Budget Airlines: The Destruction of Australia's Domestic Tourism Industry or Convenient Way to Travel Internationally?

With such a beautiful and exotic national landscape, one can immediately garner why Australia is a travel destination for many tourists. However, it is easy to overlook the fact that many of these tourists, whose travel is crucial to the Australian economy, are in fact native Australians looking to explore their vast and varied national landscape. One would believe that Australian-based flights would be on the rise within the country, but in truth, Budget airlines such as Air Asia and Tiger Airways are believed by some to be heralding the death of the domestic tourism industry in Australia, as their cheap flights draw would-be domestic travelers into the international travel sphere.

With carriers offering such cheap packages to Asia, it appears impossible for local destinations to compete. As such, the question has been raised amongst Australians and individuals within the airline industry: are budget airlines truly destroying the market for domestic tourism in Australia? In viewing the impact that domestic tourism has on the Australian economy as well as in viewing how the money that would aid the economy is not being funneled into the Asian market, one can begin to see that such budget airlines do in fact harm the Australian sector. Additionally, in understanding the problem that currently exists, one can view the pros and cons of an Australian choice to accept the Singapore Airline Qantas.

Australia and Domestic Tourism

A mere glimpse into Australia, with its pristine coasts and beaches, equally beautiful outback, thriving cities and calming countryside, one can immediately understand that appeal of domestic travel within the country for citizens. Varying landscapes and amenities throughout the country continuously exist as a draw for citizens to truly explore the nation in which they live. As such, domestic tourism is an extremely important fixture of the Australian tourism industry and more importantly, the Australian economy.

According to a 2011 TNS Travel Omnibus report, one in four Australians (24%) plan on taking more trips within Australia within the next twelve months, with far more survey participants noting plans to take shorter, smaller breaks and trips within Australia (Tourism Australia, 2011, pp. 4). And trips come with a price, both to the Australian economy and the individual traveler. As of 2008, the TDEV (total domestic economic value) of the domestic tourism industry landed at $64.6 billion, with the average TDEV per trip, per day averaged $297 (Tourism Alliance, 2008, pp.1). This national economic impact is clearly extreme and significantly influential on the nation's overall economy. However, in viewing the national trip average as compared to the minimal prices asked by Asian competitors such as Air Asia, who in January of 2011 offered fares to Kuala Lumpur from Melboure, Perth, and the Gold Coast for a mere $199 (Travel Mania, 2011, pp.1). Such deals, since their inception, have consistently led would-be domestic travelers into the international travel sphere, and with more and more Australians jumping at the chance to travel internationally for a minimal cost, the Australian economy as well as the domestic tourism industry are set to continually suffer.

Budget Airlines: Air Asia, Tiger Airways

With Australian tourism markets losing out to the Asian market, money and profits additionally move from the Australian market into the pockets of Asia and its budget airlines such as Air Asia and Tiger Airlines. Budget airlines such as the two aforementioned companies have found a market in Australia, because the Australian people generally like to travel, and their travel habits have been easy to pinpoint in viewing the national economy as a whole. As such, with Australians funneling out of the country for travel, budget airlines are not only making a monumental profit, but have seen an area for the continued influx of profits by marketing specifically to the Australian people.

Today, the Australia is essentially unable to compete. Alan Dodson, managing editor of travel company Holiday Planet said he, "was finding it harder and harder to market Australia as a destination with low-cost carriers" such as Air Asia and Jetstar which continually offer cheap packages to Asia (Saurine, 2011, pp.1). In seeing the open market and influx of Australian travelers, companies such as Air Asia have even begun to launch "Exit Australia" promotions, with sales running continuously throughout 2012. A recent Air Asia promotional campaign, led by Australian marketing manager Stuart Myerscough notes the Asian draw:

"While your mates will be rugged up over winter,...

And with every Australian traveler opting for Asian destinations, the Australian tourism sector has not failed to notice. "If the low-cost carriers continue to grow, I think Australian is going to struggle more and more to fill leisure beds," Alan Dodson said, adding, "You can get four nights accommodation on the Gold Coast for $250 to $300, but for not a lot more than you can get a cheap package deal overseas" (Daily Telegraph, 2011, pp.1).
With every passing travel season, the Asian market continues to expand in Australian, and as such the Australian domestic market continues to contract. Budget Asian airlines continue to put more and more of their budgets into Australian marketing, and the Australian public continues to answer their call, and with every one of those answers, the Australian domestic tourism market takes another hit. The question, then, is how many hits can this industry take before it begins to crumble?

Singapore Airline, Qantas Merger: A Good or Bad Idea?

A Singapore Airlines, Qantas Airways, Ltd. merger has been on the table in the industry since early 2005, and even today, industrialists and laymen alike continue to speculate what would come of such a merger, especially in terms of how this merger would compete with budget airlines. In viewing the possible outcomes of such a merger, one can speculate whether or not such a business plan is in fact a good idea.

The merger of Asian airline, Singapore Airlines and Australian Airline, Qantas, some believe would have the capacity to bridge the gap between Asian and Australian markets the has existed since the inception of the "budget airline." One could imagine that should these two airline powers merge, the company, and its travelers, would reap the benefits of reasonable airfare within Australia as well as internationally with flights to Asia.

Travelers, industry insiders and government officials alike have continued to back the merger, and the proposal has been backed by many individuals, including Trade Minister Mark Vaile, who initially backed the plan in 2005 saying he wanted to "ensure that Australia's national carrier remained viable in the challenging commercial environment facing global airlines" (Creedy, 2008, pp.1). This belief is one that is mirrored by many individuals who back the proposed merger, and one can note that this type of deal allows Australia to put a foot in the door in terms of an escalated problem. In essence, if Australia can join "the problem," one could say that the Australian government, the airline industry, and the Australian economy could fare favorably in the long-run. Proponents of the plan see an outcome that includes Australia beginning to reap the benefits of international Asian travel in a way that not only aids the economy, but allows the Australian public a manner of transportation that is backed by the Australian people, rather than forcing travelers to look elsewhere to budget airlines.

This type of merger could essentially make up for the lost profits of the past and of today, that continue to accumulate and move from Australian pockets into the hands of Asian businesses and relative Asian economies. Additionally, such a merger could essentially stand up to budget airlines by not only competing but setting a new standard of excellence and practices within the airline industry. Such a merger, proponents believe, would allow the Australians to face an existing problem head on, and essentially join a thriving market rather than adjusting business plans in order to make up for lost time and lost profits in the international market.

Unlike individuals who back such a merger and its overall outcomes, others believe that the outcome of such a transaction could not only compromise the Australian airline market but Australia's travel industry. With the merger of one successful Australian airline with an airline that is more likely to adhere to budgetary standards, Qantas can set the standard of Australian airlines essentially "caving" to the competition rather than implementing ways to fight the issue from the inside-out.

The Australian tourism industry has long been one of the most successful industries in…