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Sydney airfares fall on key international routes, hotel rates rise more than 5%: CWT/CAPA Report

August 2, 2017 Statistics & Trends No Comments Email Email

CWT Solutions Group, the consulting division of Carlson Wagonlit Travel, and CAPA – Centre for Aviation have identified that the Average Ticket Price (ATP) to Sydney on many key international routes has decreased year-on-year. Airfares on the Sydney-Singapore and Sydney-Hong Kong routes have fallen more than 5% year-on-year.

Meanwhile, the ATP between Sydney and almost all major Australian cities has increased, with tickets to Melbourne and Perth rising more than 5% year-on-year.

These findings are published in CAPA and CWT Solutions Group’s latest Business Travel Pulse report.

“Sydney is very much at the heart of Australia’s aviation system both internationally and domestically,” said CAPA Executive Chairman, Peter Harbison. “With very strong international growth, particularly from China, it is a key stepping off point for international tourism. Domestically, as the fare war between Qantas and Virgin subsides and capacity constraints, particularly in Sydney, we will begin to witness a gradual move upwards in fares.”

“We have seen a capacity evolution from Asian and Middle Eastern carriers, as well as more routes becoming available between Asia and a wider range of Australian cities for LCC’s,” said Richard Johnson, Director, Asia Pacific, CWT Solutions Group. “These factors create more choice for travelers and could be contributing to the decrease in international airfares.”

Passenger numbers for Sydney increased by 5.6% in 2016, with a further increase of 3% projected for 2017. Seat growth has evolved at a slower pace, with only a 3% increase in 2016. However, 2017 is showing a more aggressive capacity increase to absorb the growing demand with the introduction of several new services including Vietnam Airlines’ recently commenced three times weekly Hanoi-Sydney service. Further, Cebu Pacific plans to increase its Manila-Sydney frequency from four to at least seven times weekly.

The introduction of new upgrades, in particular Singapore Airlines’ change to A380 equipment featuring new first and business class seats on Singapore-Sydney service from October, and American Airlines’ replacement of Boeing 777-300ER aircraft with 787-9 equipment, proves continued investment into Sydney.

Looking at hotels, Sydney has the highest occupancy rate in Australia at 89%. The report reveals that occupancy is expected to remain flat in 2017, but average room rates have increased 5.6% due to supply issues. New hotels including the Travelodge Hotel at Sydney Airport and the Sofitel Darling Harbour are opening in 2017, but are not expected to fully absorb the growing demand.

“We’ve seen evidence of booking times to access lead-in room rates extending as demand has increased,” said Johnson. “Leisure travelers are often booking months in advance and the historical ‘best practice’ of at least 21 days out for business bookings has consequently also increased to around 30 days.”

 “The consistently high occupancy rates that Sydney enjoys could attract foreign investment into the hospitality market and increase the hotel pipeline, facilitating more growth down the road,” added Johnson.

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