar to start regional WA flights in bid to cut fares
The West Australian, 11 September 2017
Jetstar may start operations within WA to cut airfares, but Australia’s largest airline group has warned that regional airports need to cut fees. Qantas Domestic chief executive Andrew David told the Economics and Industry Standing Committee inquiry into airfares within WA that the group was looking at deploying the Jetstar operation within WA to “address some of the challenges that currently exist”.
According to government data in real terms as at June 2017, all fare categories are lower than they were in 2003.
“The best discount economy fare for example was 38.5% lower, despite the Australian CPI increasing by 32.1 points over the same period,” Mr David said.
Mr David also noted that during airfare sales, which occurred 25% of the time during FY17, only 20% of tickets were sold.
And that is Virgin Australia’s experience.
The airline introduced special discounted fares for regional WA in 2014 that included discounts of 30% and more on resident, senior and child/student fares.
Despite wide promotion it ended up withdrawing them at the end of 2014 because of a low uptake.
Jane McKeon, group executive government relations for Virgin Australia, also appeared before the inquiry and noted that “the characteristics of the operating environment in WA make regional flying a particularly difficult proposition”.
“The State has a relatively small population base, with a strong concentration in Perth,” she said.
Ms McKeon added that regional centres have small populations which contrasts with Queensland, where 45% of the population lives outside the capital. Just 25% live outside the capital in WA.
“In Queensland there are 10 regional centres of more than 50,000 people which are served by RPT operations – there are none in WA,” Ms McKeon said.
Qantas also warned that intra WA services were dependent on the resources industry and since the peak in 2013, its revenue from the regions has decreased by $255 million.
The high cost and difficulty associated with operating in the regional Western Australia market is highlighted by the fact that since 1960, 48 airlines in Western Australia have been acquired or become bankrupt.