Falling profits to blame for Canberra to Sydney cancellations: former Qantas economist

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NOVEMBER 1 2017 – 2:27PM

Tom McIlroy

Falling profits and passenger demand on flights between Canberra and Sydney could be to blame for nation leading cancellation rates, a former Qantas chief economist says.

Tony Webber, chief executive and founder of Airline Intelligence and Research, said the 8.1 per cent cancellation rate on flights between the two cities in September follows a reduction in passenger demand over the past six years and is likely related to cuts to public service travel budgets since the Global Financial Crisis.

Dr Webber said the number of passengers on the route had fallen by 12.5 per cent since 2010, resulting in excess capacity for carriers including Qantas and Virgin Australia.

“This manifests itself in two ways – lower yields and lower seat factors,” he said.

“Seat factors on the route have fallen from 67 per cent in 2010 to 61.5 per cent in 2013.

 “The decline in the seat factor was arrested by consecutive reductions in airline capacity by 9 per cent and 10 per cent in 2014 and 2015 respectively.
 “On a route like Sydney-Canberra excess capacity can be devastating because demand is highly insensitive to fares – it’s very hard to fill excess seats on this route by offering cheaper fares.”

In a post on networking website LinkedIn Dr Webber said he suspected considerable passenger yield reduction had taken place on the route, information closely guarded by the airlines.

Airline Intelligence and Research runs databases of aviation financial and operational information as well as data subscription services.

“Why has demand weakened? We can pinpoint forces that are specific to Sydney-Canberra but I think it is the wider Canberra domestic market.

“I say this because Melbourne-Canberra passengers carried have fallen by 10 per cent, Brisbane-Canberra by 6 per cent and Adelaide-Canberra by 10 per cent between 2010 and 2016.

“I suspect the answer lies partly in a steep reduction in public servant travel budgets since the global financial crisis.”

Department of Infrastructure and Regional Development statistics showed flights between Canberra and Sydney topped the nation for cancellations last month, at 8.1 per cent and ahead of Sydney to Melbourne flights at 7.5 per cent and Melbourne to Sydney at 7.4 per cent.

There were 59 cancelled flights on both the Canberra to Sydney route and Sydney to Canberra, far higher than the 30 cancellations between Canberra and Melbourne in the same period.

This week Canberra Airport managing director Stephen Byron called for the federal government to investigate higher than average flight cancellations in Canberra and to consider introducing new national performance benchmarks.

In September, Qantas cancelled 32 flights from Sydney to Canberra, 6.8 per cent of its schedule for the month, while Virgin cancelled 27 flights, or 10.5 per cent.

Qantas cancelled 31 flights in the other direction, or 6.6 per cent, while Virgin cancelled 28 flights, or 10.9 per cent of its schedule.

Nationally, cancellations represented 2.7 per cent of all scheduled flights, up from 1.7 per cent a month earlier and above the long term average of 1.4 per cent.

Almost 1 million trips on bus services and ease of driving between the capital and Sydney are likely contributing factors.

Qantas and Virgin didn’t directly address the cause of frequent cancellations in statements to Fairfax Media this week.

Qantas crew members at Sydney Airport told ticket holders last week the repeated delays for flights to Canberra were caused by staffing shortages and competing priorities on other routes.

Source  :  The Canberra Times

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