BUDGET airlines are slowly killing Australia's domestic tourism industry, a leading Australian travel agent has warned.
Alan Dodson, who is managing director of travel company Holiday Planet, said he was finding it harder and harder to market Australia as a destination with low-cost carriers such as AirAsia and Jetstar offering such cheap packages to Asia.
Earlier this month AirAsia was advertising fares to Kuala Lumpur in Malaysia from Melbourne, Perth and the Gold Coast from $199 one way.
"If the low-cost carriers continue to grow I think Australia is going to struggle more and more to fill leisure beds,'' Mr Dodson said.
While his company still advertises domestic packages, Mr Dodson said it was very difficult to compete on price.
"You can get four nights accommodation on the Gold Coast for $250 to $300, but for not a lot more than that you can get a cheap package deal overseas,'' he said.
"We're persisting with it because we think there are some people who definitely prefer to travel domestically but if anybody is looking at a budget it's very difficult to justify paying so much more to travel domestically.
"Unless somebody looking at the dollars and cents hates Asia it makes it hard to add up - especially if you have a couple of kids involved.''
Mr Dodson, who is originally from the United Kingdom, said he could see Australian holiday destinations following the same path as the one-time tourist hotspot of Blackpool in England, which died a slow death after budget airlines were introduced in Europe.
"You go back 15 to 20 years ago when the likes of EasyJet and Ryanair launched it encouraged more people to travel,'' he said.
"There used to be 16 million people a year holidaying within their own country.
"Blackpool had thousands of hotels - it's now given over to workers coming over from Eastern Europe renting accommodation.
"It's the same problem that's starting to happen here.''
But Tourism and Transport Forum chief executive John Lee said low-cost carriers also gave international source markets access to Australia and domestic airfares are more affordable now than ten years ago.
"The key for Australian tourism operators is to know what those markets want and ensure we are marketing ourselves effectively,'' he said.
"Australia can't compete on price alone, so we need to offer value instead - that doesn't mean cheap, it means bang for your buck, with great accommodation, unique and authentic experiences, great locations and high service standards.''
Mr Dodson has been operating his company for more than a decade and said it cost 20 to 25 per cent less to travel to Bali than it did two years ago.
"Consumer's perception of what they should pay has altered dramatically over the past few years,'' he said.
"There's more and more people going away two and three times of year because it's so cheap.''
The low-cost carriers had also encouraged full service airlines to lower their fares to be more competitive.
"For a little bit extra you can travel with the likes of Garuda Indonesia to Bali or Thai Airways to Phuket and have the advantages of movies and food included,'' Mr Dodson said.
AirAsia's Australian marketing manager Stuart Myerscough said the increased availability of travel options was only stimulating more frequent travel among the Australian public, including domestic breaks.
"At the end of the day what budget international carriers are offering to the general public of Australia is a greater choice,'' he said.
"Australians are now better off for having a greater availability of holiday destinations both at home and abroad.''
Mr Myersough said the number of Malaysian and Chinese passengers flying into and out of Australia on AirAsia X far outweigh the number of Australians flying out.
"The net effect of these budget airlines on the overall Australian tourism industry then could be said to be very positive, with more tourists being flown into our tourism markets, than being flown out.''
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