Australian domestic airfares soar on high demand

Jetstar & Qantas 787 Dreamliner at Sydney Airport
Bidgee, CC BY-SA 3.0 AU, via Wikimedia Commons

LONDON – According to Australia’s Competition and Consumer Commission (ACCC), the country’s top three airlines are forecasting a profitable year. In what appears to be a recovery after three years of poor financial performance caused by the Covid19 pandemic.

A quarterly report that has been released today shows that the “average revenue per passenger” has increased 27 percent in the month of October 2022, when compared to the same month in 2019. 

The rise was based across all passenger fares, but it would come as no surprise to see that it is the discounted economy fares that have increased the most.

Driven by the fact there are fewer flights available, but still strong demand. Airlines have not been required to offer special prices in order to fill their seats.

Commissioner Anna Brakey for the ACCC said: “Airfares have risen due to strong demand for travel and constrained supply as airlines have scaled back their schedules in response to high jet fuel costs and operational challenges.”

In an index of the discounted economy fares across the 70 most popular domestic routes had doubled in November 2022, when measured against April of this year, when they were at an 11 year low. The same statistics show that the cheapest available fares reached a 15 year high in September 2022.

These abnormal fluctuations from one extreme to the other on discounted airfares in the same year goes to prove how the industry has been affected by the Covid19 pandemic.

Flexible economy tickets and business class airfares have not increased at the same rate as discounted economy tickets. As of November 2022, they remained lower than pre-Covid prices.

“We accept that the airlines are still experiencing some pandemic-related resource challenges, but the ACCC will be monitoring them closely to ensure they return capacity to the market in a timely manner to start easing pressure on airfares.”

“We would be concerned if airlines withheld capacity to keep airfares high,” continued Brakey.

The Qantas Group, Virgin Australia and Rex have all forecasted to end this financial year in profit, testament to the higher air fares and strong demand.

The Qantas Group are predicting underlying profits of between $1.35 – $1.45 billion for the 6 months to the end of 2022, hitting this will put them close to a record for a full year operation.

Although the market has recovered well from the pandemic, the carriers are still seeing interruption to their operations through both staff shortages and sickness. Supply chain issues are an ongoing problem that continue to disrupt the air travel industry.

As such, airlines have told the ACCC that they are keeping additional crew and aircraft on standby in a bid to help minimise any delays over the Australian summer period.

2.9% of flights across the big 3 airlines plus Jetstar were cancelled in October 2022, which is still 0.8% above the long-term average of 2.1%.

A shockingly high 31% of all flights were delayed during the same month, and this is 13% over its long-term average. Qantas and Rex were the two coming out on top with the lowest proportion of flights being cancelled in October.

Let’s hope to see the continued recovery of the air travel market. With airlines putting on more capacity where required, which in turn should bring prices down for the consumer.

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