Australia’s most lucrative airline routes and who’s benefiting the most

Qantas and Virgin Australia make more revenue flying Melbourne to Sydney than any other route, despite capacity still sitting below pre-Covid levels.

Qantas and Virgin Australia’s duopoly is safe, according to JPMorgan data showing the two major airlines continue to maintain a stranglehold on the domestic market.

Qantas and Virgin Australia make more revenue flying Melbourne to Sydney than any other route, despite capacity still sitting below pre-Covid levels.

In-depth analysis of domestic and international routes by JPMorgan analyst Anthony Longo revealed Qantas earned about $92m a month on Melbourne-Sydney flights, while Virgin Australia pulled in an estimated $44.7m a month.

High frequency on the route and strong demand particularly from corporate travellers meant a healthy yield of 48.9c per revenue seat kilometre for Qantas, and a more modest 28.2c for Virgin.

The data showed Qantas had increased its yield on the Melbourne-Sydney route by 6.8 per cent since the pandemic even with less flying, while Virgin’s yield had fallen 12.4 per cent.

The difference was attributed to Virgin Australia’s shift to lower airfares since a change of ownership in late 2020, and the ongoing struggle with costs despite good passenger loads on the route.

Mr Longo said JPMorgan believed “a rational duopoly” would prevail and Virgin could be profitable. “In our view, there will always be a need for air travel given the proximity of the capital cities, and there are limited alternatives to air travel,” Mr Longo said.

Other routes delivering strong revenue for Qantas were Perth-Sydney, which generated about $58.2m a month, Melbourne-Perth at $55m, and Brisbane-Sydney at $50.1m, with a yield of 43.3c.

JPMorgan data has named United Airlines’ San Francisco-Sydney services as the most lucrative international route into Australia. Picture: Dan Peled

Virgin Australia’s second-best revenue route was Brisbane-Melbourne, which brought in $28.8m a month, then Melbourne-Perth ($26.7m).

The JPMorgan data revealed the most lucrative international route into Australia was San Francisco to Sydney operated by United Airlines, which was estimated to be making about $111.9m a month.

The US carrier had more than double the capacity of Qantas on the route, flying twice daily, with yields improving 84.9 per cent since 2019 to 29.8c a revenue seat kilometre.

Qantas’s biggest-earning international route was Los Angeles to Sydney, generating about $76.3m a month, for a yield of 26.6c; followed by LA-Melbourne ($48.2m) – just ahead of United ($41.4m).

Singapore Airlines was also seeing strong revenue from its four flights a day into Sydney, with revenue of $107.7m in a month.

As a result, yield was up almost 50 per cent at 25.5c, the best of any carrier on the route.

Mr Longo said the data was an illustration of the good health of the airline industry. “The revenue and the demand environment for aviation are still pretty strong and that’s reflected in the forward bookings we are seeing and the capacity that continues to be added,” Mr Longo said.

The big revenue routes for Qantas and Virgin Australia.

“In aggregate what we are seeing is growth in capacity that’s coming through and that’s largely driven by increased demand, so consumers still want to fly and although yields are high relative to what they were pre-Covid, they are moderating.”

He said the trends were supportive of Qantas’s revenue outlook heading into its half-year results for the 2024 financial year, to be announced on February 22.

Qantas chief executive Vanessa Hudson is expected to deliver a healthy profit for the six months to December 31. Qantas shares fell 1.4 per cent to $5.65.

Originally published as Australia’s most lucrative airline routes and who’s benefiting the most