In an indication of the still sluggish nature of the domestic market, the cost of the cheapest economy tickets remain well below last year’s levels.
However, demand for business class appears to be holding up, with fares for seats at the pointy end of the plane higher than 12 months ago.
The Bureau of Infrastructure, Transport and Regional Economics’ (BITRE) monthly measure of domestic ticket prices found the “best discount” economy fare in September was lower than a year ago.
The best discount index was 61.9 points in September 2014, down from 72.6 points in September 2013.
The measure has been below its year-ago level for the past four months.
The budget or leisure sector has been hit by weak consumer confidence and with airlines adding too many seats amid weak demand, ticket prices have been lowered in a bid to fill aircraft.
Latest figures from the airlines showed low-cost carriers Tigerair Australia and Jetstar continue to pour additional seats into the local market.
Jetstar’s capacity rose 4.7 per cent in July, compared with a year ago, while Tigerair added 13.6 per cent.
It should be noted that Jetstar is four times the size of Tigerair, based on available seat kilometres flown.
While the best discount fares remain under pressure, it is a different story in business class.
The BITRE index measuring ticket prices for seats at the front of the plane was at 86.4 points in September, up from 81.9 points in the prior corresponding period.
The business class index as been above its year-ago level for the past 13 months.
Virgin Australia chief executive John Borghetti said at the airline’s full year results presentation the corporate and government travel market had held up better than the leisure end.
“We are seeing quite good corporate traffic,” Borghetti said.
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