Covid-19 has transformed the aviation market in Australia in a way that no one could have guessed.
What will be the “new normal”?
Who will be the leading players?
What does 2021 mean for me, the business traveller?
Whatever the ‘new normal’ becomes, it will undoubtedly be quite different from the market that we have become used too.
VA (Virgin Airlines) has signalled its intention to withdraw from the full-service market to concentrate on the LCC (Low-Cost Carrier) segment.
ZL (Regional Express Airlines or “Rex”) appears to be moving to enter the east coast Boeing 737 market. It is not clear whether they will take a position against VA or QF (Qantas). In either scenario, it is a bold move involving enormous market risk and operational complexity for ZL. The Australian airline market is littered with the corpses of other such entrants. Whichever slot they take, they will encounter strong headwinds.
Now that VA has signalled their intentions, QF will return to their favoured position of a monopoly, full-service carrier. The airfare wars are over. The era of cheap, high-quality air travel has gone.
QF CEO, Alan Joyce, signalled as much last week stating that they expect to hold 70% of the domestic market next year.
The option of Private Air Charter will still be available and essentially unchanged in its offering and market fit.
Charter has always had the highest value propositions for private and business travellers. Convenience, flexibility, speed, security, access to any route are the hallmarks of Charter.
There has usually been a gap between the Charter price point and VA and QF when they were duking it out trying to win the full-service carrier war. That gap will narrow when QF completes its move back to or near to monopoly status.
For passengers who don’t mind “nuts and cola” class, then their options may improve.
For others, the “new normal” will include fewer available routes; less frequency on the routes that do remain and possibly lower capacity, all at higher prices.
Business travellers and their travel companies will need to spend more time assessing their available options to ensure that they achieve the best value. This will include Private Charter becoming more prevalent in those considerations.
As the hangover of Covid-19 wears off over the next few years, the attractiveness of the east coast monopoly market may attract new entrants to challenge QF. For many industry observers, this will be a familiar ride.
