INTERNATIONAL TOURISM REMAINS STEADY DESPITE FRAGILITY IN THE GLOBAL ECONOMY. Tourism Australia s Quarterly Market Update Issue 8.

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1 Quarterly Update INTERNATIONAL TOURISM REMAINS STEADY DESPITE FRAGILITY IN THE GLOBAL ECONOMY According to the Australia Bureau of Statistics (ABS), international arrivals to Australia reached a record six million visitors for the September 2012 year-end, up three per cent compared to the 12 months to September The latest International Visitor Survey (IVS) results show total expenditure for the June 2012 year-end reached A$26.6 billion, a rise of one per cent from While arrival figures have risen steadily and spend in local currency from a number of key markets has also increased, the price competitiveness of Australia remains a challenge with the dollar continuing to be strong. Leisure arrivals strong in the September quarter International visitors for the September quarter 2012 increased five per cent on the previous year, with solid growth recorded across all segments (). The Holiday and Visiting Friends and Relatives (VFR) segments, accounting for almost 70 per cent of total international visitors to Australia, improved four and seven per cent respectively in the September quarter versus the same period in Figure 1 shows rolling annual arrivals to Australia and monthly percentage change on the previous year. Strong growth in Business Events Business Events arrivals are showing strong growth with an overall increase of 14 per cent for the September 2012 year-end. The strongest growth came from the USA up 30 per cent, China up 27 per cent and Japan and the UK both up 17 per cent. Global recovery remains patchy The global economy continues to be challenged. In Europe, a number of economies continue to be volatile, with some re-entering recessionary conditions, while sovereign debt problems in Southern Europe are ongoing. The weaker economic conditions in key European economies are dampening discretionary spending, in particular long haul travel. However, according to the Tourism Forecasting Committee (TFC), there are encouraging signs out of the USA, with the housing and job markets stabilising and consumer and business confidence improving as a result. Positive signs from the USA and Europe from the USA grew four per cent in the first nine months of 2012, compared with the same period in 2011, driven by Leisure arrivals (). Despite the strength of the Australian dollar, in the 12 months to June, visitors from the USA were staying longer, spending more, and visiting Australian cities and towns outside of the major gateways of Sydney, Melbourne, Brisbane and Perth (Source: IVS YE June 2012). Despite the backdrop of the Eurozone economic crisis, France and Italy have shown positive signs of growth. Total arrivals were up three per cent from France and 10 per cent from Italy in the first nine months of 2012, with the Youth and Working Holiday Maker segments the key drivers. In the 12 months to June, French and Italian Holiday arrivals stayed longer and dispersed more to regional Australia on their trips. Positive tourism performance ahead According to the latest TFC update in October 2012, inbound visitor arrivals are forecast to increase by 2.3 per cent, to reach 6.1 million in This forecast has been slightly moderated from the initial three per cent growth forecasted earlier this year, largely due to ongoing global economic factors. Total inbound tourism expenditure is expected to increase 2.8 per cent to A$28 billion in Asia will continue to be of particular importance to the performance of inbound tourism sector, with arrivals from Asia expected to increase 4.5 per cent to 2.6 million in , while only marginal growth is expected from elsewhere in the world. Asia continues to drive demand Asia continues to drive the growth in international visitors to Australia. The largest increases were from China, up 16 per cent in the first nine months of 2012 compared to the same period last year, followed by Singapore (up six per cent), Malaysia (up five per cent), India (up four per cent) and Indonesia (up four per cent). Growth from Singapore, has been assisted by the commencement of Scoot s services to Australia in June, with arrivals up 10 per cent in July, up 29 per cent in August, and 15 per cent in September (). 1

2 Quarterly Update Figure 1: Tourist arrivals to Australia (rolling annual) and monthly percentage change on the previous year. 6,100,000 6,000,000 Monthly % change year-on-year (RHS) Annual tourist arrivals (LHS) World Youth Day (WYD) July 2008 Easter occured in April 2009 versus March 2008 Chinese New Year occured in Feb 2010 versus January 2009 Impact from Icelandic ash cloud April - May 2010 Start of Air Asia X's KUL- SYD in Apr and Scoot's SIN- SYD in June 15.0% Reverse impact from declines in arrivals out of NZ during RWC % 5,900, % 5,800, % 5,700,000 5,600,000 5,500,000 'Credit crunch' and US recession begins (Nov 07) Global financial markets crash confirming GFC (Oct 08) Reversed impact from WYD July 2008 Flooding and Cyclone Yasi in Queensland in February 2011 Volcanic erupmon in Iceland impacted air transport from 14th April into May 2010 Japan earthquake and series of abermaths March 2011 Grounding of flights due to Chilean ash cloud June 2011 RWC 2011 in NZ slowed outbound Kiwi travel in Sep & Oct - 5.0% % 5,400,000 Source: TA & ABS, Overseas and Departures, Australia, up Mll March % Jun- 07 Sep- 07 Dec- 07 Mar- 08 Jun- 08 Sep- 08 Dec- 08 Mar- 09 Jun- 09 Sep- 09 Dec- 09 Mar- 10 Jun- 10 Sep- 10 Dec- 10 Mar- 11 Jun- 11 Sep- 11 Dec- 11 Mar- 12 Jun- 12 Sep- 12 2

3 Aviation Summary International aviation capacity to Australia grew an estimated three per cent in the September quarter. Average loads also increased, reflecting strong demand for additional services. There is continued strong growth in capacity from China and Singapore, which was boosted by the Singapore Airlines Group s recent increases including Scoot s new Sydney and Gold Coast services and Silk Air s new Darwin service. In recent months, capacity declines from the United Kingdom (Qantas/British Airways) and Indonesia (Air Australia/Indonesia Air Asia) have reduced overall capacity growth into Australia. Alliances and partnerships continue to develop and deepen Qantas and Emirates announced plans to form a comprehensive alliance from April 2013, including Qantas re-routing some of its London services via Dubai, code sharing on Emirates 33 European destinations, and reciprocal access to frequent flyer programs and lounges (subject to regulatory approval). Qantas subsequently announced plans to end its Joint Service Agreement with British Airways, as well as code share agreements with Eva Air, Air France and Cathay Pacific. Virgin Australia has applied to government authorities to buy 60 per cent of Tiger Airways and 100 per cent of Skywest. Singapore Airlines plans to buy a 10 per cent stake in Virgin Australia (subject to regulatory approval). Virgin Australia has applied to Australia s International Air Services Commission (IASC) seeking approval for Delta Air Lines to code share on its Australia-Indonesia services. Etihad commenced code share arrangements with Aer Lingus in September 2012 and announced plans to commence code sharing with Air Berlin, Air France-KLM and Garuda Indonesia. Global demand for air seats increased five per cent in August 2012, compared to a four per cent increase in aviation capacity, resulting in average load factors increasing to 82 per cent. Latin American, Middle Eastern and African carriers continue to report the strongest capacity growth, while North American carriers continue to improve profitability through tight capacity management (capacity has reduced by 0.5 per cent). During August, economy class traffic continued to grow while premium traffic rebounded. Similar to global demand, Australian demand increased five per cent with average load factors also increasing (to 74 per cent). Oil prices remained volatile in the September quarter, declining below USD90/barrel in June and peaking to USD115 in August. Overall prices are expected to average USD110/barrel for the full year with many airlines continuing to increase their fuel surcharges, potentially adding to the cost of travelling to Australia. Domestic capacity within Australia continues to report strong growth (11 per cent in the September quarter 2012), however average loads have declined slightly. Capacity growth was focussed on capital city routes (eg Sydney/Melbourne/Brisbane to Perth) and on high yielding traffic such as mining routes. Premium traffic also continues to improve in Australia with a number of airlines upgrading services and products. There were no Air Service Agreement expansions for major tourism markets in the September quarter. In December, the Australian Government is expected to meet with a number of countries at the International Civil Aviation Organisation s conference (ICAN) in Saudia Arabia, to discuss agreements. There are currently some routes where capacity is restricted due to bilateral agreements, such as Malaysia, Hong Kong and Qatar. Qatar Airways announced plans to join Oneworld. Qatar is the first of the big three Gulf carriers to sign with a global alliance. Christchurch and Adelaide Airport signed a Memorandum of Understanding (MOU) to promote and attract services between the two airports. Melbourne s Avalon Airport is one step closer to attracting international services after the Australian Government granted it permission to construct an international terminal. Tourism Australia s activities A high level delegation of Australia s leading airports attended the World Routes conference in Abu Dhabi (29 September to 2 October 2012). Tourism Australia, four State Tourism Organisations and seven major airports represented Australia with one voice in an effort to best attract new international capacity. This was the largest ever World Routes with over 3,000 attendees from more than 300 airlines and 750 airports around the world. Tourism Australia recently signed cooperative marketing agreements with China Southern Airlines (August 2012; which, along with STO partners, is worth A$9m in the next year), Emirates (October 2012; A$14m over the next three years) and China Eastern Airlines (; A$9m over the next three years). 3

4 Aviation Summary Change in international and domestic seats for year-end September 2012 for selected airports % change on same month previous year Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Sydney Domestic -7% -3% -4% -4% 4% 0% 2% -1% 3% 10% 10% 10% 1% International 6% 4% 3% 2% 5% 1% 2% 3% 8% 6% 6% 6% 4% Melbourne Domestic -8% -5% -6% -4% 6% 2% 2% 1% 7% 18% 15% 16% 3% International 4% 10% 7% 1% 2% 3% 0% 0% 5% 1% 3% 5% 3% Brisbane Domestic 0% 2% 4% 10% 13% 7% 5% 4% 5% 8% 11% 11% 7% International 11% 5% 6% 5% 3% 0% 4% -7% 2% -1% -4% -2% 2% Gold Coast Domestic -7% -5% -6% -12% 10% 5% 5% -4% 7% 16% 17% 24% 3% International -4% -12% -5% -5% -6% -5% -3% -20% 11% 63% 56% 65% 7% Cairns Domestic 0% -3% -3% -1% 6% 4% 8% 8% 5% 10% 7% 11% 4% International 10% -2% -4% -2% 3% -7% -8% -12% -16% -16% -8% -12% -6% Adelaide Domestic -12% -7% -9% -8% 4% -5% -5% -2% 3% 6% 8% 8% -2% International 10% 12% 25% 28% 15% 11% 4% 2% 9% 21% 18% 19% 15% Perth Domestic 8% 13% 10% 16% 22% 15% 14% 15% 18% 20% 18% 15% 15% International 2% 5% 6% 5% 9% 5% 4% 4% 5% 8% 7% 10% 6% Darwin Domestic -14% -8% -16% -14% -3% -16% -100% -5% -6% 8% 10% 14% -4% International 47% 21% 23% 4% 0% -31% 3% -23% -25% -24% -32% -36% -9% YE Sept 12 4

5 Americas USA 469, % 3.9% Canada 119, % 2.3% Brazil 30, % 7.1% Growth has continued in Leisure, Business and Business Events arrivals from the USA in the first nine months of USA visitors are staying longer, spending more money, and dispersing into regional Australia despite the Australian dollar remaining strong against the greenback. Australia continues to be an increasingly popular long haul destination for Brazilians, particularly amongst Leisure travellers. The USA travel market continues to show signs of recovery with total outbound travel expanding and overall visitor numbers to Australia up four per cent in the first nine months of Growth was driven primarily by the largest segment, Holiday arrivals, which increased by three per cent, followed by Business arrivals registering 12 per cent growth, and Visiting Friends and Relatives (VFR) arrivals up seven per cent. Business Events arrivals also produced increases, up 38 per cent in the September quarter. growth from the USA is set to continue according to the Tourism Forecasting Committee s most recent estimates (October 2012), with a two per cent increase in arrivals expected in 2012/13. Despite the strength of the Australian dollar, in the 12 months to June, USA visitors were staying longer, spending more, and visiting regional areas beyond Sydney, Melbourne, Brisbane and Perth. Leisure (Holiday and VFR) arrivals were the driving force behind these increases with expenditure growing strongly to A$2.29bn, up seven per cent for the year and equating to double-digit growth in US dollars, while dispersed nights were up 10 per cent. Aviation Air Canada will increase capacity to Sydney from daily services to 10 flights per week between 15 December 2012 to 30 January Air New Zealand is increasing services from San Francisco (to daily) and Los Angeles (to double daily) in December 2012, which should benefit connections to Australia from the USA. Air New Zealand also announced it is increasing Pacific coast capacity from Vancouver. The Vancouver route will move to five services per week over the December 2012 February 2013 peak period which will improve connections into Australia from Canada via Auckland. Hawaiian Airlines new nonstop flights (three times per week) between Honolulu and Brisbane from 27 are likely to aid Australian outbound more than American inbound. Tourism Australia appointed Development Counsellors International as its Canadian Travel Trade Representative as of 1 July Merit Travel Group s Mike Merrithew was named the President of the American Society of Travel Agents (ASTA) Canadian chapter. Brendan Vacations launched its new 2013/14 Australia and New Zealand e-brochure with one new itinerary for Australia in Tasmania. Globus is offering several new tours to Australia and the South Pacific, while its sister brand, Monograms, is offering several new day packages. Moving forward, the North American market for AAT Kings will be managed by David Gendle, Head of Sales for AAT Kings in Sydney. The performance of the Canadian market is improving, however not at the same pace as the USA. Canadian arrivals grew two per cent in the first nine months of The larger traveller segments of Holiday, VFR and Business all experienced between two and four per cent growth, while Education arrivals produced the largest increases, up 15 per cent albeit off a small base. Industry feedback suggests the appreciation of the Australian dollar against the Canadian dollar has changed the way Canadians travel around Australia once they arrive, supported by decreases seen in dispersed nights and expenditure at year-end June Australia experienced solid growth in arrivals from Brazil in the first nine months of 2012, up seven per cent, with a 10 per cent increase in the Leisure segment. Brazilians are spending more and staying longer in Australia with good growth experienced for each measure in the 12 months to June. Growth was partially anticipated due to the double-digit increase in tourist visa applications following changes implemented in February 2012, which allowed visitors to apply for visas online. 5

6 UK and Europe United Kingdom 591, % -4.1% Germany 151, % -1.9% France 95, % 2.9% Italy 58, % 10.4% from the UK remain in decline, impacted by a number of factors including continued economic uncertainty, lagging consumer sentiment, and major UK events such as the Diamond Jubilee, Olympics and Paralympics encouraging Brits to stay at home. The Business segment is performing well out of the UK, with spend and visitor numbers increasing during 2012, compared to Business Events also showed a return to growth. The Youth segment and Working Holiday Makers (WHM) were the driver behind arrivals from Germany, France and Italy. from the UK were down four per cent in the first nine months of 2012, driven by a 13 per cent decline in Holiday arrivals. have been impacted by a combination of factors including continued economic uncertainty in the UK and Europe, lagging consumer sentiment, and major events such as the Diamond Jubilee, Olympics and Paralympics encouraging Brits to remain in the UK. Pockets of growth were still evident, with a three per cent improvement in VFR travellers, Business arrivals up 10 per cent and Business Events up 17 per cent. WHM is a segment to watch, with an increase of seven per cent in WHM visa grants in the 12 months to June. Industry reports suggest strong bookings into 2013, particularly around the British and Irish Lions rugby tour to Australia in June and July. Continental Europe is still going through challenging economic times and will do so for the foreseeable future, especially France and Italy. Although the German economy is performing stronger than most other European countries uncertainty remains high and consumer confidence has declined in the last three months. Reflecting this sentiment, German arrivals were down two per cent in the first nine months of 2012, despite strong growth in the VFR segment of 12 per cent. Germans who are travelling to Australia, have increased their length of stay and dispersal to regional Australia resulting in an increased spend in Euros. However, spend in AUD remains flat due to the appreciation of the Australian dollar against the Euro. Spend and arrivals from the Youth and WHM segments remain strong. Aviation news The following new service announcements were made by Emirates: An Adelaide service was launched on 1 (four times per week), increasing to a daily service from February An A380 service into Melbourne will commence in December A third daily Dubai-Perth flight from 1 March Qantas and Emirates announced plans to form a comprehensive alliance from April 2013, including Qantas re-routing its London services via Dubai, code sharing on Emirates 33 European destinations, reciprocal access to frequent flyer programs, lounges (subject to regulatory approval). Qantas subsequently announced plans to end its Joint Service Agreement with British Airways as well as code share agreements with Eva Air, Air France and Cathay Pacific. China Southern s new service into Cairns, commencing 18 December 2012, has the potential to generate interest from the UK due to competitive pricing, with China Southern now operating to the UK. Joel Saunders has left Austravel as Managing Director. At the time of printing, no replacement had been announced. Qantas has announced structural changes as follows: Eric Jelinek is Qantas Regional General Manager UK & Ireland Rob Harrison is Qantas Head of Sales UK & Ireland Nick Crabb is Qantas ing Manager, UK & Ireland. The distribution landscape in France is shifting with a merger of two top travel sellers for Australia (Travel & Co, owner of Australie Tours, has bought Australie Autrement). A new trend has also appeared in France with some websites (such as evaneos.com, tracedirecte.com) launched to create a direct link between travellers and incoming travel agencies around the world. For the moment, these websites target individual tailormade travels and Australia is included on some sites. Despite the negative economic outlook for France and Italy, arrivals to Australia have increased by three and 10 per cent respectively in the first nine months of are being driven by the Youth and WHM segments. Australia saw an increase of WHM visa grants of 49 per cent from Italy (off a small base) and eight per cent from France for year-end June Overall, in the 12 months to June, French and Italian Holiday arrivals were staying longer and increasingly dispersing to regional Australia on their trips. 6

7 New Zealand New Zealand 1,199,600 3% 3.2% growth remains steady in the first nine months of the year from Australia s largest inbound market. Total expenditure from the New Zealand market remained positive, up four per cent, however travellers are dispersing less to regional Australia. New Zealand has experienced modest improvements in consumer and employment confidence, despite an historically high unemployment rate of 7.3 per cent, the highest rate since the March quarter of Coinciding with modest improvements in consumer and employment confidence, New Zealand arrivals experienced growth in the first nine months of the year. Growth was driven primarily by an increase in travellers Visiting Friends and Relatives (VFR), up six per cent, and Holiday arrivals which rose three per cent. The growth from New Zealand is set to continue according to the Tourism Forecasting Committee s most recent estimates (October 2012), with a one per cent increase in arrivals expected in 2012/13. New Zealand travellers stayed longer and spent more money in the 12 months to June 2012, encouraging results given the decline in arrivals during the Rugby World Cup in September 2011 (there were 25,000 less arrivals compared to September 2010). Leisure arrivals (Holiday and VFR) were the driver behind expenditure growth, with Leisure expenditure increasing six per cent. Australia continues to be a popular return destination for New Zealanders, with 94 per cent of travellers being repeat visitors. Aviation news Air New Zealand increased its Auckland-Perth capacity by 20 per cent in September In July-September 2012, Air New Zealand operated twice weekly seasonal services to the Sunshine Coast for the first time. Results are yet to be reported. Emirates has commenced its twice-daily A380 service between Auckland and Melbourne translating to an extra 1,000 seats per week. Air New Zealand will expand capacity to North America (LAX, SFO, VYR) in December 2012, which poses a competitive threat for Australia. A combination of exchange rates, attractive packages and increasing capacity are driving New Zealand arrivals growth to the USA. Highlighting further competition, Hawaiian Airlines has commenced sales for its new direct Auckland Honolulu service, launching in March Norm Thompson, Deputy CEO has resigned from Air New Zealand after 44 years with the airline. Thompson will retire in June The new CEO of Air New Zealand, Christopher Luxon, replaces exiting Rob Fyfe from January The new COO of Air New Zealand has also been appointed, Bruce Parton (previously Group GM) will commence alongside Christopher in January Overall, travellers are dispersing less to regional Australia, which could be influenced by the higher Australian dollar impacting travel choices once here. The largest declines in visitor nights were seen across Tropical North Queensland, South-West Western Australia and Adelaide. 7

8 Japan Japan 349,800 2% 7% from Japan grew seven per cent in the first nine months of the year. Overall expenditure by Japanese travellers increased, driven by growth amongst VFR, Education and Employment arrivals. Aviation news Jetstar will operate a Kansai to Darwin service via Singapore from. Two major travel agencies KNT and Club Tourism (both subsidiary companies of Kintetsu Railway Corp.) will merge from January 2013 to form KNT-CT Holdings. The new company will be the second largest travel agency in Japan, after JTB. Tourism Australia is working toward new campaign activity in Japan, utilising the Asia ing Fund. Japanese arrivals grew seven per cent in the first nine months showing tentative signs of recovery. However, this has not been enough to restore arrival numbers to 2010 levels (prior to the natural disasters of 2011). The key driver of growth was the Holiday segment, which increased by eight per cent, while declines were seen across VFR and Business arrivals. According to the Tourism Forecasting Committee s most recent estimates (October 2012), growth is set to continue with 350,000 travellers from Japan expected in 2012/13. Expenditure by Japanese travellers increased by two per cent for year-end June 2012, however this was driven by Education, VFR and Employment arrivals rather than the Holiday or Business segments. Spend by Holiday arrivals, which accounts for 61 per cent of total spend, declined by one per cent. These results reflect the sluggish Japanese economy and rising unemployment that is not being remedied by post-tohoku investment. As part of the Asia ing Fund, announced in the 2012/13 Federal Budget, Tourism Australia is currently working on a broadcast project to assist with revitalising Australia s image in Japan. 8

9 North Asia China 606, % 15.9% Hong Kong 172, % 5.1% South Korea 196, % -0.8% China has overtaken the UK to become Australia s second largest inbound market for visitors (as at year-end, and remains Australia s largest market for spend (at year-end June 2012). Hong Kong has performed well in the first nine months of the year, with growth amongst Holiday arrivals and Working Holiday Makers (WHM). The Korean travel market remains a challenge for Australia as travellers are choosing short-haul Asian destinations for their holidays. The strong growth from China continues, with arrivals increasing 16 per cent in the first nine months of 2012, making China the second largest inbound market by arrivals (behind New Zealand). Holiday travellers accounted for the largest number of arrivals and produced 29 per cent growth during the first nine months of At year-end June, expenditure by Chinese visitors reached a record high of A$3.78 billion, driven by a strong Leisure segment - Holiday and VFR. These Leisure travellers are also visiting more regional cities and towns (dispersed nights increased by 60 per cent), due to increasing airline capacity and promotion of regional destinations. Tourism Australia has capitalised on the opportunity by conducting several campaigns promoting non-gateway destinations* including Cairns and Adelaide. Large increases were also experienced in Business Events arrivals, up 61 per cent in the September 2012 quarter. growth from China is expected to continue with the introduction of flights to Cairns by China Eastern in November. Holiday travellers from Hong Kong are also dispersing in higher numbers, with an increase in the number of nights spent outside of gateway cities* at year-end June. A drop in VFR and Education arrivals has impacted overall expenditure, which declined by three per cent. The high Australian dollar and competitive offers by education providers in the UK and USA have affected these results. from Hong Kong grew steadily in the first nine months of the year, with Holiday arrivals remained the largest segment. Australia saw an increase of more than 60 per cent in WHM visa grants for the year-end June 2012 and feedback from the Department of Immigration and Citizenship suggests this segment is set to grow in Aviation news China Eastern Airlines commenced services from Shanghai to Cairns on 30 October Tourism Australia is running a partnership campaign with China Eastern Airlines to drive destination awareness and sales. The airline also announced plans to increase its Shanghai-Sydney services from daily to nine per week from 14 December China Southern Airlines also announced a new seasonal service from Guangzhou into Cairns (via Brisbane). Cathay Pacific introduced its new Premium Economy and Business class on services to Adelaide, Perth and Melbourne in October 2012, with Brisbane and Cairns to follow in Sichuan Airlines has announced plans to launch thrice weekly Chengdu-Melbourne services. Chengdu represents one of China s fastest emerging secondary cities and is the largest aviation hub in western China. Tourism Australia will commence trade and consumer marketing activities in three new cities (Chengdu, Chongqing and Qingdao) from. These cities were identified in the China 2020 Strategic Plan, and the roll out has been accelerated by the Asia ing Fund, announced in the 2012/13 Federal Budget. The following Business Development Managers (BDM) have been appointed by Tourism Australia: Benjamin Chen, Regional BDM, Greater China Jonathan Zhang, BDM, Northern China Evelyn Xie, BDM, Southern China Carol Yuan, BDM, Western China Three new inbound tour operators have been approved under the Approved Destination Status (ADS) scheme. AAT Kings Pty Ltd, Trafalgar Tours Pty Ltd and New Star Travel Services Australia Pty will join 55 other approved operators that can bring Chinese ADS tour groups to Australia. Tourism Australia is working with Korean online travel sellers to promote destination awareness, key messages and tactical offers in channels where consumers are making travel purchase decisions. Korea remains a challenging travel market for Australia as travellers choose short-haul Asian destinations for their holidays, evident in the small decline in arrivals for the first nine months of 2012 and the increasing market share for Thailand, Vietnam and Cambodia. There are segments of growth, with Business arrivals increasing six per cent for the year-end September 2012 and WHM from South Korea growing seven per cent for the year-end June Tourism Australia launched the next phase of its There s nothing like Australia campaign in September, rolling out across digital, print and out-ofhome channels. * Gateways are: Sydney, Melbourne, Brisbane and Perth. Dispersed nights are all those spent outside of these gateways cities. 9

10 South and South East Asia Singapore 332, % 6.2% Malaysia 249, % 4.5% India 152, % 4.1% Indonesia 144, % 3.6% Although consumer confidence has remained relatively cautious in light of the Eurozone economic crisis, arrivals from Singapore grew in the first nine months of the year. As at year-end September 2012, India became Australia s tenth largest market, based on arrivals, overtaking Germany. Strong arrivals growth was experienced from Indonesia and Malaysia in the September 2012 quarter, partly attributable to the end of Ramadan falling half way through the month of August. In August, Tourism Australia launched its There s nothing like Australia campaign in India. In Singapore, consumer confidence has remained relatively cautious. Overall market expenditure performance at year-end was flat, influenced by a sluggish Holiday market. That said, arrivals for the first nine months of 2012 saw six per cent growth, driven by the Holiday and Business segments. A contributing factor to this growth was Scoot s inaugural flights to Sydney which began in June 2012, with arrivals up 10 per cent in July, up 29 per cent in August and 15 per cent in September. Demand for outbound travel is improving, a sentiment supported by industry who report strong forward bookings for the end of the year. The Tourism Forecasting Committee recently downgraded its 2012/13 arrivals estimates for Singapore by three per cent from previous forecasts, to one per cent growth. The end of Ramadan in mid-august saw a large increase in Holiday arrivals from Malaysia, up 20 per cent for the month. This had a positive impact on arrivals for the first nine months of the year, which rose five per cent. Business Events (BE) delivered strong growth in spend, visitors and number of nights for the year-end June, supporting anecdotal reports from industry of higher spend and requests for extended stays after BE itineraries end. Tourism Australia launched the next phase of its There s nothing like Australia campaign in Indonesia and Malaysia in September. from India grew in the first nine months of the year by four per cent, resulting in India overtaking Germany to become Australia s tenth largest inbound market by visitor arrivals. The growth was driven by VFR, up by 19 per cent. The doubling of Indian-born Australian residents over the five years from 2006 to 2011 (according to Census data released by ABS) has been noted as a key contributing factor to this result. The Australian Government has also introduced five year multiple entry visas with a one year stay per entry for Indian parents of Australian citizens and permanent residents, which could positively influence VFR arrivals and spend in the future. Overall expenditure by Indian visitors has declined by 23 per cent at year-end June 2012, impacted by the decrease in Education arrivals and spend. The slowdown in the economy and the falling Rupee are making travel packages to Australia more expensive. An Australian government focus on promoting longer University courses (rather than short-term courses), is also likely to have had an impact on expenditure. Holiday arrivals were the driver behind growth from Indonesia, which increased seven per cent in the first nine months of the year. This was partly attributable to the end of Ramadan, which saw Holiday arrivals increase from Indonesia by 25 per cent in the month of August. Indonesian travellers are spending more on shorter city-breaks in gateway cities*, evidenced by an increase in visitor numbers alongside declines in the number of nights stayed (-15 per cent) and dispersed nights (-38 per cent). Aviation news Virgin Australia has applied to government authorities to buy 60 per cent of Tiger Airways and 100 per cent of Skywest. Singapore Airlines plans to buy a 10 per cent stake in Virgin Australia (subject to regulatory approval). In September, Malaysia Airlines increased its flight frequency to India by commencing daytime services connecting Mumbai, Delhi, Chennai, Bengaluru and Hyderabad to Kuala Lumpur. The additional flights (three times per week) improve connectivity to Australia and shorten lay-over times in Kuala Lumpur. Malaysia Airlines will increase its Kuala Lumpur-Adelaide service to daily from November, increasing total weekly capacity to over 1,900 seats. Singapore Airlines is also increasing Singapore- Adelaide frequency from 10 to 12 services per week in July In October 2012, Singapore Airlines increased the number of flights on the Mumbai-Singapore route from 19 to 21 flights per week. Singapore Airlines will also increase its number of weekly flights out of India from 85 to 93. This will enable the airline to increase its market share out of the Indian market to Australia. Garuda decreased frequency of its Jakarta Sydney service from seven to five times per week due to performance, however frequency is expected to return in December Virgin Australia has applied to Australia s International Air Services Commission (IASC) seeking approval for Delta Air Lines to code share on its Australia-Indonesia services. USA visa application norms and waiting times for Indians wishing to travel to the USA for Business and Leisure have been reduced. The USA is a key competitor for Australia in the Indian market. Expedia has launched in Malaysia, increasing availability of online dynamic packaging in the market and providing a new online channel for promotion. Holiday Tours & Travel has shifted its business model to primarily focus on digital channels, reflecting a change in consumer behaviour in Singapore. * Gateways are: Sydney, Melbourne, Brisbane and Perth. Dispersed nights are all those spent outside of these gateways cities. 10