2014-01-23 12:56:03 - Transportation in Australia - a new market research report on companiesandmarkets.com
Qantas remained the largest airline in Australia at the end of the review period with a 43% value share in air transportation. Although Qantas´ value share in air transportation remained static in 2012, the company´s value share slipped by three percentage points over the course of the review period as competition in air transportation in Australia became much tighter. Qantas now faces strong competition from both domestic airlines such as Virgin Australia Holdings Ltd and international airlines attracted to Australia by the ongoing boom in outbound travel in the country. Virgin Australia´s value share in air transportation increased from 12% in 2011 to 13% in 2012.
Transportation in Australia increased in current value by 6% during 2012, a slower rate of
growth than the 7% growth recorded in 2011, although it was an improvement on the 3% current value CAGR recorded over the entire review period. The primary reason for the acceleration in current value growth in transportation towards the end of the review period was rising demand for air transportation, particularly among business travellers. As business travel typically involves higher levels of spending than leisure travel, in spite of the fact that the majority of business travellers in Australia now fly economy class, these stronger demand for air transportation among Australia´s business travellers towards the end of the review period boosted the average price of airfares in Australia, whilst the boom in both inbound and outbound travel towards the end of the review period led to an increase in air capacity and traffic on international air routes.
Transportation in Australia is set to continue recording strong growth over the forecast period, rising in constant value at a CAGR of 5%. Much of this growth is set to derive from the anticipated rise in the popularity of low cost carriers during the forecast period, which a constant value CAGR of 8% expected in low cost carriers. There is, however, a caveat to this growth. The prospects of low cost carrier airlines in Australia during the forecast period are set to remain highly dependent upon whether Virgin Australia´s 60% ownership of Tiger Airways will result in improvements the flagging public perception of the Tiger Airways brand which plumbed new depths following its six-week grounding on safety grounds during 2011. In addition, it remains to be seen whether the planned tripling of Tiger Airways´ capacity will ever actually come to fruition.
If it does, then Australia could have two thriving low cost carriers, Tiger Airways and Jetstar. As Virgin Australia repositioned its Virgin brand over the course of 2012 in a bid to attract more business travellers, the airline no longer competes as heavily on price as it once did, with the result that the price competition which has defined air transportation in Australia since 2008, faded towards the end of 2012. With the new investment in Tiger Airways fuelling another round of price competition in air transportation, a price war is expected to emerge during the forecast period, with the average price of airfares set to fall from A$209 at the end of 2012 to A$195 by the end of 2017.
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