Market-changing developments are taking place in Australasia as airlines in Australia and New Zealand confront difficult times, resulting in downsizing after many years of growth.

New competition has created overcapacity just as demand has been falling. This is having a negative effect on yields, at the same time as the Australian dollar has lost 30% of its value over the past half year and some of the country’s airlines have been hurt by losses on fuel hedging contracts.

The list of cutbacks has been growing in recent weeks, with Virgin Blue and smaller SkyAirWorld announcing capacity and job cuts, regional carrier MacAir going into receivership, Qantas slashing capacity growth plans and Skywest recording losses and a drop in passenger numbers.

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