Darwin Airport works to fill the void left by Philippine Airlines, Malaysia Airlines and AirAsia

    Darwin Airport should be able to attract new foreign airlines and additional capacity from existing airlines to fill the void left by three international route suspensions.


    Summary

    • Darwin is working to attract new international services to fill the void left by a spate of three suspensions;
    • Darwin will have only three international routes – Bali, Dili, and Singapore – after Manila is dropped on 24-Mar-2018;
    • Darwin lost its link with Kuala Lumpur in Jul-2017, when Malaysia Airlines suspended services to Darwin and Darwin-Bali capacity declined recently as AirAsia suspended the route;
    • AirAsia, Malaysia Airlines and Philippine Airlines had accounted for approximately 40% of total international seat capacity at Darwin.

    Philippine Airlines (PAL) is suspending services to Darwin on 24-Mar-2018, leaving Australia’s Top End with service from only two foreign airlines.

    The last PAL flight comes only two months after AirAsia ceased scheduled services to Darwin, and eight months after Malaysia Airlines. AirAsia Group’s Indonesian affiliate operated its last flight from Darwin to Bali on 28-Jan-2018. Malaysia Airlines’ last flight from Darwin to Kuala Lumpur operated on 28-Jul-2017.

    Darwin still has a link with Bali operated by Australia-based Jetstar Airways. Singapore is Darwin’s only other international route and is currently served by Singapore-based, Jetstar Asia and Singapore Airlines full service regional subsidiary, SilkAir.

    Darwin is now trying to recruit another airline to serve the Manila route. It is also working to secure new international routes which previously have not been served.

    Donghai Airlines has been seeking approval to launch services to Darwin from Shenzhen, which would give Darwin its first scheduled route to China. Even a low frequency seasonal route from China would be a boon for Darwin and local tourism.

    Air Niugini is also be a possibility, as the Papua New Guinea flag carrier looks to build its network in Australia to be part of a new strategy to pursue sixth freedom traffic to China and the South Pacific. Darwin-Port Moresby would be a relatively short, and low risk, route that could be operated with regional jets.

    Darwin should also be able to secure additional capacity from the three remaining international airlines to fill the void left by three route suspensions. Both the Bali and Singapore routes could potentially support more capacity.

    An increase by Jetstar Airways on Darwin-Bali is possible, following AirAsia’s withdrawal. Meanwhile, more capacity to Singapore from both Jetstar Asia and SilkAir is feasible. Singapore is the best, and perhaps only, alternative for Darwin passengers that previously used PAL or Malaysia Airlines to reach Kuala Lumpur, Manila and other points beyond.

    The suspension of services by Malaysia Airlines, AirAsia and soon Philippine Airlines have resulted in a nearly 40% reduction in international seat capacity. Inevitably, Darwin will regain international capacity over the next couple of years.

    However, it is unlikely that the airport will again exceed 300,000 international passengers anytime soon. Darwin is Australia’s eighth largest international airport, handling 284,000 international passengers in the fiscal year ending Jun-2017 (FY2017). International traffic exceeded 300,000 for the first time in 2011 and peaked at 333,000 in 2013.

    Darwin Airport international passenger traffic and year over year growth: 1985 to 11M2017

    Source: CAPA – Centre for Aviation and BITRE

    Darwin, the capital of Australia’s Northern Territory, is a small city of 100,000. However, maintaining international services is critical given the importance of tourism for the Top End – a scenic and remote region.

    Darwin can be a challenging market for international airlines, because of its small size and high degree of seasonality. The average load factor on international flights to and from Darwin was only 70.5% in FY2017, well below the Australia-wide average of 79.3%.

    Darwin-Manila has the highest yield among Australia-Philippines routes. However, load factors have been low since PAL began serving Darwin in 2013 and the high yield is partially driven by the fact it is the shortest Australia-Philippines route.

    PAL carried only 13,248 local passengers between Darwin and Manila in FY2017. PAL carried to 35,679 passengers between Brisbane and Manila (via Darwin) in FY2017, driving the airline’s recent decision to launch nonstop flights from Brisbane to Manila. Malaysia Airlines carried 23,765 passengers on the Darwin-Kuala Lumpur route in FY2017.

    While Darwin could potentially secure another airline to restore the Kuala Lumpur and Manila routes, other international routes and additional capacity to Singapore could be a more viable long-term option.