AUSTRALIA: International Airlines able to fly domestic routes — election promise from opposition

For non-Australian readers, we are in the midst of a Federal election campaign, with final votes to be cast on Saturday, 3 May 2025. As in most elections, this causes the competing parties to sometimes make outlandish promises. True to type, the Liberal and National parties, who work in coalition to form the opposition to the current Labour government headed by Prime Minister Anthony Albanese, have made a rather outlandish promise concerning aviation.

The promise

The Coalition is promising more frequent and cheaper flights to and from Darwin, the capital of the Northern Territory. They will do this by letting international airlines fly domestic routes between the top-end city and other state capital cities.

The opposition spokesperson on transport, Brigit McKenzie, promises a two-year trial of the policy that would allow international carriers to fly domestic passengers to and from Darwin to other Australian cities.

The reaction

Unsurprisingly, Qantas and Virgin, the biggest domestic flyers, have voiced their opposition to the proposal.

Genius or stupid idea?

I don’t think this is a stupid idea. I just don’t think it would work in practice. Here’s why.

Darwin is relatively remote from other capital cities, and has a small population of around 140,000. It is the ‘smallest, wettest, and most northerly of the Australian capital cities,’ according to Wikipedia.

Airfares between Darwin and other capital cities are expensive, but that’s mainly due to the lack of competition and the low load factors. No international or domestic airline will add flights that don’t make money just to provide competition.

Allowing international airlines to fly into Darwin and then onto another capital city may be attractive, especially if it allows the airline to increase its access to the Australian market. But no airline will do this unless the route makes money.

Think of the options. Would you choose to fly via Darwin, say to Thailand, or Singapore via Darwin when you can fly there directly from most capital cities? Only if the price is cheaper than flying directly is the answer. Making it cheap might also make it economically unviable.

2PAXfly Takeout

In aviation jargon, this proposal is ‘cabotage’ domestic legs that can be sold separately to the international sectors to domestic passengers. Cabotage is generally not permitted in most countries.

‘Cabotage is the right of a foreign airline to operate a commercial domestic flight, that is the carriage of passengers or cargo, between two airports within Australia.’

infrastructure.gov.au

I am no expert on the economics of flying, but, I would think it is harder to make money on a one stop route rather than a direct non-stop route. There are extra landing fees, extra staff hours and potentially additional catering etc.

It might be worth it if the NT government provides some cash subsidies, of an international airline can get some additional frequencies onward to other Australian capital cities.

I can see the main benefit as the potential to lower the airfares for domestic flights to and from Darwin. That could be good for tourism and make it cheaper for Darwinians to travel domestically.

Unsurprisingly, the Albanese Government is not ruling it in or out, but merely points to its white paper released last year that suggests that airlines’ cabotage requests be considered on a case-by-case basis. According to the SMH, a spokesman says:

“We will consider requests by airlines when demand is there. This is a responsible approach which keeps capacity open to regional and domestic carriers – while providing more choice for Australian travellers.”

AFR