It has been a big year in the worst possible way for airlines around the world. No more so than in Australia where our island status makes us very dependant on air transport. As the first signs emerge of an uptick in demand for travel, how does Simple Flying see aviation in Australia in a post-COVID environment?
Nothing will stop Qantas – the CEO will make sure of that
The big daddy of flying in Australia will continue to prosper. Sure, 2020 will be a rubbish year for Qantas, but you can bet your last dollar Australia’s number one carrier will be back bigger and brasher than ever in the post-COVID environment.
They’ve got the funds to sit out another 18 months of this, and they’ve got one of the best CEO’s in the business to guide them through the COVID mess. After a couple of initial public missteps, Qantas hasn’t said much about the Virgin Australia collapse. But this is a very opportunistic airline. If Qantas sees a gap in the market, it hops right in. It will gift wrap its arrival in that market with a nice PR campaign and a tasty price premium.
What we won’t see post-COVID is the Qantas 747. It looks likely its A380 fleet will be thinned out as well. We’ll see Dreamliners flying international routes and A350-1000s when business returns to normal, and Project Sunrise gets underway. Another question to ponder is what will Qantas replace ts domestic workhorse, the 737, with?
A leaner and meaner version of Virgin Australia will keep flying
Despite a slick image, Virgin Australia wasn’t sitting pretty coming into 2020. It was losing bucketloads of money. COVID-19 and the travel shutdown just pushed it over the edge. Nobody celebrates the collapse of an airline, but one positive takeout is that Virgin Australia looks like it will be restructured and keep flying.
The most likely outcome is a smaller airline with a reduced footprint. The fleet will be consolidated, and marginal routes kicked loose. There will likely be a focus on the business traffic in the southeast corner of the corner and heavily trafficked leisure ports such as the Gold Coast. Any restructured airline won’t want to give up lucrative fly-in fly-out (FIFO) and resources charter work.
You might see the airline let go of a swathe of regional routes, starting with places like Mildura, Wagga, Port Macquarie, and Launceston. It’s possible the rebirthed Virgin Australia might forego Tasmania altogether. After all, their current skeleton services are bypassing the island, and it’s not like they’ll have to put away the toastie machines and pack up any lounges there. You could also question the future of Virgin Australia services into the Northern Territory.
Virgin Australia will be a smaller, less upscale airline, but it will still be flying post-COVID.
Cranky REX will abandon its Boeing dreams
The survival of Virgin Australia will probably see the end of the jet-time dreaming at Regional Express (REX). The regional airline runs a fleet of SAAB 340s to regional and country towns. Last month, the airline thought it might like to have a run in the big league, announcing it would look at leasing some Boeings next year to take on the market space vacated by Virgin Australia.
REX enjoys letting off the odd media bombs, and this one was a good one. Analysts pondered aloud, went on TV, and wrote column inches, but the idea was just that, and it was never going to fly. REX cleverly said they were going to think about it for a couple of months (giving them time to see what happened to Virgin Australia), but thanks for the publicity fellas.
Despite these kinds of antics, REX is a well run and disciplined airline. This year might be an exception, but the airline runs on the small of an oily rag and makes money. They fly marginal routes that are often heavily subsidized. The airline has just picked up a handy US$46 million in government funding and relief this year.
The permanently choleric regional airline might always cry poor, but it does okay and will keep buzzing country airports in a post COVID environment.
Small commuter airlines will receive increased funding via subsidized routes
Even lower profile than REX is the numerous commuter airlines that scoot around Australia. Most of them you’ve probably never heard off – Sharp Airlines, FlyPelican, and Avair, for example. Like REX, these airlines fly skinny routes between relatively small population centers. They always seem two flights away from going out of business, yet they provide a vital service to rural and regional communities.
It doesn’t matter whether you live in the city or the bush, most people still pay taxes, so they expect some public services in return, and that includes transport options. Air services into the remote parts of Australia are a hot button issue. Governments recognize that. That’s why a lot of air services into regional and remote Australia are subsidized. With voters increasingly concerned about the issue, local members of parliament risk losing their seats. Away from the coast, Australia is going to see more and more unviable air routes subsidized to keep airlines on them.
While it’s easy money for an airline like REX, for airlines like Newcastle based FlyPelican, crucial subsidies allow them to operate flights into western New South Wales towns like Cobar. Dubbo-based Airlink is now flying into Bourke and Lightning Ridge. In a post-COVID environment, more and more marginal routes will be propped up like this.
Airnorth to keep on powering on
Up in Darwin, there’s an airline that flies under the radar – Airnorth. It’s Australia’s second-longest-running airline. It has a mixed fleet of ten Embraers that fly to 21 destinations around northern Australia, darting down the Western Australia coast, down to Alice Springs, and into Queensland. Airnorth also provides the only direct link between Australia and East Timor. Airnorth’s ultimate owner is Bristow Group Inc, who filed for Chapter 11 bankruptcy protection last year.
Bristow emerged from Chapter 11 in October, having sorted out its balance sheet. Airnorth kept flying and continues doing so, although it exited its participation in the Qantas frequent flyer scheme. The episode did lead to some speculation about Airnorth’s future. Naturally, REX threw another media bomb, publicly floating the idea of taking over some of Airnorth’s routes. That lasted about a week.
While COVID-19 has largely grounded the airline, Airnorth went from strength to strength in the latter half of 2019. It won charter contracts, upgraded existing passenger routes, and opened some innovative new ones, including Toowoomba to Melbourne.
Airnorth is an interesting airline that keeps a low profile, but it is powering on well up in Darwin. They might continue to expand their presence in the post-COVID environment.
If these are the things that are likely to happen, what’s less likely? Bids for Virgin Australia could stall, and the airline could be liquidated. Who would step into the vacuum? Would Indigo Partners exercise their right to apply for an air operator’s certificate? Will airlines that lurk in the background of Australian aviation, Singapore Airlines, and Air New Zealand, for example, ever be given domestic cabotage rights? Will Tigerair astound everyone and fly once more?
One thing is for sure – it won’t be boring.