Qantas blames election jitters for slowdown in domestic travel

THE tourism boom on the back of the weaker Australian dollar has been cut short by election jitters — leading Qantas to cut back on domestic capacity.

THE domestic tourism boom may prove to be short-lived with Qantas planning to make fewer seats available on Australian routes because of falling demand.

The looming federal election and a drop in consumer confidence has been blamed for the downturn, according to a Qantas traffic report for March.

“Some softness in demand ... began to emerge in the peak Easter and school holiday period in late March and continued to be seen in forward bookings in April and May,” said the report.

“To mitigate the negative impact on domestic revenue in the fourth quarter of the financial year, Qantas Group domestic capacity growth will now be negative compared with the prior corresponding period.”

Qantas will reduce capacity growth on domestic services in response to softening demand. Picture: Qantas

All domestic routes would be impacted by the cutback, with the mining and resource states of Queensland and Western Australia likely to be the hardest hit.

Qantas shares fell nine per cent on the back of the report’s release but aviation industry analyst Neil Hansford said it seemed like a very prudent move by the Flying Kangaroo.

“There’s a greater knowledge of the business than there’s ever been thanks to technology, and they would’ve looked at their forward booking profile and realised there’s too many empty seats,” Mr Hansford said.

“I don’t think the consumer will feel it. There may just be fewer bottom of the bucket fares.”

Qantas has made a concerted effort to promote domestic travel this year, releasing a slick new safety video in January that showcased regional areas.

Mr Hansford said it would be easy enough to restore capacity if demand returned.

“The old routine used to be “fly it and they will come” but competition has meant there’s no room to sacrifice yield,” he said.

The leisure destination of the Sunshine Coast saw strong growth in arrivals from Sydney in February. Picture: iStock

In the second half of the year, Qantas planned to limit capacity growth to 0.5 per cent, down from two per cent.

A Virgin Australia spokeswoman said their own capacity plans would be revealed with third quarter results to be announced next month.

But she acknowledged the factors identified by Qantas as being “challenges” for the aviation industry.

Mr Hansford said federal elections always created uncertainty for business.

“People tend to get the jitters and not commit,” he said.

“Plus we’ve had this unseasonably good weather which has meant a lot of people have done their travel for the year. It’s brought the demand forward.”

Federal Government figures for domestic aviation activity in February showed strong passenger growth on leisure routes like Sydney to Hamilton Island, the Sunshine Coast and Uluru.

In contrast, typical FIFO routes such as Karratha-Perth, Perth-Port Hedland and Brisbane-Gladstone were down as much as 20 per cent.

Originally published as Qantas blames election jitters for slowdown in domestic travel