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Jetgo’s entry into voluntary administration leaves a large hole in the Australian regional aviation market

On 1 June 2018, Jetgo, the Brisbane-based regional and charter airline went into voluntary administration. Since it started operations, Jetgo had quickly become a significant player in regional Australia and in this blog we examine the impact this will have on passengers, airports, and the market overall.

 

The Jetgo Network

Jetgo started charter operations in 2012 and began providing regular passenger services in 2014. With its fleet of five Embraer regional jets, carrying between 37 to 50 passengers, the airline serviced a small but growing network throughout the Australian east coast. Services between Brisbane and Karratha, on the Australian west coast, and Karratha and Singapore, were due to commence in the later part of this year as well; the airline introducing the larger Embraer E-190s to its fleet to do so. The network map, pulled from the Jetgo website, illustrates the extent of its operations.

 

 Source: Jetgo website

 

Origin and Destination (O&D) passenger volumes for each route, excluding charter operations, are presented in the following chart. On a route basis, Albury (ABX) to Brisbane (BNE) was the largest market for the airline, with Wagga Wagga (WGA) and Dubbo (DBO) to BNE second and third. Perhaps most interestingly are the volumes carried on the Wollongong (WOL) route, which appear fourth in the ranking. These services only commenced operations in October 2017, or half of the research period. Consequently, if the services had operated for a full year, barring any change to the other routes, they would have appeared at the top of the rankings.

 

 Source: AirportIS

 

 

On a month by month view for Jetgo overall, traffic volumes were increasing steadily, ignoring seasonal variations for the sake of argument, thanks in large part to the WOL services, as shown in the chart below.

 

 Source: AirportIS

 

This growth is evident when illustrating the data at a route level. The chart below presents the top 5 routes by month for YE Mar-18. The growth of the WOL market is clearly visible in the analysis.

 

 Source: AirportIS

 

Impacts on the market

In the year ending March 2018, demonstrated in the above analysis, Jetgo handled over 130,000 regular scheduled passengers with DBO, ABX, WOL, and WGA the primary beneficiaries of the traffic on an absolute volume basis.

 

Perhaps most notably is the WOL operation in this case. The other airports in the analysis have other schedule services with Jetgo representing approximately 10% of their overall traffic (based on most recent data available from BITRE and depending on the airport). Prior to Jetgo operating to the airport, WOL had not handled regular passenger flights since 2008 when Qantas operated the Melbourne Tullamarine route. Consequently, of the highest volume airports, WOL will see a complete loss of services at the port leaving residents and visitors to once again drive to other airports in the region, or perhaps choose not to fly at all.

 

Attention should also be given to Melbourne Essendon (MEB) who saw a sharp uptick in traffic when Jetgo started flying their. Jetgo represented a disproportionately large share of their regular passenger traffic volumes suggesting the airline’s shutdown will have a considerable impact. Luckily MEB still have a large general aviation operation in addition to other regional, although limited, passenger services still operating at the airport to give some level of buffer.

 

Whilst the Karratha services were in the planning process and never commenced operations, the Jetgo shutdown inevitable will be felt by both the community and the airport. The international services meant a shift change in the operation at the airport with considerable time and investment already going into getting the services up and running. The airport will now be left without east coast or international connections and passengers left to use the incumbent rotations via Perth.

 

On a positive note, although they have ceased services, Jetgo has been able to demonstrate demand levels for a number of routes across its network which may present an opportunity for other entrants in the near future. Assuming there are a number of routes in the network that are financially viable, the market now has known benchmarks of demand volumes from which to build from. Regional airlines that are actively growing, Fly Corporate and Fly Pelican come to mind, may be best poised to use this to their advantage.

 

Ultimately though, for now, and likely in the short to medium term, Jetgo’s cessation of operations leaves over 130,000 passengers a year looking for alternative transportation and some regional airports looking for airlines to take over lost services.

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