Airfares for the cheapest economy tickets fell to their lowest levels in more than three years in May.
The Bureau of Infrastructure, Transport and Regional Economics’ monthly measure of domestic airfares index for “best discount” tickets fares fell sharply to 49.8 points in May, from 65.5 points in April.
It was the lowest reading since January 2011 and suggests best discount ticket prices are less than half what they were in 2003.
The business class index had a similar tumble, dropping to 72.3 points in May from 92.4 points the previous month.
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 Jane Hrdlicka has described the local Australian market as “overheated”.
“While we are still profitable domestically in Australia, the margins are very thin,” Hrdlicka said in an interview published in the May issue of Australian Aviation.
“We can weather it better than most, but it still squeezes margins and it’s taken a massive toll on the Jetstar profit book.”