Cyclical downturn: “Australia has been a bit of a tough place to operate,” says Scoot boss Campbell Wilson. Photo: Jim RiceThe Australian market is proving challenging for long-haul, low-cost airlines due to a mix of soft consumer demand and overcapacity, according to Singapore Airlines’s Scoot and AirAsia X.
“Australia has been a bit of a tough place to operate for the last year or so,” Scoot chief executive Campbell Wilson said at the CAPA Australia Pacific Aviation Summit on Thursday. “I think we’ve seen that manifest in decisions by airlines to change gauge, change frequencies and in certain cases pull out of city pairs.”
Mr Wilson said the downturn was cyclical, given Australia had been a strong market just 18 months ago.
Scoot, a subsidiary of Singapore Airlines, offers flights to Australia from its Singapore hub. Rival AirAsia X, which is based in Kuala Lumpur, has increased its capacity to Australia by 40 per cent over the last year.
AirAsia X head of commercial Australia & New Zealand Stuart Myerscough said demand had softened noticeably in recent weeks.
“It is hard to pinpoint any one particular issue but I think there are a number of compounding issues,” he said. “You see minor softening with all sorts of minor events whether they be political with elections or financial with budget announcements and of course the [Malaysia Airlines] incidents as well have quite an impact on the industry in general.”
Mr Myerscough said the MH17 crash had given potential travellers reason to pause and think about whether it was worth booking an overseas trip. “People are reminded there is a reason why not,” he said.
Jetstar International, a rival to Scoot and AirAsia X, has also been struggling to fill its planes after a large increase in capacity to the Bali market and dampened demand for flights to Thailand due to the political situation in that country.
Nok Air chief executive Patee Sarasin, who runs a domestic airline in Thailand, said his carrier had been profitable before the coup, but had since turned unprofitable.
Nok Air is combining with Scoot for the Nok Scoot joint venture, which will offer long-haul flights from Thailand. Mr Sarasin said the first flights were likely to be to Japan, Korea and China but Australia could be a destination in the longer term.
Thai AirAsia X is also considering flights to Australia from its Bangkok hub and its Indonesian arm may offer flights from Bali to Australia as early as next year, with Melbourne-Bali tipped as the likely first route.
This story Administrator ready to work first appeared on Nanjing Night Net.