Sydney Airport chief blames high airfares for holding back rebound in domestic travel

Domestic travel appears to be stuck in cruise with the chief of Australia’s busiest airport blaming high airfares and limited capacity.

Sydney Airport has warned of “stagnating” domestic travel with passenger numbers still well short of pre-pandemic levels. Picture: Lisa Maree Williams/Getty Images

Outspoken Sydney Airport chief executive Geoff Culbert has warned high airfares and limited airline capacity are holding back domestic tourism.

The warning came as the airport released its February passenger numbers, showing domestic traffic was still a good distance from pre-Covid levels at 82.9 per cent.

Mr Culbert said the domestic passenger recovery at Sydney Airport had been “stagnant” since last April.

“Reduced capacity and high airfares are impacting people’s travelling habits,” said Mr Culbert.

Melbourne and Brisbane Airports were also seeing “flat” domestic travel numbers, with December and January figures below the preceding months.

February saw a further decline, but it was traditionally the month with the lowest figures due to the fact there are only 28-days in the month.

Brisbane Airport head of public affairs Stephen Beckett said the limited growth in domestic travellers since last April could be attributed to several factors.

“It’s not just the result of reduced capacity due to fleet and crew challenges, we’re also seeing the impact of interest rate and cost of living pressures for all Aussies,” said Mr Beckett.

“International travellers also buy tickets on domestic flights. Until Australia’s inbound market totally recovers, we won’t see full domestic recovery.”

The warnings came after the Australian Competition and Consumer Commission revealed falling passenger traffic numbers in the typically busy summer period, despite climbing airline capacity.

In January Qantas was back to 102 per cent of 2019 capacity, Virgin Australia was at 96 per cent, and Jetstar 84 per cent.

“While the pattern of monthly domestic passengers is similar to 2019, there are still fewer people flying than they were prior to the pandemic,” said the ACCC airline monitoring report. “The recovery in passenger numbers continues to remain at or below 90 per cent since it reached a high of 97 per cent in June 2022.

“In contrast to passengers, domestic seat capacity has increased in recent months to reach 5.9 million in January 2023.”

Sydney Airport CEO Geoff Culbert has warned high airfares and limited capacity are putting the clamps on the regrowth of domestic tourism. Picture: Justin Lloyd.

The imbalance meant flights were becoming less full, with a 75 per cent load factor in January which was the lowest since May 2022.

“Only two routes reported a load factor of 90 per cent or higher in January in contrast with 17 in October 2022, and seven in January 2019,” the ACCC report said.

“The two routes were both interstate routes linking popular tourist destinations the Sunshine Coast and Ballina-Byron Bay to separate capital cities.”

Domestic airfare data for March showed there was little downward movement in prices despite the boost to airline seats.

Bureau of Infrastructure, Transport and Regional Economics statistics had business class fares at 15 per cent higher than a year ago, and best discount seats were up 5 per cent.

Restricted economy continued to track at a similar rate to what was available towards the end of last year, and almost 13 per cent higher than March 2022.

On a more positive note, Chinese visitors were starting to return in volume to Australia, after the reopening of mainland China in January.

Sydney Airport now ranked China as its fifth biggest source of international travellers, up from seventh a month ago.

“Momentum is starting to build in our international recovery with China now back open to tourists after three years of border restrictions,” Mr Culbert said.

“In December last year, we had just three airlines on the route flying only four return services a week. By the end of April, we’ll have six airlines on-board with 26 flights a week to mainland China.”