Globally we are in economically uncertain times – of that much, most people are well-aware – the travel industry certainly is.
As covered by Travel Daily and travelBulletin over the last couple of months, demand has been softening somewhat, and generally speaking, “tariffs” and “uncertainty” seem to be the terms bandied about the most when it comes to the reasons why.
But there is growing opportunity – travel to Asia.
Last week, the Reserve Bank of Australia produced another 0.25 percentage point cut, while RBA governor Michele Bullock wasn’t shy to suggest that the RBA board considered a more substantial 0.5 reprieve – a statement which has analysts’ tongues wagging in terms of the potential for another 0.25 percentage point cut when the board next meets.
While this may not be the best news for home buyers (with house prices expected to increase – but that is another story), it could be a great thing for the travel industry, with discretionary spend, particularly in the middle market, potentially increasing.
As reported by the AFR in December last year, the average first-home buyer in Australia is “thirty-four years old, a couple and [has] a $486,000 mortgage” – they now have a nice bump in the hit pocket each month.
This is important because earlier in the year, before the “tariffs” and “uncertainty” hit, travel was high on the priority list for Australians.
Per ATIA’s Travel Trends report, which draws from ABS and Department of Infrastructure data, international travel by Australians surged to 11.97 million trips for the year ending March 2025, up from 10.54 million the year prior.
Japan led the way with a 38.4% year-on-year increase, followed by China (+35.0%) and Vietnam (+26.2%), underscoring a clear pivot toward the Asia-Pacific region.
ATIA CEO Dean Long said in a statement, “These trends highlight the need for a competitive and reliable aviation and travel sector to support continued growth.”
That clear pivot towards the Asia-Pacific region is now being leant into by a new powerhouse in aviation – the long-haul low-cost carrier, as it looks to provide the competitive and reliable aviation Long requested.
While it’s not a new thing by any stretch, the breadth of their reach onto our shores has significantly increased lately, which is opening up new destinations at more affordable prices for consumers with a bit of extra money burning a virtual hole in their digital wallet (does anyone use physical cash these days?).
Think VietJet, Cebu Pacific, Malindo, T’way and others.
Long-haul LCC has had a bumpy ride since inception, with plenty of different models seeing varied success.
OAG’s John Grant wrote: “It’s always seemed that for long-haul airlines, a key challenge has been to achieve a point of critical mass where they both have enough aircraft and a stable network with minimal seasonal churn to allow them to develop from a solid base.”
Enough aircraft and a stable network look like it could be a reality, if not now, then very soon.
Last week, the Sydney Airline Leadership Forum took place, and renowned aviation analyst Peter Harbison shared this about the situation around LCC:
“The big thing that has been developing is that there are about 10 or 11 long-haul low-cost carriers which are now servicing this market [Asia] and [they are] accounting for almost a quarter of the total international aviation market.
“Now if you relate that to the fact that all of those long-haul low-cost operators are operating within Asia, Southeast Asia and northeast Asia, it’s actually a much higher proportion of that market.”
He went on to mention that it has “created a profile for the market that is a much more low-cost profile” and that operating around 450 seats on an Airbus A330 is “pretty efficient operating” and that is really going to dominate the market.
Only a relatively stable market can produce that kind of opportunity, and what qualifies as “stable” will begin to relax, as new and smaller aircraft hit the market that are capable of doing distances only widebody aircraft were previously able to.
This will open up a variety of new route opportunities in Australia, particularly to various destinations in Asia, with much less risk for the carriers, creating what Harbison describes as an “increasingly competitive low-cost market”.
He noted the introduction of the “very efficient” Airbus A321XLRs shortly as one aircraft in particular which would change the game. While not low-cost, Qantas has ordered 28 of them.
“They’ll be coming more slowly because of supply chain issues and delivery production capabilities, but it does mean that we’re going to be able to fly on a narrow body aircraft between Hong Kong and Sydney,” he said.
“It’s going to be another gamechanger as these long-haul narrow body aircraft are really starting to [come into their own], because of their flexibility in terms of network planning, but also because of their unit costs on long haul operations.
“The unit cost obviously increases as you go further out to getting towards 8,700 kilometers, but these things are presumably heading in the same direction and going to continue in that direction.”
According to Airbus, “the A321 XLR has a range of up to 4,700nm – 15% more range than the A321LR and with 30% lower fuel burn per seat compared with previous generation competitor aircraft, as well as reduced NOx emissions and noise”.
So far, Airbus has secured more than 500 orders for the aircraft.
In the current market, it is clear that most international LCCs are pulling good pax numbers. From the most recent BITRE data for Feb, Jetstar rose from 352,732 total passengers in 2024 to 400,873 this year across all services, Cebu Pacific went from 19,929 to 26,303, and VietJet from 44,615 to 47,409.
There were some notable drops, however, like Scoot, which went from 97,642 to 82,712.
With all that in mind, it would be wise to keep note of the growth of LCCs in the Australian market, as they potentially increase the opportunities to travel significantly, particularly to a variety of Asian destinations, while lowering the price of travel.
