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Qantas plans to build a first-class lounge at London’s Heathrow Airport to open when it launches its Project Sunrise ultra-long-haul flights in 2025.

The new Heathrow facility is part of a $100 million investment in the airline’s network, in which Qantas’ international lounge in Hong Kong will reopen and its Sydney and Melbourne business-class lounges will be redeveloped.

Qantas chief executive Alan Joyce said it represented the biggest investment in the lounge network, and would help Qantas capitalise on the faster-than-expected recovery in travel demand.

“Being back in profit means we’re back to making long-term investments …That started with the major aircraft order we announced last year, and now we’re building on that with a major investment in our lounges,” Mr Joyce said.

The airline has forecast it will deliver an underlying pre-tax profit of up to $1.45 billion for the first half of the financial year on Thursday, as demand withstands inflationary pressures and higher ticket prices.

“We have three new and upgraded lounge spaces due to open this year, and the pipeline we’re announcing today will take us through to 2025,” Mr Joyce said.

“London is one of the most important destinations on our network, and it’s the perfect location for a First Lounge, especially with our direct Project Sunrise flights on the way.”

Bigger Hobart lounge

The details are still subject to agreement with Heathrow and local regulators, but Qantas says it wants the new first-class lounge to include direct access to boarding gates and “sweeping views of the airfield”.

“Heathrow is one of the world’s busiest airports, so we’re very pleased to be working with them to secure a great space in the terminal for an additional lounge,” Mr Joyce said.

The redevelopments in Sydney and Melbourne will increase the footprint and capacity of both business lounges between 2023 and 2025. They will include new beverage and food offerings once redevelopment is complete.

The airline is also planning to move its new Hobart Qantas Club to larger premises to accommodate 150 more seats. It will construct a Broome regional lounge to open next year as well.

 

Flight Centre’s chief executive Graham Turner has not seen travellers slow down their travel spend despite increased cost of living pressures permeating the world’s economy.

The seemingly insatiable demand for travel saw Flight Centre Travel Group record profits in every demographic over the December half, except for Asia, which broke even but was hampered by China’s slow return to the market.

The company narrowed its net loss to $19.8 million, from $194.2 million in the corresponding period a year ago.

“We are not currently seeing evidence that the recovery is slowing with the leisure business currently trading at post-COVID highs and corporate travel activity escalating after the traditional holiday period,” Turner said on Wednesday.

Turner said that while travel may be a discretionary purchase, it’s viewed as essential by consumers and tends to be prioritised above other discretionary items.

“This underlines both the significant pent-up demand that still exists for travel in this early recovery phase and the sector’s proven resilience,” Turner said.

The result shows the group is beginning to recover after three years of marred travel plans due to COVID-19. The group said higher than normal airfares, the continued effects of COVID-19 and an increase in lower margin, air-only sales was behind the loss.

Flight Centre recorded $95 million in underlying earnings before interest, tax, depreciation and amortisation for the December half, exceeding its own expectations by 19 per cent. The result is a $280 million improvement on the previous corresponding period where Flight Centre recorded an underlying earnings loss of $184 million. The group is bullish on its full year underlying earnings, and expects to reach between $250 million and $280 million.

The group’s total transaction value was $9.9 billion for this half, about 80 per cent of the last COVID-19 free half in FY20.

The group’s corporate division recorded record profits in Australia-New Zealand, Europe, Middle East and Africa, while the US hovered just below its record contribution recorded in the first half of FY20.

Flight Centre’s leisure business was buoyed by a $770 million contribution from its online division as well as its new focus on lower cost leisure.

No dividend was declared, but Flight Centre said it would review its capital structures “ahead of an anticipated uplift in earnings and cash generation”.

Qantas boss Alan Joyce has warned airfares will fall from their post-pandemic peaks and moderate over the year as capacity returns and increasing competition keeps a lid on prices, sparking an investor sell-off despite the airline’s record $1.42 billion underlying interim profit.

Although the Qantas share price is up 32.3 per cent in the past six months, investors pushed the stock 6.8 per cent lower to $6.03 on Thursday amid early signs that high post-pandemic travel demand could start to fall away.

Not only did Qantas loosen supply side pressures by upgrading its domestic capacity in the six months to June from 100 per cent to 103 per cent of 2019 levels, and international flying from 77 per cent to 81 per cent, but Mr Joyce said growing domestic competition would push down prices as well. Ticket prices were 20 per cent above 2021 levels because of inflated fuel prices and an imbalance between supply and demand, he added. Government data shows discount domestic fares are up 33 per cent year-on-year.

Referring to sales launched by Qantas, Virgin Australia and new entrant Bonza, Mr Joyce on Thursday said this showed “competition in real time” that would suppress prices over time.

“There is plenty of competition – Qantas cannot dictate the airfares of the market. Nobody was saying it before COVID-19, nobody should be saying it now,” Mr Joyce said.

Although Qantas said these moderated airfares would still be “significantly” above 2019 levels, it came as particularly high yields on tickets drove Qantas to a record half-year result.

The $1.42 billion underlying pre-tax profit in the December half was a huge turnaround from the $1.2 billion loss in the previous corresponding period, which Mr Joyce attributed to travel demand, better per-ticket yields and a mid-pandemic restructure that cut nearly $1 billion of costs from the business.

Revenue tripled to $9.9 billion, while bottom line statutory after-tax profits were back in black at $1 billion after a $456 million loss in the 2022 period.

Qantas announced a $500 million share buyback with the record result.

Mr Joyce said demand was strong, and that a survey of his Qantas frequent flyer members showed consumers were prioritising international and domestic travel while cutting back in other categories such as homewares and alcohol.

Northcape Capital portfolio manager Paul Parsons, a Qantas investor, said the result was strong. “The market appears to be concerned that earnings have hit a cyclical peak, and will decline from this peak imminently. However, Qantas’ inherent competitive advantages and the underlying industry supply and demand factors don’t support this,” he said.

Forager Funds chief investment officer Steve Johnson, whose company is also a Qantas shareholder, said there were two concerns in the outlook – moderating fares and a $400 million rise in expected capital expenditure to up to $2.7 billion in 2023.

“There are a lot of people who have owned Qantas over the last couple of years and done well out of it,” Mr Johnson said. “But the airline business is difficult and there are those who don’t want to own it when the tide turns.”

“This is an industry where investors sell first and ask questions later.”

He said the market had overreacted, yet conceded this was still a “once in a lifetime” profit driven by Qantas’ exit from the pandemic.

Citi analyst Samuel Seow said the interim result was “relatively in-line” with expectations after Qantas had guided for an underlying profit of up to $1.45 billion, but the market had priced the stock expecting it to beat all forecasts.

“Capex has increased materially, and interestingly, load factors are softening. Outlook for [per-seat revenues] is to reduce, however, off what we estimate were elevated levels in the second quarter of 2023. Interested in Qantas’ view on market share from here,” Mr Seow said.

On the capital expenditure, Qantas chief financial officer Vanessa Hudson said the restructured airline had “structurally changed” its cash flows and that it could “walk and chew gum at the same time”.

“Not only can we invest in new aircraft, we also have confidence that, as Alan said, we will be able to strike the right balance and renew our fleet but also continue to reward our investors on an ongoing basis,” Ms Hudson said.

Succession planning

Mr Joyce was guarded when it came to questions of his retirement on Thursday. When asked directly if this was his last interim result as chief executive, he said: “Nothing has changed from what I said before about my tenure.” “I’m going to be here until at least the end of this year,” he said.

Mr Joyce said – with the airline back in profit – it could start making investments in the customer experience again.

“There’s a steady stream of short- and long-term projects happening across the group, all with the simple aim of making people’s journey better,” Mr Joyce said. “We’re opening three new and upgraded lounges this calendar year, and just this week we announced $100 million for several more.”

“We’re also starting new routes, like Auckland-New York this June. We took delivery of four new aircraft last year and have 12 more arriving by December. Overall, we’re expecting a new arrival every three weeks on average for the next several years,” Mr Joyce said.

Moody’s Investors Service vice president Ian Chitterer said Qantas had a solid credit profile and that net debt would likely stay below target levels for the rest of the 2023 financial year.

“Given Qantas’ solid credit profile, including liquidity of $5.4 billion, we expect the airline to remain well positioned, even if the current strong travel demand outlook deteriorates,” he said.

Qantas has appointed former Air New Zealand executive Cam Wallace to lead its international and freight division, a move which has already led to a fresh set of rumours about the retirement plans of current boss Alan Joyce.

Joyce said last week – while unveiling a $1.4 billion profit for the December half – he intended to remain in charge of the $11.4 billion airline until at least the end of this year, his 14th as chief executive officer.

Joyce was effusive in his praise of Wallace and his tenure at Air New Zealand, where he worked for more than a decade before leaving in 2020 to head up radio business MediaWorks.

“Cam Wallace is one of the best airline executives in the region. He brings over two decades of airline experience including his long career at Air New Zealand, with responsibilities spanning sales, revenue management, market development, alliances and cargo,” Joyce said.

Current domestic and international chief Andrew David will retire in September after nine years at the business, eight of which were executive roles at Qantas.

“Andrew has contributed a huge amount during his 10 years across both Qantas and Jetstar. His leadership of Qantas’ domestic, international and freight businesses has been pivotal, especially during the incredible challenge of putting the airline into hibernation and bringing it back again,” Joyce said.

Wallace will begin leading the international and freight arm from July, with a recruitment process for the domestic division expected to start soon.

The domestic and international divisions became one when international flying halted during COVID-19. The carrier said on Monday it now made sense to have separate leaders for the two arms now that capacity in both divisions had increased. The airline is targeting 100 per cent of pre-COVID-19 capacity for domestic services by June and for international services by 2024.

The divisional change has bolstered industry speculation about Joyce’s retirement nearing, rumours which have also been fuelled by last week’s $1 billion investment into the carrier’s lounge network.

There had been two frontrunners for the top job: chief financial officer Vanessa Hudson and the head of the airline’s loyalty section, Olivia Wirth. Newly minted Jetstar boss Stephanie Tully is also considered to be in with a shot.

Qantas domestic was the most profitable division of the carrier in the December half in which the airline posted a $1 billion profit, with underlying earnings of $915 million.

Qantas international recorded underlying earnings of $511 million, with the launch of seven new routes and the reopening of two.

In addition to a strong performance by Qantas domestic, international and loyalty, Joyce credited a controversial $1 billion restructure as a driver of its return to profit.

David’s role in this restructure, which caused the outsourcing of some operational roles, and included 1700 redundancies, led insiders to rule him out as a potential Joyce successor.

This decision was found by the Federal Court to be unlawful, but the case now awaits a verdict from the High Court following an appeal by the airline.

Nestled in a hangar in Sydney’s south-west, engineers are trying to solve one of the aviation industry’s biggest problems: how do you reduce the carbon pollution produced by planes? The answer may lie in the electrification of aircraft. And while it may sound like fantasy, companies across the globe are competing in a race to make it commercially viable.

If the global aviation industry was a country, it would be one of the world’s top 10 polluters and is responsible for about 2.5 per cent of the world’s carbon emissions. But about 80 per cent of aviation’s emissions come from flights of more than 1500 kilometres. This is roughly the distance from Brisbane to Melbourne, and although that’s not a particularly long flight in this country, it’s beyond what existing electric batteries can manage.

Transport is the second-biggest greenhouse gas-emitting sector in Australia, with aviation forming about 12 per cent of those emissions, although vehicles on roads remain the biggest emitter. But unlike cars, developing electric aircraft is not necessarily a quick fix to the industry’s emissions problems. Making matters more complex is that what’s appropriate for larger air carriers isn’t going to work on the smaller ones – this means it’s up to companies to get creative.

Despite the constraints, many in the industry are still banking on electrification to deliver a quieter, cleaner way to fly short distances. The country’s smallest domestic carrier, Regional Express, has partnered with Sydney Seaplanes, and others, to form Dovetail Electric Aviation – a company based at a hangar near Sydney’s Bankstown Airport that is racing to develop electric motors in Australia to service routes shorter than 500 kilometres.

Aaron Shaw, Sydney Seaplanes managing director, said battery-powered electric planes will be rolled out first, with the company also working on hydrogen-powered motors. The former is heavier, so battery-powered aircraft can only travel short distances – ideally for a 15-minute scenic trip around the harbour – and require charging from the grid on the ground. This, Shaw said, also means more work is needed to ensure the electricity grid is powered by renewable energy, which would make the plane entirely emission-free.

Meanwhile, hydrogen-fuelled planes can recharge in the air, are lighter and are ideal for longer trips, such as flying between Newcastle and Sydney. It’s the type of technology Regional Express would be able to use.

Sydney Seaplanes intends to retrofit its aircraft to be electric – which is much cheaper than building a new fleet – and this would reduce operational and maintenance costs by about 40 per cent. Currently, turbine engines need replacing after 4000 hours, but an electric motor has a 10,000-hour lifespan.

“We fly into beautiful natural settings – national parks or waterways all around Sydney, so we have a responsibility to minimise our impact on the environmental noise and emissions. Electrification eliminates emissions and reduces noise,” Shaw said.

While other industries have clear road maps to reduce emissions, Shaw said the aviation sector has been left behind. He also believes Australia has slowly lost its innovative spirit.

“We are importers of others’ technology,” he said. “Our challenge as Dovetail is to bring back aviation innovation aviation into Australia. There are lots of talented and intelligent people in this country and we lose them overseas because that’s where the opportunities are.

“We want to offer long-term, opportunities. I think we can be achievers in this space.”

Two years ago, the company indicated it wanted to create an all-electric and zero-emissions airline by 2025. The project is in the early days of ground-based trials and tests on their electric motor, and there’s no guarantee the entire fleet will make the transition by the end date.

But Shaw is confident that within two years, they will have certified at least one of their planes to be a commercial electric flight. Dovetail recently secured $3 million from the federal government to develop, test and certify the conversion.

Regional Express is responsible for carrying about five per cent of passenger flights and is banking on electric aircraft to revolutionise its short-haul route map. The airline has scheduled trials to start in Wagga Wagga early next year, with one of its 24-seat Saab 340s retrofitted with a hydrogen-powered electric MagniX engine. It will be tested to fly one-hour routes. If successful, there are up to 11,000 nine to 19-seat aircraft that could be retrofitted with electric engines around the world.

Rex deputy chairman John Sharp acknowledged there are other hoops to jump through before the airline’s dream of retrofitting the bulk of its Saab fleet can be a reality. After the airline is satisfied with the trials, the Civil Aviation Safety Authority will need to provide approvals to fly the aircraft commercially, a process Sharp is expecting to be lengthy.

“We want to do it quickly, but it’s more important for it to be done safely and this is certainly not as simple as just ticking a box but at the end of the day, I don’t think we’ll have too much trouble getting certified. We expect to see our electric aircraft flying within the decade,” Sharp said.

Sharp argues critics of electric aviation are too focused on “minor” hurdles such as building the infrastructure to store the hydrogen or the charging process upon landing.

“Hydrogen is actually very portable, and it’s easy to make. There are logistical aspects to work out, but overall, I see electrification as viable for Rex,” he said, adding the transition would deliver a quieter, cheaper way to fly for passengers, reduce operating expenses by up to 40 per cent and could even result in the airline expanding its routes to regional destinations that aren’t currently commercially viable.

Other industry experts aren’t so sure. The director of global markets at Ailevon Pacific Aviation Consulting, Matthew Findlay, says only time will tell if electric-powered aircraft is a viable idea.

“There are a lot of competing ideas at the moment. I doubt all will work but at least one should, it’s just about timing. Still, the hurdles aren’t small. It feels almost like the Jetsons currently, a bit pipe-dream-esque,” Findlay said, adding the first company to make electrification a reality will almost certainly reap significant economic rewards.

“It’s heartening to see airlines investing heavily in decarbonisation, but it’s also their only option as the pressure of their social licence mounts. Emissions reduction needs to be front of mind across the industry.”

While battery and hydrogen might work on smaller planes, big aviation companies are also trying to make the push towards greener travel. Airbus and Boeing Co are among those making inroads, investigating with the latter investing in an all-electric four-seater that can fly without a human pilot and a Swedish start-up is building a 30-person commuter plane that can travel 800 kilometres. This week Andrew Forrest’s Fortescue Future Industries joined a consortium of businesses including ASX-listed airline Air New Zealand and Airbus in a research project to “design a hydrogen ecosystem for aviation” within the decade.

But University of Sydney professor Christopher Wright, an expert in organisational studies, says trying to make the aviation sector more sustainable is difficult.

“The commercial airline industry for travel is based on the business’s continued growth. We see the future as more and more people flying and not just in the developed world, but in the expansion of developing markets,” he said. “There is a disconnect in the industry, climate change and the science that is saying it is too late in the day and that radical decarbonisation pathways are needed to avoid the catastrophic impacts of climate change.”

Unlike other major airlines including Qantas, Regional Express is sceptical of banking on sustainable aviation fuel (SAF), a jet fuel alternative made from crops, household waste and other biomass which produces one-fifth of the emissions of conventional jet fuel, to decarbonise the industry.

“SAF is extraordinarily expensive and there’s a huge gap of investment. Who is going to stump it up? Even if the investment was there, the cost of the input is still much more expensive than traditional fuel and although it’s made of waste material and other matters, it’s also made of grains we’d normally be eating,” Sharp said.

As it stands, there’s currently only enough sustainable aviation fuel being produced to replace less than one per cent of the global industry, and it’s more than double the price. Qantas has so far invested $307 million into developing Australia’s sustainable aviation fuel industry with Airbus and chief executive Alan Joyce, along with many other major airline executives, arguing it’s the only way forward to meaningfully decarbonise the industry.

Flight Centre will look to capture more young and affluent travellers through a $211 million acquisition of a UK travel company known for its luxury tour experiences across the globe.

The travel retailer told investors on Tuesday morning it would buy the Scott Dunn business with a $180 million equity raising and $40 million of existing cash.

Scott Dunn is well known in the UK for its range of luxury travel experiences, from heli-skiing in Canada to luxury safaris in Kenya.

Flight Centre’s global leisure chief executive James Kavanagh said Scott Dunn had grown strongly throughout COVID and was a unique proposition to capture the younger end of the travel market.

“They attract a younger, more affluent customer. A typical [customer] is 35 to 45 years of age,” he said. By comparison, Flight Centre’s core customers are an older audience, at 51 years of age on average.

Luxury holidaymakers spend big on their adventures and the Flight Centre team highlighted on Tuesday that they are much more resilient to cost-of-living pressures than the typical consumer. The average value of a holiday booked through the Scott Dunn business is $39,000.

“The consumers in this segment are increasingly looking for more meaningful experiences... they are less susceptible to economic downturns,” Kavanagh said.

Funds for the acquisition will largely come through an institutional placement to eligible investors at $14.60 a share, which is a 7.8 per cent discount to where shares closed at $15.83 on Monday.

The company will also offer shares to retail investors, which aims to raise up to $40 million.Flight Centre’s focus on luxury comes as the company flagged booming transaction values and strong earnings for the first half of the financial year.

The company confirmed on Tuesday morning it is expecting underlying earnings to come in at $95 million for the first half of 2023, ahead of its previous guidance to the market of between $70 million to $90 million.

Total transaction values hit $9.8 billion for the half, having more than tripled from the same period last year, which was marred by pandemic interruptions.

The company said higher-than normal airfare prices had contributed to that rocketing transaction growth, but higher fares are also hurting revenue margins in travel segments where Flight Centre earns fixed fees on transactions, regardless of the value of a ticket.

Goldman Sachs analysts noted this week that airport data suggests the COVID bounce-back is continuing in the US and Europe, which are key markets for the Scott Dunn business.

“We note that data in Paris and London imply that international travel overtook domestic European travel in December, despite the higher ticket prices,” Goldman Sachs analysts said in a note.

Flight Centre is forecasting underlying earnings of between $250 million and $280 million for the full financial year, compared with a $183 million loss last year.

Shares in the company are up 10 per cent year-to-date and remain in a trading halt until the company completes its capital raising.

Virgin Australia is loading up its board with bankers as the nation’s second-biggest airline prepares to re-list on the Australian sharemarket about three years after it collapsed into administration.

Former Macquarie Bank chairman Peter Warne will join the airline’s board of directors alongside Pippa Downes, a former banking executive at firms including Goldman Sachs, who now holds several directorships, Virgin’s chief executive, Jayne Hrdlicka, said in a note to staff on Tuesday.

The appointments coincide with the company’s chief financial officer, David Marr, moving to a new role focussed on preparing the carrier for a sharemarket listing, according to the note seen by this masthead.

Race Strauss, a former chief financial officer of Jetstar and Qantas, will replace Marr in his former role.

Hrdlicka said the airline had performed well over the summer.

“Whilst our financial results remain subject to normal half-year auditor review, we expect to deliver revenue of roughly $2.5 billion and a profit margin of roughly 5 per cent,” she wrote in the note to staff.

“Given this is the first time in many years that Virgin Australia has made a profit, it is certainly a milestone to quietly celebrate.”

American private equity firm Bain Capital, which bought Virgin out of administration, has signalled its plans to list the company on the ASX once again as travel demand returns after the pandemic downturn.

Virgin declined to comment on the letter.

It faces pressure from Australian Services Union members, who work in areas like check-in counters, over a proposed pay deal that the union says is well below the rate of inflation.

The Australian Financial Review asked airline and airport bosses to forecast Australia’s flight path. Here’s what they said:

Jayne Hrdlicka, Virgin Australia CEO

Will airfares go up or down? It is difficult to accurately predict when airfares will start to moderate, given the mix of factors driving them up at the moment. If fuel prices, consumer demand and inflationary pressures remain high, airfares will understandably be higher than historic levels. We are using every available aircraft in our fleet to meet high demand, and are taking delivery of 13 additional aircraft in 2023. Not all of this capacity will go to domestic markets, given our growing international routes, but we will be working hard to get supply and demand back in better balance. The additional domestic capacity will help us add seats on our most popular routes and also to start new routes.

Will travellers stop flying if airfares stay high? History tells us the “experience economy” does well during periods of economic softness. Consumers will continue to limit discretionary purchasing, but are likely to reduce spending on household items and buy less “stuff” than they are to remove travel and entertainment experiences. They may trade down on how much they spend, but the number of trips is unlikely to be significantly hit. This isn’t surprising, particularly in the context of a couple of years with very constrained travel during the pandemic. None of us will again take for granted freedom of movement, family and travel.

Will there be more flight chaos? We are making every effort to ensure travel these holidays is as seamless as possible, including operational changes. We have recruited an additional 800 frontline roles to support the surge in demand, reopened our fast-tracked security screening facilities in Brisbane, Melbourne and Sydney for eligible customers, adjusted our rostering tools, and optimised our schedule planning. We have already seen significant improvements to our on-time performance and completion rate since the July school holidays. Unless there are weather and air traffic control issues, our network is running with cancellation rates lower than pre-pandemic.

What are your most exciting new routes? We’re launching direct services to Vanuatu and Samoa in March, as well as a new direct service between the Gold Coast and Bali in the same month. But it is hard not to get really excited about the direct Cairns-Tokyo flights. These daily, year-round flights will operate through Tokyo’s most conveniently located airport, Haneda, from mid-year 2023 and add capacity for over 2000 passengers to fly between the two destinations every week.

If fuel prices, consumer demand and inflationary pressures remain high, airfares will understandably be higher than historic levels.

— Virgin CEO Jayne Hrdlicka

Where should travellers eat and drink? Our economy and business class on-board menus have been refreshed for summer with some lighter options. We have some fabulous restaurants in our home city of Brisbane for those planning a visit to the Sunshine State. I can’t go past Hellenika at the Calile or Gerard’s Bistro in Fortitude Valley.

Where will you be flying on holiday? My big adventure this year is to head to Tasmania for some serious hiking and wilderness adventure. There is no end to the amazing trekking opportunities in Tassie and I am really looking forward to a big dose of Mother Nature.

Geoff Culbert, Sydney Airport CEO

Will airfares go up or down? That will depend on airlines bringing on more capacity. On the domestic side we’ve started to see commentary about more capacity coming online late in the March quarter, but international capacity remains uncertain. There’s a lot of work to do to convince airlines to rebuild their networks to Sydney, and then to convince travellers to come here. Pre-COVID the proportion of Australians’ travel overseas to international visitors arriving was almost 50:50. Now it’s 65:35, so for every international visitor coming in, we have two Australian residents heading out. We’re now an unbalanced market and airlines like to see strong, two-way demand to ensure routes are sustainable. Getting more international capacity into the system needs to be the priority for 2023.

Will travellers stop flying if airfares stay high? Our experience is that when households are belt-tightening, the annual family trip is one of the last things to go. The yearly holiday to Bali or Fiji or the Sunshine Coast is pretty firmly entrenched.

Will there be more flight chaos? The terminals have been running smoothly for the past few months now, with 95 percent of passengers getting through security in less than 10 minutes. Like every Christmas, the airport will be busy, but we don’t expect it to be chaotic, with staffing levels the strongest we have seen since before the pandemic. But we’re not doing a victory lap yet – we’re completely focused on the operational side of the business and getting passengers on their way through Christmas and the New Year.

What are your most exciting new routes? Pre-COVID we had two airlines serving the Sydney to Seoul route and now we have five, with T’Way Air starting their new service on Christmas Eve. That puts South Korea alongside Bali and Fiji as the only destinations served by five airlines from Sydney. Australians’ interest in Korean culture really ramped up during the pandemic, whether it was bingeing on [Netflix series] Squid Games or Korean fried chicken. With plenty of capacity into Seoul in 2023, I think we will see a lot of people heading off to see this incredible place for themselves.

Where should travellers eat and drink? Now that travel is back we have some big plans for new offerings showcasing local providers, so watch this space. Inside tip – if you’re in the arrivals area of the international terminal you have to go to Ooosh. They’re not new, but they are the unofficial staff canteen. Their cheese pockets and great coffee got a lot of us through the pandemic.

Where will you be flying on holiday? Our daughter is studying the HSC next year so we’re likely to stay close to home. I just like standing in front of the departure screens at the airport and looking at all the places you can go – during COVID the screens were empty, and now they’re full. That feels good.

Lorie Argus, Melbourne Airport CEO

Will airfares go up or down? We think airfares are likely to fall in 2023, although it could be a while yet before supply catches up with demand. We are seeing some positive signs for travellers heading to some of our key holiday destinations, with five carriers now competing between Melbourne and Bali, and almost a million seats on sale for that route next year. The arrival of Thai AirAsia X on the Melbourne-Bangkok route means our capacity into the Thai capital is now up 15 per cent on pre-pandemic levels, and we have a record number of seats available into Vietnam and India. On the domestic front, we’re excited to be welcoming new low-cost carrier Bonza to Melbourne Airport next year. It has promised fares of around $50 for a one-hour flight, which is sure to generate a response from the other airlines on routes where they compete.

Will travellers stop flying if airfares stay high? We think there is still huge pent-up demand for travel and as capacity returns to the market airfares will start to fall, so there will be plenty of opportunities for people to get away on that much-needed holiday or family break.

Will there be more flight chaos? Airports and airlines have done a lot of work over the past 12 months to rebuild our workforce and return our operations to normal. We have hundreds of new staff now working at Melbourne Airport. The one area that’s still causing me concern is ground handling and in particular baggage services. It’s not where any of us want it to be, but the ground handling companies are recruiting and training new team members every week, so the situation should continue to improve.

What are your most exciting new routes? Qantas starting the world’s fourth-longest route between Melbourne and Dallas in December will be hard to beat, but as a native Canadian I’m very keen to reconnect Melbourne with that northern part of North America. I’m also excited by Bonza’s plans to directly connect Melbourne with smaller cities such as Bundaberg and Gladstone.

Where should travellers eat and drink? Most of the Melbourne Airport staff will tell you that I have a bit of a thing for Grill’d (Terminal 2 departures level), but I also love Shane Delia’s Biggie Smalls (Terminal 3 departures) for its kebabs and loaded fries, with a side of cool ’90s vibe!

Where will you be flying on holiday? I have plans to fly to China, Japan and North America for work, but my first holiday will be back to Canada to see my family.

Gert-Jan de Graaff, Brisbane Airport CEO

Will airfares go up or down? Airfares are currently elevated due to limited capacity and strong demand. As furloughed aircraft are returned to the skies and the labour pool is expanded, we expect airfares to come down later in 2023, which is great news for the travelling public.

Will travellers stop flying if airfares stay high? If you spend time in any terminal right now, you’ll realise Australians are eager to dust off their bucket lists and travel, following a couple of tough years at home. We expect this trend to continue into 2023, especially as increased supply lowers the cost of flights.

Will there be more flight chaos? As an industry we went from lockdown to full skies in a heartbeat just in time for the Easter holidays. Since then, capacity has been built up across all airports, airlines and service providers. Each holiday period has run more smoothly than previous peaks. We would expect this to continue in 2023.

What are your most exciting new routes? Boosting capacity to North America and Europe will continue to be a focus, while we work through the reopening of Asia throughout 2023, which is critical for Queensland’s visitor economy.

Where should travellers eat and drink? In our domestic terminal, The Common recently took out an award for its sleek design, Bound is getting great reviews for its coffee and The Aviary does a fantastic lamb and baked potatoes dish.

Where will you be flying on holiday? As we plan for the future look of Brisbane Airport it’s important to keep an eye on what the rest of the world is doing. I look forward to exploring airport terminals in Amsterdam, Atlanta, Chicago, Dallas, Dubai, Kobe, Kuala Lumpur, San Francisco, Singapore, Tel Aviv and Tokyo. It’s called research!

Stephanie Tully, Jetstar Group CEO

Will airfares go up or down? There’s no doubt that fares have come off the historic lows we have seen in recent years. The main drivers of higher fares are the same here and overseas: the high price of oil, strong demand for travel and capacity constraints. The big unknown next year is the price of oil, which is being impacted by ongoing global factors, including the war in Ukraine. The fuel bill for the Qantas Group will be the highest it’s ever been this year, and 25 per cent higher than pre-COVID, even though across Jetstar and Qantas we’re doing around 30 per cent less international flying. We remain committed to providing low fares and this year one in every three was sold was for under $100. Over the next six to 12 months, capacity will increase, with airlines bringing back aircraft, which will put downward pressure on fares. Between Jetstar and Qantas, we’ll have an average of one new aircraft arriving each month next year. We’re also putting on more Jetstar and Qantas sales over the summer and frequent flyer points planes.

Will travellers stop flying if airfares stay high? We are monitoring it closely, but we haven’t seen interest rates and inflation have an impact on travel demand yet. Australians continue to put a high priority on travel, prioritising experiences and holidays over other spending.

Will there be more flight chaos? We are confident that our customers won’t see the level of disruptions that they saw at Easter and the July school holidays. Our performance has improved markedly since then. Across Jetstar and Qantas, we’re making a number of changes to ensure we maintain this improved operational performance. This includes investing $200 million to have additional crew and aircraft on standby to give us more operational buffer if we get hit by extreme weather or sick leave spikes again; more spare parts to manage global supply chain challenges; and moving our customer teams around the network to where they are most needed.

What are your most exciting new routes? We’re really looking forward to seeing the first low fares direct service between Sydney and Rarotonga [Cook Islands] take off in time for next year’s winter school holidays, which is an amazing place for a beach holiday, and it’s been great to see our new flights to Seoul fill up fast.

Where should travellers eat and drink? When I am heading through Terminal 4 at Melbourne Airport I always swing by Brunetti’s. We recently launched our new summer in flight menu with snacks and drinks from producers based in the destinations we fly to. We are partnering with Byron Bay Brewery to offer locally brewed lager and working with well-known Adelaide-based family bakery, Vili’s Pies, to provide hot options.

Where will you be flying on holiday? The Sunshine Coast is always a popular holiday spot for our family and we are planning a trip to Japan to go skiing soon – anywhere with a beach or a snow-covered mountain, we are happy!

Stephen Byron, Canberra Airport CEO

Will airfares go up or down? I would say prices will come down on domestic airfares – airlines can’t keep charging double what they used to charge; consumers won’t put up with it for much longer. On international, Australia is re-engaging with the rest of the world, but it might take six months for the crazy international airfares to come back down. We expect direct international services to return to Canberra in 2023, and, ultimately, this will lower fares.

Will travellers stop flying if airfares stay high? There is still much pent-up demand for international travel, and despite the rising cost of living and high inflation, discretionary spending is still high. Canberrans are ready to make up for lost time and take that long awaiting trip overseas.

Will there be more flight chaos? Chaos isn’t a thing in our airport – we rarely experience delays in security or check-in and baggage at the airport. The level of airline cancellations at Canberra is back down to pre-COVID levels and they are doing a good job at minimising any delays.

What are your most exciting new routes? Bringing back a New Zealand route by September 2023 is an exciting opportunity for Canberra. It also brings the opportunity to hub through New Zealand to American ports.

Where should travellers eat and drink? You can eat like a local in our airport – we serve a range of delicious local Canberra food and beverages. From iconic Capital Brewing Co beers and burgers at Airport Taproom to the famous and delicious Ona coffee.

Where will you be flying on holiday? When Singapore Airlines recommence services to Canberra, I will be on the first flight.

Kate Holsgrove, Perth Airport acting CEO

Will airfares go up or down? Airline operations were significantly impacted during the pandemic and it has taken some time to reinstate aircraft, crew and supporting staff. There is less seat capacity available this peak holiday season and this has led to a rise in airfares. At some point in 2023, though, pent-up demand will soften and airline services will be restored to optimal levels. We are also expecting new airline services to be introduced in Perth, adding more available seats for sale. Overall, we expect the cost of airfares will go down as airline competition hots up.

Will travellers stop flying if airfares stay high? If you’re reading this and it feels like most people you know are away on holiday, you’d probably be right. People are no longer prepared to wait to tick things off their bucket list, and travel remains a top aspiration for those looking to make up for lost time. While the price of airfares has risen sharply, people are still planning to take a well-deserved break, reconnect with family and friends, or explore somewhere new, and business travel remains essential for face-to-face meetings. That said, Australian travellers, who are already dealing with home loan interest rate increases and increased cost of living pressures, won’t accept continued artificially high airfares indefinitely. We expect more capacity to be added into the market in the new year, which will help to normalise the cost of airfares.

Will there be more flight chaos? Domestic airlines have struggled with cancellations and delays driven by COVID-related factors, and the aviation sector has been working together to overcome the issues. Our peak holiday season over December and January will be a big challenge, but our team has been working with airlines to ensure we’ve done everything possible to get families away on time. It may not be perfect, but we hope travellers understand that everyone is doing their best.

What are your most exciting new routes? Philippine Airlines will start a new, non-stop service between Perth and Manila in March. There are many high-priority markets such as India, Japan, Indonesia and Vietnam that we are focused on. We also look forward to the China market resuming travel when the time is right.

Travel remains a top aspiration for those looking to make up for lost time.

— Kate Holsgrove, Perth Airport acting CEO

Where should travellers eat and drink? The Aspire Lounge in T1 International overlooking our airfield with views back to the Perth CBD. We’ve tried to create a real sense of place so that international travellers get a taste of Western Australia.

Where will you be flying on holiday? High on my list is a holiday to Mauritius. With non-stop flights from Perth to this tropical island paradise, it offers the perfect blend of adventure and relaxing – and makes for a pretty amazing stop-over en-route to South Africa or France too.

Brenton Cox, Adelaide Airport managing director

Will airfares go up or down? In the absence of unexpected shocks, airfares will start to come down during 2023. Airlines are addressing imbalances in supply and demand which should start to normalise the cost of flights. In the meantime, keep booking early where you can.

Will travellers stop flying if airfares stay high? There is still significant pent-up demand for travel, and we expect that to continue into the New Year. We believe that people will prioritise expenditure on the kind of experiences they have been starved of over the past few years.

Will there be more flight chaos? Airlines and airports have done a significant amount of work to repair service capability. We’re conscious of the challenges ahead, particularly around the transition to enhanced security equipment. We’ve added security screening capacity and have employed 35 per cent more security staff since July 2022. There is more work to do and this will be made more challenging over 2023 and 2024 as the industry deploys new security equipment and processes in a live operating environment.

What are your most exciting new routes? We are focused on repairing the network with our existing customers. In 2023 we are hoping to see border restriction relief to and from China, and we are working towards the return of China Southern and Cathay. The return of Emirates is firmly on the radar over the next few years.

Where should travellers eat and drink? Our new retail precinct has a strong focus on local SA flavours and brands, from 100 Miles – which sources all of its products from within 100 miles of the airport – through to Southern Providore stocking fantastic SA brands like Beerenberg, Barossa Fine Foods and a big range of products from Kangaroo Island. And of course, the new Penfolds Bar and Kitchen is proving a hit. There wouldn’t be many airports in the world where you sip a glass of Grange while you wait by your gate!

Where will you be flying on holiday? It’s hard to leave Adelaide at the moment with all of the festivals and events in the pipeline. We had an incredible family holiday in Fiji last year thanks to Fiji Airways and plan to fly with Singapore Airlines into South-East Asia this year – if we can find a gap between events in Adelaide.

An Australian-first citywide digital marketplace has been launched in Adelaide, allowing South Australians to shop through a range of retailers and have their orders delivered the next day.

Delivered by the Adelaide Economic Development Agency (AEDA)  through the City of Adelaide, ByADL is an online platform that brings together more than 60 city retailers in categories including fashion, health and beauty, jewellery, homewares, toys, and food and beverage.

“From the city to your door, ByADL will provide convenient, 24/7 shopping with next-day delivery,” said Ian Hill, managing director at AEDA.

South Australians can visit the website, shop from retailers in one transaction, and receive their orders the following day within 50km of the city.

Some of the brands available in the marketplace include: French Laundry, Nowa The Label, Rundle General Store, Have You Met Charlie, Jam Factory, LOC Bottle Shop, and Miss Gladys Sym Choon. 

Retailers in the CBD and North Adelaide are encouraged to list their products for sales to reach new and more customers.

The commission fees are said to be priced at 5 per cent for maintenance and tech support.

The e-commerce platform used in the digital marketplace is Shopify, so retailers who use it can access an additional sales channel and utilise the marketplace’s campaign activities.

Hill added that they understand that shoppers can’t always make it in-store, so that platform brings the city retailers to them via their mobile phone or computer.

 “This is a game changer,” he added.

The AEDA has partnered with South Australian-owned and operated tech businesses Arcadier and logistics The Courier App to develop and operate ByADL.

Gerry Harvey, executive chairman of retailer Harvey Norman, says recent wet weather has resulted in fewer sales of outdoor furniture and air conditioner units, but he still expects to have a good Christmas, while next year is more opaque.

Mr Harvey told The Australian Financial Review that consumers were still spending on big-screen televisions and energy saving products with no sign of any slowdown, despite rising cost-of-living pressures.

“We’ll have a really strong Christmas, but next year is a great unknown,” Mr Harvey said. “I don’t think there’s any doubt as retailers we will be affected, it’s just as a matter of some sectors more than others. We have 65 per cent of our stores in regional areas, and because agriculture and mining is so strong they shouldn’t be affected as much.

“Sale of big screen TVs are very strong ... but things like airconditioning is not good, but in WA they had one of their hottest days [on Thursday]. Outdoor furniture is slower than we like because of weather, those are two big categories we will not get the sales we would have hoped for.”

He added that the whitegoods, home and electronics retailer is looking to cut out $300 million to $400 million worth of stock in stores, after a major expansion of inventory over the past 24 months from manufacturers. Mr Harvey said Australia is nowhere near a recession with the unemployment rate still very low, and it was tough finding shop floor assistants.

Mr Harvey’s comments came after the company posted a 6.9 per cent global sales jump in the first four months of the financial year, and his wife and chief executive, Katie Page, showed off plans to open 52 stores in Malaysia over the next six years.

Same-stores sales gained 6.3 per cent in the four months to October 31 at its company-owned stores and its independent Harvey Norman, Domayne and Joyce Mayne branded franchised sites.

Australian franchisees sales surged 9.1 per cent over the period, or 8.8 per cent on a same-stores sales basis, showing no signs of consumers pulling back on spending despite multiple interest rate hikes.

Ms Page told shareholders in Sydney on Thursday at the annual meeting the company would fund the Malaysia expansion through operating cash flows and existing cash reserves in Malaysia. For the four months, sales in Malaysia surged 44.5 per cent.

Harvey Norman opened its first Malaysian flagship store in 2003 at IPC shopping centre in Kuala Lumpur. It has 28 stores there, but plans to take the total store network to 80 by 2028.

“We have doubled the number of Malaysian stores over the past five years,” Ms Page said.

Ms Page said the flagship continues to be the No 1 store in Malaysia, and they first looked at entering Malaysia in 1996. It opened the latest store on Monday at the 1 Utama shopping centre – the largest shopping mall in Malaysia.

“If I’m a shareholder the thing that I will ask, is what is the team like because it’s a considerable jump of 52 stores over that period of time,” Ms Page said. “And you can see there that we’ve put up the strength of our bench. We have an amazing team there. It doesn’t matter whether it’s manpower, infrastructure, property, retail, or IT we are absolutely ready for this.”

In future, Ms Page said Harvey Norman will open in Sabah, on the island of Borneo, and has been testing the water route between mainland Malaysia and Sarawak, where it already has stores.

“We have got that transport down to three days across that piece of water. So, it means that we can expand there as well,” she said.

Shares in the $5.2 billion company fell 2.13 per cent to $4.14 by 3pm AEST. Year to date, the stock is down about 18 per cent.

The company said on Thursday that translated sales from its markets around the globe had been negatively affected by currency movements, although this was somewhat offset by the appreciation of the Malaysian ringgit and Singaporean dollar.

Northern Ireland was the worst performing, with sales tanking 26.4 per cent in the four months; Ireland sales were down 7.4 per cent; New Zealand sales fell 3.8 per cent, while Slovenia & Croatia inched up 3.6 per cent and Singapore gained 7.5 per cent.

Harvey Norman’s offshore expansion started in New Zealand in 1997, and now has over 270 Harvey Norman stores in eight countries. Mr Harvey and the late Ian Norman founded the chain in 1982.

Ms Page said the group is constantly dealing with different global issues. “We didn’t at that point (in February) think that China would still have their borders closed by now. So, it’s a very complex world. We’ve also still got the Brexit issue with Northern Ireland and Ireland with border issues,” she said.

“But you can see from our results that we actually take those knocks pretty well. We’re very nimble. We have an experienced team.”