Travel restrictions as a result of the recent COVID-19 Delta outbreaks have brought the majority of domestic flying to a stop and delivered a significant blow to the local airline industry, the Australian Competition and Consumer Commission (ACCC)’s latest Airline Competition in Australia report reveals.
The report shows passenger numbers in July 2021 plunged to 23 per \cent of pre-pandemic levels, after recovering to a peak of 68 percent of pre-pandemic levels in April 2021. Passenger numbers reported for August and September 2021 are expected to be even lower.
Qantas, Jetstar, Virgin and Rex, combined, were forced to cancel one in three flights in July 2021, which is the highest cancellation rate since April 2020. Weekly passenger numbers in Victoria fell 91 percent from mid-May to early June, and in NSW they dropped 97 percent between mid-June and the end of July.
“The Delta outbreak has hit the domestic airline industry hard, and it has unfortunately halted the airlines’ recovery just as they were starting to approach pre-pandemic levels of flying,” ACCC Chair Rod Sims said.
The report reveals that routes in and out of Sydney Airport were not in the top 10 busiest routes in July 2021, despite it normally being Australia’s busiest airport. Intra-state Queensland routes were the busiest, with Brisbane to Cairns, Townsville and Mackay among the most popular.
“With many state borders closed, those that could fly were doing so closer to home,” Sims noted.
“July was the first time that Sydney hasn’t been among the 10 busiest routes in the country, which is a sign of the state of the industry.”
The cancellation of flights forced Qantas, Jetstar, Virgin and Rex to implement temporary stand downs until flying can resume.
The Australian Government announced new support through the Retaining Domestic Airline Capability program, which gives eligible airlines $750 per week for frontline employees that are otherwise unable to access Covid-19 disaster payments. Additionally, the government extended a number of existing aviation support programs until the end of the year.
Despite the reduced number of flights, the industry remains optimistic that demand for domestic travel, especially to leisure destinations, will bounce back strongly when vaccination targets are reached and border restrictions are eased.
The ACCC has recently heard concerns from some airlines that airports may seek to significantly increase charges to airlines in order to recover lost profits from the pandemic. The report explains that the ACCC believes such actions would be inconsistent with the Australian Government’s Aeronautical Pricing Principles and would be a clear example of airports systematically taking advantage of their market power.
“We would be very concerned if the major Australian airports sought to use their monopoly position to charge airlines excessive prices in order to recover any lost profits from the pandemic. This could limit an already vulnerable sector’s ability to recover, and impact on both consumers and the economy,” Sims warned.