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Webjet expects domestic conditions to stay subdued

written by WOFA | August 20, 2014

Regional airlines face renewed pressure from Sydney Airport as it seeks to optimise slot value. (Airservices)
Domestic airfares are tipped to rise in the year ahead. (Airservices)

Online travel company Webjet expects the domestic airline market, particularly for leisure travellers, to remain subdued between now and Christmas.

Webjet chief executive John Guscic said the Australian domestic market was essentially flat in 2013/14, with Christmas particularly difficult.

Moreover, Guscic described the period around May when the federal budget was handed down as “a bit tricky” and while conditions were a bit better in June and July, things were still tough.

“The overall domestic leisure travel market has been depressed for at least 18 months,” Guscic said during a presentation of the company’s 2013/14 financial results on Wednesday.

“We think that will continue for at least the next six months and our objective is to outperform that level over the course of the next six months at least.”

Guscic said airfares were still low, but tipped some movement on domestic fares in the period ahead.

“International airfares are still extremely low. We’ve got some incredible offers in the market at the moment which are stimulating demand on the international side,” Guscic said.


“Domestic airfares are low but we think they will increase during the course of the year.”

Figures from the Bureau of Infrastructure, Transport and Regional Economics published recently showed Australia’s domestic carriers’ recent pullback of capacity growth appeared yet to have an impact on prices.

The BITRE data showed the cost of the cheapest economy tickets were below last year’s levels in August.

And a quick check online showed prices to Europe have been very attractive – prices for a return ticket from Sydney to Frankfurt were recently advertised for about $1,000, while fares to Asia on full-service carriers were below $600.

Webjet, which is an Australian Securities Exchange-listed company, runs both the Webjet and Zuji websites here in Australia and overseas as well as hotel room supplier businesses Lots of Hotels and SunHotels.

The company reported a net profit of $19.1 million for the 12 months to June 30 2014, up from $6.5 million in the prior corresponding period.

The improved result was due to a turnaround in the Zuji business, which Webjet acquired at the end of 2012, as well as a good year from its Lots of Hotels unit.


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