In what may be a surprise to some, more Australians continue to travel overseas, despite the value of our dollar falling 10% since December 2013.
Both Sydney Airport Holdings Ltd (ASX: SYD) and Melbourne Airport reported growth in travel by Australian passport holders in December 2014, compared to the previous year. Sydney Airport saw a rise of 1.9%, while Melbourne's Tullamarine reported a 5.4% jump in travellers. Brisbane Airport saw a 5.5% rise in international passengers in 2014 as well.
One of the reasons put forward for Melbourne Airport's faster growth is that it doesn't face a curfew from late at night until the early hours of the morning as Sydney does. (Brisbane airport doesn't have a curfew either).
Sydney Airport still boasts more passengers than other Australian airports with 38.5 million passengers in 2014 – compared to 31.7 million for Melbourne and 22 million in Brisbane.
The Aussie dollar averaged 89.9 US cents in December 2013, compared to an average of 85.2 cents in December 2014.
Source: OzForex data
The news bodes well for travel agents, including Flight Centre Travel Group Ltd (ASX: FLT), Webjet Limited (ASX: WEB), Helloworld Ltd (ASX: HLO) and an upcoming reverse listing of the Australian Travel Group Limited (ASX: ATL).
Many investors and financial commentators mistakenly believe that Australians stop travelling overseas when our dollar falls against the US dollar. Flight Centre has repeatedly shown that that assumption is false – as you can see from the RBA/ABS data in this article.
Many Australians tend to cut back on their spending once they are overseas, rather than abandon the trip altogether. They also tend to travel to a wide variety of destinations – not all of which are dependent on the AUD/USD exchange rate. And the Aussie dollar can fluctuate widely against other currencies – whilst the Aussie has fallen against the US dollar, it has appreciated against the Japanese Yen, the Euro and the British pound since December 2013 by 5%, 9% and 1.5% respectively.
According to Tourism Research Australia, just 11% of Australians travelling overseas visited the US in 2013 – a similar percentage travelled to Indonesia, while 13% travelled to New Zealand. Those facts put a big dent in the argument that Australians don't travel internationally when the Aussie dollar falls against the US dollar – and one reason why Flight Centre may be a bargain at current prices.
