Cairns Airport

AirAsia X and Scoot help make Sydney Australia's hub for low-cost long-haul carriers

The inaugural AirAsia X flight arriving into Sydney on 02-Apr-2012 is ushering in the era of low-cost, long-haul carriers at Australia's largest airport, which is poised to take the title of offering the most service from low-cost long-haul carriers between Australia and Asia. While Jetstar already links Sydney to long-haul destinations and previous carriers like Viva Macau tried, this new wave is of carriers going beyond point-to-point traffic to offer connections out of large Asian hubs.

AirAsia X will be followed by Scoot, and the presence of a Singapore low-cost long-haul carrier in Sydney makes it likely that Jetstar too will enter the Sydney-Singapore market, although parent company Qantas will have to accept that corporate routes previously in its exclusive domain must now be shared if it wants to remain relevant in a market with increasingly diversifying traffic.

The sudden influx of long-haul LCCs can be attributed to competitive responses but also the new government in New South Wales that is eager to better promote Sydney Airport.

Australia-Japan open skies agreement fails to gain traction in shrinking market

There is unlikely to be any short-term change to Australia-Japan air services following an open skies agreement between the two countries that gives Australian carriers access to Tokyo Haneda airport and fifth-freedom traffic rights. Qantas serves Tokyo Narita and has been given nonviable midnight slots at Haneda, and furthermore its low-cost arm Jetstar – the largest operator in the market – is establishing a subsidiary at Narita. The liberalisation comes as the Australia-Japan market continues to shrink, with traffic down 56% from its 2005 peak, making Japan Australia’s largest shrinking market.

The Australian government announced with great fanfare the open skies agreement with Japan, proclaiming it “landmark”. Japan last month concluded an open skies agreement with Canada and is working on a similar agreement with Taiwan.

Tiger Australia settles in for medium-term with new director but growth restrictions and lower fares

Tiger Airways Australia is settling in for the medium-term with a re-launched network it has built up, which is now approximately one-third of its Jun-2011 pre-grounding size. The immediate future will see former Virgin Blue executive Andrew David take the reigns from Tony Davis, who is leaving the company.

Tiger is also lowering its lead-in fares to pre-grounding levels, but no headline fares of AUD15 inclusive or zero (plus taxes) have been offered yet, and may not be as long as Tiger faces no price undercutting and seeks to build network volume with requisite approval from the Civil Aviation Safety Authority (CASA). Its growth outlook is focused on Melbourne Tullamarine, with service resumption from Melbourne Avalon unlikely in the next year.

Jetstar-JAL LCC, "Jetstar Japan" to commence service by Dec-2012

Japan Airlines Corp, Jetstar Airways and Mitsubishi Corp confirmed plans to establish a LCC JV in the Japan market by Dec-2012. Jetstar Japan will be Japan's third new LCC announced this year, following hard off the heels of All Nippon Airways' announcement last month that it plans to establish a JV with leading low cost airline AirAsia, AirAsia Japan, in addition to its previously announced LCC, Peach. The JAL JV would add another piece to the complex jigsaw that is now transforming the Asian airline market. The potential market growth as these successive ventures are introduced can be measured in the hundreds of millions of new passengers. Removal of highly restrictive regulatory conditions and the scale of opportunities as new city pair market options emerge mean literally that the sky is the limit for growth upsides.

Tiger Airways returns to fundamentals after reprieve in Australia

Faced with severe regulatory restraints following the lifting of a six-week grounding of services, Tiger Airways Australia is drastically simplifying its operation to focus on a single hub at Melbourne Tullamarine and only serving the popular Sydney route. As the airline returns to the skies on 12-Aug-2011, Tiger will suspend 14 routes and drop 10 destinations. This month Tiger will only operate 14% of its pre-grounding flights, but this represents only 8% of its pre-grounding available seat kilometres (ASK). But the carrier is to remain in Australia - perhaps with a re-brand.