AIRFARES to the red centre are set to fall with Jetstar and Tiger Airways Australia both announcing new flights to the region within a week of one another. Tiger announced last week that it would start flights from Melbourne and Sydney to Alice Springs from April 9, while Jetstar yesterday said it would begin operating Sydney-Uluru flights from June 4.
Uluru is currently serviced by Qantas and Virgin Australia but Qantas has been losing money on its direct flights from Sydney to the predominantly leisure destination. It will cease the Sydney flights on June 3, although there will still be a daily service between Alice Springs and Cairns. It will also cut direct flights from Canberra to Darwin.
Cheap airfares to central Australia dried up in 2011, but Tiger and Jetstar are bringing them back, writes Clive Dorman.
Central Australia has become a new battleground for cheap airfares after languishing for years as one of the country’s most expensive destinations, served only by the Qantas group.
A trickle of budget fares to the Red Centre began in 2009 when Tiger Airways launched flights three days a week between Melbourne and Alice Springs with specials of less than $100 one-way.
Then in 2010, Virgin Australia challenged the Qantas monopoly on the Sydney-Uluru route but at much higher fare levels – typically $150-$200 one-way.
The cheapies dried up in July 2011 when Tiger was grounded by the safety regulator. When Tiger resumed flying, central Australia wasn’t on its route map.However, the Red Centre airline service map began to change rapidly earlier this year when Tiger announced its return to Alice Springs with four-times-weekly flights from both Melbourne and Sydney.
A change with greater ramifications followed this month, when the Qantas group for the first time allowed its budget brand to venture into central Australia.
Since Jetstar’s invention in 2004, its core market has been the east-coast holiday destinations that required cheap fares that would be unprofitable for the Qantas parent.
But the centre and the north-west, except for the Jetstar international hub in Darwin, were off-limits even though Alice Springs, Uluru and Broome are prime holiday destinations.
Now Jetstar is taking over Qantas’ unprofitable Sydney-Uluru route and reducing the frequency from daily to four times a week.
It is also reducing the fare from a typical $250-$300 one-way to $120 for the launch period. But that will leave Qantas, the highest-cost Australian domestic airline, attempting to compete with the lowest-cost carrier, Tiger, on routes to Alice Springs.
Tiger’s fare from Melbourne starts at about $110, while Qantas’s current special is $259; the Sydney fare starts at $120 on Tiger and $285 on Qantas. It’s cheaper to fly to Perth than to the centre from Melbourne and Sydney.
So why has it taken the Qantas group so long to mobilise Jetstar?
“I think the market’s changed over the time,” says Jetstar’s Australian chief executive, David Hall, who was Jetstar’s foundation chief financial officer in 2004.
“What we’re seeing now is a need to boost tourism. I think the Jetstar model enables us, within the Northern Territory, to attract a very strong leisure market and for us to continue to grow that market.
“Ayers Rock has been on our agenda for a very long time, from when I first joined Jetstar.”
Hall rejects the suggestion it’s a competitive response to Tiger’s return to the Red Centre.
“We’ve been talking with the Mills administration [in the Northern Territory] about tourism opportunities,” he says. “We’ve been negotiating with [Ayers Rock resort and airport operator] Voyages as well, and those things take time.
Hall added that low fares are absolutely critical to demand and low fares are underpinned by low costs. “All of the operators there recognise that, and we’re working very constructively with them to boost tourism.”