Alan Kohler was shocked last night that discount airfares had risen 38.9% in December.

Note that the 38.9% is an increase on the previous month and not on the previous year. The BITRE data presented here appears to have come via CommSec who are possessed of sound clickbait skills. So to refer to BITRE:

Indexes are constructed from BITRE’s monthly survey of airline internet booking sites. Fares are recorded only when they are available on the nominated day of travel (the last Thursday of the month). The series is a price index of the lowest available fare in each fare class, weighted over selected routes.

Occasionally, the index may record an unusual result when the nominated day of travel falls on, or adjacent to, a public holiday:

The travel date fell the day after a public holiday in April 2018 and December 2018.

To return to the above chart note the initial point which is the Christmas spike in December 2012. Keen dayologists will recognise that 6 years ago was the last time the Thursday survey date fell immediately after Boxing Day. The discount airfare index increased 53.2% that year compared to the prior month. A similar spike can also be found in March this year when the early Easter shifted Good Friday to the day after the survey date. So no, not unusual.

However, airfare trends are rising in line with airline profits and Allan Joyce’s bonus as capacity discipline is maintained. In positive news though, Qantas has just announced increased capacity:

Qantas is ramping up its flights to Queensland with more domestic services to Cairns, the Sunshine Coast, Townsville and Mount Isa, along with new business class options for travellers jetting from Sydney and Melbourne to Far North Queensland.

On the Brisbane-Cairns route, Qantas currently provides up to four daily return flights, but from late March, 11 additional weekly return services will be added to the schedule.

That should provide a welcome boost to the recent weak trend at the airport.

Also, I hadn’t looked through the BITRE airfare data before but it includes a neat interactive feature where you can explore data by route such as BNE-CNS:

Reef Casino (ASX:RCT) has posted estimated distribution and guidance for 2018:

In the second half, hotel operations have continued to perform strongly. Casino operations have been lower because of strong local slots competition, a softer Chinese tourist market and lower spending by patrons generally. The recently completed Casino Refresh Project resulted in some disruptions however the casino now has a more competitive product.

RCT reports on a calendar financial year. The estimated profit of approximately $10 million is the lowest result since 2010. The second half result in particular is a concern:

1. The commentary on China is consistent with flat ABS arrivals data despite direct flights to Cairns throughout the 2H period.
2. The commentary on lower slots (pokies) is in contrast to booming numbers at pubs & clubs in Cairns including other venues in the City SA2. Should be an imminent update on that data for November.

All interesting in the context of a new casino proposal for the “global tourism hub”.

There has been an issue with the International Visitor Survey (IVS) around purpose of visit data. This hasn’t been provided for recent quarters with the most recent data for the year to December 2017. The IVS requires benchmark data on this from ABS Overseas Arrivals & Departures (OAD). TRA have indicated issues with this as the reason purpose of visit data has been withheld in the IVS. The ABS explains:

In July 2017, the Australian Government Department of Home Affairs introduced changes to the incoming passenger card. The change was to capture the main reason for journey for both residents returning, and visitors arriving in Australia. The ABS has noted changes in the distribution of responses to the question on main reason for journey for short-term visitor arrivals in recent months, notably an increase in the number of persons reporting that the main reason for travel was visiting friends and relatives and a decline in the number of persons reporting the main reason was a holiday. From investigations by Home Affairs changes were made to their process of coding main reason for journey from the new incoming passenger card, and to further assist in improving quality the imputation for main reason for journey was reviewed and improved by the ABS.

Clear as mud. Holiday and VFR (visiting friends & relatives) are overwhelmingly the dominant categories for short term (< 1 year) arrivals. Here is what it looks like over the last 5 years or so in terms of rolling annual growth for these categories;

The inverse correlation since 2015 is just a bit curious. Where this becomes interesting is that Queensland appears to have recently had something of a revival in arrivals growth for state of intended stay in the ABS data mostly at the expense of NSW:

The green & gold snake there is Straya. However, short term arrivals in Queensland are more heavily weighted to the holiday sector than other major states. Category by state only comes with the IVS and not the ABS data. IVS category share by state data year to December 2017 for major categories:

NSW          Vic          Qld
Holiday                   58.9%       53.5%      70.0%
VFR                          27.2%       32.1%      24.0%
Business                  11.3%       11.2%       6.9%
Employment             2.3%        2.2%       1.9%
Education                 5.4%        6.3%        4.1%

Yet, growth in Queensland has rebounded while the holiday sector has been flat for Australian arrivals? Should be interesting when we finally get the IVS numbers from TRA.

Note: State totals sum to more than 100% related to note b in table 4:  “b. Individual purpose totals will not sum to the State total as international visitors may have visited more than one region within the state for different purposes while in Australia”

Previous post: Some quick graphs on O/S A&D

Overseas Arrivals and Departures data from ABS last week. Apart from a few tweeters and bloggers recent trends in Chinese short term arrivals have drawn little interest. The kind of growth numbers we have seen in the past have sort of evaporated in recent months: Is the Chinese tourism boom to Australia coming to an end?

It’s worth looking at the ABS original raw data in comparison with the seasonal and trend measures:

Seasonal adjustment on the Chinese data is huge. Note that this isn’t just related to the Chinese New Year period on monthly data but also to July which also correlates with education purpose of visit.

The scale range there doesn’t quite display the growth slowdown. The slightly negative original monthly data for October is the first such month outside the monthly lunar new year fluctuations for quite a while. Flat periods have happened before most particularly the regulatory change around Chinese tour packages a few years ago.

What prompted this post was the release yesterday from Auckland Airport which seems to indicate a rather abrupt slowdown in Chinese arrivals over the ditch:

October:  -3.4%; Financial year to date: +2.1%; Rolling annual growth: +8.2%

This looks like something to watch to me.

The Queensland Government Statistician’s Office has updated population projections for local governments areas and statistical regions from SA4 to SA2 level. There are a few posts and comments on this floating around and Pete has the basic numbers for the region at Conus: Cairns projected growth

At SA4 level Nick Behrens tweeted a regional SA4 comparison graph. There are a few issues with regional comparisons between urban areas and SA4 but what I would look at in the weirdly organised QGSO collection of reports and files is this one:

This graph is numbers of people and not percentage growth. I can’t find any information for download that relates specifically to this graph in the convoluted QGSO web nightmare but haven’t looked too hard.

There are two questions that stand out for me here:

1. Net Overseas Migration estimates compounded appear to be less disparate between regions as a percentage than recent history would suggest but detailed numbers would be good.
2. Intrastate migration is negative in areas without lifestyle proximity to Brisbane except Townsville. I would like to know the assumptions behind that.

There will inevitably be another response some time from Bill Cummings on this topic. While he typically raises a few good points his approach related to long term historical averages is also questionable: Cairns – Leading Population Growth in Northern Australia

Previous post: Population & Migration

The October report from Sydney Airport today was somewhat different from Cairns Airport:

Sydney Airport CEO Geoff Culbert said, “We had more than 3.9 million passengers travelling through the airport during October. This has been the busiest month for 2018, with growth of 3.2 per cent compared to October 2017.
“International passenger traffic in October increased 6.0% compared to the prior corresponding period. Domestic passenger traffic also performed well growing 1.6%. This strong October result was driven by both seat capacity growth and stable load factors.
“Sydney’s fastest growing foreign nationalities included Japanese (13.0%), American (12.3%) and Indian (10.1%) visitors. Australian outbound international passenger growth also performed well increasing 8.6% for the month, with many Australians choosing to travel overseas during the September/October school holiday period.”

Now these are very different airports with a different mix of passengers. However, if anything this may indicate the recent underperformance gap at Cairns has not closed or may even have widened further.

Sydney provides this information because it is a listed public company. Cairns Airport has provided timely information superior to any other airport apart from Sydney that I am aware of in Australia. However given the relative significance to Cairns and issues around a controversial privatisation maybe it should. Cairns Airport has provided no commentary on monthly performance for two months now which is the first time I can recall .

The ABS Overseas Arrivals & Departures data was out yesterday with a few interesting things to look at.

Update: Sydney also provides excellent timely monthly data on international visitor traffic.

Any anticipation of a bounce in October related to changes in school holiday timing were disappointed with another Friday dump of negative data. International +0.1%, domestic -1.2%, total -1.0% ex transits and transfers. I guess a less negative result could sort of a positive.

Should be some numbers and commentary from Sydney Airport next week to provide some comparison and general market context.

Previous posts: Cairns Airport: Friday dump; Cruising just above stall speed

EGM (pokie) player loss growth updated for October:

Cairns was led again by the gambling pokie elites of Port Douglas up 19.6% on October 2017 followed by the Cairns City SA2 up 14.9% (ex Reef Casino).

BITRE comparative airport data for the year to August 2018:

Cairns drops two places down the ladder at 1.4% ever so slightly behind Newcastle and Gold Coast.

Proserpine remains an outlier and should accelerate from here back towards the field even before Whitsunday shark scares. See last months post: What goes around

Huge winners for the month of August YoY though were Sunshine Coast +20.9%; Ballina +18.5%; Mackay +15.2% compared to the previous year. Nowhere else was although Tasmania is noted again with both Hobart and Launceston among the higher single digit performers for the month. In winter.

There are some differences between the BITRE data and Cairns Airport statistics but this comparative graph of annual passenger growth should be a concern:

Hopefully there will be some positive effect from increased accommodation capacity at the higher end of the market and any external shocks are avoided. Also that current crane activity rolls over into new projects.

Experience Co held its AGM last week. The only thing usually to note from these events is the update since the FY2018 end.

FY19 1st QUARTER UPDATE
Experience Co Limited advise the following update for the period 1 July 2018 to 30 September 2018:
Passenger numbers: • Skydive (Australia and New Zealand) passengers are down 1.4% on same period last year (LFL) • Other Adventure passengers are up 1.6% on same period last year (LFL)
Based on the passenger numbers for the 1st quarter, together with the passenger bookings and processing during October to date, the business is tracking in line with management expectations and accordingly reaffirm FY19 guidance.

What to look at here is “Other Adventure passengers”. This is almost entirely the suite of Cairns tour businesses*. I’m not sure I would call 1.6% passenger growth on the previous peak season quarter an outstanding result. I think I would call it modest. As some businesses were acquired within the year I am assuming these are comparable numbers.

Experience Co has been an interesting ride for investors since the acquisitions into FNQ and the name change. Investors would now be down more than 50%:

I have repeatedly warned with every post that Experience Co is followed as an insight into an important sector of Cairns tourism and not investment advice. The lower share price will though constrain scope for further acquisitions.

* FNQ Cairns businesses: Raging Thunder; Reef Magic; Big Cat; GBR Helicopters; Tropical Journeys