The competitive market in Australia will look very different to what we have become accustomed to and there are many unanswered questions about what the future will look like. Based on a combination of analysis of government statements, airline projections and underlying demand, CAPA’s Air Capacity Models Australia edition projects a phased recovery in domestic air capacity in the country through the remainder of 2020, reaching 55% of 2019 levels by the October school holidays and 74% by mid-Dec-2020.
Latest data from Tourism Research Australia shows domestic overnight tourism results showed considerable growth for the year ending Mar-2020, despite the effects of the Australian 2019–20 summer bushfires and the initial stages of the Covid-19 pandemic.
In the year to Mar-2020, Australian residents spent a total of AUD78.8 billion on domestic overnight travel, up +6% on the previous year. The number of overnight trips taken by Australians had also increased by 3% to 112.3 million, with 405 million nights away from home. This highlights the strong growth in domestic tourism through 2019, with +12% growth for both trips and nights.
But then followed a sharp decline in domestic travel as the combination of Australian bushfires and Covid-19 had a significant impact on visitors. Overnight visitors fell -18% in the subsequent quarter while spend fell -10%. The Australian bushfires showed their impact on domestic overnight travel results in January and February of 2020, with a decline in trips of -6% and -7% compared with the same month in the previous year.
Without any time for recovery, the effects of Covid-19 were even greater. By Mar-2020, visitor numbers plummeted by -39% and spend fell significantly, down -41% or by AUD2.6 billion. While these results showed a large reduction, Australia’s success to date in ‘flattening the curve’ of Covid-19 has provided the opportunity to slowly ease restrictions and re-open some state borders for non-essential travel.
A continuation along this path would provide potential for a gradual recovery of Australia’s tourism industry. Data collected in the National Visitor Survey during May-2020 and Jun-2020 on domestic travel intentions showed almost a third (29%) of Australian residents planned to either take a domestic day or overnight trip within the next month; more than half (53%) planned to take a domestic trip within the next three months; and over three quarters (80%) intended to undertake a domestic trip within the next 12 months.
But it is a long road back. Australia‘s Bureau of Infrastructure, Transport and Region Economics (BITRE) data for May-2020 shows domestic passenger levels were down -96.4% for the month. The big trunk Sydney – Melbourne route, one of the world’s biggest city pairs, saw passenger levels down -97.5%. Nationally domestic passenger load factors averaged 40.3%, down -37.1 percentage points, but most of the major domestic routes recorded an above average performance, with the exception of Melbourne-Perth (27.1%, -54.1pp) and Adelaide-Melbourne (38.3%, -38.0pp).
Leisure and VFR demand massively overshadow the diluted corporate travel flows and this could have long-term repercussions on the travel landscape, especially in relation to business travel. The Federal Government’s July Economic and Fiscal Outlook documents suggest the Australian economy could decline by 3.75% in the current calendar year.
The current crisis has put managed travel front and centre and showcases that there is more to a travel management company than simply acting as a consultant. A huge opportunity you may say, but one that could lead to a much changed landscape. The Association of Travel Management Companies (ATMC) a travel industry organisation that represents and promotes business travel throughout Australia believes the need for cohesion amongst professional travel management companies has never been greater.
ATMC’s members have combined revenues that exceed AUD3 billion and employ in excess of 2,000 travel industry professionals throughout Australia. It’s executive director Oliver Tams tells The Blue Swan Daily that a significant consolidation is now on the cards as the industry readjusts to the new environment.
In an exclusive interview for the Corporate Travel Community, recorded at the CAPA – Centre for Aviation headquarters in Sydney, Mr Tams warns that a large proportion of travel companies across both the retail and corporate space have been lulled into a false sense of security by schemes such as the JobKeeper payment subsidy and he sees bankruptcies (more so on in the retail area) and consolidation as the sector adapts to the ‘new normal’.
In terms of TMCs he says “some of the larger players are swimming around in a small pool and looking to maybe eat some of those minnows“. There will be some “physical consolidation in terms of the numbers of TMCs,” and in his opinion the “larger ones are certainly looking at buying the books of the smarter ones”. He explains that there is an opportunity for TMCs to be opportunistic and start to offer corporates a new concept and “be that aggregator of everything in the travel chain”.