Qantas and Virgin Australia’s Bali beef, as airlines battle for extra capacity

A fresh fight has erupted between Australia’s major airline groups over hard-to-come-by capacity to Bali.

Jetstar and Virgin Australia are locked in a fierce fight for an extra 2464 seats to Bali a week. Picture: Bianca De Marchi

Barely two weeks into the new year a fresh fight has erupted between the Qantas and Virgin Australia groups over valuable extra capacity to Bali.

At the centre of the battle are an additional 2464 seats a week to Bali from secondary airports, worth about $156m a year in ticket and ancillary revenue.

Ranked as Australians’ top overseas holiday destination, no less than eight airlines operate flights to Bali from Australian ports, filling an average of 84 per cent of seats every time.

Qantas made the first pitch to the International Air Services Commission last November, seeking to have the seats allocated to low fares partner Jetstar.

The budget airline’s plan was to start a new Cairns-Melbourne-Denpasar service from May, and Adelaide-Perth-Denpasar from August 1, 2024.

Virgin Australia then lodged its own claim, seeking to use the seats on new routes from the Gold Coast to Denpasar via Perth, and Adelaide-Perth-Denpasar.

The Virgin Australia submission said the flights would help the carrier compete with Jetstar, which already operated three services a day from Perth to Bali.

It was also suggested that Virgin Australia “supported local consumers and employment to a significantly greater extent than the Qantas Group”.

“Virgin Australia staffs its flights exclusively with crews based in Australia, whereas we understand that Jetstar relies heavily on cabin crews based in Thailand, Indonesia, Singapore, and New Zealand for its international flights, and Qantas relies on crews based in Singapore, New Zealand, the UK and Finland,” Virgin’s general manager of government relations and industry affairs Todd Reynolds wrote.

Mr Reynolds also told the IASC that Jetstar’s proposed service from Cairns to Denpasar via Melbourne would be a very long flight and would not provide “any substantive consumer benefits”.

“Moreover, Qantas Group already has a dominant position on the Cairns-Denpasar route with 100 per cent capacity share, and on the Melbourne-Denpasar route with approximately 72 per cent of Australian carrier capacity in 2023,” Mr Reynolds wrote.

Bali’s culture, scenery, value for money and luxury resorts and hotels have made the Indonesian isle a favourite among Australian holiday-makers. Picture: iStock

In its submission, the Qantas Group pointed out Jetstar was the biggest carrier of travellers to Bali from Australia, and had the highest load factors on routes to Denpasar.

In September and October 2023, Jetstar’s aircraft averaged a 90 per cent seat utilisation rate, compared to 87 per cent for Qantas and 83 per cent for Virgin Australia.

Qantas executive manager of government, industry and competition Anna Pritchard said Jetstar was often the carrier of choice for travellers heading to Bali because of its competitive fares.

“Based on average fare data, Jetstar’s fares are significantly lower — between 14 and 68 per cent less — than its competitors,” Ms Pritchard told the IASC.

“During the forward looking 180-day period analysed by Infare commencing December 31, 2023, Jetstar’s average fares are 37 per cent and 32 per cent lower than Virgin Australia’s Melbourne-Denpasar and Adelaide-Denpasar services.”

A previous fight over Bali seat capacity from major airports was won by Virgin Australia when Qantas withdrew its application due to a change in circumstances.

The additional capacity allowed Virgin to add a second daily flight from Melbourne to Denpasar in mid-December 2022.

Originally published as Qantas and Virgin Australia’s Bali beef, as airlines battle for extra capacity