The success of Jetstar — Qantas’ low cost subsidiary — in capturing the domestic airline market has stalled the growth of Virgin Blue in both the domestic holiday market and business market, the…
The success of Jetstar — Qantas’ low cost subsidiary — in capturing the domestic airline market has stalled the growth of Virgin Blue in both the domestic holiday market and business market, the latest Roy Morgan Single Source data finds.
Results also show the low cost carriers still have potential to grow their share of business travellers, with 48% saying they would consider flying on Virgin Blue for their next business trip, and 25% saying they would consider Jetstar.
Jane Ianniello, Roy Morgan Research International Director of Tourism, Travel & Leisure, says: “In the last three years many Australians have been taking advantage of discount airfares and flying to their domestic holiday destination rather than driving. Virgin Blue and Jetstar have quite successfully positioned themselves as cheaper alternatives to Qantas. It will be interesting to see how the possible entrance into the domestic market of Tiger Airways, an ultra low cost carrier, will affect Virgin Blue and Jetstar.”
Domestic Holiday Travel
In the 12 months to December 2006, 24% of Australian Domestic Holidaymakers travelled by air on their last trip, up 6% over the three years that saw the introduction of Jetstar and the increase in petrol prices.
Air travel has increased for both long and short domestic holidays. Results for year ending December 2006 show 33% of long domestic holidays of three or more nights are by air — this rose dramatically after the introduction of Jetstar in May 2004. The proportion of short domestic holidays of one or two nights taken by air (16%) has also grown.
In the year ending December 2006, 26% of Domestic Holidaymakers who travelled by air flew Jetstar on their last trip (as shown in the chart below). This is up 4% in six months, and up from 9% for the year ending March 2005 after almost one year of flying. Over the last three years Qantas’ share of Domestic Holidaymakers’ air travel moved from 64% to 38%, no doubt impacted by Qantas choosing to use low cost subsidiary — Jetstar — on many popular holiday routes.
Virgin Blue experienced growth in its market share in the three years to June 2006, peaking at 50%. The latest Roy Morgan figures show 48% flew Virgin on their last domestic holiday by air.
High Yield Travellers
Australians who flew Qantas on their last domestic holiday spent more per person per night than Virgin Blue or Jetstar flyers. Results for year ending December 2006 show that Qantas holidaymakers spend on average $209 per night compared to $180 and $174 for Virgin Blue and Jetstar holidaymakers respectively.
Those who flew Qantas are also more affluent. Survey results show that 38% of Qantas holidaymakers are classified as AB, the highest socio-economic quintile (the AB quintile comprises the top 20% of the Australian population 14 years or older in terms of socioeconomic status – the socioeconomic status of a respondent is derived from their education, income and occupation), ahead of Jetstar (29%) and Virgin Blue (27%). Sixty-one percent of Qantas business travellers are classified as AB, compared to 46% of both Virgin Blue and Jetstar business flyers.
Domestic Business Travel
Although Qantas remains the predominant business airline, its share of the domestic business traveller market has declined from 72% in the year ending December 2003 to 57% in the year ending December 2006. Jetstar has captured some of this market, containing the growth of Virgin Blue. In the year ended December 2006, 25% used Virgin Blue on their last business trip, which has remained steady since year ending March 2005, and 9% used Jetstar on their last business trip.
Virgin Blue and Jetstar still have potential to grow their share of the business market, with 48% saying they would consider flying on Virgin Blue for their next business trip, and 25% saying they would consider Jetstar.
