Airlines may be benefiting from a move by young people to trade booze and binge shopping for experiences, according to Qantas chief executive Alan Joyce.
It was once a given that leisure travel was a discretionary spend, a luxury item that was among the first on the chopping block when the economy hit a rough patch.
But this no longer appears to be the case.
Australian airlines say they are not feeling the pain some industries are seeing as consumer confidence is battered by low wages growth and falling house prices.
And Joyce reckons the changing tastes of young consumers may have something to do with it.
“We’re not seeing some of what the retail sector is seeing out there maybe because the new generation of flyers are spending more on experience, less on retail, less on alcohol,’’ he told the airline’s interim results news conference Thursday.
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Nor are travelers trading down in the way Woolworth’s boss Woolworths boss Brad Banducci is seeing with a switch at his liquor outlets from French champagne to cheaper, locally-made bubbly.
Banducci attributed the significant drop in French champagne sales to rising household costs.
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Joyce said Qantas had seen no sign of the same trend when it came to premium travel.
He pointed to record results for the domestic operations of Qantas and low-cost carrier Jetstar as evidence both ends of the market are healthy and have room for growth.
He said there was a significant increase in business from small to medium enterprises tying into its loyalty program and it was seeing record demand for its premium cabins.
“For example, on the Perth-London route our premium cabins are full at 95 percent which means we’re displacing premium passengers,’’ he said.
“So we think there are growth opportunities there so at the moment we are absolutely not seeing any weakness in any of the premium classes.
“If anything, they continue to be very strong across the board.”
There was no significant update on Project Sunrise, the plan to use hub-busting planes on ultra-long-haul routes such Sydney-London.
The contenders for the project are variants of the Airbus A350 and the Boeing 777X, with Qantas expected to make a decision later this year.
Qantas had hoped the planes could perform the mission with 300 passengers on board but Joyce confirmed it looked like “there won’t be full passenger payloads year-round on some of those routes”.
“That doesn’t mean we won’t be selling all classes,’’ he said. “We have those limitations today on certain routes — on Dallas for parts of the year we don’t sell all of the seats on the A380.
“It will be similar to that”
Joyce noted it was still some time before the project Sunrise aircraft would be in operation and aircraft performance was changing all the time.
He said the airline needed an aircraft that would not only fly from Sydney or Melbourne to London and New York but one that could be rotated to do Sydney-Hong Kong and Sydney-Los Angeles.
