May 28, 2020
The changing landscape of domestic travel in Australia
We have all seen and heard much conversation in the recent weeks regarding the financial woes of Australia’s second largest carrier, Virgin Australia, but we’ve heard little about how the Australian airline sector plans to move forward in the wake of COVID-19.
We have seen domestic flight schedules cut by as much as 90% on many routes, while some routes have disappeared completely. TigerAir have closed their doors with no sign of returning and even regional airline Rex has made major schedule cuts.
On flights that are operating, in-flight entertainment, food and beverage, and amenities have been reduced or removed – it is a far cry from the onboard experience that airlines have previously bragged about. Now, airlines don’t consider these things as important as they work through the crisis with reduced passenger loads on skeleton staff. The battle between airlines in areas such as customer experience, on time performance, innovation and cost seems to have completely disappeared – now, it’s just about survival.
Virgin, Qantas, and Jetstar have all implemented social distancing rules on their scheduled domestic passenger flights. This means that in a block of three seats the middle seat has been blocked in all rows (there are route and aircraft type exceptions to this). Whilst this does not actually equate to the recommended 1.5 metre social distancing rule, it is a deliberate action that displays a genuine desire to ‘do their bit’ to help stop the spread of COVID-19 on passenger flights – and it gives each passenger more space, which is always nice!
While government support has resulted in the current domestic flight schedule we see today, it is expected to look vastly different if and when that government support is withdrawn. This support currently means that a passenger aircraft will depart with 1 or 100 passengers on board and the airline gets paid from the government regardless of the passenger load. Prior to government support, if the booked load on a flight was low the airline would most likely cancel the flight as it wouldn’t be operationally viable. This is why we are currently seeing a consistent domestic flight schedule that is operating with fewer cancelations than what we previously saw. Given that leisure travel is currently off the table , it is essential service staff, people returning home and those traveling under special circumstances that make up the majority of the current socially distant domestic travelers.
Once government support ceases, airlines will once again be forced to bear the full operating costs for each flight as they previously did – which is not currently sustainable for Virgin, Jetstar or even Qantas. So, what does this mean moving forward?
It’s predicted that we will see some heavily discounted bargains on international flights whilst airlines try to rebuild consumer confidence in international travel. Domestic flights will eventually have no option but to increase, the alternative will be a vastly smaller domestic network. For example, an airline works out its ticket prices based on the cost per seat per kilometer taking into account all operating and capital expenditure and multiplies that by the number of seats on an aircraft. With middle seats blocked on a Boeing 737-800 (the aircraft type that Virgin and Qantas predominantly operate domestically) that loss is approximately 60-65 seats – about 30%. That means the cost of these empty seats will be absorbed by the other remaining seats. What we will most likely see is ticket prices increase by about the same percentage.
There is also the additional processes, infrastructure and equipment that may be needed to operate in this new landscape. Aircraft deep cleaning will take place more often, terminal sanitising will increase, self-check-in touch screens may be replaced with expensive ‘touch-free’ biometrics, and departure gate and check in hall square footage may be expanded to comply with social distancing rules. All of this comes at a cost to airline operators.
The Qantas Group, which includes Qantas and Jetstar, has announced it’s new ‘Fly Well’ program which is designed to further protect passengers from the COVID-19 pandemic. The airlines will roll out the ‘Fly Well’ program from 12 June as Australian states and territories prepare for the return of domestic travel.
It is believed the below measures are just the start of what will become a greater suite of initiatives introduced by all airlines over the coming months.
For the future of business travel and events these changes will represent an increase to budgets and the funds allocated to travel. There are ways we can travel smarter to help offset these cost increases.
Remember the days of Ansett’s ‘21 day advance purchase’ ticket, or how expensive a last minute ticket between Melbourne and Sydney was on a Monday morning? The key to traveling smarter is all in the planning.
Top 10 tips for travelling smarter in the wake of COVID-19:
- Travel mid-week: Businesses should look to avoid the peaks of Monday morning and Friday afternoon.
- Utilise benefits of loyalty: Use points for a section of your trip to offset some costs.
- Travel as a group: Your event manager or travel coordinator will have an airlines groups contact to get you exclusive group fares.
- Travel light: Don’t pay extra for checked bags by taking cabin baggage only.
- Shop around: Your travel coordinator will know how to shop aroud and make your dollar go further.
- Be prepared to split: While group travel can have some great savings, somtimes there are only a small number of group seats per flight, so be ready to split up if needed.
- Change it up: Sometimes flying to a destination on one airline and returning with a different airline can be cheaper.
- Stop over: Direct flights are almost always more expensive. Save money by looking for non-direct flights in your search.
- Book your flights first: Air travel is usually the most expensive element of business travel, so plan your travel, then your meeting. This way you have flexibility to book your meeting around the best flight prices.
- Rely on the experts: Be flexible and let the experts do their thing – they’ll get you where you want to go and back home safely for the best price!
The future of domestic travel in Australia is still very unclear, however it will gradually return to what it once was. When it does, your best bet to getting where you want to go, when you want to go, for a reasonable price is effective planning, flexibility and advise from an expert.