Townsville aims for new international route following suspension of Jetstar’s Bali service

Townsville Airport could potentially attract a new international route to fill the void left by Jetstar’s suspension of services from Townsville to Bali.

Jetstar recently announced the suspension of these services from Townsville to Bali effective 21-Mar-2018. Jetstar has operated the route with three weekly A320 frequencies since 2015.

Bali was Townsville’s only international destination until 31-Mar-2017, when Air Niugini launched services to Townsville from Port Moresby. Air Niugini currently operates the Townsville-Port Moresby route with two weekly flights using 80-seat Fokker 70 regional jets.

The Townsville-Bali route has struggled over the last two years despite promotional efforts and airport incentives. In 2016, Jetstar carried 41,479 passengers between Townsville and Bali and had an average load factor of 75%, according to BITRE data. Jetstar’s average international load factor in 2016 was 82%.

In Jun-2017 (the most recent month of BITRE data), Jetstar carried 3,600 passengers on the Townsville-Bali route and had an average load factor of 80%. Air Niugini carried 629 passengers on the Townsville-Port Moresby route in Jun-2017 with an average load factor of only 44%.

Air Niugini’s load factor on the Townsville-Port Moresby route was an even lower 38% in May-2017. No figures for the Townsville-Moresby route were provided by BITRE for Apr-2017, the first full month the new service was operated.

While the recent data is discouraging, it is too early to fully assess the long-term viability of the Port Moresby service as a new international route typically takes several months to mature. Air Niugini is offering Townsville passengers connections beyond Port Moresby but is mainly relying on the local market. Air Niugini’s Townsville flight only connects with its Bali flight in one direction once per week. Townsville-Singapore connections are available in both directions but only once per week.

Townsville is keen to attract a bigger Asian network airline, which would open up more one-stop options, providing a larger passenger base that would be needed to make a new international route viable over the long term. With the Townsville-Bali route Jetstar had to rely almost entirely on the local market, which ultimately proved too small. Air Niugini now seems to be facing similar challenges with the new Townsville-Port Moresby route.

Malaysian long haul low cost carrier AirAsia X has previously cited Townsville as a potential new destination in Australia. AirAsia X would serve Townsville from its Kuala Lumpur hub, where connections are available on the AirAsia Group to destinations throughout Southeast Asia, South Asia and China.

However, Singapore Airlines (SIA) full service regional subsidiary SilkAir could be a better fit for the Townsville market as it operates smaller aircraft than AirAsia X and would be able to offer connections to Europe on SIA along with regional connections throughout Southeast Asia, South Asia and China. SilkAir would use 156-seat 737 MAX 8 aircraft on the potential Singapore-Townsville route, while AirAsia X would use 377-seat A330-300s.

SilkAir plans to place its first 737 MAX 8 into service in Oct-2017. The MAX 8 opens up new thin medium haul routes for SilkAir (and the SIA Group) which would not be feasible with its current fleet of 737-800s. SilkAir now uses the 737-800 to serve Cairns but the aircraft would likely not be able to reach Townsville, which is 350km south of Cairns, without payload restrictions.

Air New Zealand is also a potential new airline for Townsville. Air NZ, which is keen to continue pursuing growth opportunities in Australia, would be able to provide convenient one-stop connections to North America and stimulate demand in the local Townsville-New Zealand market. Air New Zealand has been successful serving another regional airport in Queensland, Sunshine Coast, where it has operated seasonal services since 2012.

Less than 3% of Townsville’s passenger traffic in 2016 was in the international market. Townsville Airport handled 1.53 million passengers in 2016, including 1.49 domestic passengers. Townsville Airport currently has 14 domestic routes and is served by eight domestic airlines (based on CAPA and OAG data for the week commencing 11-Sep-2017).

Qantas is the market leader, accounting for 38% of Townsville’s total seat capacity. Qantas offers international connections to Townsville passengers using its Brisbane hub. Qantas has five daily flights from Townsville to Brisbane. Qantas does not operate Townsville-Melbourne or Townsville-Sydney, but Townsville passengers needing to access the Melbourne and Sydney hubs for international services are able to use Jetstar’s services on the domestic sectors.

Townsville Airport passenger traffic has declined since 2011, when a record 1.62 million passengers were handled. However, traffic increased slightly in 2015, 2016 and 1H2017 – driven by the growth in international traffic. In 2014, Townsville did not have any international services.

Attracting a new international route will be critical for Townsville to continue its recent (albeit modest) growth trajectory.

Townsville Airport passenger traffic and year over year growth: 1985 to 1H2017

Source: CAPA – Centre for Aviation and BITRE