Domestic discount airfares lower than a year ago

Qantas engineers won't take industrial action this week following the Tiger grounding. (Seth Jaworski)
Domestic demand is still “quite week”. (Seth Jaworski)

Australia’s domestic carriers’ recent pullback of capacity growth appears yet to have an impact on prices, with the cost of the cheapest economy tickets remaining below last year’s levels.

The Bureau of Infrastructure, Transport and Regional Economics’ monthly measure of domestic ticket prices found best discount and full economy tickets in August were lower than where a year ago.

The index measuring “best discount” economy tickets was at 55.8 points in August, compared with 58 points in the prior corresponding period. It was also broadly unchanged from 55.7 in July.

Meanwhile, the index for full economy fares was 116.3 points in August, down from 122.1 points a year ago.

Qantas chief financial officer Gareth Evans said recently despite some easing of capacity growth things were still challenging domestically.

“There has been excess capacity there is no doubt about that and what we are seeing is an abatement of that capacity growth,” Evans told an aviation conference in a Sydney.

“The demand environment is still quite weak.”

By contrast, business class fares were up in August compared with a year ago, with the August 2014 reading of 92.6 well up from 79.5 the prior year and an improvement from 90.6 in July.

The index measuring “restricted economy” fares also rose.

Qantas and Virgin have waged a big battle for corporate and business travellers over the past year, while Tiger and Jetstar competed for leisure travellers.

Jetstar group chief executive Jayne Hrdlicka said recently the underlying fundamentals in Australia were stronger than they had ever been.

“We are in a brilliant position as the market starts to slow down a bit in capacity growth,” Hrdlicka said.