Virgin Australia is set to pull its Sydney-Coffs Harbour route just four months after restarting it, Australian Aviation can reveal.
It comes after the airline aggressively pursued the intrastate NSW service, offering significantly cheaper fares than competitors Qantas and Rex.
Australian Aviation understands Virgin’s exit was in light of subdued demand but could be revisited if demand improves.
The information was contained in the recent Airline Competition in Australia report by the ACCC, which revealed Virgin has removed it from its flight schedule from 27 March.
The airline only restarted its Sydney-Coffs Harbour route on 11 November, as regional and domestic travel restrictions began to ease throughout NSW.
Notably, at this time, all three major domestic carriers – Qantas, Virgin and Rex – were operating services from the holiday resort to the NSW capital.
The ACCC noted that Virgin marked its re-entrance onto the route with a $45 sale economy airfare that beat out Qantas’ lowest airfare on the same route of $129, and Rex’s cheapest fare of $99 one-way.
Both Rex and Virgin raised airfares in February, however, Virgin remained the cheapest fare on the market.
“Although the response of the other airlines to Virgin’s entry on Sydney-Coffs Harbour was not significant, consumers benefit because the new entrant offered airfares at a lower price than was previously available,” the ACCC said in its report.
“However, in this instance, lower prices offered by the new entrant may not be sustained.
“By late February 2022, Virgin was not offering flights on its website for Sydney-Coffs Harbour after 27 March 2022.”
A Virgin Australia spokesperson said, “The emergence of the Omicron variant of COVID-19 late last year and its continued spread into 2022 has had a significant impact on travel demand.
“We continue to review our forward schedule and will provide service in line with demand.”
The spokesperson stated that Virgin remains “committed to the Coffs Harbour market” with its Melbourne to Coffs Harbour service, which will soon move from seasonal to permanent year-round.
Meanwhile, Virgin has also postponed the launch of services between Sydney and Canberra through its wet lease agreement with Link Airways, announced in December 2021.
The airline was planning to reinstate over 50 services per week on this route from 30 January 2022, when it anticipated business traffic would begin its recovery, using Link Airways’ 34-seat Saab 340 turboprop aircraft.
“The agreement with Link Airways will extend the Virgin Australia domestic network reach into markets like Sydney-Canberra that its own 737-800 aircraft cannot serve effectively,” Virgin said in a statement at the time.
Once Virgin does recommence services on Sydney-Canberra, it too will join the list of routes that all three domestic airlines groups operate.
It follows months of so-called “capacity wars” following the expansion of Rex into the capital city domestic market, which incited a long-running war of words particularly between Rex and Qantas.
However, according to ACCC chair Rod Sims, the addition of Rex into the domestic airline market has been positive for consumers, increasing competition between incumbent players and driving down airfares,
“The Australian domestic airline industry has predominantly been a duopoly since deregulation 30 years ago, but we now have three airline groups competing on some of Australia’s busiest routes,” Sims said.
“We’ve seen significant price reductions on these routes due to increased competition,” he said.
“Each airline is working hard to win over consumers and as they continue fighting for market share, we can expect competitive airfares, improved connectivity, and better products and services.”
The news comes despite Virgin claiming the largest share of the passenger market in January, according to the ACCC’s report.
According to the report, Virgin claimed 34 per cent of the passenger market in January, up from 33 per cent in October 2021.
The figure surpasses Virgin’s long-held target since exiting administration in November 2020 to achieve and hold onto 33 per cent of domestic market share. Virgin boasted just 22 per cent share in November 2020.
Qantas and Jetstar each claimed 31 per cent of the month’s domestic passenger market share, sending the Qantas Group’s collective share to just 62 per cent, well below the Group’s target of 70 per cent.
Rex’s share has remained steady since October 2021 at 4 per cent.