Flying to Asia? Australians become spoilt for airline choice

“In Australia, airlines have a number of cities they can choose to operate their services into, so there’s a greater level of competitive tension in terms of attracting new services,” said Melbourne Airport head of commercial Michael Cullen.

The Malaysia Airlines announcement is the latest from foreign long-haul airlines expanding services into Australia.

Virgin Australia will partner with Qatar Airways to fly from Sydney, Brisbane, and Perth to Doha starting in June, and later from Melbourne. Emirates, US-based Delta and United Airlines have all expanded services to Australia recently.

Speaking of Australia-Malaysia travel, University of Sydney business professor Rico Merkert said: “There is competition on this round … there’s quite a bit of competition internationally”, even as there is less competition domestically for the Sydney-Melbourne-Brisbane triangle served by Australia’s domestic airlines.

That triangle, Merkert said, remained a core source of profit for Qantas and Virgin. These routes serve business travellers and premium customers who want flexible flying times and higher-end service. So airlines could also charge more, Merkert said. “The real margins are made domestically and especially on that sector.”

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Domestic airlines “protect their turf” on these routes, he said, and tend to seek to head off competitive threats. Qantas, for example, is counting on a fleet refresh of A321XLRs to drive growth with more seats to the capital cities.

Airport infrastructure limits also constrain capacity between the three major east coast cities dominated by Qantas, Qantas-owned economy airline Jetstar, and Virgin Australia.

Melbourne Airport is not as infrastructure constrained as Sydney, which has a curfew, as well as limits on slots, or allotments of time at the gate for arriving and departing planes.

Melbourne Airport’s Cullen said Malaysia Airlines’ announcement was “not just growth to Malaysia but it provides more options for connections to places like India”.

The volume of international travel to and from Australia continues to surge after the pandemic lockdowns ended in 2022. Data released last week showed flight capacity between Australia and Asia has risen to the highest levels seen globally.

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Flight capacity to India is now at 346 per cent of pre-COVID figures, the SME division of Flight Centre Travel Group said. That’s against an international average of 103 per cent of pre-pandemic levels.

Cullen said: “Melbourne is in a unique position in that we have a really strong diaspora of South and South-East Asian communities and certainly, what we’ve seen since COVID, is that demand into places like India has grown astronomically.

“So I think certainly India will be an important target market for two-way traffic,” he said, noting, however, that Malaysia was an appealing destination in its own right.

Vietnam’s flight capacity out of Australia stands at 263 per cent of pre-COVID figures, while South Korea is at 153 per cent.

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