Five and a half years!
That's what is took Australian international airline capacity to recover from the COVID-19 pandemic
Last week, we published a poignant Chart of the Week showing how international airline capacity to Australia has finally returned to its pre-pandemic baseline. In the 12 months to July 2025, international reached 24.8 million seats, slightly exceeding the 24.7 million seats in the 12 months to January 2020. It took five and a half years to recover what was destroyed in a few weeks by the COVID-19 pandemic.
Given the length of time its reasonable to expect that the distribution of that capacity would’ve changed significantly, augmented by the dramatic structural shifts in the global economy. We’ve observed significant changes in the airline landscape with some new carriers having appeared or grown their Australian presence, and several notable casualties. Travel patterns have also changed, with the popularity of several destination increasing while other historically important destinations have suffered from slow recoveries and macroeconomic shocks.
As promised last week, let’s delve into the trends, first by looking at the distribution of that capacity on the Australian side of things and then the countervailing countries before looking at the evolution by airline. The BITRE data we use tracks capacity utilising inbound seats. We’ve included a methodological note at the end of the article to explain how we handle the data since there are some quirks as to how capacity is measured for multi-stop flights.
Australia
Perth’s performance is just stellar! There’s no other way to describe it. The net increase of 595,551 is actually a slight over estimate though as Qantas’s Sydney-Perth-Rome and Paris flights can’t easily be split between Sydney and Perth, and as the methodological note highlights, we make the simplification of adding it all to Perth. However, the maximum over estimate is 45,953 seats, leaving Perth with at least an increase of 549,598 seats. So where does Perth’s gain come from?
Almost everywhere, but with a strong emphasis on SE Asia including sizeable increases from Indonesia (AirAsia, Batik and TransNusa) and Singapore (Scoot), new Jetstar flights to Singapore and Bangkok, Qantas’s new Paris and Rome flights, and new carriers from the Philippines (Philippine Airlines) and Vietnam (VietJet and Vietnam Airlines).
Melbourne and Canberra also contributed positively, with Sydney and Adelaide showing declines. The latter may be considered temporary with the late returns of Cathay Pacific and Emirates not being fully accounted for in the data at this point.
The net decline of 361,986 seats to the Brisbane-Gold Coast-Sunshine Coast area is concerning. Gold Coast’s decline was led by the loss of Jetstar’s Tokyo and Seoul flights to Brisbane (102,845 seats) and the loss of other long haul services including Air Asia’s Kuala Lumpur flights (101,790 seats) and Scoot’s Singapore flights (73,238). Given this it’s maybe surprising that the number isn’t larger!
Brisbane posted a net decline of 149,761 seats, despite gaining 170,850 seats from taking over Jetstar’s Tokyo and Seoul flights. This highlights how much worse Brisbane would’ve fared had it not been for attracting those flights from Gold Coast and several other high profile gains include additional Jetstar flights to Bangkok and Osaka, and the arrival American, Delta and United. So where did it go wrong for Brisbane?
Virgin Australia! Simply put, Brisbane has borne the brunt of Virgin’s long haul decline, accounting for a net loss of 404,928 seats. Brisbane would’ve observed a significant increase had it not been for Virgin’s demise. That said, excluding Brisbane, Virgin’s lost 699,690 seats with Sydney leading the way with 479,209 seats. Without Virgin’s demise, Sydney would’ve also observed a net increase of 294,900 seats. Virgin cost Melbourne 215,840 seats that would’ve resulted in a large net gain of 312,854 seats.
Rest of the world
We’ve seen exceptionally large swings in the distribution of capacity by country. Few of these should surprise readers since we’ve discussed many individual country trends over the last two years.
For example, it shouldn’t surprise anyone seeing New Zealand generating the largest decline as we covered in a deep dive last month that focused on the impact of Virgin’s significant withdrawal of capacity from Trans Tasman flights combined with Air NZ’s fleet challenges.
Seeing the UAE might surprised some, but this predominantly the result of Etihad’s significant withdrawal of capacity rather than Emirates’s slow return of some capacity (e.g. only having recently returned to Adelaide). Hong Kong has suffered as a result of weak demand and Cathay Pacific’s very slow recovery, while China has also suffered from a very slow recovery.
Unsurprising, the United States shows significant capacity declines although the decline is less consequential in relative terms given higher baseline capacity. We’ve also discussed the weakness of the Australia-US market, hurt by the strong US dollar in a market dominated by Australian point-of-sale.
Seeing Malaysia in the group is somewhat surprising but likely overstated by Malaysia Airlines’s temporary operational challenges in late 2024 and early 2025, combined with AirAsia’s erratic capacity. We expect this to recover much quicker than other declines. Pacific Islands have also seen declines in capacity. While these are generally small individually and in absolute terms, it’s very significant in aggregate and relative terms.
On the positive side, Asia is booming! That’s as long as we exclude China, Hong Kong and Taiwan. Indonesia continues to thrive, driven by outbound tourism to Bali and growing inbound tourism, business, educational and VFR travel. Capacity is limited by BASA constraints, however growing demand has led Australian carriers to utilise creative ways to increase capacity and several Indonesian carriers are stepping up.
Vietnam is also booming, enabled by ambitious Vietnamese carriers and an expanded BASA. Japan is the probably the hottest tourist destination for Aussies, while Singapore and Thailand are old stalwarts with strong bidirectional travel and the latter increasing its already established reputation as a critical connecting hub. India’s growth has also been phenomenal with the absolute increase masking larger relative growth in the market, aided by Qantas’s return to the market and Air India’s ambitions.
Other notable gains include Qatar, the Philippines and Turkey. This is driven by Qatar Airways’s ambitious growth as a connecting point to Europe. Expanded flying by Philippine Airlines, Cebu Pacific and Qantas is supporting growing bi-directional travel with large Filipino immigrant communities in Australia and growing Australian business investments in the Philippines. And Turkey on the back of Turkish Airlines’s recent entry into Australia.
And by airline
This is probably the most interesting section for many readers. Not to anyone’s surprise, Virgin leads the way with a near catastrophic loss of capacity. While this will moderate in the coming months as Qatar’s Virgin’s Doha capacity is fully implemented and reflected on an annualised basis it’s still expected to generate a long term capacity decline.
It’s hard to conceptualise the impact of Virgin’s dramatic decline in international flying as few airlines had the ability to replace that capacity. And it’s not just long haul flying. As previously highlighted, it’s had a particularly large impact to New Zealand and the US where other airlines were unable to fill the gap quickly. In the case of the US, United Airlines certainly tried along with the American and Delta, but despite their large capacity increases, US aggregate capacity still declined, reinforcing the scale of Virgin’s decline.
Etihad’s close call with death shows itself here, although this was foreshadowed earlier by the UAE’s capacity decline and as is now obvious, Emirates’s slowish return is relatively minor. Chinese, Hong Kong and Taiwanese carriers feature heavily, as do Malaysia Airlines and Air Asia, as expected by the decline in capacity from Malaysia noted previously.
Two very interesting juxtapositions are relevent: Qantas and Jetstar, and Singapore Airlines and Scoot. On face value, one might critique Qantas and Singapore for their capacity declines (126,612 and 69,268 seats, respectively), however when evaluated at a group level, net increases of 859,959 and 122,356 seats, respectively, were observed (when including Jetstar Asia, Jetstar’s net increase was smaller at 815,319 seats). This highlights a significant capacity pivot from mainline full service carriers (FSCs) to low cost carriers (LCCs) at both groups.
Interpreting this as increasing demand or preference for LCCs and declining demand for FSCs is overly simplistic and incorrect. Rather, it represents a deliberate strategy by both Qantas and Singapore to segment lower yielding traffic onto a lower cost base and lower value product, while concentrating higher yielding traffic on mainline brands, supported by declining cabin density on mainline aircraft. In layman’s terms, we’re seeing mainline aircraft with fewer economy class seats, replaced by more and improved premium economy and business class seats (and sometimes first class). In effect, it allows mainline to have a stronger focus on increasing yield without having to balance the product and cost base for lower yielding traffic. This strategy is nuanced and is both under appreciated and misunderstood.
Other growth leaders are somewhat unsurprising given the previous country-level discussion. Standout performers include new entrant VietJet leading the way and Batik driving growth from Indonesia, and Vietnam Airlines, Air India, and ANA supporting growth from Vietnam, India and Japan, respectively. Interestingly, several Chinese carriers showed strong growth, offset by larger declines by others, generating a bit of movement in the deckchairs.
Conclusion
Clearly, the story is Virgin with a touch of Perth and Asia. Oddly, they have very little overlap with Perth benefiting from their very limited exposure to Virgin’s international capacity, while Virgin hurt Brisbane badly, while also undermining Sydney and Melbourne’s recoveries. This probably takes a bit of the lustre off Perth’s win!
Asia has been a clear bright stop with significant growth in traditional and emerging markets, with China, Hong Kong and Taiwan being exceptions, but this shouldn’t detract from the exceptional growth elsewhere in the region, particularly Indonesia, Japan and Vietnam. This all while the US continues to suffer at the hands of the strong US Dollar and Virgin’s demise.
Methodological annex
These data are drawn from BITRE and follows inbound capacity only. We use inbound as a proxy of the total to reduce the data analysis burden. Unlike passenger flows, what comes in must go out when measuring capacity.
A challenge when measuring capacity are flights with multiple stops, this includes co-terminalisation (e.g. Qantas’s Sydney-Perth-Rome) and 5th freedom flights (e.g. BA’s London-Singapore-Sydney). In the case of the former, we apply the capacity all to the most significant point (e.g. Qantas’s Sydney-Perth-Rome is all applied to Perth and Rome). In the case of the 5th freedom flights we apply it to the final destination (e.g. BA’s London-Singapore-Sydney is all applied to London and Sydney).
When 5th freedom flights fly through Australia (e.g. Emirates’s Dubai-Syndey-Christchurch), we apply the capacity fully on both legs, meaning the capacity is fully available on Dubai-Sydney and Sydney-Christchurch as if they were seperate flights.