Budget airline Jetstar is looking at bringing planes from its Asian arm to Australia as it prepares to flood the local market with capacity in response to the reopening of state borders and a surge in local travel demand.
The Qantas-owned carrier said on Tuesday that its domestic capacity will be 10 per cent higher in March 2021 than it was in the same month in 2019, before the COVID-19 pandemic forced airlines around the world to ground their fleets.
March is also when Regional Express (Rex) will launch flights between Sydney and Melbourne for the first time in a market shake-up. Virgin Australia’s boss Jayne Hrdlicka last week said it would trigger an airfare price war.
Jetstar is currently flying at around 75 per cent of its pre-COVID capacity while Qantas is slightly lower, with capacity across the two airlines sitting at 70 per cent. Virgin is set restart 60 per cent of its flying in January.
Jetstar CEO Gareth Evans said more Australians will holiday locally in 2021 while international borders remain shut, and that his airline was already seeing demand bounce back strongly. Deeply discounted airfares would stimulate that further, he said.
“People have been cooped up for a very, very long time and now that border restrictions have gone pretty much across the whole country people are looking forward to getting out there,” Mr Evans said.
Jetstar’s extra capacity above 2019 levels will come from planes that normally fly from Australia to Bali and New Zealand. Over the coming months it will also look at moving some planes to Australia from its subsiduaries in Singapore and Japan, which are facing a much slower recovery compared to Australia.
“Those international services won’t be flying straight away so we can utilise those aircraft back in Australia to boost capacity,” Mr Evans said.
“We’ve already brought some aircraft back from our Jetstar business in Singapore, but this is the power of us being not just a domestic airline but also a group of airlines around Asia – we can shift capacity and aircraft around.”
Jetstar Asia, based out of Singapore, operates 13 Airbus A320s and Jetstar Japan operates 25, while there are 49 aircraft in its local operation.
Tony Webber, an aviation expert at the University of NSW and a former Qantas Group chief economist, said Jetstar appeared to be trying to fill the gap in the market left by the Virgin’s closure of its budget arm Tigerair.
“They’d rather have the capacity in the air and covering their variable costs and some of their fixed costs than have [the aircraft] in Singapore doing nothing,” Dr Webber said.
However despite some deeply discounted promotional airfares hitting the market, Dr Webber said he did not expect average airfares to fall in 2021 given airlines needed to recover from COVID-19.
“They’ve got to repair their balance sheets and they’re not going to repair their balance sheets by offering average fares of $19,” he said. “They’ll have some ridiculously low teaser fares, but there won’t be an enormous number of seats sold at those fares.”
Source: Thanks smh.com