Australia Is A Major Tourist Attraction Tourism Essay

Introduction

Australia is a major tourist attraction for people travelling from South-East Asia and from Europe, with numerous airlines serving various sectors of passenger’s journeys. Many flights from the Asian region are connecting flights for tourists and serve as stopover countries. Major airports in this region include Singapore Changi, Bangkok and Kuala Lumpur international airports.

South-East Asia is defined by the Britannica Encyclopodia as “taken to include

Burma, Thailand, Cambodia, Laos, Vietnam, Malaysia, Singapore, Indonesia, Brunei and the Philippines.” This sector of the world contributed 38.3% of total international passenger seats available to Australia in 2009 and 37.6% in 2008. This is a very slight increase and suggests that growth is remaining steady in this region. In a comparison of the years from 2007 through to 2009, the South-East region approximately contributed 38% per annum, with no marked decline.

During 2009, a total of 44 416 scheduled flight movements occurred between South-East Asia and Australia. This accounted for 9.5 million passengers, with 12.7 million total seats available. Inbound air traffic accounted for 22 241 of these scheduled flights and 6.3 million seats available. (Bureau of Infrastructure, Transport and Regional Economics [BITRE], 2010).

Traffic from Europe is entirely carried out by full-service carriers, at least between Europe and the respective stopover country. The United Arab Emirates or Asian countries serve as these stopover countries, with the Arab Emirates heavily utilized by foreign airlines. Only around 10% of traffic into Australia actually originates in the gulf, much of this comes from Europe (Tourism Australia, 2010).

Arrivals have increased from France and Germany recently, with a decline in those from the United Kingdom. This is largely due to the positive impacts of a code-sharing agreement between Qantas and Air France, with declines in fuel prices driving prices down for German tourists. The United Kingdom’s decrease in passenger numbers can be attributed to economic downturn in February 2010, together with ash clouds in April and a weak English pound. However, the London-Singapore-Sydney is the busiest route with just under half of all direct flights from UK to Australia operated on this route (Tourism Australia, 2010).

South-East Asian Market

The South-East Asian region is serviced by several full-service carriers including Emirates, Malaysia Airlines, Qantas Airways, Singapore Airlines, Thai Airways, Garuda Indonesia and Vietnam Airlines. Low-cost carriers have also emerged with AirAsia X, Jetstar and Pacific Blue, contributing together roughly 20% of the total airline passenger numbers carried into Australia in 2009.

This increase is also reflected overall by the percentage of international passengers carried into Australia, with Jetstar responsible for 7.8% of all international passenger traffic in 2009. For a clearer comparison, each of these low-cost carriers alone accounted for more South-East Asian inbound passengers in 2009 than a full-service carrier such as Emirates did, as indicated in the table below.

Singapore is a major contributor of inbound air traffic to Australia. From the January to May period of 2010, a 3% increase in passenger arrival numbers occurred compared to the same period in 2009. Over half of these arrivals are from the leisure travel sector. (Tourism Australia, 2010). As this sector is more wary of prices and the demand elasticity is greater, it is likely that the decrease in prices for travel after February attracted more customers during this time.

Indeed in February, a marked decrease in international travel occurred due to economic instability in world markets and the global financial crisis. This in turn turned air travel ticket prices down and attracted more leisure travellers. However, this would have a lagged effect in terms of passenger numbers travelling, as airlines had to adjust to the situation first. An increase in passenger numbers occurred between February and March 2010, as can be seen in this graph from the Bureau of Infrastructure, Transport and Regional Economics (BITRE, 2010).

http://www.btre.gov.au/statistics/images/international_pax2.gif

Other countries which attracted much of the passenger traffic in South-East Asia in 2009 include Malaysia and Thailand, together with Indonesia. Indonesian arrivals are still contributing greatly to travel numbers during the first five months in 2010, seeing a 24% increase on the figure of 2009 (Tourism Australia, 2010). Association of South-East Asian Nations (ASEAN) statistics also show that international tourist arrivals to Indonesia from outside of South-East Asia have been increasing between 2008 and 2009 (ASEAN, 2010).

This indicates that the market to this country may be expanding and in November of 2008 the low-cost carrier Pacific Blue commenced services to this country. It is competing directly with Jetstar which has been serving this market since 2006. To illustrate the demand for low-cost services for such a route, Jetstar had 15 412 passengers and Pacific Blue 14 205 passengers in May of 2010. Qantas, however, only recorded 2 974 inbound passengers in May 2010.

As can be seen, Emirates clearly had the lowest number of passengers which were taken to Australia from South-East Asia during 2009. Emirates focuses on services between Europe and Australia through the Middle-East rather than in the South-East Asian region, explaining this observation. Recently, Emirates has extended European routes to include Amsterdam and Madrid.

A total of 12.3 million international inbound passengers were recorded in 2009. From the table it can be calculated that from these ten airlines alone, the number of passengers inbound from the South-East Asian region account for roughly 32% of all inbound traffic movements in Australia. This indicates that the ten airlines above in fact have most of the traffic share between the South-East Asian and Australian flight sectors.

Overall Singapore Airlines carried the most traffic into Australia, Qantas following with nearly half that capacity. This figure for Singapore airlines is purely that between Singapore and Australia. As can be seen, Singapore airlines has a strong dominance over this route, with over half the share of passengers. Singapore airlines has recovered in the previous three months, with a profit of $252.5 million Singaporean recorded between April-June 2010. Expenditure for the whole year 2010 was reduced compared to 2009. Fuel costs reduced by around

$2 billion and aircraft maintenance was also a major part of this expenditure decrease. However, revenue also decreased significantly from the previous year, by around $3 billion Singaporean. However, Singapore Cargo (SIA) recorded an $8 million profit compared to large losses in 2009 during April-June. Revenue decreased overall in 2010 for both East Asia and Europe for Singapore Airlines, characteristics of cheaper airfares and economic downturn.

Overall in 2009 there were more short-term residents departing Australia (6.3 million) than short-term arrivals to Australia (5.6 million) (ABS, 2010). However, these figures include all countries and continents and hence are not applicable to South-East Asian passenger movements solely. Also, this included other forms of transport than air traffic and multiple movements by single individuals also influence this data. Nevertheless, Singapore and Malaysia were included in the top ten list of international short-term arrivals and short-term resident departures, with Thailand listed in the top ten list of short-term resident departures only.

In terms of air traffic out of Australia, the airlines aforementioned also dominate services out of Australia. For the month of May 2010, the passenger numbers for five of the airlines discussed earlier is represented below. This refers to flights between Australia and another country, either being the origin or destination.

It can be seen that there are significantly more passengers moving out from Australia into the South-East Asian regions for most airlines. On a global scale, short-term Australian departures have been increasing since 2006 till the present. In 2007, short-term visitors became less than Australian resident short-term departures, on a global scale (Australian Bureau of Statistics [ABS], 2010). The major reasons for departures in May 2010 were holidays (54%), visiting friends and relatives (23%) and business (13%) (ABS, 2010). This indicates that the leisure market is still quite strong in this area of the world.

European Market

In the European sector there were 2 882 scheduled international flights inbound for Australia (BITRE, 2010). Part of these operations feed into the South-East Asian flight operations, as these act as transit flights for passengers. Hence traffic inbound to Australia from Europe must travel via Africa, South-East Asia, North-East Asia or the United States.

For the period from January to May 2010, arrivals to Australia were the same compared to 2009 (Tourism Australia, 2010). A marked decrease in the total number of passengers carried to or from Australia occurred in February of 2010. In the United Kingdom, similar trends followed as in Australia for February. The Office for National Statistics indicated that in the month of February there were 1.73 million international visitors, down from 2.1 million in January 2010. Overseas departures of residents of the UK also declined in February, with 3.17 million people compared to about 4 million the month previous to that (Office for National Statistics, 2010). The number of UK travellers to Australia is still quite low, with the impact of the global financial crisis and a strong Australian dollar not making Australia an attractive or cheap destination. This percentile has in fact been decreasing from 1999 onwards, where it stood at 9.7% (ABS, 2010).

A momentary rise of total international passengers was observed during March 2010 and another decline experienced during mid-April 2010 to May. This is due to volcanic eruptions in Iceland which halted operations at major European airports during this time. A drop of 16% in arrivals from Europe to Australia was experienced in the month of April (Tourism Australia, 2010). Major airlines servicing flights between Europe and Australia include Emirates, Singapore Airlines, Cathay Pacific, Malaysia Airlines, Thai Airways and Etihad. British Airways, Air Austral, Air France, Aer Lingus and Lufthansa also service particular routes in Europe to Australia.

During April of 2010, volcanic eruptions in Iceland halted many operations across Europe. This contributed to the decline in passenger numbers as seen in the graph above for that month. Demand for flights increased during this period, as people tried to return to home countries, but restrictions imposed on air traffic meant that aircraft were grounded for several days. The supply of international flights to or from Europe came to a standstill.

The substitute of rail or coach travel became very appealing to many which needed to travel out of the United Kingdom or to other airports in the United Kingdom during the ban. A news article indicated that “a 205% increase in customers using its London-Glasgow route since the Air Travel crisis began on Thursday 15 April” occurred (Virgin Trains, 2010). One coach company stated that “a 70% increase in passenger number on its cross-border services” occurred (Breaking Travel News, 2010). This shows the existing competition between different transport forms, being high-speed rail networks and air travel, on the European continent.

For a flight from Sydney to London Heathrow, Emirates does this fare for around $100 Australian dollars cheaper than Singapore airlines, flying over Dubai rather than through South-East Asia. This is in fact a longer flight than over Singapore as a stopover country.

As a comparison to a Thai International Airways A340-500, an Emirates A340-500 has 43 more seats in a 3-class configuration, with 12 suites compared to 60 lie-flat seat beds (SeatGuru, 2010). This is evidence of poor configuration efficiency on long-haul flights, such as between Sydney and London.

Furthermore in 2009, Thai Airways reported a 65.8% seat factor, down from 68.2% in 2008 (THAI, 2010). In May 2010, the Thai Airways seat factor for their European sector was down to 58%. Singapore airlines had an increased seat factor of 78.4% in 2009, compared to 76.5% in 2008 (Singapore Air, 2010). Singapore airlines charge around $1200 Australian dollars and Thai Airways $850 for a one way fare between London’s Heathrow airport and Singapore. This irrationality is explained through political unrest in Thailand during 2009 and 2010, which have driven tourist numbers down globally and hence ticket prices also. An announcement has also been made considering expanding services to the United States rather than Europe, as this market is an unreliable source of revenue with record losses at the end of 2009 for the airline (International Business Times, 2010). The decrease in tourists is recovering currently, with Australian residents contributing a large portion of travel (TAT News, 2010).

Emirates has seen reduced unit costs for the financial year 2009, with 27.3% of revenue coming from flights within Europe for this airline (The Emirates Group, 2010). Madrid, as mentioned previously, was an added route for this airline, justified through the FIFA World Cup victory and strong demand in forward bookings (AME Info, 2010). Amsterdam was also added in May 2010, boosting cargo carrying capacity through filling holds in passenger aircraft. Emirates is competing directly with KLM and has contributed to passenger numbers significantly, as April 2010 saw a negative figure compared to 2009, and during May this turned to growth.

Italy is a market dominated by Australian residents holidaying and returning from the country, hence the leisure sector is mainly served. During World Youth Day in 2008, arrivals contributed directly to only a small proportion of seats sold. (Tourism Australia, 2010). There are no direct services between the two countries currently, but of what traffic there is, almost all arrivals are from Italy rather than stopover passengers.

Germany was not listed as a top ten country of short-term resident departures for 2009. However, arrival growths have increased and competition is increasing between Germany and Australian routes. Middle-Eastern airlines are expanding routes throughout Germany and to other airports than only Frankfurt.

Demand is growing for Australian flights and is reflected in the complement product of accommodation within Australia, with room occupancy rates higher in March 2010 than the year previous (ABS, 2010).

The following two tables represent the numbers of passengers leaving Australia to European countries through airlines flying into Australia, during the month of May in 2010 and the totals for the calendar year 2009.

Compiled from data in International Airline Activity 2009, Statistical Report, (BITRE 2010)

From the above table it is seen that Qantas Airways passenger numbers only make approximately 10% of the total outbound passengers carried by this airline in 2009

(2.5 million passengers). Much other Qantas traffic is between Hong Kong, New Zealand, Japan, the United States of America and China (BITRE, 2010).

Much European traffic is also carried by foreign Airlines as listed previously, or by code-sharing agreements, with very few European airlines actually flying into Australia themselves.