Bali gets cheaper for Australians as airline competition intensifies

Competition in the Adelaide-Bali market has intensified with the launch of services from Malindo Air and additional capacity from Jetstar. The overall Australia-Bali market is experiencing a surge in additional capacity, providing more options for Australians seeking to holiday on the Indonesian island.


Highlights:

  • Adealaide-Bali capacity levels will reach record levels in July driven by the launch of services from Malindo Air and a second daily flight from Jetstar Airways;
  • Australia-Bali capacity levels will also reach record levels in July driven by increases from Malindo, Jetstar, Qantas and Virgin Australia;
  • Intensifying competition is pressuring fares; in the Adelaide-Bali market there are now return flights available for less than AUD400.

Malaysia-based Malindo Air launched services to Adelaide on 17-Apr-2019 and is now operating four weekly Boeing 737-800 flights on an Adelaide-Bali-Kuala Lumpur routing. The Lion Group carrier is relying mainly on Australians heading to Bali for holiday to fill the first leg, using fifth freedom traffic rights.

Adelaide-Bali is Malindo’s third Australia-Bali route after Brisbane (launched in 2017) and Melbourne (launched in 2018) flights. It is planning to launch Sydney-Bali later this year. All of Malindo’s Australia-Bali flights continue to Kuala Lumpur; only one of its Australia destinations, Perth, is served with a nonstop service to Kuala Lumpur.

Jetstar has responded to Malindo’s Adelaide-Bali launch by unveiling plans to double capacity on the route. It will operate two daily A320 flights from Adelaide to Bali from early July to October, when (for the time being) it plans to revert to one daily flight.

It is offering return fares on Adelaide-Bali starting at around AUD400 including taxes for travel in 3Q2019. Malindo’s lowest fares on the route is even lower – starting at around AUD350. Malindo has a full-service economy product with seatback IFE, meals, drinks and checked bags while Jetstar follows an LCC no frills model.

CHART – Weekly one-way seat capacity on the Adelaide-Bali route will exceed 3,000 weekly seats in JulySource: CAPA – Centre for Aviation & OAG.

The Malaysian carrier also has a business class cabin on its 737s, providing the Adelaide-Bali market with a nonstop business class option for the first time since Mar-2016, when Virgin Australia transferred the route to its LCC subsidiary Tigerair Australia. The latter suspended services to Bali in early 2017, leaving Jetstar as the only operator on the Adelaide-Bali route.

Malindo’s launch has essentially filled the void left by Tigerair Australia/Virgin Australia but Jetstar’s upcoming increase results in a record level of capacity. Capacity in the broader Australia-Bali market is also reaching record levels in Jul-2019.

CHART – Weekly one-way seat capacity in the Australia-Bali market will reach nearly 40,000 weekly seats in JulySource: CAPA – Centre for Aviation & OAG.

The Malindo launch and Jetstar increase on Adelaide-Bali is just one of the drivers in the overall Australia-Bali increase. Two of the other main competitors in the Australia-Bali market – Qantas and Virgin Australia – have both increased capacity for the current southern winter season. Qantas has upgauged Sydney-Bali from 737-800s to A330s. It also relaunched Melbourne-Bali last year (this route is still served with 737-800s).

Virgin Australia launched Darwin-Bali on 9-Apr-2019, providing new competition for Jetstar. This launch and Malindo’s launch of Adelaide-Bali means that six of the eight Australia-Bali routes are now competitive. The only exceptions are the very small Cairns-Bali (operated by Jetstar) and Port Headland-Bali (operated by Virgin Australia) routes.

The intensifying competition is good for consumers as it results in lower fares, particularly during off peak periods. Bali is one of the most popular holiday destinations for Australians – and continues to grow.  Australian visitor numbers to Indonesian increased by 4% in 2018 to 1.3 million, according to data from BPS Statistics Indonesia. Visitor numbers were up 2% in the first two months of 2019 and growth will likely accelerate in 2H2019 as capacity to Bali, which accounts for most Australian visitors to Indonesia, increases to record levels.