Virgin Follows Qantas With Capacity Cuts – Troubling Signs for Domestic Travel

It seems safe to say domestic travel has peaked with Virgin Australia following Qantas in cutting capacity across its network due to softening demand.

And like Qantas, Virgin has cited weaker consumer confidence and the end of the mining boom as the major factors.

Virgin aid yesterday it’s cutting capacity by 5.1% for the June quarter across both its domestic and international operations.

In mid-April Qantas reduced capacity and re-routed services to better manage a drop in demand.

“Some softness in demand, related to the upcoming federal election and recent drop in consumer confidence in Australia, began to emerge over the peak Easter and school holiday period in late March and continued to be seen in forward bookings in April and May,” Qantas said.

As a result, Australia’s largest carrier has slashed its domestic services this quarter and says capacity growth for April, May and June “will now be negative compared to the prior corresponding period.

“As a result of these changes previous guidance for Group domestic capacity growth of around 2% in the second half of the financial year has been revised to growth of between 0.5% and 1%.

Services between Australia and the United States have also been reduced with Qantas removing three Sydney-Los Angeles services and re-directing that capacity to Singapore and Hong Kong, where demand remains strong.

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2 thoughts on “Virgin Follows Qantas With Capacity Cuts – Troubling Signs for Domestic Travel”

  1. This doesn’t add up to me … Domestic business for every leisure accomm/ attraction business I have spoken to of late has said domestic business is booming… Record levels… Is it the corporate market dropping away on BNE-SYD-MEL routes or are leisure routes dropping?

    1. I’ve been wondering the same. Could be a combination of softening corporate and also outbound. Qantas has had some issues with LA for example.

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