January growth numbers for Cairns Airport came in negative with domestic traffic down 1.4%, international up 4%, and combined total down 0.6%.
This wasn’t unexpected as posted last month. If anything given the recent lower growth numbers and the Chinese New Year move to mid February I wouldn’t have been at all surprised by something lower based on previous volatility at this time of year, although the 2017 CNY period was soft .
However, everything on the 12 month moving averages is still moving to lower growth. Domestic is the one to watch. I had intended to look more closely at the forward quarterly forecasts from the Airport last month. Indications appear to be that we could expect lower domestic capacity growth going forward than in recent years. TTNQ has recently indicated something similar in media reports:
“However, visitor growth will be constrained by access, so until more direct (international) flights are secured for Cairns we will not see the extraordinary growth experienced in the past few years.”
Qantas has been in the news for not paying tax. Don’t start me on some of the ignorance around information and partisan opinions on company tax. I suspect that tax situation is mostly related to the previous capacity war between Qantas and Virgin which saw big airline losses when Alan Joyce drew a line in the sand where Qantas would defend market share against a challenge form Virgin regardless .
There was also a tailwind with capacity shift from resource to tourism routes. We will have to see how this plays out with national seat capacity having been flat for a few years now:
United Airlines in the USA recently sent market valuations for the entire sector there into a tailspin when it announced an intention to increase capacity by 5% or so.