Fight or flight: The industry is making headway following price wars between Qantas and Virgin

Domestic airlines have been subject to turbulent trading conditions over the past five years. Intense price competition between Qantas and Virgin Australia, the industry's two largest players, has strongly affected the industry's performance. Qantas and Virgin Australia slashed airfares over the two years through 2013-14, with Qantas attempting to hold off an aggressive push by Virgin to expand its market share. Virgin acquired 60.0% of Tiger Airways in 2013 and the remaining 40.0% in 2014, solidifying its position in the low-fare market. With the acquisition, Virgin aimed to compete with Qantas's low-fare subsidiary, Jetstar. Falling airfares caused profitability for both major players to decline in more.

Industry Statistics & Market Size
Annual Growth 13-18
Forecast Growth 18-23
Market Share of Companies

Industry Threats & Opportunities

  • Qantas and Virgin hold a duopoly in the domestic market and therefore strongly affect the industry
  • Profit has risen considerably, following strong price competition between Qantas and Virgin
  • Airlines will introduce new fuel-efficient planes and provide extra perks to consumers
  • Industry Report - Industry Investment Chapter

    In 2017-18, for every dollar spent on wages, the industry invests $0.36 in capital equipment. The industry’s capital intensity has increased over the past five years as industry operators have invested in new aircraft that are safer, more fuel-efficient and provide enhanced passenger comfort. While airlines can lease planes to reduce capital costs, larger airlines generally own most of their planes as it is cheaper than leasing in the long term, and their economies of scale allow them to receive bulk discounts from aircraft manufacturers. Conversely, smaller operators are more likely to lease their planes as this allows greater flexibility to adjust fleet capacity on their routes, which are typically regional and more likely to experience significant demand fluctuations. Cap...purchase to read more.

    Additional Insights for the Domestic Airlines Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Domestic Airlines Industry are

  • Having links with suppliers
  • Optimum capacity utilisation
  • Ability to alter goods and services produced in favour of market conditions
  • IBISWorld analysts also discuss how external factors such as Domestic tourist visitor nights and Real household discretionary income in the Domestic Airlines industry impact industry performance..

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    What's in this report

    What is the Domestic Airlines Industry?

    Domestic airlines primarily operate aircraft on scheduled routes within Australia to transport both passengers and freight.

    Industry Products
  • Full-fare and business passenger transport
  • Low-fare passenger transport
  • Freight transport
  • Other services
  • Industry Activities
  • Scheduled domestic passenger air transportation
  • Scheduled domestic freight air transportation
  • Air transport terminal operation (except airports)
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Domestic tourist visitor nights
  • Real household discretionary income
  • Aircraft kilometres flown
  • International travel to Australia
  • World price of crude oil
  • Consumer sentiment index

  • Current Performance
  • Business and economy fare competition
  • Popular routes
  • Profit and fuel
  • Chart: Revenue Growth

  • Industry Outlook
  • Profit
  • Competition
  • Opportunities
  • Table: Domestic Airlines Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Domestic Airlines Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Mining
  • Rail, Air and Sea Freight Forwarding
  • Finance
  • Tourism
  • Postal and Courier Services

  • Key Selling Industries
  • Aircraft Manufacturing and Repair Services
  • Airport Operations
  • Catering Services
  • Non-Scheduled Air Transport
  • Petroleum Product Wholesaling

  • Products & Services
  • Full-fare and business passenger transport
  • Low-fare passenger transport
  • Other services
  • Freight transport
  • Chart: Domestic Airlines Industry Products and Services Segmentation

  • Demand Determinants
  • Leisure travellers
  • Business travellers
  • Freight

  • Major Markets
  • Domestic leisure travellers
  • Domestic business travellers
  • International travellers
  • Logistics companies
  • Chart: Major Market Segmentation for the Domestic Airlines Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Domestic Airlines

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Domestic Airlines Industry

  • Industry Globalization
    Qantas Airways Limited, Virgin Australia Holdings Limited,
  • Table: Qantas Airways Limited - financial performance
  • Table: Virgin Australia Holdings Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Domestic Airlines Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Domestic Airlines Industry
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Airside Services
  • Services and facilities that are provided to aircraft by an airport or other entities. These include access to facilities like runways or providing services like firefighting and telecommunications.
  • Available Seat Kilometres
  • A measure of airline passenger capacity obtained by multiplying the number of seats available on each flight by the flight's distance.
  • International Air Transport Association (Iata)
  • Assists global airlines with cost savings, technology implementation and regulatory pressures.
  • Load Factor
  • An indicator of how efficiently an airline is using its available capacity, by dividing revenue passenger kilometres by available seat kilometres.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Domestic Airlines market research report is a comprehensive guide to market size and growth prospects. Our industry reports offer strategic industry analysis of the factors influencing companies, including new product developments, economic, lifestyle and demographic influences, distribution and supply chain factors and pricing issues. Full analysis accompanies our data forecasts to illustrate how the market responds to emerging industry trends.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Domestic Airlines:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Domestic Airlines market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Domestic Airlines, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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