Airline value conflict drives Melbourne to Sydney fares all the way down to $39 in bid to spice up home tourism | Tourism (Australia)

A price war has broken out between domestic airlines. Tickets for flights between Melbourne and Sydney are only $ 39.

Qantas’ low-cost airline Jetstar, Virgin and Regional Express (Rex) have thousands of domestic flights available for sale.

Rex sparked the price war when it became known that the price for the Sydney-Melbourne route had been cut to just $ 39 on Monday.

Virgin and Jetstar soon followed suit, offering tariffs at similar prices on what is currently the seventh largest route in the world.

Rex vice chairman John Sharp hoped the sale would revitalize the domestic market and increase tourist numbers between the two major cities. It comes after both cities were banned from the government’s discount campaign to boost the tourism industry.

“Top tourism organizations reported yesterday that flagship stimulus programs from states and governments have not benefited Melbourne and Sydney,” Sharp said.

“That is about to change now as Rex ‘Cheaper Than the Bus’ fares will see airfares between the two cities even lower than federal-sponsored fares for the Tourism Aviation Network’s support program and will boost leisure and business travel.

“I believe this initiative will single-handedly revive a dying travel and hospitality industry in both cities.”

After kicking off the opening salvo in the price war, Sharp said he was expecting his rivals in the industry – including Virgin australia, Qantas and Jetstar – to follow suit.

“The resulting copycativity from our competitors means that hundreds of thousands of $ 39 tariffs will be available.”

When announcing the lower fares, Virgin said in a statement that it would include baggage, seat selection and status points with the discounts.

“Virgin Australia is committed to providing travelers with some of the most competitive airfares on the market,” it said.

A senior industry analyst at IBISWorld, Tom Youl, told the Guardian that Rex’s first move should shake up the industry.

“It’s a good marketing move, makes a bit of noise, and they’ll try to take market share from established companies like Qantas and Virgin – especially on this route.”

Youl said the move was also intended to boost demand. The airlines were hoping that with a small boost, passenger numbers could return to pre-pandemic levels.

“They are trying to revive demand, especially in the domestic market. I think there is still a little nerve, a little hesitation. People are a little more careful with their money and there is some price sensitivity out there.

“So it looks like Rex is playing a little with this price sensitivity and trying to get people flying again because Covid is still worried and nervous,” said Youl.

“But it’s about getting people back in the air and getting them moving again.”

Youl didn’t expect the cheaper prices to last long as the industry recovers from the effects of the pandemic.

“Given the losses airlines have suffered over the past 14 months, expect a careful capacity increase and therefore relatively limited cases of really cheap flights.

“In the medium term, prices are likely to return to normal or even higher levels. Unless Rex go really hard on Virgin and Qantas, which they could very well do.

“Domestically, prices are more likely to reflect at a higher point than they were before Covid.”

Revenue in the domestic aviation industry is expected to decrease 37% in fiscal 2020/21 and recover by 51% in 2021/22.

Domestic industry was worth around $ 14 billion in 2018/19, but will be worth about half of that this fiscal year at $ 6.5 billion.

However, Youl said the rebound is likely to be strong. The industry expects sales to rise to $ 10 billion by the end of 2021/22 and to $ 11.3 billion in 2022/23.

Rex’s offer is available through August 28, while Jetstar plans are also available through the end of August. Virgin will continue to offer the cheaper rates through December.