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Jetstar says south-east Asia holidays good value despite weak Australian dollar

Jamie Freed
Updated

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The fall in the Australian dollar has resulted in a shift in demand toward south-east Asian travel destinations, such as Bali instead of Hawaii, which has become more expensive when hotels and spending are included, says Jetstar Group chief executive Jayne Hrdlicka​.

"It is affecting things at a moderate level," she told the CAPA 2015 Australia-Pacific Aviation Summit in Sydney on Wednesday. "It is not a big fall. But we are seeing there is more demand going into south-east Asia – Bali in particular – and a little bit less going into more expensive travel options."

Ms Hrdlicka said the weaker currency was also helping to boost domestic leisure travel, but Australians would still fly overseas if they believed they could get better overall value.

Jetstar is seeing "more demand" for travel to south-east Asia.  Reuters

"The challenge with Australian domestic destinations is the same challenge we have had for some time, which is the value for money aspect," she said. "It is still quite expensive to travel domestically relative to south-east Asia ... If you look at the end-to-end cost of your travel with flights, transportation on the ground, your hotel, what it would cost you to go out to eat … if you have a family of four, you weigh up what that experience is relative to this experience."

Despite that, Ms Hrdlicka said she expected the domestic leisure market, which she described as "OK" at present, would improve over the next year or two.

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Focus on Bali

Jetstar has revamped its international network over the past year to focus more on flying to leisure destinations with high customer demand, such as Bali, where it is now the biggest operator from Australia. As a result, it has cut flights from Auckland to Singapore and Singapore to Beijing. Ms Hrdlicka said the changes had made a big difference to results in the carrier's international division.

In the domestic market, Ms Hrdlicka said Jetstar was reporting increased passenger revenue, which she believed was due in part to Virgin customers shifting to Jetstar as a result of Virgin's move upmarket. Virgin now includes free checked baggage and food in its fares, increasing the cost of its lowest-cost ticket options.

"Core, passionate customers have been abandoned in Virgin's move to be a premium player in the marketplace," she said. "Virgin has become too expensive. You can see it in our numbers."

Jetstar is also taking advantage of new international opportunities, such as a partnership with Chinese property developer Wanda Group for new flights from the Gold Coast to Wuhan, China. Ms Hrdlicka said the deal would add 700,000 annual seats to the market and would help increase Chinese tourism to Australia.

Rival China Southern is also planning to increase its flights between Australia and New Zealand and its Guangzhou hub to take advantage of growing demand from Chinese tourists.

China Southern senior vice-president of sales Li Dongliang said the carrier was likely to offer 67 flights a week to Australia and New Zealand by the end of this year, up from 24 in 2010. Those could include new services to Christchurch, along with increased flying to Sydney, Melbourne and Perth.

Mr Li said China Southern, which had previously flown charter services to the Gold Coast and Cairns, was also looking to make those year-round destinations. China Southern is the largest carrier between China and Australia.

"Our target is to operate to all of the main cities in the South Pacific," he said, raising the prospect of flights between Guangzhou and Brazil via either Auckland or Tahiti in the future.

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