Tasmanian Travel Jumps Overboard

The Age

Saturday June 10, 2006

CLIVE DORMAN

IT DOESN'T directly affect Victorians, but the collapse of the Sydney to Devonport ferry service on Monday has huge ramifications for domestic tourism in Australia. It's a headline-grabbing event that exposes the troubles facing the holiday business that have scarcely been reported.

TT Line, the Tasmanian Government's ferry operation that also runs the nightly Melbourne to Devonport service, pulled the pin on the twice-a-week Sydney ferry because it was losing huge amounts of money. Yet, after its first service just two years ago, it is now carrying 80,000 passengers (and half as many cars) a year.

The Spirit of Tasmania III - the third in the series, with the other two operating to and from Melbourne - had been a bold effort to tap into northern markets for a cold-climate state that struggles to get the tourism dollar. About 750,000 interstate and overseas visitors a year travel to Tassie, even fewer than the figure for the Northern Territory.

But that number peaked last year and is now falling. Meantime, the Sydney ferry was launched the same year as Jetstar, which connects Launceston and Hobart with Sydney and Melbourne, charging regular one-way fares as low as $59. In time-poor, modern Australia, even "one of Australia's great journeys" had its back against the wall from the beginning, unable to sell more than about 400 of its 660-passenger capacity per sailing on average.

But this story isn't just about Tassie, but a wider malaise in Australian domestic tourism that's affecting all the states. "Nationally, the overnight leisure market (holiday travel that requires at least one night away) has been in decline for several years," says a Tourism Tasmania research report released in November last year. "Australians are spending fewer nights away and spending less on travel. Overnight leisure travel is the largest and most valuable segment of Australia's tourism market, worth $30 billion in 2004."

The report cites three main reasons for the downturn: a contraction in spending on travel; an increasing share of travel being undertaken to visit friends and relatives interstate, which means less spending on holiday items such as accommodation and car hire; an increase in the number of Australians travelling overseas.

This is one of several reports that have described the dramatic reduction in travel spending by Australian households. Low interest rates have driven an increase in home ownership, which means many families with high mortgages. A large share of remaining disposable income is being gobbled up by gadgets such as mobile phones, pay TV and the internet.

The other amazing finding of the report is that so-called VFR (visiting friends and relatives) travel has been rising while most other domestic leisure travel is on the wane. This is what you could call the Jetstar effect. Jetstar has been responsible for a quantum leap in holiday travel to Queensland, for example, and it has almost always instigated the regular sales of the past two years, with fares of $39 to $59 one-way between the big cities down south that have been encouraging people to make quick trips interstate to catch up with loved ones.

The availability of these fares is a terrific social dividend from this renewed airline competition, but it dismays the tourism business. Sure, VFR travellers use the airline system, but they simply say no thanks to the rest of the tourism industry - the B&Bs, hotels small and large, tourist attractions and other services, such as hire cars.

The Tourism Tasmania report was written before the latest surge in fuel prices - one of the factors that killed off the Devonport-Sydney ferry as its operating costs jumped dramatically in the first few months of this year. This particularly affects Tasmania, which has as its biggest single so-called market segment the "Big Tour", in which people spend two weeks or more jaunting from one side of the island to the other.

More generally it is affecting the drive market. Two years ago, for example, it cost about $400 to drive from Melbourne to Brisbane return. Now it costs $700 or more. Meanwhile, the Australian dollar is now worth 75 US cents, when it was just 50 cents a few years ago. That is fuelling demand for overseas travel as our favourite places, such as the US and Europe, have become much cheaper (even if air fares to get there have risen).

Anyone want to buy a cheap B&B?

clivedorman@hotmail.com

© 2006 The Age

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