australian aviation logo

Constrained capacity continued in October to fuel profits

written by Adam Thorn | January 13, 2023

Victor Pody shot aircraft including this Jetstar A320-200, VH-VFO

Airlines continued to hold back capacity in October, with aircraft remaining packed to the highest levels since records began.

Across the industry, the domestic industry peaked at virtually pre-pandemic passenger numbers in June last year, but it came alongside all-time records for delays being broken that month and in April and July 2022.

Since then, the industry has recruited thousands of extra staff and cut flights to improve the passenger experience. That decision, though, has had the knock-on effect of leading to huge profits.

New BITRE data released by the Department of Transport showed there were 5.17 million passengers carried on domestic aviation in October 2022, compared to 5.9 million in pre-pandemic October 2019.

And while the number of seats for sale, or capacity, was down from 6,830,000 to 5,806,000 in the same time comparison, the percentage of seats filled, or load factors, remained at a near record high of 85 per cent.


The extraordinarily high load factors, combined with high prices, would explain how the industry is on course to deliver record profits this year.

It comes after Virgin claimed to have hit real profitability for the first time since its damaging ‘capacity wars’ battle with Qantas and weeks after the national carrier itself said it was targeting an underlying profit before tax of up to $1.45 billion for the first half of the current financial year.

Rex this week also revealed its capital city 737 flights generated a profit before tax of $2.8 million in November, up $800,000 from the month prior.

In December, the ACCC warned it would be keeping a close eye on airlines to ensure they lower prices and increase seats for sale after the busy Christmas period.

“The ACCC will be monitoring the domestic airlines closely to ensure they return capacity to the market in a timely manner to bring downward pressure on airfares,” it said in its latest quarterly report on aviation.

“In this context, the ACCC would be concerned if the airlines withheld capacity in order to keep airfares high.

“Airfares are higher than they have been in years and higher than pre-pandemic levels. The average revenue per passenger, an indication of average airfares across all fare types, was 27 per cent higher in October 2022 than it was in October 2019.

“Of the different fare types, the discount economy fares are particularly high because airlines don’t need to offer sales in order to fill their planes. The discounted tickets that are made available are sold out quickly.

“An index of the discount economy fares across Australia’s top 70 domestic routes in November 2022 was more than double what it was in April 2022, when it hit an 11-year low.

“Flexible economy and business airfares have not increased as much as discount fares, and in November 2022 remained below pre-COVID-19 prices.”

You need to be a member to post comments. Become a member today!

You don't have credit card details available. You will be redirected to update payment method page. Click OK to continue.