There was an across-the-board increase in Australian domestic airfares in October, whether travellers were buying business or economy class tickets, new figures show.
The Bureau of Infrastructure, Transport and Regional Economics (BITRE) monthly measure of airfares showed the largest increase was in the restricted economy category, which was at 83.3 index points in October, up 3.7 index points from 79.6 a year earlier.
Restricted economy is at the highest level since a change to the index in June 2011, when Virgin Australia and Jetstar introduced simplified fare structures that brought down the cost of so-called flexible tickets.
Meanwhile, the BITRE measure of domestic business class airfares was at 95.1 index points in October, up from 93.9 points a year earlier.
And the best discount economy category was also higher than a year ago at 64.1 points, compared with 61.6 in October 2016.
The BITRE air fare series is a price index of the lowest available fare in each fare class, weighted over selected routes.
Figures from an International Air Transport Association (IATA) report showed the Australian domestic market continued be stagnant, with airlines cutting capacity in an effort to better match demand with the number of seats in the market.
The IATA Economics Report said demand, measured by revenue passenger kilometres (RPK) fell 0.3 per cent in the eight months to August, compared with the prior corresponding period.
Capacity, measured by available seat kilometres (ASK), fell 2.2 per cent. As a result average load factors improved 1.5 percentage points to 77.6 per cent.
“RPKs have been trending sideways in seasonally adjusted terms over the past year or so, although domestic capacity has trended down over the same period at an annualized pace of around two per cent since late 2016,” the IATA Economics report said.
Qantas chief executive Alan Joyce told reporters the company’s 2016/17 results presentation the encouraging signs that emerged in the domestic market during the latter part of the previous financial year had continued into 2017/18.
“The domestic market continues to perform very well and we expect that to continue,” Joyce said.
“We are seeing strength in every sector apart from resources.”
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