Competition for Australia's domestic travellers will ramp up in early 2021, with Virgin Australia continuing its shift to a more value-driven approach while Regional Express launches Sydney-Melbourne and Sydney-Brisbane flights on its new Boeing 737 fleet.
But Qantas Group CEO Alan Joyce sees little reason to worry, and expects that Qantas and its low-cost arm Jetstar will retain the lion's share of the market.
“We think our market share will be above 70%, and that is sustainable going forward,” Qantas Group CEO Alan Joyce said at a wide-ranging media briefing this morning.
Although Regional Express has grabbed travellers’ attention this week with $300 business class flights between Sydney and Melbourne, Qantas doesn’t see too many of its own passengers jumping across to the competition – despite charging fares from $715 on similarly-timed flights.
“We believe for the business market, Rex’s network is extremely limited,” Joyce elaborates.
“The business corporate market is still going to be very attracted to the proposition Qantas has.”
Businesses making the move
Uncertainty over the future shape of Virgin Australia as a mid-market carrier has also been to Qantas' benefit, Joyce says, with many corporate travel accounts decamping from Virgin.
"Some 25 large accounts have come across this year, and in the last few months in particular there’s been an acceleration of that," Joyce noted. “I haven’t seen anything of that scale ever."
The appeal of the invitation-only Chairman's Lounge to many heavyweight corporates can't be discounted, especially as Virgin is yet to commit to retaining its equivalent of The Club.
Qantas' ongoing ‘status challenge’, primarily aimed at giving Virgin's Gold- and Platinum-grade Velocity frequent flyers a fast-track to Qantas Gold status has also enjoyed significant uptake, raking in "several thousand high-tier members."
Virgin's business class offering remains “under review” until early 2021, while its Boeing 737 fleet has been downsized and its lounge network almost halved, further widening the gap between it and Qantas.
By comparison, “Qantas is opening up 30 of its 35 lounges domestically before Christmas. (Virgin) has only six lounges – and there are question marks over (Canberra, a seventh),” Joyce jibes.
“We know the corporate market is moving towards Qantas – and with Tigerair removed from the market, that the low-cost market is moving towards Jetstar as well.”
Bringing out the big guns
As state borders open up, Qantas is capitalising on increased domestic demand – and Virgin's retirement of its leased Airbus A330s – to swing some of its biggest aircraft back into action on domestic flights.
The large twin-aisle Airbus A330, which boasts international-grade Business Suites in business class, will be a fixture on the Sydney-Melbourne route from next week.
On Mondays through Thursdays until at least Christmas, the A330 will take over from the Boeing 737 on Qantas’ peak Sydney-Melbourne morning QF409 flight, which departs Sydney at 7am to reach Melbourne at 8:25am.
The same days see the A330 return from Melbourne to Sydney on the airline’s final flight of the day, departing Melbourne at 7:30pm as QF490, arriving into Sydney at a pre-curfew 8:50pm.
Qantas will also add 18 Boeing 787 Dreamliner flights to Sydney-Perth and Melbourne-Perth to keep up with east-west demand once Western Australia allows visitors from New South Wales and Victoria from December 8.