Thursday, October 16, 2014

Exchange rates, airfares and tourism

The tourism deficit responds to a weaker $AUD: Qantas Warns Weaker Aussie Will Trim Visitors’ Air Fare Discount
Visitors to Australia will get a smaller airfare discount compared to outbound travelers as a weakening currency makes the country a cheaper holiday destination, according to Qantas Airways Ltd. (QAN)
The carrier’s international unit will probably earn closer to half of its sales from local purchases and half from overseas as the Australian dollar weakens, Chief Financial Officer Gareth Evans said at a conference in Sydney yesterday. It’s currently making only about 35 percent of revenue offshore, he said, as the strength of the currency raises the cost of holidaying in the country and turns off inbound travelers.
“We are already seeing some shifting in demand” as a result of the Aussie’s fall from a record $1.1081 in 2011 to about 88 U.S. cents at present, he said. If the currency falls to between $0.80 and $0.85, the carrier “will see much stronger demand coming out of the U.S. and Europe.”
Differing levels of international demand mean airlines often have to discount tickets to fill flights departing from more subdued markets. At A$1,932 ($1,703), the cheapest fares from Sydney to London Heathrow on Qantas’s online booking site cost about 20 percent more than the 887-pound ($1,419) lowest-priced tickets in the opposite direction for travelers departing Nov. 15 and returning a week later.
Also positive feedback from Mantra who have a significant presence in FNQ:
The decline of the Australian dollar, along with cheaper air tickets, was stimulating inbound tourism, Bob East, chief executive officer of hotel operator Mantra Group Ltd. (MTR), said on a panel at the Citigroup Inc. event. It is fueling greater inbound business, we have no doubt,” East said. 

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