Virgin Australia to End Cairns – Weipa Monopoly

Virgin Australia has confirmed it will launch a new direct domestic service between Cairns and Weipa after the Newman Government’s decision to deregulate air services, opening up one of Queensland’s most popular regional routes to new operators. The carrier says it intends to launch a daily flight using one of its ATR turboprops, subject to the final clearance of the ruling to open the route to new operators from 2014.

“Virgin Australia has a strong track record of bringing much-needed competition and lower fares to monopoly markets in Australia.  In Queensland the mining boom is continuing to drive increased demand and open up routes that can sustain competitive air services.”

Judith Crompton
Chief Commercial Officer, Virgin Australia

“Virgin Australia has a strong track record of bringing much-needed competition and lower fares to monopoly markets in Australia. In Queensland the mining boom is continuing to drive increased demand and open up routes that can sustain competitive air services,” said Judith Crompton, Chief Commercial Officer, Virgin Australia.

Weipa is the largest town on the Gulf of Carpentaria coast of the Cape York Peninsula in Queensland. The former Presbyterian Aboriginal mission outpost and famously the first recorded location in Australia to welcome visitors from Europe after Dutch explorer Willem Janszoon, on his ship the Duyfken, sighted the coast here in 1606, now supports a settlement of just 3,400 people (based on a 2011 survey) that purely exists to mine the enormous bauxite deposits along the coast.

The small Weipa Airport is located just four nautical miles southeast of the town, which was constructed mainly by Comalco (now Rio Tinto Alcan), a large aluminium company, which began making trial shipments of bauxite to Japan in the early 1960s. It is currently only served by Qantas Link which provides 17 weekly flights to Cairns. According to official traffic data, 58,888 passengers used the facility in the 2010/2011 financial year, the fourth consecutive year that more than 50,000 passengers had been handled. This represented an 8.7 per cent rise on the previous financial year and a doubling of the traffic figure recorded at the start of the century, highlighting the increasing demand for air connectivity from the town.

Official MIDT data highlights that bi-directional O&D demand hit record levels in 2012 when over 65,000 passengers were flown on the domestic route. Our analysis shows that demand had steadily risen up until 2008 but the market declined over the two subsequent years before returning to growth in 2011. What is also noticeable is how average fares have been rising on the route (up 110.8 per cent between 2006 and 2012), something that Virgin Australia is sure to highlight in its launch marketing when it ends the existing monopoly operation.