Jetstar Airways reduces 787 routes to free up capacity for more Melbourne-Bali flights

23 January, 2018

Jetstar Airways is adjusting its long-haul operation at Melbourne to free up additional capacity for Bali.

Jetstar is adding four weekly frequencies on the Melbourne-Bali route at the beginning of Feb-2018. Jetstar currently operates 10 frequencies on the route, which can support more capacity following the suspension of services by two competitors.

However, Jetstar needs to reduce capacity on other long-haul routes from Melbourne as it is not expanding its overall long-haul operation. The airline has a limited long-haul fleet, consisting of 11 787-8s, and has no more 787s on order.

Jetstar has seven long haul routes from Melbourne - Bali, Bangkok, Ho Chi Minh, Honolulu, Phuket, Singapore and Zhengzhou. Bali is currently served with 10 weekly flights; Bangkok, Honolulu and Singapore with four weekly flights; Ho Chi Minh and Phuket with three weekly flights; and Zhengzhou with two weekly flights.

At the end of Mar-2018, Jetstar is cutting Melbourne-Singapore from four to two weekly flights. While the reduction to Singapore does not kick in until after Jetstar increases Bali, Jetstar is able to increase Bali earlier as it is temporarily reducing Ho Chi Minh and has already slightly reduced Bangkok.

Jetstar will operate only two weekly flights on the Melbourne-Ho Chi Minh route in Feb-2018 and Mar-2018 before reverting at the beginning of Apr-2018 to three weekly frequencies. Jetstar launched Melbourne-Ho Chi Minh in May-2017 and has since operated a consistent schedule of three weekly flights.

Jetstar also has slightly reduced capacity to Bangkok. In 1H2017 Jetstar operated the Melbourne-Bangkok route generally with four weekly frequencies and occasionally with three frequencies. In 1H2018 the Melbourne-Bangkok schedule has been cut to three weekly frequencies and occasionally two weekly frequencies.

There are no changes this year to Jetstar's Honolulu or Phuket schedules. Melbourne-Honolulu and Melbourne-Phuket are both being served with three to four weekly flights in 1H2018. Jetstar is likely keen to maintain capacity on these routes as it the only airline operating them and the yields are relatively high.

Singapore is a highly competitive route that has been suffering from overcapacity, pressuring yields. The decision to reduce Singapore is therefore sensible as Melbourne-Bali at the moment is a much better performing route.

Ho Chi Minh is also competitive and has suffered from overcapacity since Jetstar entered the market, particularly during off peak months. Therefore, it is sensible to cut back during weaker periods.

Meanwhile, adding capacity on Melbourne-Bali is sensible given the high load factors and yields that resulted after AirAsia X and Tigerair Australia exited the route. AirAsia X's Indonesian affiliate dropped Melbourne-Bali in Sep-2016, while Tigerair Australia suspended all services to Bali in early 2017.

Melbourne is Jetstar's headquarters and is its largest base. In addition to the seven long haul routes, Jetstar operates 787s on some domestic flights from Melbourne to Brisbane, Cairns and Sydney. These flights are used to reposition aircraft for long haul international flights from other gateways.

Jetstar currently has four long haul routes from Sydney, two from Cairns, one from Brisbane and one from the Gold Coast. Its limited 787 fleet means the airline can generally only increase capacity or launch a new destination by reducing capacity or suspending another destination. Routes that are not performing well need to be reduced or suspended as there are generally opportunities to expand in other markets.