Australian Domestic Market: Australian Aviation Industry

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For approximately the past 20 years, since the deregulation of the Australian Aviation industry, the Australian Domestic Market has been profitable. The past half year has brought to light the first negative effects of fierce competition between Australia's airlines the Qantas group and Virgin Australia Holdings Pty Ltd (VAH) (which will be further referred to in this document as Virgin Australia) in the form of loss which can be seen in the below figure.

In recent years, the Australian Domestic market has been predominantly a duopoly style market with Qantas Group and Virgin Australia being the main competitors contributing to market share. Virgin Australia entered late after deregulation and offered the first real competition to Qantas Groups monopoly hold of the marketplace, beginning first operation in 2000 as Virgin Blue. Qantas held a monopoly position in the Australian market up until 2000, as a FCC (Full Cost Carrier). After deregulation and the end of the two airline policy, Qantas group could now bring in a LCC (Low cost carrier) in 2003 to service a newly developing market of leisure travel. Virgin Australia made the call to compete in the same market by creating their own LCC in 2007, Tiger Airways. The Qantas Group for many years has occupied around 65% market share, with Virgin Australia and Tiger market share growing each year.

In the past year, according to BITRE data, there has been an increase of 1.7% for the amount of total passengers carried on the Australian Domestic network. Accompanying the increase in total passengers carried was an appropriate increase in RPK (Revenue Passenger Kilometres) at 2.0% and an increase of ASK (Available Seat Kilometres) at 3.2%. This data tells us that the past year ...

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