Tuesdata: Who rules the domestic skies as travel returns?
Welcome to the latest edition of Tuesdata. With a portion of the industry having jetted off to Cannes after the Covid-induced hiatus, it’s an appropriate time to focus the attention of Tuesdata on the travel industry, and more specifically, airlines.
The full content of this post is for Unmade’s paying members only. Others will hit the paywall a little lower down.
Coincidentally, Unmade is running its first EOFYS. Sitting on the fence can get quite uncomfortable, so here is a great opportunity to hop off and land perfectly.
Until midnight on June 30, we’re offering 55% off an annual subscription to Unmade. That reduces the $650 price down to $292.50 per year. It’ll never be as low again.
Just click on the box below and support independent journalism. You’ll also get access to all the Tuesdata posts.
The statistics from the The Bureau of Infrastructure and Transport Research Economics (BITRE) show that there were 4.92m passengers carried by Australian domestic carriers in April 2022.
That is compared to 3.81m in April 2021 (while there were minimal lockdowns in Australia) and 5.37m in pre-COVID April 2019.
To put those numbers into context, in August during the lockdown period towards the end of 2021, passenger numbers had dropped to below 1m.
The significant increase in passenger numbers as Covid restrictions have eased has created healthy competition in the Australian commercial aviation industry.
Today we’ll be using statistics from the ACCC’s latest two Airline Competition in Australia reports published in March and June this year, revealing statistics for January and April respectively. We’ll be aligning the data with the marketing strategies and campaigns from those airlines.
While the might of Qantas Group, with Qantas and Jetstar in it, is the clear leader by passenger numbers, when you count by airline rather than group, the intensity of the competition becomes apparent.
In the marketing industry, it makes more sense to do that as Qantas and Jetstar go very separate ways in terms of target audience and marketing strategies. And at times, neither of them have been the leaders.
The early leader in 2022 was Virgin Australia. According to the ACCC report from March, “Virgin had the highest passenger market share of any single airline brand in January 2022 with 34% of passengers, ahead of Qantas and Jetstar with 31% each, and Rex with 4%.”
The rankings have changed slightly now, but considering that, coming out of administration, Virgin Australia held 22% market share, it’s a significant recovery.
Below is the domestic airline rankings by passengers carried as of April this year, published in the June report from the ACCC. We’ll also include what should be a fifth major player coming later in the year.
There are other smaller players in the domestic market, but for this post we will focus on the four big ones and the new up and comer.
Market share of Australian domestic airlines
Qantas
CMO: Petra Perry
Key agencies: The Monkeys, OMD
While Qantas is expected to top the share of market for domestic airline travel, the fact that it has been in a proper scrap with Virgin suggests there is healthy competition in the air. However, it is worth noting that Qantas will likely continue to open routes at a high rate and gain more passengers as business travel continues to slowly recover.
Also of note is that the period where Virgin Australia took the lead was one led by leisure and VFR (visiting friends and relatives) travel, a very different market to business travel.
The business travel sector has been on a go-slow in terms of recovery, with the Australian Trade and Investment Commission noting in its Domestic Tourism Forecasting report that “Travel for business purposes is slower to recover than leisure travel. Nevertheless, business travel is forecast to eventually return to pre-pandemic levels.”
Graphs it released suggest most states will hit pre-pandemic levels by 2025-26 aside from a very fast-growing Queensland, which will likely get there in 2023-24.
Qantas hasn’t hung around in announcing its intentions, although the departure of CMO Jo Boundy to Commonwealth Bank may have caught it by surprise.
The airline moved quickly to announce Petra Perry as the new CMO in March and has been continually active in the market.
Throughout the multiple lockdowns and travel restrictions both internationally and domestically, Qantas pushed vaccinations as a way to regain the right to travel while the significant drop in Australian travel restrictions early this year coincided with a stirring new version of ‘I still call Australia home’, featuring Tones & I.
It hasn’t all been easy, though, with Covid restrictions for those infected or living with infected people causing havoc on check-in times while Qantas’ customer support for all passengers including high-status Frequent Flyers has come under fire of late.
Virgin Australia
CMO: Elizabeth (Libby) Minogue
Key agencies: Special Group, The Precinct, Big Red, PHD
It’s hard to argue against Virgin Australia being the hardest hit by the pandemic. By March 2020 it had asked the Federal Government for a $1.4b loan, come April it had shut down the New Zealand operations and was only operating a Sydney to Melbourne service, and without April having ended it had announced it had gone into voluntary administration.
However, in June Bain Capital would purchase Virgin Australia Holdings and by October, former CEO Paul Scurrah left. New CEO Jayne Hrdlikca, formerly of Bain and Company (founded by Bain Capital’s Bill Bain) and Qantas, was in and a bunch of aircraft including the Airbus A330 and Boeing 777 were out.
By November, Virgin Australia had put a campaign in market via CHE Proximity announcing its return in the light-hearted campaign ‘You can’t keep a good thing down’ where a young girl dances through an empty airport to INXS.
Unsurprisingly, it joined the vaccination push in 2021 with multiple spots urging Australians to get their jabs before debuting a travel-focused campaign in October last year via The Precinct.
In April 2021 Elizabeth Minogue had also joined the airline as CMO, having previously held positions as chief revenue officer at FlexiGroup and executive general manager, media & content, marketing at REA Group.
Come November, Virgin Australia had announced that creative hot shop Special Group had been chosen as its brand strategy and creative partner while continuing to work with other agencies including The Precinct and Big Red on an ongoing basis. The battle in the sky had been transferred to the ground with two of Australia’s hottest creative agencies now representing the two major domestic airlines.
Bolting out of the gates in 2022 in terms of passenger numbers was a great start, but now it’s up to the brand and agency partners to help boost the momentum as it slips behind Qantas again. Being that it sits nicely between Jetstar and Qantas in terms of being able to try to compete on both the business and leisure front, there is room for Virgin Australia to make moves.
Jetstar
Group Marketing Manager – PR & Content: Kelly Ogilvie
Key agencies: Wunderman Thompson, Wavemaker, Thinkerbell
Qantas Group’s budget leisure brand will not mind that the forecasts on business travel are generally predicting a slow bounce back. It’s in it for holiday makers and the VFR groups, and both those are in swift recovery mode.
This year should see them return to pre-pandemic levels and Jetstar has started hard on the marketing front, particularly in its traditional sweet spot of EDMs including its Friday Fare Frenzy emails.
The market has also opened slightly for Jetstar, now 18 years old, as it no longer has to compete with Virgin Australia budget offshoot, Tiger Air, which unfortunately didn’t make it through the pandemic.
Headwinds for the brand are two-fold. Firstly, rising fuel costs will generally affect budget airlines more than they will full-service. And secondly, a new budget player is about to enter the market in Bonza.
Despite this, Jetstar CEO Gareth Evens doesn’t seem phased, telling the AFR in May that traditionally the Australian commercial aviation industry was a two player industry, where Qantas and Jetstar counted as one.
The airline has been in market recently with a number of price-led campaigns on TV. According to Canda, it’s run 33 different campaigns across various regions this year alone.
Its latest general ad, ‘Rather be on holiday?’, by Wunderman Thompson, launched in December last year but has only been placed in 101 spots since launch, although it has also been the foundation of further price-led regionally tailored campaigns.
Expect more activity when Bonza hits the market.
REX (Regional Express)
Director of Loyalty, Marketing and Corporate Communication: Jason Triebel
Key agencies: TBC
REX’s market share is akin to its major marketing executions – small. The airline that proudly boasts that “Our heart is in the country” prefers to keep a low profile. Aside from when it gets into a shouting match with Qantas, that is.
The airline has been in a continual turf war with the national carrier over regional routes to the extent that it took out a full page ad in major Australian newspapers detailing Qantas customer complaints.
It also hosts a 73-page document on its own website listing Qantas passenger complaints.
REX made a substantial push into the golden triangle (Sydney, Melbourne, Brisbane – traditionally Qantas turf) with a fleet of Boeing 737s, the launch taking place in March 2021. Despite the pandemic challenges, it has pushed ahead with connecting capital cities, again with a low-key marketing play.
Since then, it has also partnered with US airline Delta to allow its passengers easy onward travel to the US and beyond.
Whether the rebound in travel during 2022 results in a more concerted push from REX on the marketing front is yet to be seen. There is not much in the way of evidence that would suggest it wants to.
And like Jetstar, Virgin Australia’s recent troubles have helped somewhat, with the regional Virgin fleet of ATR-72s removed.
Bonza
Chief customer officer: Carley Povey
Key agencies: IMA Home
While it hasn’t even flown yet, Bonza is making a good amount of noise. Upon launch in October 2021, it released the ‘Here for Allstralia’ slogan and asked for feedback from future customers on where they would like Bonza to fly.
The slogan and campaign was produced by freshly signed up agency IMA Home. It was followed by an expression of interest directed at airports to explore the best deals the airline could get for its future route network.
PR stunt? Perhaps. But it gathered enough headlines to give the airline yet more momentum, as did the new uniforms that included white sneakers and T-shirts, more commonly found on advertising agency execs than airline cabin crew.
While Bonza will be flying somewhat unique routes and is targeted at the budget market, the brand style, particularly the purple, and the relaxed brand tone, is reminiscent of Virgin Australia.
It’s likely the marketing strategy will become more evident shortly as Carley Povey (previously of UK low-cost carrier Jet2 as well as Australia Post), who’s remit according to a company press release includes marketing, pushes the brand forward.
Just a small hiccup that one of the founding members, Peter McNally, departed after seven months.
Enero shines in a tough market
The board has lit up green again on the Unmade Index, but it still sits at under 600 points.
There was positive movement from Enero Group and Domain Holdings, up 3.4% and 2.68% respectively, as the former continues to inch closer to being valued higher than SCA.
Seven West Media again saw drops, falling 3.9% for a market capitalisation just under $581m.
Two down, three to go
As my colleague Tim Burrowes enjoys a well deserved break, I’ll be manning the Unmade fort this week. If you haven’t listened already, Start the Week had a slightly different sound yesterday as Pure PR founder and managing director Phoebe Netto joined me to discuss the latest in media and marketing.
I’ll be back again this week, particularly with Best of the Week on Saturday, and you will still get to hear Tim, as we publish a new podcast, The Unmakers, on Thursday.
In the first episode, Tim interviews Mutiny’s Henry Innis and Matt Farrugia on the news of the $2.4m seed funding round.
Enjoy the rest of your Tuesday,
Damian
damian@unmade.media
