Australia braces for new tourism boom as flights from Asia surge

July 12th, 2017 | | Accommodation

Australia is on the brink of its biggest tourism boom since the influx of Japanese tourists in the 1980’s, as a rising Asian middle class and new aircraft technology encourages airlines to launch hundreds of new flights and re-map the traditional aviation hubs linking Australia (and no doubt New Zealand) with the rest of the world.

A dramatic shake-up of Qantas and Virgin Australia’s international routes, at a time when a record number of foreign airlines are opening up new routes into Australia, will spur the growth and further cuts to airfares, which have already fallen 30% over the last decade.

Government ministers, airline chiefs and tourism officials told the AFR Weekend the country must prepare for a tourism bonanza, which has the potential to replace mining as the country’s key economic pillar. However, there are concerns within the $120 billion industry that Australia lacks the infrastructure to cater for millions of new visitors and believe more resources need to be injected into one of the country’s few growth industries.

“I used to say Australia was geographically challenged, now I think it is geographically privileged because it is only one sector away from the biggest population in the world which is transforming so much,” Virgin Australia chief executive John Borghetti said in an interview on board his airline’s first Melbourne to Hong Kong flight this week.

He added “We are about to see on steroids what we saw in the early ’80’s with the Japanese.” However, he also warned Australia’s tourist infrastructure was not ready for the influx of Chinese and other tourists visiting the country. There has not been enough long-term planning in Australia, in politics or business and things have suffered. Infrastructure has suffered. Standards have dropped in terms of treatment of international tourism in Australia.”

China Landings

Mr Borghetti said he wants to fly into China next year. The move is a further sign that Australia is becoming less reliant on the Middle Eastern hubs of Dubai and Abu Dhabi, although they still remain important.

Qantas also has big international expansion plans. The arrival of the airline’s first Boeing 787 Dreamliner aircraft later this year will be a game-changer and allow Qantas to become the first airline in the world to fly Australia to London direct. It launches the 17-hour-long flights from Perth in March and expects to be flying direct from Melbourne and Sydney to New York and London in the early 2020’s.

The Australian government is in talks with a host of countries to secure more liberalized air services agreements. Trade, Tourism and Investment Minister Steve Ciobo said Australia could also become an important hub for Latin America into Asia. International aviation capacity in Australia has grown 30% over the last five years.

The industry is particularly excited about the possibility of direct routes to Europe and North America for the first time in Australia’s history. This should open up markets such as the United States east coast where travelers have traditionally been put off by the prospect of taking two long flights.

Tourism Australia managing director John O’Sullivan said “The tourism industry now is becoming more about technology. It has been one of the most disrupted industries since the advent of the low-cost carrier. Every time it is disrupted, it throws something out that makes it easier for the consumer.

New technology

“Low-cost carriers unlocked this whole segment of a market. New technology and the way consumers book their own holidays themselves on their phones are changing things again.” Analysts say new fuel-efficient aircraft such as the Dreamliner, which offer more comfortable flying conditions and can cover longer distances, would also open up new routes. However, direct long-haul between Sydney and London, for example, could be confined to wealthier passengers initially.

“As advanced ultra-long-range aircraft such as the Boeing 777X and Airbus A350-900ULR take to the skies, some airlines will be able to offer non-stop flights such as Sydney-New York or Melbourne-London at a premium price while keeping the stopover routes as the more affordable option,” David Flynn, the editor of Australian Business Traveller said.  There was also a flurry of discounting on fares. A single fare from Sydney to the United States is now as low as $1,000 per person.

While there is no shortage of international travellers due to the rising middle classes in countries like China, the debate now is focused on what Australia can do to attract a bigger slice of the pie. Chinese tourism numbers are booming but the growth is greater in other parts of the world such as Europe.

Infrastructure lacking

The federal government and Tourism Australia was on a charm offensive in Hong Kong this week to sell Australia’s natural beauty, food and other attractions to the rest of the world. However, there are also critics such as travel agents catering to foreign tourists who say there is a lack of quality hotels and other infrastructure to keep up with demand.

Tourism Australia has a goal of 20,000 new hotel rooms by 2020 and has been working with Austrade to target Chinese investors such as the Wanda Group. However, relying on Chinese funding to boost the industry would be dangerous given signals from Beijing last month it might crack down on big spending by large conglomerates.

Tourism authorities are also keen to develop new attractions to replicate the success of the Sydney Bridge Climb.

Tourism Australia was focused on tapping growth in Asian and North American markets and has launched a strategy that focuses on utilizing travel agents who still account for the bulk of bookings for Australia. It is working with 1500 specialist travel agents in Hong Kong alone.

Ciobo said there were ongoing discussions with Chinese airlines looking to increase capacity into Australia. He said the government’s role was removing impediments to passenger movements such as by streamlining departure cards and speeding up the customs process.

Tourism Australia projects total overnight annual spending ranging between $115 billion and $140 billion by 2020.
Total international aviation capacity reached 25 million, up 9% for the 12 months ending March 2017. This was led by China with 24% growth, and Japan with 15%.

Great news for tourism and yes it is time the federal government supported infrastructure for tourism and tourism growth. But what of youth market infrastructure? where is the support for them? Where is any mention of a market that makes up 26% of all inbound arrivals in this article? Hotels aren’t the only places people stay! International students (and their VFR) drive a major segment of the Chinese market (but isn’t mentioned). Have your say.

Sourced by Chris Harrison

Source: AFR, written by Michael Smith


One Response

  1. Dean Nixon-Harding says:

    Can you tell me where these stats have come from?